The Dynamics of Globalization

What is Globalization?

Globalization is the process by which businesses, cultures, and societies become integrated and interdependent on a global scale.

Global-ization… Straight forward.

It’s been going on for centuries. But over the last few decades, due to a variety of technological and geopolitical reasons, globalization has drastically accelerated.

At it’s core, globalization is leading to the free movement of goods, services, information, and people across borders. But that’s not all…

Whether you work in an office, in a shop, in a garage, or even out on the street – globalization related changes will have a significant impact on your career, as we will describe below…

Definition and Key Components of Globalization

Globalization has several key components:

  • Economic Integration: The creation of a global marketplace driven by international trade and investment.
  • Cultural Exchange: The sharing and blending of cultural practices, values, and ideas across borders.
  • Technological Connectivity: The rapid spread and adoption of technology, enabling people to work across borders. This used to be predominantly restricted to migrant and immigrant labor, but is rapidly shifting into a white collar office context.
  • Political Cooperation: Collaboration between countries for national self-interest, politician’s self-interest, and profit at large.

Historical Context and Evolution of Globalization

The roots of globalization can be traced back to ancient trade routes like the Silk Road, which connected East and West. However, modern globalization actually began during the Age of Exploration in the 15th and 16th centuries, when European powers established colonies and trade networks around the world.

The Industrial Revolution in the 18th and 19th centuries further accelerated globalization, through advancements in transportation and communication. The late 20th century saw another significant leap, driven by – of course – of the internet, and perhaps equally importantly: the liberalization of trade policies.

Ultimately, globalization is a force to reckon with, and it is here to stay. But before we can discuss it’s impact, and how to orient your career to succeed in the world of globalization, we need to gain a clear perspective.

The Three Perspectives on Globalization and Your Career

We can identify three distinct perspectives, representing three different coalitions of interest. Here’s how they each think as explained in the well written article “Globalization and Your Career” by Eric T-S. Pan.

Business Perspective

Globalization has a profound impact on businesses, driving them to both adapt and compete in an increasingly interconnected world. For most corporations in developed countries, globalization means someone out there can do what they are doing significantly cheaper, resulting in a reduction in product (and service) prices, and therefore profits.

Here’s how the chain of events unfold:

  • Shrinking Profit Margin: Businesses face pressure to maintain profitability in a competitive global market.
  • Need to Reduce Labor Costs: To counter shrinking profit margins, they look for ways to minimize expenses – this usually means cutting labor costs.
  • Outsourcing: Many businesses outsource operations to regions where the workforce is cheaper. They increasingly develop a global workforce.
  • Improved Business Competitiveness: By leveraging a global workforce, businesses enhance their competitiveness. (“Back in the game baby”)
  • Participation in Emerging Markets: Companies also enter and expand in emerging markets such as China, India, and Latin America.
  • Opening of Global Offices: As businesses grow, they establish global offices, becoming multinational.

Economic Perspective

From an economic standpoint, these company actions lead to significant changes:

  • Global Workforce: Global workforce reduces production costs.
  • Lower Product Costs: Reduced production costs result in lower prices for goods and services.
  • Increased Product Demand: Lower product costs drive higher consumer demand. (When things get cheaper, people can buy more stuff.)
  • Increased Product Supply: To meet the rising demand, businesses expand.
  • Increased Labor Demand: This expansion leads to a greater demand for labor.
  • Increased Labor Supply: The global labor market adjusts, with more workers available to meet demand.
  • Higher Incomes: Increased employment opportunities and economic activity result in higher incomes. (Not necessarily in the locality of the company, but globally. Remember, the companies are multinational now.)

Professional Perspective

The shifting corporate and economic landscape has a profound impact on professionals:

  • Global Workforce: The initial request for a global workforce is driven primarily by businesses seeking to cut costs and outsource work.
  • Displaced Home Workforce: As companies outsource jobs, the domestic workforce gets laid off.
  • Lost Jobs: The jobs that go away, do not come back.
  • New Jobs, Eventually: Over time, the growing global economy results in new job creation – also globally.

Understanding these three perspectives on globalization is crucial for navigating your career in a globalized economy.

The Narratives of Capital About Globalization

Here’s What Capital Thinks…

Investors, governments, and employers often claim that globalization is beneficial for everyone, citing the short term reduction of costs, as well as the long term (possible) job creation. They argue that globalization drives economic growth and increases opportunities worldwide. However, it’s essential to critically examine these narratives.

