Does Globalization Benefit Developed and Developing Countries?

Introduction

Globalisation has offered countries a tremendous chance of economic development. Nevertheless, not all countries are growing at the same pace. While a majority of the developing countries are struggling to integrate into the global market, developed countries are already enjoying the benefits of globalisation. Globalisation enables developed countries to focus on outward-oriented policies (Albrow & King 2001).

Hence, they relate to developing countries and allow free flow of goods and services. There are numerous factors that influence globalisation. They include technological growth, politics, market regulations and competition. Both developed and developing nations benefit from globalisation. It opens room for foreign direct investment to countries. Besides, it helps organisations to diversify their risks, thus guaranteeing the continuity of their businesses. In spite of the numerous benefits, globalisation poses numerous threats to corporations. For instance, it poses a significant threat to cultural diversity (Bakari 2005). This paper will discuss the benefits of globalisation to both developed and developing countries. In addition, it will touch on the drivers and threats of globalisation.

Drivers of Globalisation

Both media and published journals discuss numerous drivers of globalisation. One of them is the technological driver. Growth in technology has laid a base for contemporary globalisation. Presently, technology has made it easy for transportation of raw materials and finished goods from one country to another (Bridges 2002). In return, transport development has brought significant changes in the global market. Development of commercial jets has enabled countries to reach the global market without challenges. Besides, containerisation has ensured the safety of transit goods. Technological growth has led to the development of microprocessors as well as telecommunications. Hence, it has become easy for organisations to communicate with overseas clients without difficulties (Clayton 2004). Besides, microprocessors have enabled companies to compute and run business transactions efficiently. The growth of the internet has allowed countries to engage in e-commerce.

Another driver of globalisation is politics. Today, the majority of countries have relaxed their trading rules. Therefore, companies can freely trade and invest in foreign markets. Besides, many countries have lowered tariffs on foreign products. Therefore, there is free flow of goods and services (Conversi 2010).

In addition, countries have come together to establish common markets and trade agreements. For instance, the establishment of World Trade Organisation enabled member countries to trade efficiently. It opened the global market to member countries. Market drivers are other forces that influence globalisation. As numerous enterprises compete for a common market within a country, it becomes saturated. Organisations are forced to look for an alternative market for their products. The majority of companies result in global expansion as the ultimate way to overcome competition. Additionally, universal customer needs prompt organisations to turn to the global market. Cost drivers also influence globalisation (Fotopoulos 2001). The production cost varies from one country to another. Besides, it is easy to procure raw materials from some countries. Consequently, organisations tend to relocate their production plants to countries with low production costs.

Threats of Globalisation

Globalisation results in extensive cultural homogenisation. Consequently, it poses a significant threat to cultural diversity. According to Frank (2002), globalisation is forcing people to adopt a common way of life. Many people are abandoning their cultures and embracing the Western civilisation. Today, many societies that once valued communism are freely embracing capitalism, which is associated with Western countries. India is one of the countries that have experienced cultural disintegration due to globalisation. Increase in tourists’ influx in Ladakh has led to a significant transformation of lifestyle in the region. Indeed, the majority of Ladakhis suffer from psychological pressure. They feel inferior compared to other cultures (Hopkins 2004). Hence, they opt to abandon their culture for the western lifestyle to be at par with others.

Globalisation is a threat to democracy. The present globalisation process is business-oriented and not a democratic choice. In most cases, governments pass globalisation policies without involving the public. Besides, they use propaganda campaigns to lure people to embrace the policies. For instance, the majority of people in the United States were against North American Free Trade Agreement (James & Steger 2014).

However, the government used mass media and immense propaganda to ensure that the agreement went through. The same case happened in Europe. The citizens were against the introduction of a common currency. However, influential leaders in the region made sure that the currency was introduced. In most cases, globalisation is meant to benefit elites. Failure to consult and involve the public in the formulation and implementation of globalisation policies results in unexpected effects. Moreover, globalisation has weakened democracy through suppression of labour cost.

Benefits of Globalisation to developed countries

Globalisation has enabled developed countries to access cheap and readily available raw materials. The majority of developed countries have exhausted their raw materials. Hence, they get raw materials from developing countries. Indeed, globalisation has enabled many companies to relocate their production plants to developing countries as a way to minimise production costs (James 2005).

