Globalization and the Developing World Essay
Globalization and the Developing WorldGlobalization is the most popular trend in international economics today. Increasing integration of economies not only in terms of products and services, but also with regards to information and technology – this trend includes foreign direct investment as perhaps its single most important factor. Foreign direct investments are an extraordinary boost for the economies of the developing world. As a matter of fact, FDI flows to developing countries increased nearly four-fold in the 1990s and reached approximately $120 billion in 1997. Globalization entails growth to a worldwide or international scale. By importing and exporting more goods and services, a developing nation can increase its income and also improve the standard of living of its peoples. However, an increase in international trade is usually accompanied by an increase in income inequality, seeing that the majority of the people in developing nations are poor and cannot afford to purchase relatively expensive foreign goods in the local market, nor form gigantic enterprises to sell to the foreign public.
The World Trade Organization protests globalization on behalf of the poor nations whenever these nations are threatened by it. As an effect of globalization, the developing nations are asked to accept the standards of environmental and labor protection that the rich nations have been able to afford only now – just because the poorer nations are doing business with the richer ones. Because the pace of development is extraordinarily rapid with respect to globalization, the World Trade Organization wants to emphasize that developing nations must be given more time to adjust to change. The fact that these nations require more time to adjust to change is illustrated by the experience of India with regards to child labor law. In point of fact, child labor law inGLOBALIZATION AND THE DEVELOPING WORLD Page # 2India took a long time to be developed.
The law was implemented at various levels over the course of many years, the reason being that India required children to work in its factories because of the Indian economy’s dependency on cheap labor. Besides, the parents of Indian children who worked could not afford to support their children that did not work. Poor nations are primarily agricultural. These nations exported agricultural produce to the developed world in exchange for manufactured goods to begin with.
Due to globalization, manufactured goods may now be produced worldwide, and are being manufactured thus. This, of course, must lead to a decrease in exports and a reduction of money making possibilities in the developing world. The debate over agricultural trade is by and large the most important issue at the World Trade Organization. Pitting rich nations against the poor, the debate emphasizes that the world’s poorest nations have few exports to offer besides basic agricultural products. Given that international trade is a necessity in today’s internationalized world, developing nations must compete against the giant nations, such as the United States and Japan.
Developed nations support farmers with subsidies because if they did not, their farmers would go out of business. This assistance – amounting to approximately three hundred billion dollars every year – increases the supply of basic agricultural products on the world market. As the price of agricultural produce is lowered, it is the poor nations that are hurt. In other words, the average cow in the European Union receives a daily subsidy of more than two dollars, and this figure is greater than the daily wage of twenty percent of the world’s population.
GLOBALIZATION AND THE DEVELOPING WORLD Page # 3 Developing nations are not in a position to compete against the developed world at present. However, efforts are being made to make it easier for the developing nations to stay on the globalization stage, and perform as best as they can. There is no doubt about who will win the contest.