The Unwinding of Globalizaton May Benefit Region

One the most important trends of the past generation has been globalization, that is, the development of world trade. There have been numerous trade agreements by the World Trade Organization to promote trade and reduce barriers to the free flow of goods and services. In the Western Hemisphere, there was the North American Free Trade Agreement (NAFTA) creating a trade zone incorporating Canadian natural resources, American capital and Mexican (cheap) labor. Proponents maintain that such arrangements benefit everyone, that globalization is a tide that lifts all boats.

In the brave new world of globalization, local communities and regions have been advised to figure out what they do best and market that product or service to a world market, while multinational corporations at the same time dominant some sectors of their local economy.

World trade has not been without its problems, and wrenching changes. America manufacturing is disappearing. Jobs were lost first to Mexico, and then later to China. People in industrialized countries have been put in the position of competing against cheaper labor in the Second and Third Worlds. There is nagging doubt about the loss of manufacturing. After all, actually producing something of value is the basis of national (and local) wealth. And we have lost our share of good paying manufacturing jobs here in Northern New York in recent years.

Meanwhile, companies have reduced their production costs with cheaper foreign labor but continue to charge First World prices, creating significant profit margins. World Trade Organization meetings have generated protests, mainly by young people warning of corporate domination and exploitation.

It is too early to tell for sure, but we may have seen the high water mark of globalization due to the combined effects of the financial crisis and the specter of expensive and scarce energy. Capital l is the lifeblood of world trade, and the lack of money to borrow will affect many business enterprises. The closing of retail outlets is expected to reach 500,000 nationwide over a three year period, ending in 2010. Cheap energy is also crucial to global trade since product supply lines now stretch across thousands of miles. Scarce or expensive fossil fuels could make transportation of goods over such long distances untenable.

A contraction of world trade would shift attention to national and local economies. Producing goods for local and national use, and closer to these smaller markets will most likely make a comeback in the future. In that possibility, there may be more opportunities for American communities like those in Northern New York.