Developed Country and Globalization Essay Example

and The World Trade Organization are the major forces driving globalization. One of the main events resulted from globalization, is the huge increase at off shoring business. Off Shoring simply mean locating the business at another place, at old days, it was used at manufacturing companies mainly for Blue Collar, where they relocated their business to lower cost countries.

However nowadays it’s widely used thanks to the technology for White Collar too. This means that off shoring now does not entirely means moving business elsewhere, it means sourcing talents everywhere. After few year there will be also no barriers, or walls that forbids companies to sources talents everywhere in the world, not only to benefit from the low cost, but also to avoid the shortage for talented employees such as engineers, IT guys etc. so companies now should be able to manage talents globally.

Some critics argue that off shoring is a bad idea, as it decreases job opportunities at some places, however when this solution was introduced in France the percentage of people who lost their jobs remained the same, as this solution was used when they tried to expand their business, not to lay off employees. Globalization argument has been widely discussed in many different occasions, but everyone sees it form different side, “Globalization, as defined by rich people like us, is a very nice thing... you are talking about the Internet, you are talking about cell phones, you are talking about computers.

This doesn't affect two-thirds of the people of the world. ” Jimmy Carter Said. Globalization means different things to different people, a business man might see it as an opportunity, an economist may

see it an opportunity to study its effect on jobs and standards of living, an anthropologist may want to examine the influence of globalization on the culture of a group of people, a political scientist may be concerned with the impact of globalization on the power of government relative to that multinational companies, and finally an employee might see it as an opportunity for new work or a threat to his/her current job.

That’s why the globalization debate is very complex. As everyone see it from different perspective. The main items in the globalization debate include the following: - Jobs and Wages as globalization cause dislocation in labor markets, supporters believe that the overall gains of national economies are worth lost jobs for individual, however globalization critics disagree. Also labor unions argue globalization causes a “race to the bottom” in labor and environmental regulations, but they lack supporting evidence. Inequality within nations, also has been one of the issues, developing nations can oost incomes of their poorest citizens by integrating themselves into global economy, however in this debate nations that embrace world trade and investment grow faster than rich nations, whereas sheltered economies become worse off. Both of the two groups agree that global inequality has fallen in the last decades, but differ in the extent of the drop. Pro-Globalizations argue that it has helped in spreading democracy around the world, and added progress in many global issues, as in recent decades the people of many nations have thrown off the chains of authoritarianism and are now better educated, better informed, and more empowered.

However opponents of globalization take the right of national authorities to enter into

binding international agreements on behalf of citizens, critics charge that such agreements violate the right of subfederal governments. Finally, protesters complain that globalization is homogenizing our world and destroying its rich diversity of cultures. Critics say that in some drab, new world we all will wear the same clothes, bought at the same brand-name shops, eat the same food at the same brand-name restaurants, and watch the same movies made by the same production companies.

But supporters argue that globalization allows us all to profit from differing circumstances and skills. Trade allows countries to specialize in producing the goods and services they can produce most efficiently. Nations can then trade with each other to obtain goods and services they desire but do not produce. Bottom line people negative globalization says that it negatively affects wages and environmental protection, reduces political freedom, increases corruption, and inequitably rewards various groups.

Yet there is evidence that most global nations have the strongest records on equality, the most robust protection of natural resources, the most inclusive political system, and the lowest levels of corruption. People in the most global nations also live healthiest and long lives, and women there have achieved the most social, educational, and economic progress. The one thing that the debate over globalization has achieved is the dialogue on the merits and demerits of globalization. What has emerged is a more sober, less naive notion of globalization.

Those of each side of the debate understand that it can have positive effects on people’s lives, but globalization cannot – by itself – alleviate the misery of the world’s poor. Both sides in the debate are now working together to harness

the benefits of globalization while minimizing its costs. This leads us to an important question, is globalization threat or opportunity?! Well to my mind there is no right answer for this question, as it differs in different situations. For example for developing countries, Globalization has often been regarded as the ‘cradle’ of global economic development.

This so called ‘world liberator’ however has not escaped criticism as opponents claim that it has been the cause of social evils and rising levels of poverty in developing countries. Due to the nature of globalization and in its bid to open up social, economic and political boundaries currently in place, various functions in different countries have been affected. The effect of globalization in developing countries has been a subject of debate with different views being put forth about the possible outcome of globalization in developing countries.

