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In the last decade the world has experience the phenomena of globalisation, which is considered beneficial, by most intellectual. It promotes free movement of people, goods, culture, food and so on. From an economical prospective it is all about free market, outsourcing and bringing down national borders, making the world seem “smaller”. Therefore in Western developed countries this is fully accepted as it is considered being market capitalism and a final stage to open economy, which started with privatization and economic liberalization (Sharma 2013). Even though some people might argue that globalisation leads to the loss of sovereignty, which is considered negative globalisation. At the same time globalisation issues in a way have brought people and countries together, increased their mutual independence with higher trade flow and investments, fuelling economic progress and creating vast opportunities for human progress (Sharma 2013).
But, on the other hand, it is a bit more controversial for the Third World countries, however does it pull upwards or downwards? As such progress and enlarged opportunities has been quite unbalanced, unequal and unmanaged because of lack of common values, mutual benefits and shared concerns towards those who are marginalized or left behind.
Globalisation follows many principles of the Neo-liberal model that leads the developing region of the world more exploited especially Sub-Saharan Africa (Hoogvelt 2001, pp. 256).
According to Robinson (1998), globalisation has let to a polarised way of accumulation, which the domestic market is not seen important to development, so is not necessarily advantageous for a country that is not economically strong. For the ruling class, in these countries, all that matters is to create the most profitable conditions to attract international capital through: cheap labour, lax and flexible working conditions, the elimination of environmental controls, little or no taxation, and the withdrawal from public obligations, and provision of the very poor majorities.
Roughly just under 20 percent of the population get richer, and find it beneficial by integrating into the global circle; the rest are thrown in the scrapheap (Hoogvelt 2001, pp. 256).
In addition, from the 80s globalisation caused a decrease of prices for resource input due to the seismic shift in market orientation towards information based products as well as the application of information technology to the production process. Therefore this is a bad news for those peripheral countries as the majority of their exports are primary commodities.
In few words, globalisation seems to be more gainful to the advanced countries and it is totally ineffective to solve the main problems of the third world countries. It is obvious that globalisation and liberalisation are incapable to solve the main problems of the developing nations such as poverty, increasing unemployment and underemployment, inflation, human deprivation, hunger, social tensions and civil wars, disruptions of millions of people and so on. Back in the days especially in the 80s and in the 90s these issues were associated to crisis and environmental degradation caused by human beings, which have also been today’s main issues of peripheral countries.
However, natural resources are often seen as one of the major problems of inequality in developing countries. Having said that, if we have a closer look at the effects of globalisation in developing countries it is noticeable (especially in the 70s and 80s) that inequality in some regions of the global south has decreased, but consequently it has increased in the global North, reason being is that globalisation made it easier for unskilled labour in poor countries to migrate without any problem, to developed countries. For instance the USA has witnessed a widening of wage inequality due to this phenomena. Unfortunately, according to Williamson (2000) it wasn’t the same case for Latin America and East Asia as they experienced an increase and not decline of wage inequality. Even though economic theory suggest that a greater openness to the world trade in developing countries will reduce inequality.
In conclusion, globalisation reduces the need of the government’s intervention in the economy, and the nations become more dependent on each other. This interdependency may be beneficial in a particular way to the advanced countries as they have a strong capitalist system, that is very unlikely to collapse any moment soon. Globalisation doesn’t seem to be significantly effective for the developing nations due to the fact that it doesn’t solve the fundamental economic challenges their facing. Even thought the Third World countries can’t avoid the negative economic impacts the globalisation may cause. Therefore the only solution is to minimize the cost of globalisation, in order to avoid a lot of damages. It is also important to remember that globalisation also gives some opportunities to the developing countries, therefore it would be wise to take advantage of that.
Hoogvelt, A. (2001): “Globalisation and the post colonial world – The new political economy of development”. 2nd ed. Baltimore: The Johns Hopkins University Press
Sharma, N. K. (2013): “Globalisation and its impact on the Third World Economy”: Crossing the border: International Journal of Interdisciplinary Studies. Vol.1, No.1
Robinson, W. (2000): “Latin America and global capitalism” 1st ed. Baltimore: The Johns Hopkins University Press.