The Positive and Negative Impacts of Globalisation on the Developing World

| March 18, 2015

The concept of globalization is currently a popular but very controversial issue, and has been one of the most widely debated issues since communism collapsed. ‘Debates currently raging about globalization include whether it even exists, whether it is more important now than at some earlier date, whether it is displacing the nation state, and whether it is more important than regionalism or localism’ (Stallings 2000). It means different things to different people, but in most cases remain a loose and ill-defined concept. Globalization has several definitions, but an undisputable fact which everyone agrees to is the fact that it is a complex process that has wide and varying impacts on economies, both developed and developing.

Looking critically at the concept, globalization in its broadest sense can be said to be a prismatic, complex, and multidisciplinary topic. It can be examined from several angles which includes not only economic, the most common viewpoint, but also social, cultural, ideological and political ones. James Rosenau, a foremost political scientist, defined globalization as ‘a label that is presently in vogue to account for peoples, activities, norms, ideas, goods, services, and currencies that are decreasingly confined to a geographic space and its local and established practices’ (Stallings 2000). For those looking at it from the economic angle, it refers to the increasingly internationalized character of the emerging global economy. To the lawyers, it has to do with ‘the threatened changes in legal status of states and their citizens” (Saker et al. 2004). It means different things to different people, but the bottom-line is that these disciplinary-based viewpoints fail to take into consideration the multiplicity and complexity of change processes, and therefore fail to appreciate their effects, both directly and indirectly.

Globalization is widely accepted and referred to as ‘the widening, deepening and speeding up of world-wide interconnectedness in all aspects of contemporary social life, from the cultural to the criminal, the financial to the spiritual’ (Lawal, 2006). This widely accepted definition shows the way in which globalization today connects the cultures and communities in one corner of the world to development occurring in another country.
Globalization is truly a complex phenomenon ‘which encompasses a great variety of tendencies and trends in the economic, social and cultural spheres’ (Bertucci & Alberti 2001). It is dynamic and unpredictable, although not entirely disordered. Four major factors have been identified to be the driving forces pushing forward worldwide interdependence. They include entrepreneurship, liberalization of trade and investment, technological innovation, and global social networks (Bertucci & Alberti 2001). Although it is believed in many quarters that the two major forces behind globalization are entrepreneurship and technological innovation, these two alone cannot give an explanation of the process of improved economic integration. Through the elaboration and adoption of market-oriented policies and regulations at both the international and local levels, the national governments have played a very vital role in allowing greater interdependence and economic integration of specific activities (Bertucci & Alberti 2001). The most formidable force is the economic dimension of globalization as it is the driving force for both the social and political aspects (Ibrahim 2006). Taking Africa for example, European cultures were able to find their ways into the innermost regions as a result of the colonisation of various countries which was triggered by the European industrial revolution.

Globalization today has now cleared the way for worldwide development, but the progress is not “even” as some nations are getting integrated into the global economy faster than others as shown by these countries’ fast economic growth and reduced poverty levels (Lawal 2006). This then means that globalization does not hold the same benefits for all members of the global community. It holds more benefit for members of developed nations while developing nations can be said to be in a rather deprived position. But looking closely at the impacts of globalisation on developing countries, one would observe both sides of the coin, in that it has both positive and negative impacts.
Globalisation has had a lot of positive effects on developing countries. For instance, it played a significant role in the ability of some countries to achieve independence. Taking the case of Ghana for example, ‘the end of the Second World War was significant for Ghana’s gaining independence and a turning point in the history of the Gold Coast’ (Ofosu 2010). And just like Scholte argued that situations occurring in a country thousands of miles have a way of affecting the economic, social and political situations in one’s country, the rising up of capitalism in the United States and Socialism/Communism in the Soviet republics were to Ghana’s benefit as they assisted in the achievement of independence. The same thing for Nigeria, Rwanda, and a whole lot of other developing countries in which occurring world events positively impacted their abilities to achieve self-rulership.

