Globalization and its Effects on Developing Countries

Presented By: Basit Zaheer Roll No. 11

GLOBALIZATION!

What is Globalization?
A Turkish national, receives a Master's degree in France, will work for an American registered company, which is based in China and started by an Italian....

This is called GLOBALIZATION!

What is Globalization?
The process by which PEOPLE, THEIR IDEAS and THEIR ACTIVITIES in DIFFERENT PARTS OF THE WORLD become INTERCONNECTED or INTEGRATED Globalization as a term is new but the Process is not
It shows how the world has shrunk and how people, goods and information can be moved easily around the world

Examples of Globalization
The Internet Selling local products (e.g. OCK Curry Puff) in the global market (e.g. Malaysia, China, Indonesia, etc) Attending lectures by a British professor teaching in an American University via a web-conference in NUS

History
The term globalization was first used around 1960s and the process of globalization started after world war I (1914-1918). In real sense globalization took its shape after world war II (1939-1945) when countries restored their relations in terms of trade and investment.

United Nations
United Nations officially came into existence on October 24, 1945. The birth of United Nations Organization (UNO) brought nations together for peace and prosperity of all nations. There are number of UN bodies like UNICEF, UNESCO, ILO, FAO, WHO, UNDP are working globally to minimize the gap between rich and poor countries in term of socio economic development.

Globalization and Developing Countries

Main beneficiaries of globalization are developing countries. During last two decades developing nations that tend to be globalized and open their doors to international trades showed more progress. Awareness of masses of developing countries about the facilities of developed countries created a pressure on the government of developing countries to enhance living standards.

Globalization and Developing Countries

According to World Banks (2002) study of Globalization two billion peoples become the part of global market from developing countries. Foreign direct investment as percentage of GDP is 2.5 times greater today than 20 years ago and four times greater in developing countries.

Effects of Globalization on developing countries

Following are the effects of globalization in developing countries
I. II. III. IV. Economic Effect Social Effect Environment Effect Good Governance

Economic Effects
Financial and industrial globalization is increasing substantially and is creating new opportunities for developing countries. The largest impact has been on developing countries, who now are able to attract foreign investors and foreign capital. This has led to both positive and negative effects for those countries.

Economic Effects
Increased Standard of Living Access to new market Decreased Employment Widening Income Gap between the Rich and Poor

Social Effects
Increased Awareness of Foreign Culture Loss of Local Culture

Environmental Effects

o o o

Environmental Degradation
Deforestation and Related Problems Global Warming Environmental Management

Effects of Globalization

Effects of Globalization
1) Economic Effect Improvements in Standards of Living o As countries trade and open their doors to foreign investment, they earn more revenue
As a result, their citizens benefit from a higher standard of living Free trade allows for a larger variety of foreign goods for the consumer to choose from Better quality of life

Effects of Globalization
1) Economic Impact Increased Competition Among Nations
o Investment and Market
Globalization means more competition as TNCs source for the cheapest places to lower their cost of production Governments have to compete with each other to attract these foreign corporations to invest When China opened its doors to foreign investment in the 1970s, industrial cities like Suzhou, Wuxi and Dalian were formed

Effects of Globalization
1) Economic Impact Increased Competition Among Nations
o Investment and Market
Competition for markets and investment is intense Countries that are better able to offer incentives to investors will be more successful in attracting investment and markets This results in further growth for the country when infrastructure is more developed

Effects of Globalization
1)
o

Economic Impact Increased Competition Among Nations

Talent

Highly skilled people are in high demand all over the globe Globalization allows people to move freely from one country to another in search of employment Advanced economies with stable or shrinking populations seek new talent pools Emerging economies seek back their best and brightest E.g. Indias Brain Drain (e.g. Computer)

Effects of Globalization
1) Economic Impact Widening Income Gap Between the Rich and the Poor o Due to rapid development in many countries and the spread of poverty in others o Developed countries experience rapid income growth as they own most of the manufacturing activities

Effects of Globalization
1)
o

Economic Impact Widening Income Gap Between the Rich and the Poor
These developed countries and their TNCs are able to attract investments, skilled labor and resources away from poor areas International trade has generated much revenue for them

Effects of Globalization
1) Economic Impact Widening Income Gap Between the Rich and the Poor
o o o However, Developing Countries face trade restrictions put up by Developed Countries They are not capable of manufacturing better quality goods that fetch higher prices Poorer nations are only attractive for labourintensive and low-cost ventures

Effects of Globalization
1)
o

Economic Impact Widening Income Gap Between the Rich and the Poor
The rich developed countries prosper with better opportunities while the poor developing countries face economic uncertainties like retrenchment Widening income gap can lead to social problems, increasing tension between the rich and the poor

Effects of Globalization
2)
o

Social Impact Increased Awareness of Foreign Culture

Travel, the Internet, mass media (products of globalization allow you to learn more about foreign culture

o o o o o

Loss of Local Culture

Global (Western) brands dominate consumer markets in developing countries Creation of homogenous culture across the world Spread of pop culture and erosion or loss of local culture Negative influence of youth Enforced beliefs

Effects of Globalization
3)

o o o

Environmental Impact Depletion of natural resources by TNCs Concern over profits vs. protection of the environment Lack of funds to implement environmental protection Environmental Degradation
Deforestation and Related Problems Global Warming Environmental Management

Effects of Globalization
3)
o

Environmental Impact Environmental Degradation

Deforestation and Related Problems
Rainforests cut to make way for development Rainforests cut down for industries, agriculture, housing, forestry, cattle ranches Planting of cash crops Projects to achieve higher level of economic development

o o

Global Warming Environmental Management

Effects of Globalization
3)
o

Environmental Impact Environmental Degradation

Deforestation and Related Problems
Soil erosion, extinction of flora and fauna, flooding and haze Loss in tourism (haze) Water pollution

o o

Global Warming Environmental Management

Effects of Globalization
3) Environmental Impact Environmental Degradation o Global Warming
Large amount of greenhouse gases produced by increased usage of airplanes and ships Factories and transportation also emit greenhouse gases, contributing to the increase in world average temperature.

Environmental Management
Greater awareness Sustainable development is the key to further growth Source for alternative energy

Good Governance
Governance systems need to be changed from traditional to modern, autocratic to bureaucratic and centralization to decentralization. Pressure on developing economies by international organizations (IMF & World Bank) and donor countries (USA & its Allies) require them to develop special capacities in managing public affairs. Good governance brings political and economic stability and socio-economic development. Many monitory funds are give to developing countries in order to develop their economy.