Expatriate Compensation

GLOBALIZATION

A compensation manager in Dallas, Texas, was walking around an automobile dealership as her car was being serviced. She was looking at the stickers on the new cars, and some of the information struck her forcefully. The sticker listed the percentage of car parts that came from different countries. Around 6 countries were listed and the country in which the car was assembled constituted only around 40% of the parts.

Later, she noticed that most of the electronic equipment she had at home and in the office was manufactured in different parts of the world, almost none of it made in the United States. And, while sorting through her clothes, she started noticing where her clothes were made. Again, the list included many countries and almost none of her clothes were made in the United States.

These observations illustrate a change over the last forty years in the world economy called globalization.

Global businesses produce and market their products to be sold in worldwide markets, rather than just a single country. They adapt their global product, brand, and advertising to successfully market their products to gain customer loyalty locally.

Think globally...Act locally

Although the global pandemic and the resulting supply chain disruptions forced a reexamination of the benefits of globalization, it remains an essential part of the world economy and is the result of:

• Growth in air travel making movement of products and people easier than ever
• Containerization making shipment of goods more cost effective and reliable
• Revolution in technology making business and communications more effective around the world
• Global and multi-national corporate business models marketing to customers across the globe
• Globalized financial services and systems supporting multi-national businesses and improved mobility of capital
• Reduction in the cost of labor and manufacturing by outsourcing to low-cost countries
• Labor mobility
• Reduction in national trade barriers such as through the European Union (EU), the United States-Mexico-Canada Agreement (USMCA, formerly NAFTA), and the Association of Southeast Asian Nations (ASEAN)
  • ASEAN aims to promote economic growth and stability among member nations.
  • USMCA is a treaty between Canada, Mexico and the United States that governs agreements from labor standards to digital trade.
  • The EU (European Union) is a unified trade and monetary body of member countries. It eliminates all border controls between member nations and provides for the free flow of goods and people (subject to random spot checks for crime and drugs).
• Global media coverage