Impact of Globalization on Developing Countries

INTRODUCTION * Globalization describes the process by which regional economies, societies and cultures have become integrated through a global network of ideas. * This integration has been fueled by technological advances in communication, transportation and trade that break down national divisions and barriers. * Globalization is recognized through a number of trends such as growing economic integration and liberalization; trade regulation; convergence of macroeconomic policies; modification of the role and concept of nation state; proliferation of supranational agreements and regulatory bodies; and globalization of information systems. These trends are associated with both positive and negative impacts on human well-being, the use and conservation of the environment, equity within countries and between developing and developed countries, participation and democratic decision-making, food security, poverty alleviation and others. 1 http://elearn. usiu. ac. ke/webapps/portal/frameset . jsp? tab_tab_group_id=_2_1&url=%2Fwebapps%2Fblackboard%2Fexecute%2Flauncher%3Ftype%3DCourse%26id%3D_4144_1%26url%3D- GLOBALIZATION LECTURE. PPTX EFFECTS OF GLOBALIZATION ON DEVELOPING COUNTRIES Globalization has brought in new opportunities to developing countries.Greater access to developed country markets and technology transfer hold out promise, improved productivity and higher living standards. But globalization has also thrown up new challenges like growing inequality across and within nations, volatility in financial markets and environmental deteriorations. 2 This paper assesses the positive and negative impact of globalization on developing countries in the following dimensions; 1. Economic 2. Social 3. Political POSITIVE ECONOMIC IMPACT Increased Standard of Living Economic globalization gives governments of developing nations access to foreign lending.When these funds are used on infrastructure including roads, health care, education, and social services, the standard of living in the country increases. If the money is used only selectively, however, not all citizens will participate in the benefits. Access to New Markets Globalization leads to freer trade between countries. This is one of its largest benefits to developing nations. Homegrown industries see trade barriers fall and have access to a much wider international market. The growth this generates allows companies to develop new technologies and produce new products and services.Access to New and More capital Developing nations attract foreign investments resulting in better smooth consumption, deepens financial markets, and increases the degree of market discipline. In most developing nations, the financial markets are not fully developed, as such globalization is a boost to the country’s financial markets. Employment Opportunities Because the wages in developing countries is far lower than that of developed countries, work such as software development, customer support, marketing, accounting and insurance is outsourced to developing countries like India.The workers in the developing countries get employment. Access to technologies As a result of outsourcing, developing countries get access to the latest technology and technological improvements; they are thus able to use the technologies to improve the standard of living. They can also utilize these technologies in solving problems, for example advanced medicine to cure local diseases. Increased competition Due to the need to compete globally, companies have had to reduce prices, which is good for the consumer in such countries. In addition, there is improvement of goods and services accompanied by improved technology.Globalization is thus a win for consumers. NEGATIVE ECONOMIC IMPACT Widening Disparity in Incomes While an influx of foreign companies and foreign capital creates a reduction in overall unemployment and poverty, it can also increase the wage gap between those who are educated and those who are n ot. Over the longer term, education levels will rise as the financial health of developing countries rise, but in the short term, some of the poor will become poorer. Not everyone will participate in an elevation of living standards. Decreased EmploymentThe influx of foreign companies into developing countries increases employment in many sectors, especially for skilled workers. However, improvements in technology come with the new businesses and that technology spreads to domestic companies. Automation in the manufacturing and agricultural sectors lessens the need for unskilled labor and unemployment rises in those sectors. If there is no infrastructure to help the unemployed train for the globalized economy, social services in the country may become strained trying to care for the new underclass. http://smallbusiness. hron. com/effects-economic-globalization-developing-countries-3906. html Globalization for Developing Countries in Asia Backed by sound economic policies and informa tion technological advancements, the South-East Asian countries have prospered as their employment growth rate has increased tremendously. One fine example of this phenomenon is India which continues to have an economic growth rate of 8 percent or more per year. Easy access to foreign capital and increased foreign direct investment lays down the foundation for a competitive and yet, thriving market.Since the players increase in the market, the consumers not only get better products, but also at a cheaper price. Hence, another benefit is low inflation rate which helps the country to have a stabilized economy. Poverty has reduced in the Asian countries which have adopted liberalized economic policies. Companies from other countries bring their products with their technologies. Newer technologies in IT, production and research cut down the production cost, and increase sales. Moreover, they also sharpen the skills of the local labor force. Globalization in AfricaAfrica is a huge contin ent with many countries which are downtrodden and poor mostly sustaining life on agriculture and aquaculture. Not only that, there are regions which are torn apart by war and violence, and hence steady income from a stable employment would work as a respite from the in-fighting. Education plays a major role in the development of any nation and is one of the important drawbacks in the growth of the African region. UNESCO believed that 48% of children in Africa were never ever enrolled in primary schools in the year 2000.This disappointing number can go down if African countries open their doors to free market policies. With significant players in the market, a major positive impact would be on the education and technological field of the African continent. More resources and FDI would be at hand because of globalization and ensure lower exchange rate of local currency. Hence, it will indirectly help boom the economy. Though, globalization is not a magic wand and cannot wipe away all of Africa's woes, but it can surely create a favorable environment for a fair and stable government.Globalization would bring any African country more closer to rest of the world and any wrongdoing on the part of a government or a faction can be monitored and curtailed. Trade treaties and co-dependence in business is fostered by globalization. It can bring about a vast change in the political, economical, and social set ups in Africa. With more money, resources and people coming to Africa, the real and the most devastating problems of these countries could grab the limelight, and relief intervention can be provided by the global community. Read more at Buzzle: http://www. buzzle. com/articles/benefits-of-globalization. html