Globalization: Winners and Losers

The idea of globalization is a sort of “rising tide lifts all boats,” and that is not exactly true, as seen in the statistics from the past 30 years (Alkharafi & Alsabah, 2025). Globalization, trade, and investment have provided overall benefits with differential impacts on firms, workers, and countries. The advantages of globalization have been reaped by multinational corporations and highly skilled workers in advanced economies, while the costs have been borne by manufacturing workers who are competing with imports and by the majority of the workforce in the Global South. Recent academic research reveals that openness depends on the rule set, the institutional structure, and the incentive structure (Dorn & Levell, 2024). It becomes critical to identify the strengths and weaknesses for the construction of a fairer international economic environment.

Globalization has been the greatest blessing to large corporations. There are fewer, more productive companies running modern trade, with the ability to trade, source parts, and produce at large scale across different countries; Apple does this with iPhones globally, sources components from dozens of countries, and assembles across China, India, and Vietnam, lobbying governments on trade rules that benefit its global supply chain. These firms act as leading figures advocating for liberalization, having consistently triumphed politically through the course of many decades (Menon & Osgood, 2024). Not only are these firms huge, but they have also managed to dominate entire value chains, brand identities, technological advancements, and logistics, such that the majority of value-added is achieved by these firms within foreign productions. According to Menon and Osgood (2024), “economists have documented startling levels of concentration of exporting, importing, and offshoring in the hands of elite corporations” (p. 1180), implying that small businesses will face great difficulty competing against large companies within a liberalized environment. The net effect is a hierarchy where the advantages of openness push up to a limited group of corporate actors while the talk of globalization is global in nature.

In addition to this, there has been a relatively small but still welcome gain for skilled workers in the advanced economies. The benefits of globalization involve an increase in demand for highly skilled workers when advanced economies are the ones that have the comparative advantage in the production of these goods, and thereby higher wages for skilled labor. Manufactured goods have offered a relatively small offset to disruption in the labour markets, and consumers with all incomes have benefited from their lower prices (Dorn & Levell, 2024). The consumer benefits are real, but are spread thinly and with low intensity per household, while the losses suffered by those who have been displaced are concentrated and intense—a distributional difference that is the essence of trade politics today.

At least in the net sense of the word, there have been developing countries that have been genuine winners. However, in other countries, like China, Vietnam, Mexico, and Bangladesh, industrial upgrading, job creation, and poverty reduction have been observed due to the relocation of labour-intensive production to countries offering lower labour costs (Abreha & Lopez Acevedo, 2024). The consequence of this is an improved situation with regard to between-country inequality; on this score, globalization has helped to reduce the gap between poor and rich countries. But these gains are fragile and limited in the economies that win. An export-processing zone may create jobs but not jobs for everyone, and the gains from integration may disproportionately benefit the local elite and foreign investors. The present trend towards reconsideration of trade policies considering factors such as automation, reshoring, and geopolitics indicates that production processes would shift away from economies which previously benefited from earlier waves of globalization (Abreha & Lopez Acevedo, 2024). This raises significant questions about whether those economies would succeed again within the next wave of globalization, and there seems little doubt that past success does not necessarily guarantee future success.

Manufacturing workers in high-wage countries, especially those facing a sudden influx of competition, have been the clear losers. Most dramatically, it is the “China shock” of the 1990s and the 2000s. Manufacturing jobs have decreased in numerous advanced economies as Chinese exports have grown; in the United States, two of every 10 manufacturing jobs were lost, and in the United Kingdom, jobs in manufacturing dropped by three of 10 during the rapid trade expansion (Dorn & Levell, 2024). The losses were not evenly spread out. They were disproportionately concentrated among workers in industries exposed to the event and in industries where workers are concentrated in local labor markets. In addition to losing jobs and income, those who were out of work in these communities suffered not only from adverse health consequences but also from increases in crime and household instability (Dorn & Levell, 2024). The gains to the consumer, while real, were relatively small and distributed uniformly throughout the population, and were insufficient and too thinly sliced to offset the cost of adjustment suffered by the workers. This imbalance in the distribution of losses and gains is one of the reasons for the political counterrevolution against globalization, such as the support by voters for far-right politicians in affected areas (Dorn & Levell, 2024).

The visible losers are workers in the North: the structural losers are workers in the Global South, who are disadvantaged, not by a bolt from the blue, but by the terms of their integration into the world economy that have been in place for a long time. This can be done with a startling clarity through recent research on unequal exchange. In 2021, the world of the Northern countries net appropriated 826 billion hours of embodied labour from the world of the Southern countries, which roughly doubles the amount of labour available for consumption by the Northern countries (Hickel et al., 2024). The working population of the South accounts for around 90% of the workforce that drives the world economy while receiving only 21% of world income. The wages in the South are 87–95% lower than the wages in the North, if the work done is of the same skill (Hickel et al., 2024). This is not only about lower productivity; it’s about a global economy in which Southern economies are forced to sell ever more labour and resources to finance imports, while Northern companies have a strong position in global value chains with which they are squeezing Southern wages and prices. The people who put together goods, harvest crops and dig up materials to be sold in the international market are therefore connected to globalization on terms which systematically transfer value down from them.

Such distributional results are not “naturally” occurring but rather the result of policy decisions. According to Dorn and Levell (2024), the general reactions to the trade-induced displacement can be divided into two big categories: first, transfer payments to those affected by the losses; second, adjustment policies to limit trade flows that lead to losses. The first strategy is to incorporate openness into a powerful welfare state, which can keep the efficiency benefits of trade while softening the impact of trade. But it requires that the winners offset the losers with trade transfers that are sufficiently large. The second one, protectionism and reshoring, could be good for tackling the symptoms of displacement, but it might come at the cost of the aggregate benefits of trade, and it could cause harm to consumers and downstream industries (Abreha & Lopez Acevedo, 2024). The more promising is a “trade and” route that consists of opening and complementary domestic policies in education, social protection and regional development, and international cooperation to reduce corporate concentration and achieve fairer value chains.

To sum up, globalization has created winners (large firms, educated workers and some new economies) and losers (manufacturing workers in advanced economies and most of the workforce in the Global South). The main lesson of recent studies is that these results are not persistent, but distributive. What can happen as a result of the same trade and investment forces that lead to aggregate gains is a large number of concentrated losses, and the difference between inclusive and exclusionary globalization is in the policies governing openness. But it is not enough to simply applaud the overall benefits of globalization; it is necessary to ensure that those who suffer from the negative effects are compensated, that the conditions under which southern workers participate in the world economy are improved, and that the concentration of benefits enjoyed by a handful of firms be curbed. Globalization will have winners and losers, but it will be for the winners to choose whether or not they are willing to pay for the losers—and for the losers to decide how to determine the rules under which they will live their economic lives.