Globalisation: Source of woe or source of wealth?

Conclusion

Because technology and innovations are only developed by highly qualified, workers, an appropriate education and R&D policy is necessary to secure the advantages of globalisation in the long term and to translate them into an increase in real income. The industrialised countries can only maintain and increase their high wage levels if they increase their technological capacity and their stock of human capital. A reduction of public expenditure on R&D and education, which are essentially investments in technological capacity and human capital, is thus not the answer to the challenges of globalisation. This is especially true because a share of the high real income in the industrialised countries can be traced back to innovation rents, which will be lost if the pace of innovation slows down in comparison to the newly industrialising countries.

Globalisation offers enormous economic opportunities, but also entails risks for low-skilled workers. The latter can, however, be combated, in particular by an appropriate education policy. Of course, globalisation demands mobility and flexibility on the part of the individual. Defensive reactions are not the answer—they will lead only to the feared race to the bottom. Countries which exploit the opportunities presented by globalisation through an increase in their education and R&D endeavours can compete in the other race, i.e. the race to the top.