While
globalization can increase the profitability of certain businesses, it can have several negative
effects.
First multinationals with globalized structures can avoid paying
taxes, meaning that they essentially become free riders, taking advantage of infrastructure and
social safety nets to which they do not contribute.
Next, globalized supply
chains can shift production to low wage countries, having a global downward effect on wages.
This can also lead to a race to the bottom, with globalized companies farming labor out to
sweatshops in countries with minimal labor regulations. Child labor and other forms of abuse of
workers can be major issues.
An other major problem is that companies may
move operations to countries with little environmental regulation or oversight, leading to
massive environmental degradation.
Because companies rely on globalization,
they can lead governments to ignore human rights abuses in countries that offer cheap
wages.
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