Be Critical of the Narratives

Net Positive for Jobs?

A study published in the National Center for Biotechnology Information suggests that globalization is a net positive for jobs, true. However, this study is vague and lacks concrete evidence. More importantly, it focuses on Asian countries who were targets of outsourcing; meaning – it ignores the lost jobs side of the globalization equation.

This is like burning the house down to cook a meal – “Hey, look! It boiled our pot of water real fast!”

In our experience, as you dig into the statements about the positive job growth benefits of globalization in the academic literature, you often find similar gaping flaws that do not get communicated in headlines…

Do your own research. But as far as we can see: The job creation benefits of globalization are often overstated, and the negative impacts on local job markets are downplayed or ignored.

Globalization is great for profits though…

Job Growth and Trickle-Down Economics

Capital often ties globalization to job growth using the business and economy perspective we outlined above. Yet, this approach is suspiciously similar to the theory of trickle-down economics.

This theory claims that benefits to the investors and corporations will eventually reach everyone. In reality, This is partially true – yes benefits do indeed reach everyone in the long cycle.

But in the short term, those that lose their jobs due to globalization, do not receive any of those benefits In any meaningful time. Furthermore, the social impact of those lost jobs are not mitigated by the corporations or the investor class, and instead, get spread throughout society.

To put it bluntly:

Don’t Trust What Capital Says About Globalization

Investors have a vested interest in promoting globalization. They benefit from access to cheaper labor markets, reduced production costs, and higher profits. They are not objective.

Don’t Trust What Governments Say About Globalization

Governments often push the narrative that globalization is good for everyone. However, many governments are heavily influenced by corporate interests. Policies are frequently designed to benefit big businesses, not the general public. Government claims about the benefits of globalization should be viewed with skepticism.

Don’t Trust What Employers Say About Globalization

Employers, especially large multinationals, promote globalization because it benefits their bottom line. They emphasize increased opportunities and economic efficiency, but the Initial and immediate reality is often job displacement, wage suppression, and reduced labor standards. Their interests are contrary to those of their employees.

The Impact on the Economy and the Job Market

Here’s What Actually Happens…

Globalization significantly impacts the economy and job market, often in ways that are detrimental to workers. Increased competition between companies lead to closures, offshoring, and job losses. According to a report from the European Parliament, globalization forces companies to compete on a global scale, which often results in drastic measures to cut costs and stay competitive (source).

Increased Competition and Job Losses

Globalization leads to heightened competition among companies. To maintain profitability, businesses are frequently forced to relocate operations to countries with lower labor costs. This offshoring results in job losses in higher-cost regions. Entire industries can be decimated, leaving workers unemployed and communities economically – and as a consequence culturally – devastated.

The European Globalization Adjustment Fund (EGF)

Recognizing the adverse effects of globalization, the European Union created the European Globalization Adjustment Fund (EGF) in 2006. The EGF’s purpose is to support workers who lose their jobs due to globalization by providing financial aid and retraining programs (source).

If globalization were truly beneficial for workers, there would be no need for such a fund! The existence of the EGF highlights the fact that globalization harms employees in the short term.

All of that being said… Globalization is not a choice…

Make no mistake: the consequences of globalization for workers in developed countries is terrible. But the consequences of not globalizing would be significantly worse, not just for the workers that lose their jobs, but for the entire nation. History tells us that nations in decline, don’t make it. And that path of not making it gets brutal and bloody.

How Globalization Affects Your Career

Now that you have a clear perspective of where we are and what globalization means, let’s shift our attention to the career impact.

Global Labor Market Trends

Increasing Demand for Specialized Skills

Globalization has increased the demand for specialized skills across practically all industries. As businesses expand globally, they require employees with expertise in areas such as technology, finance, and international relations. There is a growing need for skills in data analysis, cybersecurity, and digital marketing – among many others that enable corporations to operate and turn bigger profits in a global marketplace.

Shift Towards Remote and Gig Economy

The rise of globalization has also led to a significant shift towards remote work and the gig economy. Companies now have access to a global talent pool, allowing them to hire the best talent regardless of location. This shift has been accelerated by advancements in communication technology and the increasing acceptance of remote work models.

Opportunities and Challenges

Expanded Job Opportunities

Globalization creates expanded job opportunities by opening up new markets and industries. Professionals can now explore careers in multinational corporations, startups, and remote work platforms, broadening their career prospects.

