Globalization has been around for centuries, one of the earliest examples being the Silk Road, a complex series of ancient trade routes connecting China with Asia Minor and the Mediterranean.
But thanks to technological advances and the integration of markets and transport systems, the globalization of today is occurring on a scale never seen before.
Globalization has given the big multinational companies the freedom to scour the world looking for the cheapest labour, resulting in the outsourcing of jobs to countries such as India and China.
While free markets have brought great opportunities and resulted in millions of jobs in developing countries, concerns are being raised in OECD countries about major job losses in the years ahead.
In Canada, globalization has led to new economic opportunities in some sectors including the resource sector. But according to a Statistics Canada study released last week, the economy of certain regions relying on those sectors saw a decline in population and employment between1981 and 2001.
Over the past two decades, said the agency, "one of the most important factors for change for Canadian communities has been the process of global economic integration."
One in every five communities is vulnerable to a loss in population, and one in 20 to job losses. Communities in the Prairies, northern Ontario, northern Quebec and remote parts of Atlantic Canada are the most susceptible to globalization-related losses.
These communities have experienced a "steady and constant loss of population" over the last 20 years, said the study, with traditional sectors such as agriculture, forestry and labour-intensive manufacturing being the most vulnerable to foreign competition.
Albert Berry, professor emeritus of economics at the University of Toronto, says one of reasons globalization negatively impacts small communities is that the multinationals tend not to "operate in or draw from" small communities.
"These firms like to buy huge orders and so small producers, whether they're in big cities or small cities, are on average hurt by globalization because the big dominant firms in international trade don't want to operate with the little guys."
Economic theory suggests that outsourcing jobs to countries such as China, India or Bangladesh raises total national income in Canada, says Berry. But that increase brings a bigger increase in capital income matched by a decrease in labour income.
"If you outsource those jobs you basically decrease the total demand for labour in Canada, and if the market is working that pushes wage rates down — it either pushes wage rates down or unemployment rates up."
In this scenario, the unskilled labourer who has to compete with his counterpart in Bangladesh is going to lose out, he says.
"My best guess is that freer trade and globalization if it has brought benefits to Canada at all they've been marginal. If you look at the trade figures we've benefited a great deal, but the trade figures do not show up in the growth figures and that's very damning."
Berry adds that globalization has contributed to inequality in many countries, most notably in the United States and Britain over the last 30 years but more recently in Canada as well.
Thanks to the Internet and low-cost communications, businesses can be easily shifted from country to country. Many companies have moved call centres, accounting operations and many other functions offshore, mostly to India.
China's dominance of the clothing industry dealt a blow to the textile and apparel industries worldwide, and manufacturing industries in some countries have suffered from China's vast need for raw materials.
According to a paper by Park Myung-seok at Dankook University in South Korea, many western economies "appear to have lost the capacity to create local jobs through economic growth."
Until recently, American white collar professionals such as software engineers and accountants haven't been exposed to foreign competition the way factory workers have. Now, however, high-skilled workers' jobs are also threatened by outsourcing, wrote Myung-seok.
He predicts that by 2020, three million service jobs in the United States will have shifted abroad, a number that would double if Europe, Japan and South Korea are included.
"The question today is whether the case for free trade made two centuries ago is undermined by the changes now evident in the modern global economy. Free trade delivers the goods, but an increasingly large number of people today believe that the sacrifices exceed the benefits."
Research by Alan Blinder, a professor of economics at Princeton University, estimates that 30 million to 40 million U.S. jobs are "potentially offshorable." These include scientists, mathematicians and editors on the high end and telephone operators, clerks and typists on the low end.
However, Keith Head, HSBC professor in Asian Commerce at UBC, says the enormous growth in China and India, which occurred because these countries provide an abundance of products at low prices, has had the "mutually beneficial" effect of keeping inflation under control in Canada.
"Canada has continued to have very low inflation rates and part of the reason is because Chinese goods remain very inexpensive. When people walk into Wal-Mart they find that they can buy a lot with their salaries."
On the "export side" of globalization says Head, Canada is thriving thanks to a commodities boom.
"Communities that are tied to commodities are doing very well from globalization. Communities that are tied to old labour-intensive manufacturing … those people would be more vulnerable now because Canada is more open."
The government needs to make sure that "we don't let people fall through the cracks and get forgotten as globalization happens," says Head, because in today's dynamic economy, there are going to be "shocks."
"The winners are going to do well, and I think the winners are going to outnumber the losers, but that doesn't mean you should forget about the losers."
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