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Joseph Schumpeters description of capitalism as an economic system that operates through an ongoing process of creative destruction provides a useful framework for examining some of the defining features of an increasingly integrated world economy Indeed much of the debate surrounding globalization centers around whether technological advancements which have reduced cross-country barriers to the commercial cultural and political exchange have thus far produced a net of benefits or losses Are we better off because of globalization or not The answer seems clear While competiting to meet the wants needs and desires of consumers by natureit produces both winners and losers its aggregate effects have meant higher average standards of living for millions of people throughout the world Critics of globalization make a number of claims concerning its negative effects One of these is that multinational corporations operating in third world countries exploit workers by forcing them into sweatshops and to accept inadequate and unfair wages Evidence suggests these claims are false or misleading It is true that workers in undeveloped countries earn significantly less than Americans making the same product At the same time their productivity is much less because they lack the skills training education infrastructure and institutions available to Americans and because wages are based on marginal productivity it follows that their compensation will be less Still research shows that multinational corporations on average pay wage premiums ranging anywhere from 30-800 above local employers Similarly the working conditions of those employed by multinationals tend to be superior What about American citizens Dont they suffer from the outsourcing of jobs Americans suffer from outsourcing in the same way that they suffer at home when competition or technology displaces workers Likewise it also benefits them in the same way To see how these two effects are comparable consider the following scenario suppose a US firm can either produce 10 computers or 80 bicycles while a less productive Chinese firm can make 5 computers
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