Pros And Cons Of Globalization
2. Leontiff paradox – The United States makes export more labour intensive, this is due to the high tech products with high labour quality input rather than man hours of work e.g. level of education will also affect a country's advantage rather than its scarcity or abundance. The prospect of losing millions of jobs to low-wage countries is not just an issue in Europe. In the United States, Congress and presidential candidates have diverted their rage at China sucking away US factory jobs to threaten action to stop India sucking away service jobs: IT help desks, call centres, back-office processing of accounts. But why shouldn't firms do that, when wages in India are far lower than in the US, and Indians need jobs too?
In Australia too, manufacturers are wondering how long they can afford to keep producing here if the dollar remains so high against other currencies. Company boards may decide that much of Australia's production should not be here …show more content…
If globalisation is properly managed, it could be a powerful force for improving people's lives in developing countries. Middle-income countries, too, are being hit. Mexico became the flavour of the month for US manufacturers in the '90s after their free-trade agreement. Many US jobs moved to the maquiladores (assembly plants) across the border, and northern Mexico boomed. But then the US discovered China. Suddenly jobs that had been sucked out of the US into Mexico were sucked out of Mexico into China. By last year Mexico had fewer manufacturing jobs than it started with; the flying geese had flown on. Developed countries have absolute advantage in various products and services. A country has an absolute advantage over it trading partners if it is able to produce more of a good or service with the same amount of resources or the same amount of a good or service with fewer resources. Countries like America can continue to produce goods such as computers in which they have absolute advantage and exports it to those countries that specialise in the production of other goods or services.