Global trade is an important indicator of globalisation because it is able to measure how goods and services produced in one country are consumed in other economies. Data has shown the trading of goods and services has grown rapidly in recent decades, from $US 8.7 trillion in 1990 to $US 39.5 trillion in 2008. [Pearsons 2019 book] Global trade has increased strongly over the past decade due to the advancement of technology in transport and communication, that have reduced the cost of moving goods between economies and providing services to customers in distant markets. Factor endowment encourages the idea of comparative advantage in economies to specialise in areas of production where they have the lowest opportunity cost and trade with other nations to maximise both living standards.
However, due to the increasing role trade plays in the expansion of the global economy, it has countries trading an increased amount of what they produce efficiently. This results in unemployment as seen in the video. Though it may be more efficient for a business to seek production where it is the most cost-effective i.e. moving production abroad, it leaves individuals in the domestic economy unemployed. Thus, many workers in Western France are protesting against the closure of a coal-fired power station after the automaker announced its production moving abroad, leaving the workers there worrying about the stability of their future.
However, it is only a short-term unemployment as this situation require governments to provide retraining schemes and welfare assistance to individuals who are structurally unemployed in the affected industries. Thus, the short-term rise in unemployment should correct itself in the long-term as domestic economies redirect resources to areas of production in which it has a comparative advantage. This is what the European Globalisation Adjustment fund is intended to do. It supports individuals who have lost their jobs due to shifts in global trade patterns and since 2007 over 150,000 redundant workers have been assisted by the fund to retrain and find work with the new skills they have gained. Unfortunately these funds are not eligible for workers who have found themselves redundant due to the advancement of technology. Hence the Members of the European Parliament would also like to see these workers to be supported under the fund, which would become simpler with less red tape, as well as the budget increasing. Thus, this would allow individuals to experience the benefits of globalisation through reducing the social inequality.
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