Another positive impact of globalization on developing countries is an increase in standard of living. One of the aims of globalization of economies is to reduce poverty, and this aim is being achieved by the increased access to foreign funding from industrialized nations to developing countries. And the spending of these funds on improving the education, health, social, and transport infrastructure of the developing nations aids in improving the standard of living of the people.

Thanks to globalization, developing countries now have access to new markets. And this has been taken full advantage of by several nations (Bertucci & Alberti 2001). This opening allows the transnational movement of labour, foreign capital, new technology and management to developing countries from the more industrialized nations. There is now an increase in the inflow of foreign direct investment to developing countries as more than a quarter of world foreign direct investment inflows were received between 1988 and 1989 and this has increased yearly (World development indicators in Bertucci & Alberti 2001). From US $12 billion in 1980, private capital flows to developing countries increased to US $140 billion by 1997 (Bertucci & Alberti 2001). The only catch to this is that the bulk of these capital flows so far is strictly limited to a small number of developing countries, especially the big ones such as Nigeria, Ghana, South Africa, India, Brazil, China, etc. ‘The report on financing for development prepared for the UN Secretary-General notes that, during the period 1993 to 1998, 20 countries accounted for over 70 per cent of all FDI inflows to all developing countries’ (Bertucci & Alberti 2001).

Again looking at the effect of globalization on world trade, and indirectly on trade in developing countries, it is quite obvious that it enhances economic growth. One of the emphasis of globalization is that member countries should open their markets to ensure open trading free of limitations. In this regard, liberalisation of trade would lead to the removal of all restrictions, causing unrestricted forces of demand supply to direct the movement and substitution of the factors of production, leading to efficient investment by producers (Mubiru 2003). This is clearly evident in developing countries such as Uganda in which reduced trade restrictions has lead to a large improvement in the nation’s economy (Lawal 2006).

Again, from the positive impact of globalisation on trade, there is an ‘emerging trend towards trade in production components’ (Mubiru 2003). Reduction in trade restrictions in a lot of developing countries lead to the partial relocation of several manufacturers from more industrialized nations to new locations in developing countries. This may have arisen as a result of tax exemptions or reduced tariffs offered by many developing countries in order to encourage foreign investors, or increased proximity to cheap labour and occasionally consumers. And the resultant benefits to the host developing nations are numerous. One is an increase in employment opportunities for the indigenes as there is creation of more jobs. Also, influx of foreign manufacturers may also lead to the import of new technology. And with transfer of new technology from developed countries comes more opportunities for training for local employees. ‘Quite often manufacturing subsidiaries have also been linked to establishment of distribution networks that expand employment even further’ (Mubiru 2003). This, in some cases, has lead to impaction of entire regions at a time, causing the benefits to go beyond national boundaries. Taking this further, the slackening of barriers to various other products and sectors, especially agricultural products, would lead to immense gains to developing nations.

In addition, globalisation leads to global competition, and in the long run, to local competition, ensuring the improvement of creative abilities and innovative capabilities. Competition between producers of commodities ensures the quality of the products and services at reduced prices, leading to specialisation and efficiency.

Other positive impacts of globalization on developing countries include better access to foreign culture and entertainment through television broadcasts, music, clothing, movies, etc; increased cooperation between governments and the ability to work with better focus towards the achievement of common goals; and diffusion of knowledge and technical know-how among member countries, especially the less-privileged countries. Much has been said about improvement in technology but globalisation also improves communication as it leads to faster means of communicating and travel.

But as much as globalization holds a lot of opportunities, it has a lot of negative effects which several sceptics have used to criticize the concept and its “so-called benefits”, especially to developing nations. As stated earlier, globalization is somewhat partial as industrialized nations benefit more from it than developing countries. This uneven impact is well demonstrated by the rise of India and China ‘which reveals highly uneven distribution of the benefits of globalization among countries’ (Globalization and its impact 2004).

