Globalization The process of increasing interdependence and interaction among people companies and governments of different nations LER 100 Spring 2015 Exam 4 Study Guide Aspects of Globalization 1 Economic 2 Political 3 Social Each of these is interconnected with each other Economic Globalization The increasing internationalization of product and labor markets 50 years ago Most companies operated in one country exported to others Now 2015 Production is globalization with different countries contributing different things to the product process e g labor raw materials etc Raw Materials and Expertise shipped in Richer Countries Involved in more lucrative activities planning design marketing sales Poorer Countries Involved in Least Lucrative activities providing unskilled labor What does Globalization mean for workers Globalization affects workers in an innumerable number of ways We re all affected by this every day and will be for our whole lives But is a globalized economy a good thing or a bad thing Globalization and Labor Markets One effect of globalization is to allow countries to compete against each other for the cheapest production costs For instance our products used to say Made in Japan o Then Made in Taiwan o Then Made in Korea o Then Made in Philippines o Then Made in Mexico o Now Made in Vietnam and or Made in Bangladesh and or Made in China and or Made in Haiti Jack Welch Ideally you d have every plant you own on a barge What makes globalization possible Technology Communication Networks Growth of economic cooperation trading blocs EU NAFTA etc Collapse of Communism Socialism Internet access The growth of Multinational companies Multinational companies MNCs are businesses with a headquarters in one country but with operations subsidiaries in a number of other countries The first MNC Dutch East Indiana Company Started in Netherlands and then shipped all over the world EXAMPLES OF U S MNCs Wal mart General motors Coca cola Nike McDonald s Dell Apple And many more Examples of Non U S MNCs Honda Japanese BP British Nestle Dutch Phillips Swiss Hyundai Korean Nokia Finnish Volkswagen German Ford Motor Company Ford has manufacturing operations in six continents These include In Europe alone there are around 35 sites in 9 separate countries o Assembly plants o Stamping plants o Engine plants and casting o Firing and aluminum plants What does American Made mean American made can have different meanings For instance Toyota s cars might be more American made than Ford or Yet GM s cars and most of Ford s cars are union made whereas Toyota GM s cars is anti union Toyota Made in America 2014 Youtube o They are building cars in the US using non union labor o The Toyota Camry is the most American made car today Expansion by MNCs costs of production As MNCs expand they create new jobs and revenue streams and lower But they also damage the environment potentially exploit labor and sometimes ignore local culture and customs Is the world becoming Americanized because of U S MNC expansion Is Americanization a good or bad thing At heart the concerns regarding MNCs relate to accountability Are MNCs accountable to local cultures customs and environments And if they operate independently should it matter Pros of Globalization Exported jobs often pay more than other jobs in a given country Average living standards in poor countries are often raised Global competition keeps prices lower for consumers Good for U S companies possible trickle down effect Cons of Globalization Millions of American workers have lost jobs due to imports New jobs created are in the service industry and pay less Service and white collar jobs are increasingly vulnerable to moving offshore Workers face pay cut demands from employers who often threaten to export jobs Sweatshops and Immigration Human Rights at Work Sweatshops Any workplace that doesn t meet minimal global labor standards UN Declaration of Human Rights Article 23 states 1 Everyone has the right to just and favorable conditions of work 2 Everyone has the right to equal pay for equal work without any discrimination 3 Everyone has the right to just and favorable pay ensuring for himself and his family an existence worthy of human dignity 4 Everyone has the right to join and form unions International Labor Organization ILO Global Labor Rights 1 No forced labor 2 No discrimination 3 No child labor 4 Freedom of association unions 5 Payment of a living wage 6 No excess overtime 7 Safe and healthy workplace 8 A legally binding contract with pay rates A fundamental assumption of both the UN and ILO conventions is that LABOR RIGHTS HUMAN RIGHTS Two Sides to the Debate There are two arguments that can be made with regards to sweatshops 1 Anti sweatshop argument Sweatshops are exploitative and harmful for workers Hurting workers in the process even though you are employing works you are employing them far off their value 2 Pro Union Argument Sweatshops bring countries out of poverty and create better jobs It s possible that both arguments are correct Consider the situations at Apple and Wal Mart So have Apple and Wal Mart been good or bad for China and Bangladesh Sweatshop Regulation How do we regulate sweatshops One response codes of conduct and monitoring Corporations opposed in principal How do you enforce monitor THERE S NO REAL WAY OF ENFORCING Hard to know whether they will engage in that behavior An option is to use independent monitoring organizations Audits Checked in on regular regulating sweatshops Monitoring outside auditors Another approach that companies take is agree to sign up to corporate code of conduct labor code Monitoring Organization Worker Rights Consortium WRC Independent organization investigating working conditions in factories around the globe PSU joined in 2005 One key target is universities and the apparel produced for them United Students Against Sweatshops USAS Pushing PSU to endorse the Designated Supplier Program DSP DSP requires licensees to source most university apparel from factories that have been determined by independent verification to not operate under sweatshop conditions How to regulate Sweatshops 1 Monitoring organizations 2 Consumer behavior pressure We re going to boycott if you don t produce more careful products 3 Worker empowerment 4 Trade agreements Maquiladoras Companies operating on the border of the U S and Mexico Duty free and tariff free manufacturing firms Grew in response to rising unemployment along border