Most companies produce goods overseas and ship them back to home countries. Globalisation has not only helped developed countries to access raw materials, but also guaranteed growth and stability of their industries. Apart from cheap and readily available raw materials, globalisation has enabled developed countries to exploit cheap labour that is readily available in developing countries. The majority of people in developing countries are jobless. They offer cheap labour to foreign companies. Hence, developed countries have benefited from cheap labour in developing nations, therefore reaping maximum profits.

Globalisation has enabled developed countries to reach the global market. Today, a majority of companies in developed countries have subsidiaries in most foreign countries. The subsidiaries help the mother companies to sell their products or services in the foreign markets. Hence, they ensure that products and services do not go into waste. There are limited investment opportunities and stiff competition in developed countries.

However, in developing countries, there are numerous unutilised investment opportunities. Globalisation has enabled developed countries to exploit investment opportunities in developing countries. Currently, a majority of investors are moving from developed to developing countries to seek investment opportunities. Globalisation has helped to boost the economic growth of the developed countries. The majority of companies that operate in foreign countries repatriate their profits back home contributing to economic growth (Kochler 2000). Besides, globalisation has helped developed countries to curb global warming. Developed countries are relocating their industries to developing nations, therefore lowering their rate of environmental pollution.

Benefits of Globalisation to Developing Countries

Globalisation has helped developing countries to reduce the level of poverty. As developed countries continue to relocate their industries to developing nations, they are creating jobs for the locals. Currently, there are numerous job opportunities in developing countries. Globalisation has helped to raise the living standard of many families in the developing countries. For instance, globalisation has created over 250 million job opportunities to the Chinese (Ritzer 2011).

Moreover, it has enabled the Indian government to minimise poverty level in the country. Globalisation is a primary stamina of economic growth for developing countries. Globalisation, coupled with reduced global tariffs has enabled developing countries to sell their products in the global market. Presently, developing countries, especially in Asia are benefiting from reduced global tariffs and relaxed market policies. They are now pursuing export-oriented growth. In addition, globalisation has enabled developing countries to diversify their economies, thus enjoying steady economic growth.

Globalisation has allowed companies in developing states to specialise on products that they are best suited. Therefore, they can now produce quality goods in large quantities, thus benefiting from economies of scale. Moreover, specialisation has helped companies to cut down on operation costs and enhance production efficiency. It has promoted inward investment (Ritzer 2011). Globalisation has compelled institutions to invest in foreign countries. For instance, organisations are “transferring their call centres to developing countries like India” (Ritzer 2011, p. 47). Inward investment has created numerous job opportunities for local people. Even though foreign organisations are blamed for taking advantage of cheap labour in developing countries, they offer favourable wages.

Problems of Globalisation

Globalisation is associated with numerous problems. One of the problems is the inability of developing nation to compete in global market. Developing countries cannot manage to establish new industries due to cost and lack of skilled personnel. Hence, it is hard for growing companies to compete with established corporations that benefit from skilled labour and economies of scale. Globalisation enables developing nations to continue manufacturing primary goods (Scholte 2005). They do not face stiff competition in primary goods. Nevertheless, primary goods do not contribute to steady economic growth as they are susceptible to price fluctuations.

Globalisation allows free flow of unskilled and skilled labour from one country to another. Thus, the majority of the developing countries lose their skilled workers to developed nations. Many skilled workers move to developed countries because they offer competitive wages. In return, developing countries experience slowed economic growth since they cannot venture into investments that demand skilled manpower. Globalisation poses a significant threat to local companies. Developed countries invest in foreign markets posing a threat to local retailers (Scholte 2005). In most cases, local retailers opt out of the market since they are unable to withstand competition. Thus, consumers are denied an opportunity to select from a wide variety of goods.

Conclusion

Globalisation has eliminated national boundaries that once hindered trade among countries. Today developed and developing countries can trade freely. As a result, developed countries have managed to diversify their markets and reduce operation costs by investing in developing countries. On the other hand, globalisation has enabled developing countries to access the global market. Some of the drivers of globalisation include technology, politics, competition and production cost. In spite of the numerous benefits of globalisation, it has acted as a major threat to cultural diversity. Many countries are abandoning their cultural practices and embracing the Western civilisation.

In addition, globalisation has posed stiff competition to local companies in developing countries. Local companies are unable to compete with foreign companies that offer quality and cheap products. Moreover, globalisation has led to developing nations losing their skilled employees. The majority of skilled workers have moved to developed countries in pursuit of favourable salaries.

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