The Basic Challenges Of Globalization

The balance between fair consumer prices, fair worker wages and worthwhile profit for investors is the first of many challenges of globalization. For many businesses looking to go overseas, the infrastructure of building a new facility, in addition to the cost of training unskilled laborers and paying taxes is huge. Some employers are willing to make that short term sacrifice because the standard of living and wage requirements are lower, which will add more padding to their pockets in the long run. Obviously, the easiest solution for a business owner is to keep the factory at home base in the United States and cut their employee benefits or wages. Therefore, to keep foreign investment capital coming into under-developed nations, there must be an open door policy and trade strategy that provides either tax benefits or relocation facilitation in the overseas nation. However, in an effort to appease big spending investors, some leaders are quick to offer everything and demand nothing for their people, which is the crux of the globalization debate.

The challenges of globalization are obvious in a country like Chile, where the mining industry exports 41% of the country's total GDP, but only steadily employs 2% of the population. Instead of hiring full-time salaried workers, the mining companies hire disposable contractors to offset the high start up costs of the technology and infrastructure. The development of new technology is one thing that could benefit these companies.

There are more effective ways of attacking the local challenges of globalization. Instead, products should be more expensive in the global markets so foreign workers can be paid fairly; tax breaks for the consumers can free up disposable income and offset the price difference. With a proposal known as "Fair Tax," people are offered a choice to pay a slightly higher price for something, knowing that they're conscientiously choosing to pay a fair price for fair work conditions.

Several independent fair trade impact studies have been examined to meet some of the challenges of globalization. In 2002, researchers at the University of Sussex examined fair trade as it related to the "Coocafe Cooperative" in Costa Rica and reported: "In light of the coffee crisis of the early 1990s, fair trade can be said to have accomplished its goal of improving the returns to small producers and positively affecting their quality of life and the health of the organizations that represent them locally, nationally and beyond." Similarly, "fair trade" coffee harvesters in Bolivia, Peru, Ecuador and Nicaragua have enjoyed greater access to credit and development funding, education, domestic food consumption and improved living conditions. After conducting a four year study, Michigan State University professor Daniel Jaffee concluded that fair trade is not a cure-all and requires wide-scale consumer participation to bring all participants out of poverty and create drastic changes.

Agenda-setting activists are alerting the UN and organizations like World Bank to get change initiated to tackle some of the challenges of globalization. Generally, solutions go into effect to meet some crisis, such as the coffee crisis in the 1990s. Surprisingly, many government officials are finding that consumers are willing to take up some of the burden to ensure fairness, as long as the government does their part by offering tax breaks to offset the globalization impact on the market.