Increased Competition

However, globalization also brings increased competition. Professionals must compete with a global workforce, which means staying ahead in terms of skills, education, and adaptability. The competition is not just local but international, making it essential to continuously upgrade one’s skill set.

Risk of Job Displacement and Automation

Globalization can lead to job displacement due to offshoring and automation. As companies seek cost efficiency, they may move jobs to countries with lower labor costs or replace them with automated systems. This trend poses a risk, particularly for workers in routine and low-skill jobs. It also highlights the importance of acquiring skills that are less susceptible to automation and offshoring.

Specific Impacts on Workers in The West

Fewer Manufacturing Jobs

According to WorkingNation, globalization has led to a decline in manufacturing jobs in the United States. Companies often relocate manufacturing operations to countries with cheaper labor, resulting in fewer job opportunities in this sector for American workers.

Lower Wages for Unskilled Workers

Globalization tends to depress wages for unskilled workers. As businesses offshore jobs to lower-cost regions, the bargaining power of unskilled workers in developed countries diminishes, leading to stagnant or declining wages (source).

Relatively Higher Wages for Skilled Workers

Conversely, skilled workers often benefit from globalization. The demand for specialized skills can drive up wages for professionals in technology, finance, and other high-skill industries. This disparity, yet again, highlights the importance of skill development in securing higher wages and career growth.

Cultural Savvy as a Job Requirement

In a globalized job market, cultural savvy has become a crucial job requirement. Professionals must navigate and collaborate with colleagues, clients, and partners from diverse cultural backgrounds. This skill is essential for effective communication, negotiation, and relationship-building in a global context.

What to Expect in the Coming Years

Based on the outline above, here’s what you can expect in the coming years if globalization persists. There are some arguments that it will slow down, which we’ll cover in our de-globalization article.

For now, lets assume that it will continue and accelarate, as all trends indicate:

  • Migration to Emerging Markets: Businesses will increasingly move operations to emerging markets with lower costs and new opportunities. This will not be limited to manufacturing jobs, but will actually include any and every job you can imagine.
  • Need for New Careers or Ventures: As traditional roles become obsolete, new career paths and ventures will (**need to**) emerge.
  • Competition in a Shrinking Job Market: Heightened global competition will lead to fewer local job opportunities, requiring workers to continually update their skills.
  • Increased Competition and Job Losses: Globalization will drive competition, resulting in business closures and job losses as companies cut costs.
  • Fast-Growing Digital Trade in Services and Data: Rapid expansion in digital services and data trade will introduce both opportunities and challenges like cybersecurity risks. Digital skills will continue to gain prominence.
  • International Recruiting: Companies will increasingly hire internationally, intensifying job competition and complicating team management.
  • Managing Employee Immigration: Navigating visas and permits for international employees will become complex and costly.
  • Incurring Tariffs and Export Fees: Global trade policies will continue to impose tariffs and export fees, affecting business profitability. Yet this will only slow the trend and make it more painful, but will not stop globalization. (Tariffs never have)
  • Payroll and Compliance Challenges: Managing payroll and compliance across different countries will pose significant challenges.
  • Loss of Cultural Identity: Globalization will continue to erode local cultures while simultaneously enriching and transforming it with newcomer cultures. This will influence business practices, introduce multiculturalism and cultural competence requirements into HR, impacting community and employee morale.
  • Foreign Worker Exploitation: The pursuit of lower costs might (has pretty much in every case) lead to the exploitation of workers in lower-cost regions.
  • Immigration Challenges: Increased migration will continue lead to integration issues and social tensions.
  • Local Job Loss: Offshoring jobs to cheaper labor markets will result in significant local employment and economic losses.
  • Unequal Economic Growth: Globalization will exacerbate economic disparities, creating regional imbalances and tensions. Populism is a direct consequence of this.
  • Lack of Local Businesses: Multinational corporations will start to more overtly overshadow local businesses, stifling entrepreneurship and innovation.
  • Increased Potential for Global Recessions: Interconnected economies are more vulnerable to global recessions. The next recession will likely be much worse than the previous.
  • Profitable, Multinational Companies Will Grow Wild: They will make so much profit – we’ll start getting trillionaires.
  • Global Investors Will Get Richer: More trillionaires.
  • Products Will Get Plenty and Cheap: Raising global living standards across the entire globe.
  • Greater Interdependence Among Nations: Countries will need to rely on one another more and more, decreasing the probability of a global conflict. (i.e. no world war, even though local and proxy wars will continue)

How to Prepare for Globalization

Let’s discuss how to set your career up for success in this globalized world…

Three Keys to Protect Your Career from Globalization

  1. Continuous Learning: Stay ahead by constantly upgrading your skills and knowledge. Enroll in courses, attend workshops, and stay updated with industry trends.
  2. Networking: Build a robust professional network to access opportunities and gain insights. Engage with professionals globally through online platforms and industry events.
  3. Flexibility and Adaptability: Be open to change and willing to adapt to new roles and environments. Embrace remote work and even be ready to relocate if necessary.

