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
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