The more workers, the less average labor price. Labor surplus would drive the market to realign wages. Multi-national corporations found it rational to shift a significant portion of their capital to labor-rich China. It is estimated that the cost of labor in China is one-eight (on the average) compared to labor cost in developed countries (Goldberg, R.K., and N. The reason can be derived from the cost of labor in the country. Order custom essay Effects of Globalization on the Micro Level In China, for example, after opening to globalization, several multi-national corporations (which are based in developed countries) transferred a significant portion of capital to the country. Skilled workers from developing countries are paid less than unskilled workers from developed countries. It is generally noted while globalization aims for wealth redistribution between developing and developed countries, inequality in terms of income and capital increased (Goldberg, R.K., and N. The first impact focuses on the condition of the labor force of developing countries (exposed to globalization). There are generally two negative impacts of globalization on the micro-level. While for many economists globalization is a positive force of development, certain practical issues were laid exposing the bad effects of globalization on the micro-level (individual and communal). Here economists assume that the “income” derived from labor migration would then serve as capital outlay. Added to that, the capital inflows from developed countries would serve as a stimulant for capital build-up in the recipient country (developing countries).īecause developed countries usually experience labor shortages, labor immigrants from developing countries would serve as the compensating medium. Poor and developing countries can export unlimited volume of goods and services to developed countries. Trade liberalization serves as a redistribution mechanism of capital and goods. In order for a country to achieve economic development, it must open its economy to trade liberalization. Globalization was generally derived from the assumptions of neo-classical economics.