PIIE: What is Globalization?

Perhaps it is human nature as so many people take credit for their every success but blame others – trade, migration, technological advances and other facets of globalization – for their woes. The Peterson Institute for International Economics undertakes the task of reminding about the age-old processes of globalization, urging an understanding of the relative costs and benefits to avoid the problems associated with protectionism and explore ways to adapt. Global consumers prefer affordable products, which in turn fuel global supply chains, and then protest when companies transfer manufacturing jobs overseas. “Globalization encourages each country to specialize in what it produces best using the least amount of resources, known as comparative advantage," the report notes. "This concept makes production more efficient, promotes economic growth, and lowers prices of goods and services, making them more affordable especially for lower-income households.” In advanced economies, employment in services is expanding. Without government regulations, taxation and other interventions, especially in wealthy nations like the United States, inequality widens. The report notes that wage losses from transitions and transfers over time are generally temporary and the gains are permanent. – YaleGlobal