Outsourcing and Globalization

Topics: International trade, General Agreement on Tariffs and Trade, Globalization Pages: 6 (2072 words) Published: October 25, 2010
Globalization and its Impacts|
A Brief Look at Effects and Ramifications|


I challenge you, the reader of this paper, to attend a party, church or school event, or any gathering of adults, and not hear about someone’s job being outsourced. I also dare the reader to remember a time when there was not an abundance of affordable products in the marketplace and wax romantic over spending over a thousand dollars for a cell phone in the age of buy-one-get-one free. Well, this paper is all about that. I am going to skim the surface of the global economy and its impact on American industry and workers. Such a meaty topic cannot be covered in so short a forum, so my intent is to provide a high level understanding to the reader. In order to understand the impacts of outsourcing in a global economy, we must first understand the components. What do we mean when we talk about Globalization and the global economy? According to globalization101.org, “Globalization is a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology.” (What is Globalization, 2010) In other words, Globalization is achieved when we look beyond our national borders when conducting business. The global economy as we see it today is likely to have been born in the aftermath of World War II. Political leaders believed that creating an international interdependence for trade would enhance wealth for all partners, enhance international cooperation, and ultimately serve as deterrent for another conflagration like WWII. In order to accomplish this, international corporations would need to be created; money needed international regulation and tariffs needed to be monitored. The groundwork for this took place in July, 1944 in New Hampshire at the Mount Washington Hotel. Members of the Allied nations met at what is now known as the Bretton Woods conference. Resulting from the conference some 15 years later was the International Monetary Fund (IMF). The fund has morphed into the World Bank which monitors and oversees international exchange rates allowing all markets to operate with commonality. Also born out of the Bretton Woods conference was The International Trade Organization (ITO). The Allied nations from the conference proposed the creation of a regulating body to oversee trade as well as money exchange. The ITO was that body. Some of the countries looking at ITO formation were also starting to negotiate rules to govern the trade that would be overseen by the ITO once formed and agreed upon. These rules were called The General Agreement on Tariffs and Trade. The ITO was never formed, primarily due to the United States’ refusal to sign. This left only GATT to govern international trade and tariffs. The preamble to the agreement, excerpted below form the treaty itself, calls all signing nations to work to ensure free trade, reduced tariffs and enhance full employment throughout all of the participatory nations: “Recognizing that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, developing the full use of the resources of the world and expanding the production and exchange of goods,

Being desirous of contributing to these objectives by entering into reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international commerce” (www.worldtradelaw.net/uragreements/gatt.pdf, unknown)

The hope of IMF and actuality of GATT did much to enhance international trade. Taking advantage of the new, international marketplace, the United States grew its industry exponentially....
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