Globalisation

“Far from being the greatest cause of poverty, globalisation is the only feasible cure” (The Economist, 2001).

Based on the above statement, analyse the opportunities and dangers of globalisation for industrialized and developing nations.

Globalisation is the increasing interaction of people through the growth of the international flow of money, ideas and culture. Globalisation is primarily an economic process of integration which has social and cultural aspects as well. It involves goods and services, and the economic resources of capital, technology and data. Major factors of globalisation are: Transport facilities, telecommunication infrastructure (internet and mobile phones), technology, changing world order and Regional Trade Agreements.

There are several kinds of globalisation which includes; Economic globalisation, culture globalisation and political globalisation.

One of the main benefits of globalisation is faster growth of economies. As globalisation involve many other countries, many foreign direct investment (FDI) invest in attractive market countries. FDI have developed at a much  quicker pace than those economies closed to such investment. As there are FDI in countries, this creates jobs and the population have a better living standard.

Free trade is supposed to reduce barriers such as tariffs, value added taxes, subsidies, and other barriers between nations.

It also provides poor countries, through infusions of foreign capital and technology, with the chance to develop economically. With the help of new technology, developing will be able to increase productivity which could lead to an increase in their gross domestic product (GDP).

With globalisation, there is an increase in competition with companies around the world. Due to high competition, prices of products tend to decrease which could benefit the population. However, in many cases this is not working because countries manipulate their currency to get a price advantage. Foreign competition will encourage domestic producers to increase efficiency

The proponents say globalization represents free trade which promotes global economic growth; creates jobs, makes companies more competitive, and lowers prices for consumers.

There is cultural intermingling and each country is learning more about other cultures.

Labor can move from country to country to market their skills. This could help developing countries, if they lack skilled labour and this could lead to an improvement of quality of work and the skilled labours could train the unskilled one.

Multinational companies investing in installing plants in other countries provide employment for the people in those countries often getting them out of poverty.

Globalisation has given countries the ability to agree to free trade agreements like NAFTA and COMESA. reduction of barriers to entry such as tariffs on imports will lead to a fall in price.

However, The general complaint about globalisation is that it has made the rich richer while making the non-rich poorer. In other words, gobalisation increase the poverty gap, where the managers, owners and investors become richer and the low lever worker remain unchanged are become poorer.

Globalisation is supposed to be about free trade where all barriers are eliminated but there are still many barriers.

The biggest problem for developed countries is that jobs are lost and transferred to lower cost countries. When NAFTA was implemented, many United States manufacturing industries was sent to Mexico and Mexican did the job at a cheaper price.

Multinational corporations are accused of social injustice, unfair working conditions (including low labour wages and poor working conditions), as well as lack of concern for environment, mismanagement of natural resources, and ecological damage. Mexican workers were exploited due to the implementation of NAFTA.

Countries are increasingly losing their sovereignty and powers to implement local decisions because of the powers provided to the WTO.

Technology could also widened the poverty gap between countries. For instance, countries which are not able to afford new technologies, will not be able to improve their productivity as the one who can afford new technologies.