1. Is globalization responsible for the deindustrialization of the highly developed countries through exportation of jobs to less developed countries?

2. Are the multinationals exploiting the poor people of the less developed countries?

Although the issues are very controversial, we will try to find the right answers to those problems.

The basic argument of these critics is that globalization—the increased openness of the United

States to international trade—has changed the rules of the game. Economic expansion cannot produce bottlenecks because firms can always turn to suppliers abroad. Firms will not raise prices, no matter how hot the market, because they fear foreign competitors. And workers, constantly threatened with loss of their jobs to other nations, will not demand higher wages no matter how low the unemployment rate goes. According to this view, internationalization has either drastically lowered the natural rate or even made the whole concept irrelevant. Many people find this argument extremely attractive. It is hard to see,

First, the whole emphasis on the importance of international competition ignores the fact that both the U.S. economy and the economy of Western Europe are still primarily in the business of producing goods and services for their own use. Imports are only 11 percent of U.S. GDP. While it is true that a somewhat wider range of goods is subject to international competition than is actually traded, at least 70 percent of each economy remains effectively insulated from foreign markets—and therefore is capable of experiencing inflation regardless of international conditions.

It is certainly true that workers in the export sector of developing countries earn far less than their Western counterparts earn and often work in much harsher conditions. The proper comparison, however, is not between U.S. wages and developing-country wages but between export-sector wages in developing countries and other locally available opportunities. After all, it is not as though low wages and poor working conditions were a creation of multinational companies—that combination has been the rule throughout history. It is lamentable that nearly 3 billion people currently live on less than two dollars a day,19 but the critical question to ask is, why are the other 3 billion people doing better?

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