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How the process of Globalisation might have affected the position of labour in industrialized and developing countries.

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EO314 Issues in International Economics How the process of Globalisation might have affected the position of labour in industrialized and developing countries. Submitted to Frank Brouwer London Metropolitan University December 2nd, 2004 By Iolanta Lyebyedyeva ID: 02019931 This essay aims to explain the question how the process of globalisation might have affected the position of labour in industrialised and developing countries with the focus on effects of trade on skilled and low/unskilled workers, especially how on how trade affects employment and wages, in developed and developing countries. As a starting point, it might be useful to look at what is actually meant by Globalisation, because many people definitely know whether they are for or against it, without even considering what exactly it is. There are hundreds of definitions of globalisations. Following a British sociologist Martin Albrow (1990) "globalisation refers to all those processes by which the peoples of the world are incorporated into a single world society, global society".1 According to Robert Cox (1994) globalisation includes "the internationalizing of production, the new international division of labour, new migratory movements from South to North, the new competitive environment that generates these processes, and the internationalizing of the state...making states into agencies of the globalizing world".2 Thus, globalisation provides, or it IS increasing links between different parts of the world. On the other hand, this "global linkage" is perceived as forcing actions from the nowadays' "empires" - powerful developed countries, such as USA, UK, Germany, etc. This is similar to what the director of Christian Aid partner the Third World Network (TWN) Martin Khor (1995) insists: "globalisation is what we in the TWN have for several centuries called colonization".3 Different sources argue different starting point of globalisation, however there is still no agreed time: some point to the time of the traders of the ancient world, others to the colonialism and imperialism of previous centuries. ...read more.


N.A. 3.60 N.A. 10.10 4.18 3.43 4.72 2.19 N.A. 2002 N.A. N.A. 9.10 3.48 N.A. 10.20 4.00 3.30 4.35 2.44 N.A. 2001 4.70 1.82 8.10 3.68 N.A. 9.80 3.60 3.71 3.32 3.32 N.A. 2000 4.70 2.47 6.14 3.10 N.A. 10.10 3.10 4.06 3.08 3.60 6.40 1999 4.50 0.60 6.36 3.42 4.05 9.60 3.10 6.28 3.48 4.19 6.70 1998 N.A. 5.30 5.50 3.20 4.07 9.60 3.10 6.79 3.22 4.36 6.90 1997 N.A. 0.70 4.70 2.60 4.08 7.90 3.10 2.58 1.82 0.90 6.00 1996 N.A. 0.90 4.90 2.50 4.10 7.40 3.00 1.99 2.02 1.10 5.90 1995 N.A. 2.50 7.20 2.80 4.15 8.40 2.90 2.02 1.98 1.10 5.80 1994 N.A. 2.50 4.40 2.90 4.15 8.40 2.80 2.40 2.00 1.30 N.A. 1993 N.A. N.A. 2.80 3.00 4.16 8.90 2.60 2.78 1.92 1.50 N.A. 1992 N.A. N.A. 2.70 3.70 4.16 8.60 2.30 2.41 2.02 1.40 N.A. 1991 4.70 N.A. 2.60 4.30 4.19 9.00 2.30 2.32 1.75 2.70 N.A. 1990 N.A. N.A. 2.50 5.10 4.17 8.10 2.50 2.46 1.78 2.20 N.A. Another debate is increasing wages (decreasing income inequality) inside and across countries. This question is very controversial, because different sources argue entirely opposite positions and give utterly different empirical evidences and statistics: globalisation allies insist on rising income equality, while critics of globalisation claim rising inequality. For example, the Treasury of Australian Government referring to the World Bank data declared that a proportion of people living below the internationally accepted poverty line has fallen from 28% to 24% between 1987 and 1998 with some particularly successful regions such as East Asia & the Pacific with a decline from 27% to around 15% (Figure 6). Furthermore, the Treasury emphasized that narrowing income inequality in APEC (Asia-Pacific Economic Cooperation) economies (Chart1) was greater than in the world as a whole (Chart2).27 Figure 6 Proportion of People living on less than 1USD a day Chart 1 World Inequity Chart 2 APEC Inequity Another evidence in favour of declining inequity given by the Globalisation Guide Organisation (a child of The Australian APEC Study Centre) ...read more.


