subject: Jobs Lost, Customers Gain [print this page] Jobs Lost, Customers Gain Jobs Lost, Customers Gain
Jobs Lost, Customers Gain.
China has been able to deliver cheap goods around the world. The structure of the country's economy has welcomed trade. Thus, good are exported from China to countries like the United States and Canada. In this article, I will uncover the reason behind China's exportation and how this plays out for the importing country. What are the reasons behind the importing country to trade, and what are the implications of such actions. I will help readers understand how jobs are lost in one country, yet are gained in another.
China's main focus is on manufactured goods. The country is able to produce commodities cheap and efficiently. The country has welcomed foreign investors to build capital structure, which accommodates production. Meaning, overseas businesses build factories in China to make products. The products would then be shipped to the importing country. There are various incentives for businesses like Wal-Mart to go ahead with this. One of the major incentives would be to cut costs heavily on labour. Major corporations like Microsoft and IBM have placed capital in China. Not only is the country a source of cheap labour, but it is an excellent place for innovation and businesses to develop. The policies placed support a globally competitive environment and pave way for new knowledge.
The knowledge and capital brought into China from overseas has leaked major benefits for the country. The country has been blessed with many new job openings in factories and other work-environments. Transferred human capital has equipped China with new ways to innovate and create efficiency in business processes. Companies are able to do this at a fraction of the cost they would pay in countries like the United States. Which would cause these businesses to ship their operations abroad, and import the products back overseas.
Moving operations abroad takes businesses away from the United States, this also removes jobs. This means that jobs lost in North America are being shipped overseas in China. Simply because someone else is willing to work harder for a lesser pay. The cause of this would be that the GDP shrinks in the United States, and gains in China. Businesses have a direct contribution to the GDP, the values move with the net worth of goods and services. When these good and services start to disappear, the GDP decreases. The decline in GDP causes a shrinkage in the growth of the economy. Along with that, goods from American companies are being imported back in to the U.S. These imports, if cheaper than domestic American goods, hurt American businesses. Since the products cost less, the consumer will buy imported goods. This is why the U.S. has to enforce restrictions on imports, these restrictions could be tariffs or quotas. The objective of these tools is to protect domestic businesses. By protecting domestic businesses, local growth is encouraged. There is less threat from external businesses.
It is important to note a very simple contradiction. The consumer always wants to pay less for any commodity available. Yet, at the same time, businesses want to thrive. When businesses thrive, employees have their jobs secured. The employees of a business is effectively the consumer. In other words, the local taxi driver is also the husband buying milk for the family. Can both the consumer and the employee be satisfied?
Written by Basim Mirza
Sources Used:
Wang, C., Kafouros, M. What factors determine innovation performance in emerging economies? Evidence from China. International Business Review (2009). 18(6), 606-616.
