Globalization brings more economic advantages to developing countries than disadvantages, even though this statement is arguable for many. But the simple effect of enabling developed countries and developing countries to compete in the same “Global arena” is already a gain, not only for DCs but for LDCs as well. The increased interaction among actors promoted by Globalization facilitates free trade which in turn provide LDCs with higher incomes and better socio-economic standards of living. The degree of development achieved and the areas in which benefits are present vary from country to country, but exist in all of them without mistake.
On the other hand, it is evident that there are disadvantages that come with Globalization, disadvantages that grieve on countries that are not able to attract foreign investment. Some of the arguments on the negative effect of Globalization include exploitation of minorities by the MNCs, centralized wealth to a few countries, adverse reaction of depression in one country to another, widening of income gap, among others. We also need to consider environmental, health and other social issues which are greatly detrimental for less-developed countries due to lack or poor domestic and international policy planning in these specific areas.
Many of these disadvantages can gradually be corrected or lessen by the implementation of market reforms and the evolution of domestic and international institutions. Increased interaction among developed and developing countries fosters an environment that supports economic growth. Free trade enables opens opportunities for more and new business opportunities. An International economic system supports countries to sell the goods and services they can produce better, enabling economies to raise to the internationalized level – Comparative Advantage.
The competitive nature of the system also promotes technological and entrepreneurial development. In turn, all these economic factors transforms into greater incomes and enhanced living standards for developing countries taking action in the Global Market. China is an excellent example of developing countries that have greatly benefited from Globalization. “China’s economic successes are associated with liberalization and globalization and each aspect of globalization has brought China further successes. It went from being a greater challenger to globalization and its institutions to enthusiastically joining the globalized system. China received $60. 6 billion of foreign direct investment in 2004 and trade in 2004 was equal to 70% of its GDP. Gradual changes into an Export-led economy and the globalization of institutions enabled a startling economic growth. (Overholt 1-6) Another benefit of better interaction among international actors is a better understanding of goodwill among DCs and LDCs countries. Developed nations assist third world countries through Humanitarian assistance or Food Assistance and Development Aid.
The U. S. government has provided over $321 billion in assistance since World War II to help decrease Third world poverty. (Majewski) Third World countries improve living standards in the through foreign investment, a form of capital flow that benefits the host country creating more jobs which in turn increase income and living standards. FDI triggers technology spillovers, assists human capital formation, contributes to international trade integration, and helps create a more competitive business environment. OECD 1-4) MNCs and MNEs open new opportunities for developing countries to participate and benefit from Global competition. The development of a good FDI-Assisted strategy can greatly increase employment for MNEs host countries. (Narula 1, 142) Globalization has also brought better health solutions coming from developed countries: Medical products, vaccines, and technologies. Developed countries have a better understanding of the lack of appropriate health care in developing countries and have implemented a waide variety of actions to help strengthen their health systems.
Institutions like the Center of Global Disease and USAID have created “health action plans” like the USAID Global Health Strategic Framework that proposes a country-led approach s instead of donor-driven disease control programs. Initiatives are mostly focused on women and children and include the following: the eradication of smallpox, implementation of science, family planning, public-private partnerships. (USAID) The major disadvantages of globalization and its impact on the development of developing states are largely macroeconomic, social, and environmental in nature.
Macro-economically, globalization widens the geographic impact and intensifies the contractionary and stagnatory duration of economic recessions and depressions, therefore severely affecting and further impoverishing the national economies of developing states. Also, but in the more socioeconomic sense of intellectual thought, globalization centralizes economic wealth, restricts social mobility, and deviates toward an unsustainable path of high inequality in both the social and economic spheres of developing states.
According to the Report on the World Social Situation 2005: The Inequality Predicament, “changing labor markets and increased global competition have spurred an explosion of the informal economy and deterioration in wages, benefits and working conditions, particularly in developing countries” (United Nations 2005). In other words, multinational corporations take advantage of cheap labor in developing states to compete with global competitors, resulting in sustained inequality and suppressed demand.