International Economics, 12th ed. New York: McGraw Hill, pp.45 15 http://www.globalpolicy.org/socecon/inequal/gates99.htm [Accessed on November 1,2004] 16 http://www.business.uca.edu/~isaltz/freetrad.html [Accessed on November 1,2004] 17 Pugel, T.(2004) International Economics, 12th ed. New York: McGraw Hill, pp.197 18 Pugel, T.(2004) International Economics, 12th ed. New York: McGraw Hill, pp.197 19 http://www.imf.org/external/np/speeches/2004/061504.htm [Accessed on November 26,2004] 20 "Trade liberalisation is a process by which countries make decisions to reduce or remove existing barriers to trade in goods and services and investment. It also establishes rule for the conduct of international business." http://www.tln.org.nz/Downloads/Tradeliberalisation.pdf [Accessed on November 21,2004] 21 http://www.itcilo.it/actrav/actrav-english/telearn/global/ilo/seura/mains.htm#Jobs%20in%20Developed%20Countries [Accessed on November 21,2004] 22 "...trade liberalisation may result in a permanent reduction in demand for certain types of labour services. Workers supplying those services may be permanently worse off from trade liberalisation. It has been argued that this has been the case for low-skilled workers in industrialised countries." http://www.wto.org/english/news_e/spmm_e/spmm80_e.htm [Accessed on November 1,2004] 23 "The Stolper-Samuelson theorem is as follows: In some models of international trade, trade lowers the real wage of the scarce factor of production, and protection from trade raises it. That is a Stolper-Samuelson effect, by analogy to their (1941) theorem in a Heckscher-Ohlin model context. A notable case is when trade between a modernized economy and a developing one would lower the wages of the unskilled in the modernized economy because the developing country has so many of the unskilled." http://economics.about.com/od/economicsglossary/g/stolper.htm [Accessed on November 21,2004] 24 http://www.globalpolicy.org/socecon/inequal/gates99.htm [Accessed on November 1,2004] 25 Smith, S., (2004) EO314 Issues in International Economics, lecture notes, week 4,semester A, London Metropolitan University 26 http://aric.adb.org/ARIC_OUTPUT/MACROECONOMY/Real_Sector/Inflation_and_Unemployment/unemp_10plus2_A.htm [Accessed on November 21,2004] 27 http://www.treasury.gov.au/documents/66/PDF/Global.pdf [Accessed on November 25,2004] 28 http://www.globalisationguide.org/03.html [Accessed on November 25,2004] 29 http://bear.cba.ufl.edu/xu/papers/China03.pdf [Accessed on November 25,2004] 30 http://www.globalpolicy.org/socecon/inequal/gates99.htm [Accessed on November 1,2004] 31 Dicken, P., (1992) Global Shift :The Internalization of Economic Activity , 2nd Edition, London: Paul Chapman Publishing Ltd, pp. 118 32 http://www.worldbank.org/research/journals/wber/revjan97/pdf/artcle~3.pdf [Accessed on November 25,2004] 33 Pugel, T.(2004) International Economics, 12th ed. New York: McGraw Hill, pp.125 34 http://www.oecd.org/document/2/0,2340,en_2649_33729_29034626_119699_1_1_1,00.html [Accessed on November 27,2004] 35 http://fparchive.ceip.org/story/cms.php?story_id=1845 [Accessed on November 27,2004] 36 http://www.oecd.org/document/2/0,2340,en_2649_33729_29034626_119699_1_1_1,00.html [Accessed on November 27,2004] 1 EO314 Issues in International Economics ...read more.

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