The impact of globalisation on developing countries

 Highlight the impact of globalisation on developing countries

What Is Globalization?

How are you watching this lesson right now? Are you on your laptop, or maybe a tablet, or even your cell phone? When a company like Dell is building a computer, the computer may be assembled in India (a developing country), though certain complicated parts were built in China (a transitional country), while the research and development were done in the United States (as you probably know, a developed country). All this is possible due to globalization.

Travel, communication, and trade between countries are becoming easy and create the development of closer economic, cultural, and political relations among all the countries of the world. Globalization impacts countries differently depending on the stage where their economies are. In this lesson, we will explore the impact of globalization on developing, transitional, and developed countries.

Highlight the impact of globalisation on developing countries

Types of Economies

First, let's ensure that we understand the three types of economies we'll be discussing:

Developing countries are nations with an underdeveloped industrial base where people have lower life expectancy, less education, and less income. Examples of developing countries are most of the countries in Africa and certain countries in east Asia.

Transitional countries are those emerging from a different type of economy towards a market-based economy. Transitional economy refers to all countries that attempt to change their basic economic structure and policies towards market-style fundamentals. The best examples of transitional countries are China and Russia.

Developed countries are countries with a lot of industrial activities and where people generally have high incomes. They have post-industrial economies, meaning the service sector provides more wealth than the industrial sector. The United States of America, Australia, and most of the European countries are examples of developed countries.

An economy can have sectors in both the developing and developed stages, but cannot be transitional at the same time.

Highlight the impact of globalisation on developing countries

Impact of Globalization

So now that we understand some characteristics of these economies, let's examine how globalization affects them.

Globalization creates greater opportunities for firms in less industrialized countries to tap into more and larger markets around the world. Thus, businesses located in developing countries have more access to capital flows, technology, human capital, cheaper imports, and larger export markets. Globalization allows businesses in less industrialized countries to become part of international production networks and supply chains that are the main conduits of trade.

Globalization helps developing countries to deal with rest of the world increase their economic growth, solving the poverty problems in their country. In the past, developing countries were not able to tap on the world economy due to trade barriers. They cannot share the same economic growth that developed countries had. However, with globalization the World Bank and International Management encourage developing countries to go through market reforms and radical changes through large loans. Many developing nations began to take steps to open their markets by removing tariffs and free up their economies.

Highlight the impact of globalisation on developing countries

The developed countries were able to invest in the developing nations, creating job opportunities for the poor people. For example, rapid growth in India and China has caused world poverty to decrease (blogspot.com.2009). It is clear to see that globalization has made the relationships between developed countries and developing nations stronger, it made each country depend on another country. According to Thirlwall (2003:13) " Developing countries depend on developed countries for resource flows and technology, but developed countries depend heavily on developing countries for raw materials, food and oil, and as markets for industrial goods". One the most important advantages of globalization are goods and people are transported easier and faster as a result free trade between countries has increased, and it decreased the possibility of war between countries. Furthermore, the growth in the communication between the individuals and companies in the world helped to raise free trade between countries and this led to growth economy.

However, globalization has many economy and trade advantages in the developing countries, we must also note the many disadvantages that globalization has created for the poor countries. One reason globalization increases the inequality between the rich and poor, the benefits globalization is not universal; the richer are getting rich and the poor are becoming poorer. Many developing countries do benefit from globalization but then again, many of such nations do lag behind."

Highlight the impact of globalisation on developing countries

In the past two decades, China and India have grown faster than the already rich nations. However, countries like Africa still have the highest poverty rates, in fact, the rural areas of China which do not tap on global markets also suffer greatly from such high poverty (blogspot.com.2009). On the other hand, developed countries set up their companies and industries to the developing nations to take advantages of low wages and this causing pollution in countries with poor regulation of pollution. Furthermore, setting up companies and factories in the developing nations by developed countries affect badly to the economy of the developed countries and increase unemployment.

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