Globalization on Developing Countries Globalization Thesis
- Length: 20 pages
- Sources: 5
- Subject: Economics
- Type: Thesis
- Paper: #89966058
Excerpt from Thesis :
India was also part of this globalized trading world. The cities within the Indus Valley
were well planned and included a trading system that was managed much in the same way as that in the Middle East. Indian socialism, combined with an economy of private managers played a significant role in the success of their trading endeavors. Moore & Lewis note that ancient India could well have been the inventor of supply-side economics. This claim is based upon the Arthashastra, an Indian manual for economic planning and political policy, and how these should integrate to ensure the economic well-being of the country. General Indian thought was however much more focused upon the afterlife than upon successful economic and trade policies in the physical world.
According to Moore & Lewis, China was far ahead in terms of technology and management theory. Chinese thought was much more practical than that of India. With the collapse of the Shou dynasty during 600 BCE, the thinkers of the time were forced to carefully construct a system for social management. The centuries that followed saw both kind leaders such as Confucius, and cruel, controlling philosophies such as that formulated by Han Fei. After the death of the Dragon Emperor, Shihuangdi, subsequent leaders made an effort to integrate China in the rest of the world's trading system once more.
These developments set the stage for the current system of globalization. Although many developing countries and advocates against globalization have offered considerable resistance as a result of fearing exploitation and abuse. However, countries such as India and Egypt are realizing the importance of participating in rather than resisting the global arena.
At the heart of such participation is the current drive towards the spread of information, the elimination of national borders, and a focus on increasing similarity rather than differences among communities throughout the world (Egypt State Information Service 2003). Others however still hold the opinion that globalization is no more than the result of individual nations to control their own economic affairs. Opponents also view globalization as an attempt at dominating the world market by a few powerful companies, while all other social and national elements are repressed by economic considerations. It has however been established that globalization, whether for good or evil, is a persistent phenomenon, particularly in the light of new communication technologies. Hence it makes little sense to demonize it or distance oneself from it.
Several international entities, agencies and concepts have arisen as a result of globalization. The most prominent of these is the World Trade Organization (WTO), established during 1995 to replace GATT. The WTO is supported by international institutions, and is established according to the Briton Woods Agreement (1944).
Multinational companies have internationalized the economy to the extent that, according to 1998 figures, 30,000 companies were responsible for more than half of the world's production. Value assets for these companies exceeded $92 trillion. Multinational companies are the most common phenomenon associated with globalization.
Proponents of globalization note that it is beneficial not only on the scale of collective businesses, but also for individuals. Individuals are able to enter the global arena and gain international recognition for their products and work. On the international scale, both individuals and businesses have the opportunity to vastly increase their wealth, and also to help in the process of eliminating poverty.
Both developed and developing countries can then draw great potential benefits from globalization. However, it must be recognized that the possibility of exploitation and abuse of human rights remain. Regulations and safeguards should therefore be in place in order to limit the potential of such problems.
III. THE IMPACT OF GLOBALIZATION ON THE ECONOMIES OF DEVELOPING COUNTRIES
A major obstacle to taking advantage of the benefits of globalization is the lack of access to sufficient information. This is particularly a risk factor for developing countries without the means to gain access to information via the Internet and other media. According to Pari Baumann (2002: 4), the rural poor face new risks because of this. Particularly, this sector of society have experienced risks from ecological and seasonal variations that they could generally anticipate to some extent. To mitigate these risks, rural poor communities have developed a complex integration of livelihood strategies.
The problem is however that globalization is increasingly affecting the environments of these people in ways that they can no longer anticipate, because they do not have the information to do so. This increases their risk of poverty and environmentally unsustainable livelihoods, as factors that they do not understand and have no knowledge of are now added to the equation. Hence these communities have no control and therefore no strategizing options to mitigate the new risks.
Baumann notes that several factors are now affecting the ability of the rural poor to mitigate their risks. These include international trade agreements on markets and natural resources. Such agreements affect the availability of products and services to the rural poor. In addition, factors such as biotechnology and natural resource extraction have rapidly increased environmental risks and social upheaval in ways that the rural poor have no way to anticipate. Structural economic reform and environmental resource management also influence and shape the lives of these communities in ways that they cannot control. It is on this basis that opponents to globalization have demonized the phenomenon for its potentially harmful and abusive effects, particularly upon the poor and upon developing countries.
Baumann also makes note of an interesting attempt to include local communities in the global effort to mitigate environmental risks. This effort is based upon the general trend of redistributing power to local communities in the form of funds and responsibilities. This means that natural resource management arrangements are being redirected towards communities, who are expected to build upon traditional practices and knowledge in order to provide a sustainable livelihood for each community. Significantly, the effect of this is an increased sense of uncertainty among the rural poor. New structures and power relations in order to effect what Baumann refers to as the "devolution" of resource management are being introduced in addition to the ones that already exist. Mostly, these new structures are unknown to the communities involved, which increases uncertainty regarding the status of their own power relationship and management arrangements.
This uncertainty is easily perceived as an abusive attempt at imposing an unknown power structure and management arrangement upon local communities. Hence it is important to ensure that these communities have communication structures in place and that arrangements are communicated effectively. In-depth knowledge and concomitant reasons for new developments will mitigate much of the uncertainty experienced within these communities.
IV. THE EFFECTS OF GLOBALIZATION ON EGYPT AND INDIA
Egypt and India are examples of developing countries that have constructively entered the global economy. Indeed, the two countries also actively collaborate with each other in their effort to make effective use of the globalization phenomenon. The Egyptian President, Mohammed Hosni Mubarak, discussed several related issues in his presidential address when visiting India during 2008.
Although both countries have been involved in global trade since ancient times, this is not to say that their former positions of powerful global economies remain. Indeed, in the eyes of many, both Egypt and India are seen as developing countries faced with several challenges in terms of globalization. According to the President, Egypt and India are entering a "new era" in this regard, which means new realities and the necessity of economic reforms.
Both countries are thoroughly aware of the fact that they need to adjust their own economies to the dictates of globalization in its current form. India has for example begun its reform policies during the early 1990s. So successful were these reforms that the country can now be seen as a key player in the economy of the world. Doubtlessly this is beneficial for the local economy, which includes both businesses and individual citizens. However, it must also be noted that this does not necessarily mean the end of uncertainty or challenges on the rural and poverty scale within the country.
Egypt is similar to India in terms of its status as a developing country, and also in terms of its progress in the global environment and policy reform. In terms of the country's macro-economic indicators, Egypt has, like India, become an economic leader in Africa and the Middle East. According to the President, the country is also seen as an attractive Foreign Direct Investment destination.
Upon this basis, the President suggested that the two countries continue their collaborative efforts. Indeed, Egypt is collaborating with many countries in order to strengthen its economic position, and with great success. The country's trade relations and diversity have for example tripled in the four years ending with 2007, reading USD 3.5 billion. Indian investment in the country amounts to about USD 800 million, involving more than 20 Egyptian companies. According to the President, India's investments have been very fruitful, resulting from…