caribbean studies globalisation

1. GLOBALIZATION AND
ITS IMPACT ON
LABOUR, INDUSTRY
A
AND COMMERCE
A
ANDTHEIR
RESPONSE TO
GLOBALIZATION
HESKETH A. WILLIAMS
ELTONIA A. ROJAS
02.11
GLOBALIZATION
International integration of goods,
labour, technology, and capital.
(Slaughter and Swagel, 1997)
International integration in commodity,

2. capital and labour markets. (Bordo et
al., 2003)
EPA
LABOUR
POSITVE IMPACTS OF
GLOBALIZATION ON
LABOUR
International integration of goods,
labour, technology, and capital.
(Slaughter and Swagel, 1997)
International integration in commodity,
capital and labour markets. (Bordo et
al., 2003)
EPA

3. Increased demand for skilled workers
and decreased demand for less-skilled
workers.
Increased technology and
communications facilitates higher
education.
Ease of travel allows labour to compete
on an international scale.
Decentralization of labour market to
industry hubs.
POSITVE IMPACTS OF
GLOBALIZATION ON
LABOUR
A rise in worker remittances.

4. Increased accessibility of employment in
new areas.
Rapid technological change may be
responsible for a more abrupt price
decline in skill-intensive industries
rather than in unskilled-labor-
intensive.
NEGATIVE IMPACTS
OF GLOBALIZATION
ON LABOUR
Difficulties of integration into the host
community.
Increase in poverty as a result of the

5. concentration of low skilled and low
paying jobs .
Dramatic income inequality between the
more and the less skilled in some
countries.
Unemployment among the less skilled in
other countries.
Limited employment protection
OF NOTE:
What explains the differences in
wages and employment across
countries is their labor market
structures .
In countries with relatively flexible
wages set in decentralized labor
markets, such as the United States
and the United Kingdom, the decline
in relative demand for less-skilled
labor has translated into lower relative

6. wages for these workers.
In contrast, in countries with relatively
rigid wages set in centralized
labor markets, such as France,
Germany, and Italy, it has meant lower
relative employment.
(Matthew J. Slaughter and Phillip
Swagel)
INDUSTRY
IMPACT OF
GLOBALIZATION ON

7. INDUSTRY
The reduction of barriers to cross-border
trade and capital flows, along with
progress in transport and
communication, has made it easier for
firms to move parts of their production
to less costly foreign locations—a
process referred to as offshoring.
The location of production has become
much more responsive to relative
labor costs across countries.
Imports of intermediate manufacturing
and services inputs (excluding energy)
accounted for about 5 percent of
gross output and about 10 percent
of total intermediate inputs in
advanced economies in 2003.
IMPACT OF
GLOBALIZATION ON

8. INDUSTRY
Offshoring is relatively limited in the
United States and Japan, in the same
way that trade openness is usually low
in large and booming economies.
In 2003 , the offshoring intensity in
manufacturing ranged from 4 percent
in Japan to a high of about 25 percent
in Canada. Interestingly, the rise in
offshoring in advanced economies has
been driven mostly by imports of
skilled rather than unskilled inputs.
The manufacturing sector has been
most affected by offshoring.
IMPACT OF
GLOBALIZATION ON
INDUSTRY

9. Domestic manufacturers produce more
efficiently due to their international
specialization.
An actively trading country benefits from
the new technologies that “spill over”
to it from its trading partners, such as
through the knowledge embedded in
imported production equipment.
For the advanced economies as a
whole, trade with developing countries
has led to about a 20 percent decline
in the demand for unskilled labour in
manufacturing.
IMPACT OF
GLOBALIZATION ON

10. INDUSTRY
Goods traditionally produced in unskilled
sectors (e.g., textiles) are more likely
to be imported as final goods rather
than intermediates.
The bulk of advanced economies’
imports (of both final and intermediate
products) still comes from other
advanced economies and likely
includes more skilled rather than
unskilled products.
The productivity- enhancing effect from
trade in intermediates is large and
trade in intermediates reduces the
costs of production.
COMMERCE
Trade can be viewed as effectively shipping
from one country to another the services of the
workers engaged in the production of traded
goods.

11. (Matthew J. Slaughter and Phillip Swagel)
IMPACT OF
GLOBALIZATION ON
COMMERCE
More and more output in the advanced
economies consists of largely non-
tradable services : education,
government, finance, insurance, real
estate, and wholesale and retail trade.
Perhaps it would be more accurate to
measure the importance of
international trade by considering
merchandise exports as a share of the
production of tradable goods only.
The share of imports and exports in
overall output provides a ready
measure of the extent of the
globalization of goods markets.

12. IMPACT OF
GLOBALIZATION ON
COMMERCE
Developing countries’ imports have
been growing faster than those of
advanced economies and the share of
advanced economies’ exports going to
developing countries has been rising.
IMPACT OF
GLOBALIZATION ON
COMMERCE
Changes in product prices are the result
of trade rather than other, purely
domestic, influences.

13. Global competition has brought down
international trade prices.
The United States tends to specialize in
skilled-labor-intensive products and to
import unskilled-labor-intensive
products.
RESPONSES
RESPONSE OF
LABOUR TO
GLOBALIZATION
Decentralization of labour market to
industry hubs.
Persisting large cross-country

14. differences.
Reductions in the tax wedge.
Deregulation of product markets
RESPONSE OF
INDUSTRY TO
GLOBALIZATION
Changes in product prices brought
about by competition from imports.
Firms shift resources toward industries
in which profitability has risen and
away from those in which it has fallen.
Governments often:

15. prohibit or reduce selected imports by
introducing quotas
make imports more expensive and less
competitive by imposing tariffs.
RESPONSE OF
COMMERCE TO
GLOBALIZATION
Policies should seek to:
improve the functioning of labor markets
strengthen access to education and
training;
ensure adequate social safety nets that
cushion the impact on those adversely
affected, without obstructing the
process of adjustment.
The adjustment costs can be minimized
by:
encouraging flexible labor markets and
by reducing structural rigidities facing
firms
such as onerous work rules

16. staffing requirements, and hiring and
firing costs.
CONCLUSIONS
There is a common belief that
globalization harms the interests of
workers, especially unskilled workers,
either directly through immigration or
indirectly through trade and capital
mobility.
Moreover, the belief that globalization
threatens wages and jobs is
contradicted by the historical evidence
that free trade along with labor and
capital mobility improve global welfare
and tend to improve national welfare
for all countries involved.
Finally, cheaper imports have increased
the size of real total labor
compensation, implying that workers
have participated in the benefits of the

17. bigger economic “pie,” although their
share of it has declined.
BIBLIOGRAPHY
Bassanini and Duval, 2006;
Annett, 2006
Bordo et al., 2003
Florence Jaumotte and Irina Tytell, 2007
Grossman and Rossi-Hansberg ,2006
Prachi Mishra, 2007
Matthew J. Slaughter and Phillip Swagel, 1997

18. FOR YOUR
ATTENTION,
THANK YOU!!!