GLOBALIZATION AND THE AMERICAN ECONOMY
Date of submission
One of the most debated economic issues in our time is the effect of globalization on the U.S. economy. Globalization is a very general term but in this context it is used in reference to the changes that lead to the free movement of goods, services and the factors of production between different countries. Economists argue that globalization is very important in the aspect of the benefits that arise from free trade. On the other hand, these economists also look at the negative effects such as job losses, unemployment and reduced wages. Despite these downfalls, I believe that America will continue to prosper in this globalizing economy. On the brighter side, the US will gain more jobs and boost its economic activity through globalization. In terms of the office work for example, the U.S. insources far more than it outsources. This means that foreign companies make far greater use of the U.S. residents’ services. In 2003, America bought around $77 billion worth of foreign services and sold $130 of these services (Bertho, 2008).
Another reason is that between 1991 and 2001 America based multinationals went ahead and created around 3 million jobs overseas but also created over 5 million jobs in the U.S. This is a clear indication that creating more jobs overseas translates into hiring more workers in America as well (Bertho, 2008). The U.S. also gains jobs as foreign companies invest in the country. In 2001 for example, foreign firms hired over 6 million workers in America who included high paid Mercedes-Benz and Honda workers in the Auto sector (Rao, 2008). Other companies such as Samsung and Toyota have done the same and with more and more free flow of economic activities in the country, this trend will continue. When foreign economies become stronger as a result of this trade, the demand for America based goods and services increases...