Socially, globalization increases the risks of global pandemics, resulting in potentially fatal outcomes for many populations in developing states that have limited access to quality health care. To understand the health risks of globalization we can look to October 17, 2004, when a Thai man smuggled two eagles from Bangkok to Brussels, which were later tested positive for H5N1, resulting in the treatment of over twenty-five people, and effectively stopping a biological bomb from exploding all across the European continent.
However, what if that virus was transported and released into a developing country with inadequate access to quality medicine as a result of globalization? If “biological invasions are now driving up approximately 50 percent of the world’s 10 million species to extinction,” then what is to happen to the most vulnerable among the human species in an increasingly globalized world? As a consequence of globalization, “in the early 1990s, cholera made a rousing comeback, eventually killing 10,000 poor people across South America”.
Environmentally, globalization leads to profit-driven multinational corporations taking advantage of the poor or loose environmental standards of many developing states that are now initiating or currently undergoing their own industrial revolutions. This “seems plausible as developing countries need to attract foreign investors to create more jobs”. In Indonesia, pulp and mill producers Sinar Mas and Raja Garuda Mas have cleared about 170,000 hectares of natural forests, resulting in the destruction of elephant and tiger habitats.
In addition, these same multinational corporations have been associated with illegal logging in China and Cambodia, resulting in the deforestation and degradation of the environment. Major damage that may arise from globalization is that some cultures are getting lost. Cultures and beliefs of countries that have more economic power are more likely to feel a dominant power more than others.
First World countries produce and manufacture goods that can affect cultures on various levels sometimes never even thought about throughout history, for example, movies, clothes, and technological products. While the global market increases, morals and values start to decrease. People have become almost ignorant about social, and ethical values that define us as individuals now and in our past. This in term, leads to the assumption that globalization harms small cultures that are in risk of being extinct. Big disadvantages, but many possible solutions.
In 2010, Dominique Strauss-Kahn, Managing Director of the IMF, stated that, “crisis is an opportunity,” and then called for “a new global currency issued by a global central bank, with robust governance and institutional features, and that the global central bank could also serve as a lender of last resort. ” However, he then stated, “I fear we are still very far from that level of global collaboration. ” This may be true for many aspects of a government including political, social and economic, however that same movement we create is the same movement that can ultimately salvage or assist in the areas that are in more dire need.
The concept of global power has taken an evolutionary route to the present day. The standard political, global, and economic actors that make up institutions, little by little are constructing the machinery for the foundation of a global government. In addition, within the modern world, global governance is solely about an intertwined and intersecting web of international organizations, multinational corporations, NGO’s, humanitarian foundations, military and intelligence agencies, banks and interest groups, the list goes on and on.
Globalization is a term that was popularized in the late ‘80s to refer to the global spread of multinational corporations. This has laid the principle ideological and institutional foundations for this process. Global social, economic and political integration do not occur at an equal pace; rather, economic integration and governance on a global level has and will continue to be ahead of the other sectors of human social interaction, in both the pace and degree of integration. In short, global economic governance will set the pace for social and political global governance to follow.
All in all, there are certain factors as institutional, human and social capital that are required to acquire the benefits of globalization. Strengthening competitive market structures, evolution of legal institutions, and improvements in market management capabilities are required to assure the benefits from openness. International organizations can assist developing countries in building the legal frameworks and by providing institutional supports to reduce the risk of openness.
We go back to use China and their magnificent growth experienced in the last decades as an example, emphasizing how developing countries could study the factors involved in the process and draw conclusions, based on their specific case, on what policies should apply. Quick market liberalization will not be the answer to increased economic growth, the process of opening foreign investment needs to be gradual and needs to be done side by side with market reforms in order to achieve the competitiveness in the world market. Even when this might be seen as too slow, avoids risks and instability in the lobal market. The specific policy toward market liberalization needs careful assessment of the concrete conditions in certain stage of development of a certain country. (The World Bank)
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