Impact of globalisation on developing countries

7 February, 2021 12:00 AM printer

Impact of globalisation on developing countries

Globalisation is not a very recent phenomenon. Rather, people have been familiar with this term from the last phase of the last century. The features of globalisation have always been paving the way for better economic well-being through interconnectedness and the free flow of information among the nations. Globalisation is the integration of national economies, into the emergent international division of labour. It is a contrary term which may be rational in Economics; in other cases, it may be irrational. But the process of Globalisation is not equally beneficial for all the state stakeholders.

Developed or developing countries, both are being influenced differently by Globalisation. In general, Globalisation promotes growth. Usually, more developed countries do experience better economic well-being due to Globalisation. Because the process of globalisation reduces the role of government and increases interdependence among states, as a result countries with less economic capability fail to attain their expected benefit from these interdependencies. 

Existing literatures on Globalisation and its impact are mainly biased to the positive impacts of Globalisation. Even most of those who introduced the term ‘Globalisation’ as mythical and controversial, supported its positive impacts as well. In the article, ‘Globalisation and Its Impact on the Third World Economy’, writer Neelam Kumar Sharma, Assistant Dean of Tribhuvan University approached to determine the factors associated with this controversy and tries to analyse the economic impacts of Globalisation in the third world countries. According to Neelam Kumar Sharma, Globalisation is kind of a necessary evil for developing countries. Because the features of Globalisation have never been fully accustomed in the developing third world countries, but these are neither disdained. This article asserted that state-assisted capitalism started getting rejected in the mid-1980s. That is how it paved the way for rapid Globalisation. Economic Globalisation was the very initial facet of Globalisation which refers especially to trade and market liberalisation whereas Globalisation is related to open economy, weakening the border wall.

Thus, Globalisation means the condition of unrestricted and easy movement of the factors of production, goods, services along with information and technologies. In this scenario, states become subject to the influence of multinational companies, with decreased state authorities’ role, increased cross border interdependence. The whole process paves a way for attaining a common culture in every aspect in exchange for sacrificing the world’s existing economic and political structure. In the changed economic structure, low-income countries go under the influence of MNC’s of technologically advanced countries.

In another article, ‘Does Globalisation affect growth? Evidence from a new index of Globalisation’, author Axel Dreher tries to formulate an index of Globalisation based on three major dimensions, economic integration, social integration, and political integration. To examine the impact of Globalisation on the growth of a country, the author used data of 123 countries from 1970 to 2000. The empirical study found that economic growth is greatly related to the economic flows and restrictions, and the growth that takes place in the developing countries is less robust.

Another article by author Mr Patrick Mutua Kioko, named ‘A Study on The Impact of Globalisation in Developing Countries: Focus on Africa from a Liberal Perspective’ gives an overview of the term ‘Third World Countries’. The author levelled those countries as third-world countries that are still in the process of development. Capitalist activities have been a strong part of the Globalisation process since it believes in the possibilities of progress. Juridical, equality, democracy and the free market are the four values also embraced by the Globalisation process according to the author.

‘Globalisation and the Challenge for Developing Countries’ by Mr. Shahid Yusuf, who is affiliated with the World Bank, included some aspects of how Globalisation impinges on development. He emphasised using trade to promote development, at the same time warned on the varieties of capital flows and their effects. He also explained the roles of migration as it can be a drawback for a developing country.

How do developing countries see Globalisation? In most of the developing countries, Globalisation is a mixed experience. It is like a new reality for developing countries. “There is no point to a Globalisation that reduces the price of the child’s shoes but costs the father his job” - This is the catchphrase used in the report prepared by the World Commission on the social dimension of Globalisation of 2004 (Page- 01).

Even though Globalisation has some negative impacts, still countries have to adjust their policies just to be accounted for in the globalised world. Globalisation creates a milieu of insecurity due to the interaction with other state entities. Since Globalisation produces uneven development, all the stakeholders do not get equal benefit from this process. The less developed countries are always on the verge of being underdeveloped countries in terms of culture and other identical characteristics. The economic openness in terms of open markets, threatens the developing countries in competitions with the developed countries, which is not always fruitful for the developing countries.

What are the effects of Globalisation on developing countries? How is Globalisation sponsoring inequalities through trade and economies to the developing countries? The effects of Globalisation on developing countries can be separated into few parts, for instance wages and inequality, education, health status and longevity, and lastly spread of infectious diseases. Highly paid jobs are for people with more expertise and highly skilled workers. So, less-skilled workers will be overlooked. On the contrary, due to economic integration, the multinational companies will outsource their work for the cheaper labour which will ultimately make the job market open for all. By this process, money can go to poorer economies where people will have money to invest in education, even the government will be more enthusiastic in spending for education.

As an outcome of economic flow to the developing world, people can have better health services, nutrition and life expectancy. But, when the countries are not isolated from the outer world, various infectious diseases have chances to spread. Even these infectious diseases could be beyond the control of the developed countries, and developing countries may lean towards western countries' humanitarian assistance.

Globalisation always promotes the idea of economic growth. Previously, most developing countries could not cope with the high rate of tariff and trade barriers. Later, Globalisation paved a way for decreasing the tariff and trade barriers. But this process was not equal. Because the developing countries could not ensure the same amount of economic growth as the developed countries. The developed countries also invested in developing countries to create job opportunities. Many countries also benefited from this, for example, India and China.

The rapid growth in these two countries even caused a global decrease in the poverty rate. But the notion of inequality prevails when the developed or strong country’s MNC’s extract the resources (such as raw materials, oil, natural gas, hydrocarbons, etc.) of the developing countries in the name of Globalisation, and later these developing countries are in the situation of buying final products made from raw materials of their own country. Technological advancement is the leverage for the developed countries; thus, they promote inequality through Globalisation in terms of trade and economies.

Globalisation is always good for the economic growth of nations. Many analysts believe that by making markets more effective, increasing competition, limiting armed tensions and distributing resources more equally around the world, Globalisation gives a net profit to individual economies around the globe. There are both benefits and drawbacks to the developing countries due to Globalisation. It makes the sovereignty of the State fade and promotes interdependence. But the developing countries particularly cannot attain the benefit from the process of being globalised, rather the already developed countries have the benefit of Globalisation since they are technologically advanced and control the production know-how.

 

Shiblee Nomani, student of International Relations and Development Studies, Bangladesh

University of Professionals


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