One of the major negative impacts of globalization on developing countries is poverty. Globalization has been said to increase poverty. A former United nations Secretary-General, Kofi Annan, stated that: “. . . at present, only a relatively small number of countries are enjoying these gains [of globalization]. Many millions of people are excluded, left behind in squalor . . .” (Annan 2000). Although the exact impact of globalization on poverty is very difficult to assess, research estimates show that poverty has increased by 82 million, 14 million, and 8 million in sub-Saharan Africa, Europe and Central Asia, and Latin America and the Caribbean respectively (Globalization and its impact 2004). Taking a more critical look at this, globalization itself cannot be held responsible for most of the poverty in developing countries as other factors such as bad governance, poor economic policies, weak reforms, etc have also implicated. But globalization is a major factor. As claimed by Princová (2010), globalization leads to wealth redistribution – ‘global richness and local poverty’. It makes the rich countries, in this case, the industrialized nations, to become richer, and the poor nations, the developing countries, to become poorer (Zygmunt Bauman in Beck 1997).

Although several African economies initially benefited from globalization as there was a transient economic growth, over the years, they have become heavily dependent on the wealth of well developed nations (Lawal 2006). ‘African economies are increasingly geared to the export of a very limited range of commodities and the importation of a wide range of consumer goods’ leading to their being referred to as a largely consuming economy (Adedeji 1981). To make this worse, agricultural growth is very feeble. And since the 1980s, the terms of trade and the import capacities have declined sharply resulting in the reduction in the per capita income of the region (Lawal 2006). Compounding the woes of several developing states is the enormous debt build up. ‘According to the report of the survey of Economic and Social conditions in Africa, (1977-78), the total outstanding external debt of African Countries rose from $9.02 billion in 1970 to $18.88 billion in 1974 and $30.02 billion in 1976, while the total debt services rose to $0.89 billion in 1970, $2.43 billion in 1974 and $3.03 billion in 1976’ (Lawal 2006). These and several other evidences has led to Africa, which houses a major part of world developing states, to being referred to as the most heavily indebted region globally.

Considering globalisation from the health and disease angle, it has impacted seriously on the epidemiology of infectious diseases, as regards the ability to prevent, control and eradicate these diseases, worldwide and especially in developing countries. One of the ways by which this has occurred is the enhancement of technological capacities worldwide, leading to increased emissions and a resultant global warming. This in turn leads to enhanced breeding of vectors such as mosquitoes, animal or human behaviours such as bathing in pools which may have been contaminated with the larvae of schistosomes, etc (Saker et al. 2004). Over the years, large increases in international trade have encouraged the introduction of western diets to the previously natural diets of most developing countries. This has led to changes in dietary habits as the so-called “ethnic foods” have been relegated to the background and more and more junk food are being consumed in the name of western diets (Saker et al. 2004). And in the long run, western diseases are gradually becoming prevalent in developing nations.

Again, introduction of western lifestyle through globalization to the developing has led gradually loss of core values leading to increased looseness and promiscuity among the youth and adults alike. This has caused a surge in the numbers of those living with HIV/AIDs, and the long-term effects on the economy and society at large.
Globalization has increased the vulnerability of the rural farmer in the remotest village to world events. An example is the case of coffee farmers in Uganda. Prior to the start of liberalisation, the country’s Coffee Marketing Board (CMB), on the behalf of the government, served as the middle-man between the coffee farmers and foreign buyers. In doing this, the Coffee Marketing Board made sure that the farmers themselves were guaranteed standard coffee prices based on assured quotas negotiated by the Coffee Marketing Board on the world coffee market on the government’s behalf (Mubiru 2003). Although the individual farmer had to pay the cost of this existing infrastructure, thereby reducing the net income to the farmer’s pocket, he/she was still assured of a standard price. But since globalization came in and the Coffee Marketing Board was abolished, the farmers have been made vulnerable to changes and shocks in the world market. And for developing countries to have buoyant agricultural sectors, the farmers have to be sheltered from the full vagaries of the world market, a task made very much impossible by globalization.

