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Globalization - What Has It Really Meant To Trade, Jobs and Recovery

By: Ian Campbell | Tuesday, November 6, 2012

This is a commentary you might consider passing on to your children, grandchildren, and friends with children and grandchildren. It speaks specifically to what jobs (and types of jobs) I believe will be available in the developed countries in coming years. If you agree with my observations you might want to consider passing this Newsletter along to friends and colleagues with children and grandchildren.

A recent article said:

"the European Union will not back down from protecting its industries against Chinese competition it sees as unfair, but mutual self-interest will prevent a damaging trade war".

That caused me to reflect on what I think globalization means in the context of trade, trade wars and jobs in the developed countries going forward.

First, it seems to me the following 'types of jobs' are protected for the long-term from offshore sourcing:

Simply put, in a globalized world, the only local jobs that are afforded long-term protection from off-shore sourcing are those that either:

For me, this makes talk of 'trade wars' with developing countries mere political rhetoric. Trade wars would exacerbate the current developed countries poor economic conditions. This is because where one of the two foregoing criteria are not met, the prices of consumer products would increase significantly as developed fully-benefited country labour rates were substituted for much lower developing country labour rates.

In the simplest terms, globalization after 1985 has:

resulted in an ability of developed country consumers to enjoy their lifestyles for longer that would have been the case without globalization. This is because they have been able to buy products at Wal-Mart or similar retail chains that have been 'made in China and elsewhere' at much lower prices than would have been the case had those products been manufactured in America or other developed countries; and,

seen the Internet link the world population, such that everyone now can see what is under everyone else's kimono. People in developing countries like what they see, and it is human nature to want what others have.

Given the developed country debt build-ups and their fully benefited labour rates, globalization can't be reversed - or can't be reversed without serious pain in both the developed and developing countries. I don't for a minute think such a reversal will occur, and in any event it would not solve the economic dilemma the developed countries find themselves in. That dilemma can be stated as:

I believe that what has, is, and will continue to transpire in the world economy is very Darwinian (i.e. very 'survival of the fittest') in nature.

You might want to review charts on globalization presented in Chart: 30 Years Of Increasing Global Economic Synchronization.

Topical References: Europe and China don't need a trade war: EU trade chief, from Reuters, October 21, 2012 - reading time 3 minutes. Also see Topical Reference: Chart: 30 Years Of Increasing Global Economic Synchronization, from Business Insider, October 21, 2012 - reading time 2 minutes.


Author: Ian Campbell

Ian R. Campbell, FCA, FCBV
Business Transition Simplified

Through his website and his Business Transition & Valuation Review newsletter Ian R. Campbell shares his perspectives on business transition, business valuation and world economic and financial markets influences on those two topics. A recognized business valuation and transition authority, he founded Toronto based Campbell Valuation Partners Limited (1976). He currently is working to bring his business valuation and transition experience to both business owners and their advisors in our new economic, business and financial markets normal.

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