How Global Competition Affects Work

Global competition is on the rise in recent years with the reduction of barriers to trade and the liberalization of many economies. A common theme of increased global competition is its effects on the ability of people to find work or to keep their existing jobs. While a favored conception is that global competition causes jobs in developed countries to be lost, the reality is that it actually requires a relocation of workers to new forms of employment.

In developed countries, such as the United States, global trade often means that wages are decreased for a variety of jobs. This is because developing countries tend to pay their workers less, and in order to compete with businesses in those countries on cost, domestic businesses are often forced to reduce wages for their own employees.

Another implication of global trade on developed nations is that low skill jobs, such as basic manufacturing, tend to be lost to developing countries. Because these countries can often produce simple goods at a lower cost than developed countries, many low skill industries die out in developed countries because the developed country can more cheaply import goods from abroad than produce them at home.

While developed nations often lose low skill jobs, they tend to have a competitive advantage in high technology or professional services industries. As developing countries increase in wealth, they demand these products and services from developed countries, creating more jobs in advanced industries and services in those economically developed nations. Therefore, it is not entirely accurate to say that global trade causes jobs to be lost, only that it forces some workers to retrain and relocate into new, more advanced industries.

Another factor of global trade is that it increases overall economic growth. Opening up a nation's borders to global competition is a voluntary action, and nation's would not engage in this action if they did not believe it would promote growth. The mutually beneficial gains from trade are a fundamental principal of economics. As economies grow, jobs are created in those expanding economies.