IMF puts forth that most debates generally focus on whether globalization is a threat or an opportunity for developing countries.

Globalization as an opportunity:

Economic development:

• Globalization can be said to be economically benign;
• playing the significant role of enhancing economic prosperity and
• offering a new beacon of hope to developing countries.

Globalization is often characterized by a reduction in trade barriers such that there is a free flow of goods, services and labor from one country to another.

Richardson contends with these views and adds that that the effect of this is increased trade which in turn translates into increased income for developing countries. Globalization therefore serves as an opportunity for developing countries to stabilize their economies by taking advantage of trade. These statements can be considered true because globalization has greatly reduced barriers between countries through elimination

of tariffs and import duties. The rise in globalization has led to increased capital flow into developing countries’ economies.

Foreign Direct Investment (FDI) injects a considerable amount of capital into developing countries thus easing their efforts towards economic stability. The developing countries have also benefited in terms of increased financing through loans and grants from developed countries. It is true that increase in capital inflow serves the purpose of enhancing economic development in a country. What proponents fail to incorporate in their studies however is that net capital inflow could lead to negative effects on trade.

Large capital inflows often result in appreciation of exchange rates and inflationary pressures that impact on the country’s current account. This means that globalization in an attempt to improve the economy could actually thwart the progress of the economy. The reduction in trade barriers has led to the promotion of specialization. This is an economic concept which denotes that countries can concentrate on the production of commodities that they can produce at the least cost. This commodity can then be traded to earn maximum income for the country while other goods may be imported from other countries.

In this regard developing countries should take advantage of globalization to enhance their income through trading in goods which they can produce most effectively. Such a development not only gives developing countries an opportunity to prosper economically but also to obtain goods that prove expensive to produce in their own countries. Most studies on globalization contend that globalization enhances competition as the flow of goods and services between countries becomes easier, competition is an effective way of enhancing innovation and the production of better quality

goods.

Technological advancement and knowledge transfer:

• The transfer of technological know-how has taken an integral part in globalization.

This has led to increased innovation and better methods of production to developing countries. The direct result of this is increased income and thus appreciation of the countries’ economic development. At the same time, globalization has led to increased transfer of knowledge and skills to developing countries. Foreign nationals coming to work in multinational companies add to the knowledge banks of developing countries thus increasing the level of efficiency.

Increased knowledge about production methods, economic policies and management techniques present invaluable inputs in developing countries. At this juncture, it would be worthwhile to note that developing countries should use this as an advantage to tap these knowledge and skills because foreign investors are not destined to stay there forever. Training of professionals and development of technology within the country are vital yet they are not effectively addressed in the globalization literature presented by these authors.

Employment and social welfare:

• Developing countries have an opportunity to increase their per-capita income following the increase in globalization.

The increase in Foreign Direct Investment following the reduction in foreign investment laws has played a great role in reducing unemployment in developing countries. Increased employment levels raise the social welfare of the citizens of developing countries as a result of increased disposable income so that they can comfortably take care of their needs. In consideration to this proposition, increased personal income would be worthwhile for developing countries’ citizens.

It is however notable that education in developing countries is not well established. As a result, many multinational companies have to bring in foreign expatriates to take up management positions

while local citizens mostly take up positions requiring lower skills. If developing countries have to benefit from globalization through increased employment, increased training and education must be provided to the country’s citizens.

Globalization as a threat:

Increased inequality:

Critics of globalization propose that globalization does not negate the needs of developing countries.

Globalization only serves the interests of countries in the developed world such as United States, Europe, Australia and Canada among others. Developing countries are normally left out of major decisions on globalization even in cases where they are directly involved. According to IMF, globalization serves to amplify the level of inequality between nations. As far as opponents are concerned, developed countries have a larger stake in influencing the world economy to an extent that they influence the economic and social policies in developing countries. Multi-national Corporations have not made the situation any better in developing countries.

Multinational companies take advantage of the cheap labor that can be obtained from developing countries’ citizens. These companies normally provide poor working conditions and do little to upgrade the knowledge of their workers. Consequently, the workers are not in a position to improve their social welfare. It is true that inequality has been on the rise due to globalization. Studies conducted by the World Economic Outlook indicate that while the average per capita income rose considerably in the 20th century, the income gap between the developed and developed countries had become wider.

Income distribution was more unequal at the end of the century than at the beginning.

