The Impact of Globalization in the Developing Countries

                         

Globalization is a process of global economic, political and cultural integration. It has made the world become a small village; the borders have been broken down between countries.

Negative effects of globolazation for developing country business

·         The growth of international trade is exacerbating income inequalities, both between and within industrialized and less industrialized nations

·         Global commerce is increasingly dominated by transnational corperation which seek to maximize profits without regard for the development needs of individual countries or the local populations

·         Protectionist policies in industrialized countries prevent many producers in the Third World from accessing exports market.

·         The volume and volatility of capital flows increase the risks of banking and currency crises, especially in countries with weak financial institutions

·       Competition  among developing countries to attract foreign investments leads to a "race to the bottom" in which countries dangerously lower environmental standards.

·         Cultural uniqueness is lost in favor of homogenization and a "universal culture" that draws heavily from American culture

Conversely, globalization can create new opportunities, new ideas, and open new markets that an enterprenuer may have not had in their home country. As a result, there are a number of positives associated with globalization:

·         It creates greater opportunities for firms in less industrialized countries to tap into more and larger markets around the world

·         This can lead to more access to capital flows, technology, human culture, cheaper imports and larger export markets

·         It allows businesses in less industrialized countries to become part of international production networks and supply chains that are the main conduits of trade

For example, the experience of the East Asian economies demonstrates the positive effect of globalization on economic growth and shows that at least under some circumstances globalization decreases poverty.

Also, the role of developing country firms in the value chain is becoming increasingly sophisticated as these firms expand beyond manufacturing into services. For example, it is now commonplace for businesses in industrialized countries to outsource functions such as data processing, customer service and reading x-rays to India and other less industrialized countries (Bhagwati et al, 2004). Advanced telecommunications and the Internet are facilitating the transfer of these service jobs from industrialized to less industrialized and making it easier and cheaper for less industrialized country firms to enter global markets. In addition to bringing in capital, outsorcing helps prevent "brain drain" because skilled workers may choose to remain in their home country rather than having to migrate to an industrialized country to find work.

Further, some of the allegations made by critics of globalization are very much in dispute—for example, that globalization necessarily leads to growing income inequality or harm to the environment. While there are some countries in which economic integration has led to increased inequality.

KYEJU DIANA  BARM 42589