Effects of Globalization on the Micro Level

globalisation was loosely derived from the assumptions of neo-classical sparings. In order for a country to deliver the goods economic development, it must open its saving to trade liberalization. Trade liberalization sees as a redistribution mechanism of uppercase and goods. clinical depression-d ingest and underdeveloped countries shadower export untrammeled flashiness of goods and services to developed countries. Added to that, the come forwardstanding inflows from developed countries would serve as a stimulant for cap build-up in the telephone receiver country ( exploitation countries).Because developed countries usually gene stray chore shortages, press immigrants from developing countries would serve as the compensating medium. Here economists assume that the income derived from application migration would then serve as superior outlay. While for many a(prenominal) economists globalization is a positive force of development, certain mulish issues were l aid exposing the bad effects of globalization on the micro-level ( various(prenominal) and communal).There ar primarily two negative impacts of globalization on the micro-level. The first impact focuses on the form of the campaign force of developing countries (exposed to globalization). It is in everyday observe while globalization aims for wealth redistribution amongst developing and developed countries, discrepancy in footing of income and capital change magnitude (Goldberg, R.K., and N. Pavcnik, 2006). Skilled workers from developing countries are gainful less than unskilled workers from developed countries. In China, for example, after opening to globalization, some(prenominal) multi-national corporations (which are etymond in developed countries) transferred a significant portion of capital to the country.The motive can be derived from the cost of labor in the country. It is estimated that the cost of labor in China is one-eight (on the average) compared to labo r cost in developed countries (Goldberg, R.K., and N. Pavcnik, 2006). Multi-national corporations give it rational to pillow slip a significant portion of their capital to labor-rich China. The economic assumptions are clear. Labor intemperance would drive the market to realign wages. The to a greater extent workers, the less average labor terms. The antonym relationship between the number of demand workers and labor price pushed these corporations to increase their capital inflow to China. Needless to say, because labor be are below the market price of labor, these multi-national corporations can increase their profit level, generating spic-and-span capital (to be transferred to the mother country).Added to that, it was found out that after 10 old age of exposure to trade liberalization, China experient vast disparities in terms of income of its own citizens. Urban workers, on the average, have generally higher incomes than rural workers. Needless to say, these urban work ers are generally better move out than their rural counterparts. Thus, the vast disparity of income between developed and developing countries is mirrored out in the labor price of urban and rural workers. It can be tell that the macro-level effect of globalization resulted to internal income disparities. This owes more to the economic rationalizing of multi-national corporations regarding the proper handling of labor costs.Exposure to longer working hours and vile working conditions are also study impacts of globalization in the workplace. These impacts severely decreased the labor productivity of developing countries. Stallings (2007, pp. 6-7) noted that in Latin America, the opening of several countries to trade liberalization and privatization led to capital build-up in the short-run. Foreign direct investing and other capital inflows contributed to economic harvest-feast as well as sustainability of the industrial sector.The labor sector though suffered. The evaluate l evel of employment growth as well as improvement in labor productivity in many sectors of several Latin American countries was not met. In fact, some industries like the snip and textile industries suffered from stagnation and high-costs of operations. Several governments were strained to implement longer working hours and tax revenue incentives to several multi-national companies. The general effect labor productivity decreased by half. Strikes became a common sight in the streets of major(ip) Latin American cities. Companies owned by local residents were forced to close as a result of the polity. Multi-national corporations though can easily shift their capital base to countries undeterred by political and economic debacles.We come now to the second general effect of globalization on the micro-level. globalization requires that all national currencies be on a floating status. This would allow the good transfer of capital from developed countries to developing countries. As su ch, many economists assume that this policy would generally improve the overall economic standing of developing countries in terms of capital outlay and technology acquisition. This is though not the case.Akar (2007) noted that floating currencies would essentially alter the predictability of the market. Inflation, or in many cases stagflation, are usually the main economic problems in developing countries. Because developing countries further own a small helping of the globes total pecuniary reserve, they can easily be alter by price changes in the world market (Kasapidis, R, 1999). Price changes can remove the predictability of the markets of developing countries. Inflation can hold out highly unpredictable.Thus, this puts pecuniary institutions on a very high-level of jeopardize. This high risk can be translated to low-level enthronement schedule of firms. Nonetheless, the overall interest rate increases as a result of monetary downfalls. Increases in interest rate cau ses pompousness and concomitantly, low economic output.On the individual level, as inflation progresses, the present volume of goods and service that can be bought by the value of money is less than the preceding volume of goods and services bought. In a simple relationship, globalization requires that national currencies be on a floating status. For developing countries, putting its national currencies on a floating status increases the risks on financial institutions. These risks are translated to high inflation and low economic output. The end the current buying power of a consumers income is devalued.BibliographyAkar, O. (2007). Globalization. forthcoming from Accessed 24 October 2007.Goldberg, P.K., & N. Pavcnik. (2006). Distributional Effects of Globalization in Developing Countries. for sale from Accessed 24 October 2007.Kasapidis, R. (1999). The Opportunities and Dangers of Globalization. Available from Accessed 24 October 2007.Stallings, B. (2007). Globalization and loosening A View from the Developing Countries. U.N. economic Commission for Latin America and the Caribbean. Available fromAccessed 24 October 2007.