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Globalization_ Pros And Cons For Developing Countries

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This Document addresses the advantages and disadvantages of the term “Globalization” for developing countries. Some social, economic and environmental issues are discussed in the paper.

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									This    Document     addresses    the
advantages and disadvantages of the
term “Globalization” for developing
countries. Some social, economic and
environmental issues are discussed in
the paper.




Globalization,
Pros And Cons
For Developing
Countries
January 2012




Hosein Rahmati
Globalization could be defined as the contemporary trend in all aspects of human life such as

cultural, economic and business, political, educational and ... to reduce or remove barriers

between nations to communicate with each other.


However, most of the countries of the world have engaged in this phenomenon, but still there are

some disputes over the subject. Somebodies believe that however, it has benefited both developed

and developing countries, but also the costs and disadvantages of globalization had been

underestimated. But despite the critics, it seems that the globalization will proceed faster and

faster to shape the global village. In this process the rapidly evolving and developing information

technology and ease of information flow has speed up the term globalization effectively and

drastically.


In globalization from an economic point of view, the barriers of a free trade between nations will

be removed. Some of these barriers are import tariffs, export taxes, regulations that hamper the

flow of capital, regulation against owning of properties and businesses by foreigners.


Globalization has some advantages and disadvantages for developing countries. These

advantages or disadvantages are dependent to the social, economic, cultural, and geographical

conditions of a country. in globalization, may be one country be benefited more and one country

less or even lose, but in reality all of the countries try to make themselves more adapted to the

new situation and get ready for a competitive global environment to generate more benefits from

their core competencies in a larger competition with more opportunities and threats. More, some

advantages and disadvantages of globalization for the developing countries are discussed.
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1- Advantages:

More Resources for External Finance:


Globalization gives the opportunity to the developing countries to attract more foreign

investments. Normally foreign investors are willing to invest in developing countries to reduce

their costs. Lower wages for workers and lower tax rates are only two of the interesting

characteristics of developing countries business environment for foreign investors.


Higher Growth Rates:


Foreign direct investment helps the capital accumulation. More investement and capital

accumulation leads to higher growth rates. So the developing countries can achieve higher

growth rates with foreigners’ money.


Technology Transfer:


When foreigners (specifically from developed countries, which are wealthier) invest in a

developing country, they bring advanced and higher technologies with themselves. Therefore,

developing countries can reach their technology development goals sooner and easier.


Higher Productivity:


More advanced technologies beside the proffesional management experiences that foreigner

investors (specifically from developed countries) bring with themselves to the developing

countries gifts higher productivity to the developing countries.
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Lower Unemployment Rate:


As the foreign investors invest in the developing countries and establish their businesses, they

create new job opportunities and cause to reduce the unemployment rate.


2- Disadvantages:

Spread of Economic Crisis to the Other Countries:


As the countries’ economies integrate together, they will be affected more by each other problem.


As we know the 2008, financial crisis began from USA and spread out to other countries. The

closer economic relations with USA, the more affected by USA crisis.


Depletion of Resources:


As the investors come to developing countries, they use the natural resources of destination

country, with low prices. So the consumption of these resources will increase considerably,

leading to depletion of resources and probably lack of resources in the future.


Environmental Pollution:


Investors prefer to establish their factories or businesses in the countries that less strict about the

environmental regulations. In addition, developing countries do not have up to date

environmental regulation, inherently. In addition, they have to be attractive for international

investors. Therefor developing countries usually are the more environmental polluting countries

in the world.
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Cultural Consequences:


One of the aspects of globalization is more cultural interaction between nations of different

countries. But in most of cases, the culture or county will be dominant to other cultures that have

more advanced tools to promote their culture, such as Medias, products, well-known celebration

or events. In addition, developing countries cultures have less self-confidence against the

symbols of the civilization of developed countries. So in this interaction usually developing

countries are affected by developed countries cultures. There is no matter that these cultures have

good or bad habit or features.


Brain Drain:


Another consequent of globalization is more immigration through the world. However, these

immigrations are usually from developing countries to developed countries and immigrants are

the specialist and highly educated citizens that look for a more developed society with higher

standards of living and welfare. while developing countries have invested their money and time

to nurture these experts, but after graduation some of them which usually more talented migrate

to developed countries and the developed countries can enjoy of these ready expert, while the did

not do anything for their nurture and training.



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Summary:

Globalization has affected both the developing countries and developed countries, in various

aspects of economic, social, cultural, business and ... . It has good and bad effect for both of

them. From both group some have been successful controlling bad effects and enjoying good

effects and some no. but the important considerable point is that most the countries like to be

more globalized to be benefited from the opportunities of globalization, specifically the economic

and business opportunities.




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