An In Depth Look Into Globalization
Globalization has proven to be an evolving process with many advantages and disadvantages, but it has a generally positive impact on the world. An article published by the International Monetary Fund (2008) highlights a notable point that every nation is subjected to the challenge of embracing globalization and each country will follow different paths to gain economic momentum. Nations that remain open to the world economy are able to enjoy the perks and benefits of the globalized economy. Establishing the basic foundations for economic prosperity such as foreign direct investment, technological prowess and sound economic policies will be able to have access to more diverse industries, goods and services, an educated workforce and an overall improved quality of life. Over the past twenty years, nations have increased their reliance on the world economy and in return the “percentage of the developing world living in extreme poverty…has been cut in half.”
Research suggests that globalization has several economic benefits, but does come with risks and potential setbacks. Globalization has brought about new challenges and threats to the security of the global environment such as transnational threats, organized crime, disease outbreaks and intensifying global pollution. To prevent and counter these economic and criminal threats, the IMF and the international community strive to lower such risks by improving upon anti-terrorism policies and strategies as well as offering economic guidance and assistance that will allow further financial advancement and integration into the globalized economy.
Globalization presents numerous opportunities for accumulating wealth and preserving financial stability in developed and developing nations. According to the World Bank (2003), the largest developing countries with over 3 billion people and the countries that tend to struggle the most, have been able to substantially improve upon their manufacturing industries. For example, “in 1980 only 25 percent of the exports of developing countries were manufacturers; by 1998 this had risen to 80 percent.” This is a remarkable advantage for developing countries. The World Bank (2003) asserts that China, Bangladesh, and Sri Lanka have exceeded the global average in their manufacturing exports. Other countries are close to the world average such as India, Turkey, Morocco, and Indonesia. Another positive outcome for developing countries is the amount of exports has continued to rise and is comparable to that of the developed nations. In 1980, wealthy nations exported 17 percent, while developing nations produced only 9 percent. However, as time progressed developed nations exports increased to 20 percent and the developing nations exports substantially increased to 17 percent.
An important principal of globalization is the enhancement of international trade by reducing costs and barriers to trade. A larger volume of imports provides an array of goods and services at reduced prices and gives countries the motivation to “remain competitive.” The interconnectedness of the world market allows nations to concentrate and refine their specialization in certain goods and services, giving them a competitive edge in the world economy. As countries adopt more policies favoring trade liberalization rather than protectionist policies, costs of international trade considerably decrease, creating a more conducive environment to maximizing trade profits. During the 1980’s, only 20 percent of developing countries traded with other developing nations and by 1995, 40 percent of developing nations began to trade with each other. Expanded international trade has given developing countries more opportunities to enhance trade profits.
India & Globalization
Globalization has proven to have a more positive impact on the world economy to include well-developed and developing nations. Critics suggest developing nations tend to absorb the shocks and or pitfalls of globalization more so than well-developed nations. With this in mind, lets take a closer look at India’s economic disposition and growth. India progressively adopted economic liberalization reforms starting in 1975 and continuing through 1991, which then shifted to an “outward-oriented economic regime openly seeking integration with the world economy.” Before 1975, India’s GDP was approximately ten percent and by 2002, they’re GDP flourished reaching thirty-one percent. India has also experienced a surmountable rise in “services exports.” India has maintained its advantage in services exports within the global economy, rising from “4.9 billion in 1992…to 25 billion in 2003.” India’s slow acceptance of trade liberalization and the globalization process as a whole has allowed India to substantially increase its services and software exports, further assimilating India into the global market. Similarly, once India adopted less protective economic policies and became more open to foreign direct investment, their “FDI net inflows” significantly improved over the years. In the 1980’s, India’s FDI net inflows finally reached 100 million and continued to rise, reaching 4 billion by 2001. Although, in comparison to China’s FDI net inflows, India is staggering behind and has more work to do to surpass China. However, according to Nayar (2006), globalization has proven to be an essential asset that has greatly improved India’s economic growth. He also argues that globalization has given India more gateways into certain fields of study such as “information technology (IT), pharmaceuticals, and automobile components.” India was then able to capture these specializations and elevate its volume of exports to other nations. As mentioned earlier, globalization has several advantages and disadvantages for various countries. Critics of globalization argue that inequality between nations is increasing and along with it is poverty. Although in regards to India, the poverty level has continued to slowly decline from 54.88 percent in 1975 to 26.10 percent in 2000. India has substantially benefited from the inclusion and integration into the globalized society, but the country itself still has a long journey ahead to reach a financial growth comparable to China.