Increased control by developed countries:

• With increase in globalization, the level of control over developing countries over developing countries has increased.

This not only threatens political systems but

the social aspects as well. Political leaders in developing countries are under the control of developed countries and the policies taken in developing countries mostly result from pressure by developed countries notes that these policies are mostly meant to address particular developing countries’ interests.

Developing countries often have to submit because failure to do so could lead to deleterious effects including the withdrawal of financial assistance, FDI and possible trade restrictions through trade embargos. It is notable that even when developing countries receive financial aid from developing countries and international financial organizations, they are not at liberty to spend the finances in the projects that they desire to develop. The projects to be undertaken using the funds are often dictated by the donor countries; most often to promote their own self interests.

While the concept of dominance is true, it is a perfect example of the struggle for dominance that characterizes societies. Societies strive to outdo one another politically, socially and politically through development of methodologies to dominate others even if it means using acts that may be considered unethical. To a certain extent therefore, the actions of developing countries cannot entirely be blamed on globalization.

Threat to the workforce:

• The ease with which individuals can move from one country to another has been a threat to the level of professional skill and expertise for developing countries.

Highly qualified professionals are now moving to developed countries where they are assured of better pay incentives. The direct result of this is that the developing countries are now experiencing shortage of qualified staff to run local institutions. This is a great threat to the developing countries’ workforce which is bound to

decrease as more learned and experienced workers migrate to developed countries. IMF fails to mention the decision to go for higher incentives in foreign countries is a question of rational choice.

It is only normal for employees to seek greener pastures and attractive packages in international firms provide them with these.

Increased dependence on developed countries:

• Reduced trade barriers have led to increased supply of cheap products from developed countries to developing ones.

Developed countries are in a position to produce cheaper products due to the availability of advanced technology, capital and economies of scale. Cheaper goods often lead to unfair competition to companies producing similar goods in developing countries thus putting them out of business.

The result of this is that countries now have to depend on imports to furnish their demand for such goods. This increases dependency on developed countries. As far as unfair competition is concerned, this should in fact be a wakeup call to developing countries and not a reason to allow the closure of industries. Companies should rationalize production so as to ensure that they are as efficient as possible to compete with others in the market. This shows that increased competition could indeed play to the advantage of countries if proper measures are taken to address the country’s shortcomings.

Effect on the socials structure:

• As far as conservatives are concerned,
• globalization has been the cause of culture erosion,
• increase in the level of crime,
• immorality among other evils.

The concept of culture erosion has led to wide criticism of globalization. There is a considerable erosion of cultural identities and boundaries between nations. This is what has been referred to as a borderless world such that

leads to the loss of identity as people start behaving in similar ways across the globe.

The critics of globalization under this claim have not taken time to look at the positive side of cultural interaction. Not only does it promotes communication across nations thus enhancing interdependency but also eliminates undesirable behavior such as racial and ethnic segregation hence increasing international cohesiveness. When people interact socially, political and economically, their differences are less visible such that they can effectively work together. Summery From the above review, it is possible to identify that globalization has both its upsides and downsides.

Globalization is desirable because it draws the world together in a mutually interdependent manner through enhancing trade and breaking political and cultural barriers. Globalization on the other hand proves to be a threat to developing countries in certain aspects. It is notable however that globalization is advancing at a fast rate and attempts to stop it would only result in remote results. The question of what next for globalization then arises. There is a general contention that despite the benefits associated with globalization; there are downsides of the same which often make globalization undesirable.

Globalization even then is a phenomenon that is here to stay. In a way, creation of policies and institutions to reduce the probability of globalization downsides is what should be adopted in order to make globalization useful to every country. The IMF and other international bodies have offered recommendations as to how the developing countries can catch up and to help reduce the negative effects of globalization. IMF cites the presence of factors that hinder the accumulation of human and physical capital and technology advancement

as the reasons for slow advancement in poor countries.

If these are eliminated through modification of policies, technical and financial assistance, the level of inequality between poor and rich countries could be reduced. In order for developing countries to integrate into the global economy, the following should be addressed: improvement of trade, encouraging foreign direct investment, increase in debt relief for developing countries, macroeconomic stability, increased education and research, structural reforms and outward oriented policies.

These developments will not only aid developing countries in benefiting from globalization but also in enhancing overall development of their economies, political and social systems.

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