Globalization

Governments in developed countries often provide foreign aid to developing countries in an effort to improve economic, social and political development. Regardless of the intended use for the money, recipient governments sometimes employ the funds to keep civil peace and to accommodate the demands of new groups, especially in times of tension. A sudden withdrawal of foreign aid could thus trigger internal struggles.

Rare-earth minerals are essential to the production of high-tech items such as smart phones and laptops, and they are being increasingly utilized for a variety of purposes in the defense and clean energy sectors. These include elements such as lanthanum, used in camera lenses; praseodymium, for lasers and magnets; and promethium, used in atomic batteries.

As nations undergo economic development and open their markets, they will see necessary structural change within their labor sectors. One key assumption about globalization is that it will uniformly force economies to become more productive and efficient as competition exerts pressure. However, local conditions may significantly alter globalization’s impact, particularly as it relates to the nature and quality of employment.

During the 1930s, the upheaval of the Great Depression spurred a wave of protectionist trade policies and created a global atmosphere of isolationism that further exacerbated the contraction of economic activity. Many observers feared that the Great Recession of 2008-09 might similarly prompt nations hurt by the financial turmoil to erect barriers around their economies.

In this era of economic globalization, the race for innovation and future growth among nations has prompted a profound debate about how the U.S. is preparing its next generation of workers and leaders. While the United States has responded vigorously to global challengers in the past — the Soviet Union in the era of Sputnik, Japan in the 1980s — the potential for a dramatic loss of competitiveness is more acute than ever.

The United States has traditionally led the world in the manufacture of advanced technological products, but in recent decades global patterns have shifted. The country recorded a trade surplus in terms of such products as recently as 2001, but by 2010 that trade balance was a deficit of $81 billion. Overall, from 1998 to 2010 the U.S. lost some 6 million general manufacturing jobs and now has only 11.6 million such jobs, representing just 11% of the labor market.

Since the Industrial Revolution, the disparity in per capita income between the richest and poorest nations has increased many times over, and the economic leaders of the prior agricultural era did not necessarily become powerhouses in the next chapter in global development. What caused this great transformation of the world income distribution?