Trade, Jobs, and Globalization

Most economies around the world have increased their links with the global economy over the past two decades or so. The share of trade in GDP has tended to grow, as has the incidence of foreign direct investment (FDI). An earlier ILO-WTO study considered the impact of increased international trade and investment on employment and wages. The study found that, in general, globalization holds the promise of faster economic growth, as well as higher employment and incomes. However, the study did not primarily focus on the effects of trade and investment on the quality of jobs or the incidence of informal employment. This is a key issue in developing countries and emerging economies, where there is concern about the fact that the incidence of informal employment has remained stubbornly high, or has even increased, despite more robust economic and employment growth (Bacchetta, Ernst, and Bustamante, 2009).

Globalization is not a new story. Since the 1950's and especially in the past decade, countries that have been more open to trade and investment have grown twice as fast as others. This has helped to lift three billion people out of poverty during the post-war period, according to an estimate by the Organization for Economic Cooperation and Development. Nowhere has this been more dramatic than in Southeast Asia Today's Asian tigers- South Korea, Taiwan, Hong Kong, Singapore - were largely closed economies in the 1950's and '60's. So were rapidly developing nations of today such as Malaysia, Thailand, and Indonesia. But most African nations have chosen to rely on protectionism, foreign aid, and an inefficient public sector (Hadekel, 2001).

Technological progress and globalization are widely regarded as two of the main drivers of recent economic growth. One can broadly think of technological progress as the development and spread of new ideas and methods that enhance productivity and efficiency, and globalization as a catalyst of technology that facilitates the...