Now a company headquartered in Pennsylvania may have production facilities in 6 states, buy inputs produced in 12 states, and sell goods in all 50 states. Similarly, all but the largest Pennsylvania companies used to rely on local banks for the bulk of their financing. Now they borrow not only from local banks but also from a variety of financial firms headquartered in other parts of the country. And residents of Pennsylvania, who used to keep their savings on deposit at local banks, now entrust much of their wealth to portfolio managers in New York who buy stocks and bonds issued by companies in all 50 states. Similarly, portfolio managers in Valley Forge handle money for residents of states other than Pennsylvania.
Globalization has benefits, but also costs.
Let's focus first on the benefits. These activities generate profits for their American shareholders. Still focusing on benefits of globalization, we know that as consumers we have gained access to new products, including compact disks, digital cameras, and fresh raspberries and blackberries in January and February. And as savers, we have gained the ability to diversify more broadly. These benefits have led to a higher standard of living in the U.S. and abroad.