Focus on Job Security

In the face of globalization, job security becomes paramount. Learn how to safeguard your career with practical strategies here.

Essential Skills for the Global Market

As globalization reshapes job markets, possessing the right skills is crucial. According to this study, while job growth is expected, many current occupations will vanish, displacing workers. Emerging jobs will demand “twenty-first-century” skills such as creativity, adaptability, digital competence, and problem-solving, which are currently lacking in many workers.

To thrive, focus on developing the “5 Core Skills” and “7 High Value Disciplines” that are essential in a globalized job market. These skills will not only make you adaptable but also increase your employability in various industries.

How to Take Advantage of Globalization to Grow Your Career

Surviving globalization is good. Getting it to work for you is better. Here’s what to do:

Identifying High-Value Opportunities

Focus on high-value sectors that are booming in the West: technology (especially AI and cybersecurity), healthcare, and finance. These sectors are not only stable but are also expected to grow significantly. Look for companies and regions within the West that are leaders in these fields.

Here, the crucial point is going where the money is, and also, going where jobs aren’t being outsourced. While more jobs are going to open up globally, we consider positions outside of the West as loose footing.

Strategic Career Planning

Set global career goals with a focus on Western markets. Aim for international work experience that enhances your value in your home country. Seek assignments or roles in Western Europe, North America, or Australia. These regions offer the best opportunities for high salaries and career advancement. Position yourself in roles that can be transferred back to the West or that have significant influence in Western companies.

It’s OK to work outside of the West and leverage growth opportunities. But you should always keep one foot here.

Leveraging Global Talent Pools

Use the global talent market to your advantage. Hire or collaborate with top international talent, especially from regions with high educational standards but lower costs. This can enhance your projects while maintaining a competitive edge.

You can use platforms like Freelancer or Upwork to find skilled professionals for specific tasks, enabling you to complete high-quality work without the overhead of full-time staff. If you are a manager, this means becoming an expert in leading remote teams and recruiting great talent from otherwise unreliable sources. Being the gatekeeper of outsourcing, decreases the likelihood that you will be outsourced.

Conclusion

While the impact of globalization for most workers in the West is detrimental, we should conclude with a clear, unbiased perspective… Globalization has many positive benefits.

Cheaper goods and services. Cultural exchange. Unity among nations. Interdependency among nations decreasing the probability of war…

The last one is particularly pertinent: we’ve been living through some of the most peaceful times on the planet. The likelihood of dying from war has dramatically decreased. For instance, in the 1600s, the probability of dying in a conflict was about 1 in 100. Today, it’s less than 1 in 10,000. Back in 1000 BCE, it was even worse, with the likelihood of death from war being as high as 1 in 20.

But we’re not an everything organization. We are a career development organization. So we’ll limit our analysis to the impact of globalization on your career.

And as far as your career is concerned, globalization is a massive challenge for the majority of professionals. Sure, it is also a sizeable opportunity for a handful of professionals who are positioned fortunately to enjoy its benefits. But for most people in the West, globalization is a major career threat. It’s side by side with automation and technological disruptions.

Here are some final thoughts for protecting your career from globalization:

  • Above all else, ascend to managerial and executive ranks so that you are shielded from the primary job elimination impact of globalization.
  • Align with capital, go where the money is going.
  • Think international – high-value jobs in other countries can be accessed through virtual work, and being in the Anglosphere can be a competitive cultural advantage.
  • Switch to growth industries with high-skill requirements.
  • Orient yourself toward the culture of high-income countries and develop cultural savvy.
  • Focus on your personal brand as well as your persona; soft skills are in massive demand.
  • Protect your rights as an employee proactively and aggressively. In some cases, it may be prudent to take political action – white-collar unions and trade organizations are naturally going to emerge, as automation combined with globalization decimates the labor market.

Ultimately this freight train is coming, and it cannot be stopped.

We recommend watching from the sidelines and avoiding the tracks at all costs.