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GLOBALIZATION, WAGES, AND THE QUALITY OF JOBS: FIVE COUNTRY STUDIES
The fourth section of this chapter contains a step-by-step approach to implementing a study of working conditions in developing countries using the proposed framework. This section includes a discussion of appropriate data, methodology, and critical estimation issues that should be incorporated into an effective study. The goal of the section is to facilitate the application of this approach to generate high-quality studies that will expand the understanding of how globalization affects workers in developing countries.
Defining Globalization The first step in studying the effects of globalization is to carefully identify the mechanism of globalization and understand how policy and global trends affect it. The term “globalization” could encompass the transmission of ideas; the intermingling of cultures; the preservation or loss of national identity; exchanges of technology, capital, workers, and products across borders; and the role of international nongovernmental organizations. While these are all important concepts, most economic studies focus on migration, trade, or foreign investment, for three important reasons. The first is that flows of labor, goods, and capital are often either the primary mechanism or the motivation for most definitions of globalization. When pressed for a formal definition, many people who use the term “globalization” have some aspect of migration, trade, or investment in mind. A second reason is that migration, trade, and investment are generally more measurable than other aspects of globalization (such as culture or ideas). Third, barriers to two of these—trade and investment—have been significantly reduced since the late 1980s. It is possible that the wave of liberalization of trade and investment has been driving the current “era of globalization” in developing countries. The framework and subsequent studies in this volume primarily focus on trade and investment. Although migration flows have been increasing and remittances are playing an increasingly important role in many migrant-sending countries, restrictions on migration have not significantly changed. Furthermore, in most countries, the link between globalization and working conditions seems more direct when globalization is defined as trade or investment. The second step is to understand the nature of changes in globalization. Both the speed and dimensions of globalization are relevant to understanding how globalization affects workers. The remainder of this section, therefore, discusses facets of trade, foreign investment, and liberalization.
TRADE Globalization, in its narrow economic definition, occurs through imports and exports of goods. Trade liberalization generally involves reducing tariffs, quotas, and other barriers designed to reduce imports. Exports may increase if trading partners lower barriers or as a result of a domestic export-promotion policy. Services are playing an increasingly important role in international trade. Services fall into two categories: professional services (insurance, banking, and accounting) and less skill-intensive services (personal services). Professional services account for most of the rise in trade in services. Concerns about working conditions are less relevant for professional services than for manufacturing. In addition, governments are only now starting to