The Impact Of Globalisation With Rigid Labour Markets

The public debate reveals that people are unsettled about the impact of the current globalisation wave. News about job losses fuels this unrest regularly. It is a matter of fact that firms relocate their production activity to low-wage countries in Eastern Europe and the Far East, or specialise in more capital intensive fabrication in order to withstand international competition and to maximise profits. Although firms have always been investing abroad and globalisation is not at all a new phenomenon, the fall of the Iron Curtain and the rise of China and other East Asian economies have created new investment and trade opportunities, and have thereby accelerated the process of global market integration.