globalization and its effects on developing countries

8/13/2019 Globalization and Its Effects on Developing Countries

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Globalization and its

Effects on DevelopingCountries

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 registeredcompany, which is based in China and started byan Italian....

• This is called GLOBALIZATION!



What is Globalization?

• The process by which PEOPLE, THEIR IDEAS andTHEIR ACTIVITIES in DIFFERENT PARTS OF THE WORLDbecome INTERCONNECTED or INTEGRATED

• Globalization as a term is new but the Process is not…

• It shows how the world has “shrunk” and howpeople, goods and information can be movedeasily 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 inNUS



History

• The term globalization was first used around 1960sand the process of globalization started after worldwar I (1914-1918).

• In real sense globalization took its shape after worldwar II (1939-1945) when countries restored theirrelations in terms of trade and investment.



United Nations

• United Nations officially came into existence onOctober 24, 1945.

•

The birth of United Nations Organization (UNO)brought nations together for peace and prosperityof all nations.

• There are number of UN bodies like UNICEF,UNESCO, ILO, FAO, WHO, UNDP are workingglobally to minimize the gap between rich and poorcountries in term of socio economic development.



Globalization andDeveloping Countries

• Main beneficiaries of globalization are developingcountries.

•

During last two decades developing nations thattend to be globalized and open their doors tointernational trades showed more progress.

• Awareness of masses of developing countries aboutthe facilities of developed countries created apressure on the government of developingcountries to enhance living standards.



Globalization andDeveloping Countries

• According to World Banks (2002) study ofGlobalization two billion peoples become the partof global market from developing countries.

• Foreign direct investment as percentage of GDP is2.5 times greater today than 20 years ago and fourtimes greater in developing countries.



Effects of Globalization ondeveloping countries

• Following are the effects of globalization indeveloping countries

I. Economic Effect

II. Social Effect

III. Environment Effect

IV. Good Governance



Economic Effects• Financial and industrial globalization is increasing

substantially and is creating new opportunities fordeveloping countries.

• The largest impact has been on developingcountries, who now are able to attract foreigninvestors and foreign capital.

• This has led to both positive and negative effects forthose 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

• Environmental Degradation

o Deforestation and Related Problems

o Global Warming

o Environmental Management



Effects of Globalization




1) Economic Effect

• Improvements in Standards of Living

o As countries trade and open their doors toforeign 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 Globalization1) Economic Impact

• Increased Competition Among Nations

o Investment and Market

• Globalization means more competition as TNCssource for the cheapest places to lower their cost ofproduction

• Governments have to compete with each other toattract these foreign corporations to invest

• When China opened its doors to foreign investment inthe 1970s, industrial cities like Suzhou, Wuxi and Dalianwere formed




• 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 attractinginvestment and markets

• This results in further growth for the country when

infrastructure is more developed




• Increased Competition Among Nationso 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 shrinkingpopulations seek new talent pools

• Emerging economies seek back their best andbrightest

• E.g. India’s Brain Drain (e.g. Computer)




• Widening Income Gap Between the Rich and thePoor

o

Due to rapid development in many countriesand the spread of poverty in others

o Developed countries experience rapid incomegrowth as they own most of the manufacturingactivities





o These developed countries and their TNCs are able to

attract investments, skilled labor and resources awayfrom poor areas

o International trade has generated much revenue forthem




• Widening Income Gap Between the Rich

and the Poor

o However, Developing Countries face traderestrictions put up by Developed Countries

o They are not capable of manufacturing betterquality goods that fetch higher prices

o Poorer nations are only attractive for labour-intensive and low-cost ventures





o The rich developed countries prosper with better

opportunities while the poor developing countries faceeconomic uncertainties like retrenchment

o Widening income gap can lead to social problems,increasing tension between the rich and the poor



Effects of Globalization2) Social Impact

• Increased Awareness of Foreign Culture

o Travel, the Internet, mass media (products ofglobalization allow you to learn more about foreign

culture

• Loss of Local Culture

o Global (Western) brands dominate consumer markets indeveloping countries

o

Creation of homogenous culture across the worldo Spread of pop culture and erosion or loss of local culture

o Negative influence of youth

o Enforced beliefs




3) Environmental Impact

• Depletion of natural resources by TNCs

•

Concern over profits vs. protection of theenvironment

• Lack of funds to implement environmentalprotection

•

Environmental Degradationo Deforestation and Related Problems

o Global Warming







o 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 Global Warmingo Environmental Management






o Deforestation and Related Problems• Soil erosion, extinction of flora and fauna, flooding and haze

• Loss in tourism (haze)

• Water pollution

o Global Warming




Effects of Globalization3) Environmental Impact


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.

o 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 bureaucraticand centralization to decentralization.

• Pressure on developing economies by international

organizations (IMF & World Bank) and donorcountries (USA & its Allies) require them to developspecial 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.

globalization and its effects on developing countries

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