Problems And Challenges Of Globalization

In international finance if globalization is a non- stoppable train, as many argue, it seems to be a rather selective one in admitting passengers aboard. Economies possessive of skilled and educated manpower and endowed with well developed production and marketing capacities can get on board to reap significant benefits if they have developed financial systems and access to technology. Those who do not have the products and services to sell or the means to market them will assuredly be left in the station. The same is true for individuals also who have not invested in their human capital and in obtaining the requisite skills for global jobs. Thus, faced with the phenomenon of marginalization of firms, of people and of countries; the global system confers a large rent differential upon the participants and applies exclusion to the non- participants. Unless the means to spread around prosperity and wealth are built into globalization, it will become the domain of the already established, of the capable and skilled. Faced with the reality of the requirements of global economy, are forced to increase their expenditure on infrastructure and education to enter into or keep their presence in the global system. To all that must be added the system consequence of accepting global openness: national governments must extend safety nets for taking care of the casualties of globalization, be it firms, banks or workers, if they are to maintain the social compact and preserve domestic civil peace. These are contradictory demands on national governments. Another problem concerns the timing and location of the short run benefits and losses in the trade sector. While the countries with high wages and salaries and more exigent environmental standards stand to lose jobs as business shifts some branches of industry to cheaper locations abroad, higher paying jobs have not followed the lost ones in the short run. However, with openness it is possible that higher productivity might be associated with lower wages for skilled unemployed workers in a different country.