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How We Compete: What Companies around the World Are Doing to Make It in Today's Global Economyby Suzanne Berger
Synopses & Reviews
Who's Afraid of Globalization?
Globalization means a world of opportunity and a world of danger. We rush to Wal-Mart for the basics, but we know that many of them are made in China or some other low-wage country. We want low prices at Best Buy and Circuit City on digital cameras and ﬂat-panel TVs, but we fear that our good fortune as consumers costs jobs at home. We like to be able to place orders on the telephone twenty-four hours a day, but when we hear strange accents on the other end of the line, we wonder where on earth the operator sits. We realize when we think about it that the rise out of poverty of more than 2 billion Chinese and Indians must be good for the world; we question whether it's good for us.
We celebrate the fact that American success is built on innovation and rising productivity, but we wonder whether the new technologies and products will create enough jobs and if our children will live as well as we do. Surveys in the United States and Europe ﬁnd very mixed opinions about globalization, often reﬂecting these conﬂicting feelings within individuals themselves, rather than simply the rifts between supporters and opponents of globalization. A majority of Americans and Europeans think globalization raises their standard of living; a majority also believe that it is bad for employment and job security.(1)
For the questions about who wins and who loses in the new global economy and the uncertainties about whether the opportunities are worth the risks, there is no one right answer. People disagree about deﬁnitions of globalization, its causes, and its consequences. Many simply wonder whether any job in America is safe. By mid-2004, about 1,000 stories a month on outsourcing and offshoring were appearing in the U.S. print media, with such titles as Is Your Job Going Abroad?(Time, March 1, 2004), “Is Your Job Next?”(BusinessWeek, February 3, 2003), and “Is Your Job Coming to India? Get Used to It (William Pesek Jr., Bloomberg.com, October 5, 2004).(2) One consulting ﬁrm predicted in September 2003 that 1.4 million American jobs would move overseas over the next twelve years, and that the real wages of 80 percent of the population would fall.(3) But a McKinsey study conducted a month earlier concluded that offshoring jobs was a win-win for both the United States and developing countries like India, as many low-skilled jobs would move overseas, raising incomes there, and U.S. ﬁrms would become more productive and proﬁtable and better able to expand higher value-added operations at home.(4) Despite their optimism, however, McKinsey researchers did acknowledge that 55 percent of those reemployed after losing a job because of import competition or offshoring end up earning less than 85 percent of their old wages in the new job. Many take even bigger pay and beneﬁt cuts.
Other studies claim that outsourcing low-end jobs leads to more job creation at home. Matthew Slaughter, an economist at Dartmouth, analyzed government data on U.S. multinational corporations and found that for every job offshored, a company created almost two in the United States.(5) Catherine Mann at The Brookings Institution showed that by lowering the cost of information hardware, production abroad has raised
U.S. productivity and generated $230 billion of additional GDP between 1995 and
An in-depth analysis of more than five hundred international companies looks at the impact of the global economy on today's business practices and decisions, comparing the strategies of high techcorporations, textile and clothing manufacturers, and others to discuss such issues as outsourcing, competition, business growth, and more. 20,000 first printing.
SUZANNE BERGER is the Raphael Dorman and Helen Starbuck Professor of Political Science at MIT and director of the MIT International Science and Technology Initiative. She was a member of the MIT Commission on Industrial Productivity, whose report, Made in America, analyzed weaknesses and strengths in U.S. industry in the 1980s. She lives in Boston, Massachusetts.
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