Jarrett Davis BUSI 560 Project

PRINCIPLE: Globalization is thought to be the spread of economic activity both into and out of the US.

Initially globalization advocates stated that everyone benefits when nations specialize in producing goods or services in which they are the most efficient. Many feel the free trade environment is taxing the US economy by sending many jobs to countries that demand lower salaries (FRBSF, 2004).

PRACTICE: The US insources more business than it outsources. In 2003 the US bought 77 Billion in foreign services, and sold over 130 Billion to foreign companies (FRBSF, 2004). Outsourcing is the practice of contracting out functions that were previously maintained inhouse within a US firm. Offshoring is the practice of purchasing goods or services abroad due to lower costs. One cannot expect the American consumer or business to business agent to purchase from US suppliers when they can be purchased cheaper abroad. PARTICULARS: Globalization can aid the US in increasing their productivity (FRBSF, 2004). Dell Corp. used offshoring tactics to revolutionize computer manufacturing. Cheaper labor and services drops retail cost of computer equipment up to 30 %. The cheaper prices helped distribute information technology throughout the US, and increasing productivity. Productivity Historically productivity has always been essential to economic development. The ability of US companies to produce more goods or services in less time than the competition made the US a global power. Manufacturing Agriculture Services Increased global market. (Bradford, Grieco & Hufbauer, 2006). Declining tarriiffs/ transportation cost Opening historically closes foreign markets Roughly 1 Trillion of annual US GDP results from globalization

Globalization and the open market brought about the best half century of economic growth ever seen. Competition benefits society through more choices and lower prices.

Persons:

PERIOD: In the 1970s-1980s The US share of world manufacturing declined. (Pearson, 2010) In 1994 the North American Trade Agreement (NAFTA) signaled a change in US economic position. In the 1990s The US economy rebounded, due to US technological innovation. 1991- 2001 US corporations created nearly 3 million jobs abroad. They simultaneously created 5.5 million jobs inside the US. Overseas expansion generally means additional hires must be made in the US as well (FRBSF, 2004). Foreign firms employed almost 6.5 million people in the US in 2001 Economy growth in 1990s and 2003-2005 did not reduce income inequality in the US. (Pearson, 2010)

Places:

PHRASES: The New Global Economy Companies compete globally for advantages in cost of labor, technology, and material costs (Pearson, 2010).

Pictures:

Prospects: Removing all trade tariffs would increase us production by 450-600 billion annually (Bradford, Grieco & Hufbauer, 2006).

In favor of Globalization: Open trade creates opportunities in the US as foreign economies become stronger. US policymakers should not miss opportunities to fulfill foreign demand for imports by erecting trade barriers. Trade barriers would cause US companies to lose sales, and the US economy to lose jobs. (FRBSF, 2004). Against Globalization: Some companies have been forced to become lean and mean, in order to remain competitive in the global economy (Pearson, 2010). Reduced salaries and wages Reduced health care benefits US manufacturing exports are growing but not yielding additional jobs.

Problems: Displaced workers: Rather than protecting jobs through tariffs and barriers, we should protect people who are threatened by globalization. Displaced members of society should receive financial assistance and opportunities to build on their skill sets preparing them for future opportunities (FRBSF, 2004). Adjustment cost In 2003 Globalization was responsible for nearly 54 Billion in worker dislocation costs (Bradford, Grieco & Hufbauer, 2006).

The US federal government spends less than 2 Billion annually on trade adjustment assistance. Between 2000-2003 job loss estimates are between 85,000- 197,000 jobs per year.

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