Do you think developing nations benefit from Globalization?
Building Domestic & International Support
The global community plays a major role in building and maintaining support for globalization and the integration of poor and non-globalized countries. Since poorer or low-income nations tend to not attract valuable investment opportunities, the international community can assist by providing foreign aide to enhance investment opportunities while lowering the poverty rate. The World Bank suggests that the reallocation of aide into poorer nations with realistic economic reforms will significantly reduce the poverty rate. This strategy has been implemented in Africa and is predicted to “make a substantial dent in poverty.” According to the World Bank (2003), aid packages can be used to improve upon certain problem areas such as health treatment and sponsored research of specific life threatening diseases. Dedicated aid to poorer nations would greatly improve living conditions and their overall quality of life. Aid can also lower external and internal debts of developing nations that are struggling with being integrated into the world economy. Aid provides many solutions to the growing and often overwhelming problems that low-income nations face. Financial assistance and debt support would give these countries more opportunities to flourish and would be able to build upon their basic institutions to achieve financial stability.
Building support for globalization is going to require nations to move away from protectionist and strict economic policies that impede integration into the world economy. The World Bank suggests creating a “development round” of trade negotiations” to remove some of the barriers of trade between developed and developing nations. Engaging in multilateral talks would allow countries to work together in a more favorable manner and the international community should be open to initiating a variety of trade strategies that accommodates every country’s “environmental standards, social protection, cultural preservation, and other issues.” It is essential that the international community takes a strategic look at the opportunities; successes and the failures of globalization to ensure that the struggling nations become better integrated into the global marketplace and fix the economic errors that are causing such countries to struggle.
As previously mentioned, globalization offers more access to goods, services, foreign direct investment and capital flows throughout the international community. It is the interconnectedness of the world economy that helps advance and share technological advancements, educated workforces, and diversifies markets with foreign goods and services. However, the integration of the world markets offers ongoing challenges to the U.S. security environment. The ease of the Internet, technology, and migration of people can negatively impact national and international security. The September 11th terrorist attacks are a prominent example of how Al Qaeda was able to “effectively exploit new communications technologies, global financial networks, and the ease of movements of people.” As globalization positively impacts society, criminals, transnational organizations and terrorists are able to use the world economy to their advantage. These illegal networks are able to exploit the transfer of illicit materials and goods with fewer restrictions and boundaries, ultimately intensifying such threats on a global scale. Author, Victor Cha (2000), states that the 21st century military powers have put significant emphasis not on “greater firepower but greater information technology and ‘smartness’ of weapons as the defining advantage for future warfare.” However, globalization weakens a country’s control over the transference of knowledge, ideas and information in general, creating an unstable atmosphere.
Globalization presents a plethora of dangerous threats that can erode or damage the security environment. The increased movement of people on an international level has elevated the chances for disease outbreaks, pandemics, and pollution that can cause significant health and welfare issues. Since globalization is causing more challenges such as pollution, diseases and the worsening of global warming, government’s are not acclimated to such new threats and lack the appropriate policies or attention to environmental awareness to rectify these security implications. Other noteworthy security threats have emerged, exploiting vulnerabilities of the world economy, such as cyber attacks, viruses, human and drug trafficking and organized crime. On a positive note, the international community is aware of the emerging threats to the security environment and continues to refine governmental policies and “preventative strategies” to ensure the global economy is not as susceptible to such threats in the future.
Globalization is an evolving phenomenon and continues to have a more positive impact on the international community. Globalization has provided more opportunities for international trade and greater access to expanded global markets, causing numerous nations to financially flourish over the years. Every country responds differently to globalization and will follow a variety of paths to achieve economic success. Globalization benefits not only developed countries, but developing nations as well. The countries that fully embrace the globalization process and adopt trade liberalization policies will benefit from being integrated into the world economy. Developed and developing nations need to continue to work together to build a strategy for helping poorer countries embrace trade liberalization and sound economic policies that will support a better quality of life for its people. The interconnectedness of nations does present challenges to the security environment. The ease of access to information, transportation, communication, and migration of people also aids illegal activities to expand across geographic boundaries. To face such challenges and threats, the international community needs to establish multilateral negotiations to assist the struggling nations and develop preventative strategies and policies to reduce the vulnerabilities within the global economy.