Today, the employment structure in developing nations has been changed, a result of globalization and capitalism (Bacchus & Foerster 2005). Before the advent of globalization in developing countries, the main source of occupation for the active members of the population, both men and women, was agriculture. But since the influx of foreign corporations occurred, there has been a sectoral shift in the labour force as more hands are being drafted towards assembly production and fewer hands left in the fields. Empirical evidence shows that there has been a significant decline in male agricultural work ‘from 62% to 14% . . . [and] a similar decline in agriculture [for women]’ (Schultz 1990 in Bacchus & Foerster 2005). Another effect of globalization in this regard is a relative increase in unemployment. Several research studies have examined the hypothesis that globalization does not only affect the income level of the labour force, but in addition exposes the workers to increased economic vulnerability and uncertainty via less secure employment and increasingly volatile income (Goldberg & Pavcnik 2007). All these, coupled with shocks in the global economy and the act of outsourcing have led to the laying off of thousands of workers who previously worked in the big multinational companies resulting in mass unemployment.
Globalization has succeeded in widening the inequalities in skill premium, wage, income and consumption in developing countries (Goldberg & Pavcnik 2007). ‘Globalization affects individuals through three main channels: changes in their labour income; changes in relative prices and hence consumption; and changes in household production decisions’ (Goldberg & Pavcnik 2007). Prior to the onset of globalization, there existed a little wage difference between skilled and unskilled workers in most developing nations. But since globalization came in, there is a widely accepted fact that increases in the demand of skilled labour drove the drastic increase in skill premium. Although the exact cause of increase in the need for skilled labour is still the subject of debate, but evidence from Attanasio and Szekely (2000); Sanchez-Paramo and Schady (2003) (in Goldberg & Pavcnik 2007) and others support the increase in demand of educated workers in developing countries. Similarly, different theories have been proposed for the changes in relative prices and consumption as caused by globalization. But the most widely accepted conclusion is that globalization has contributed largely to inequalities in developing nations.
Better opportunities in more developed countries, coupled with the possibility of easy travel, have lead to a lot of educated people being lured away from developing countries. It has been said that more than US $4.1 billion is being spent annually in the African continent to employ 150,000 expatriates to replace the intellectual vacuum being created by the ongoing brain drain (Globalization and its impact 2004).

In addition, globalization has resulted in the loss of cultural boundaries. In this wise, it has caused the extinction of several languages in many developing nations. The way languages are going extinct is very rapid, and this has been predicted to continue unless something can be done to stop the complex process of globalization (Cronin 2003). The enhanced interaction of western cultures with local cultures in the developing world has led to melting of previously existing cultural barriers so that the individuality of the local cultures begin to fade. The increase in international travel has also contributed to this as the World Health Organization estimates that approximately 500,000 people are in airplanes at any one point in time (The Guardian 28 April 2009, p. 10). Also, the adoption of multiculturalism coupled with the melting of international barriers and easy spread of propaganda through the internet has led to youths of developing nations imbibing extremist ideas, causing their being used by terrorists in suicide attacks, as is occurring in many developing nations such as Somalia, Sudan, Tunisia, Egypt, etc.

The encouragement of free trade zones in developing countries in a bid to woo foreign investors has resulted in negative effects. A documentary released in 2003, The Hidden Face of Globalization, revealed how female factory workers in free trade zones are being physically and verbally abused so as to keep up with the production demands from the firms (Bacchus & Foerster 2005). In a bid to maximize profit, most of these multinational companies prefer to refrain from creating healthier and safer working environments for their workers. According to Fuentes and Ehrenreich 1998 (in Bacchus & Foerster 2005), 12 women died in Taiwan from the inhalation of toxic fumes at a Philco-Ford assembly plant. And coupled with the inability of the workers to unionize as a result of the free trade policy, the workers have to suffer in silence.

Other negative impacts of globalization in developing countries include the alteration of the environment and reduction in environmental sustainability, increase in human trafficking, exploitation of cheap labour by foreign industrialists.

This paper has been able to show globalization as a complex process with wide reaching impacts on developing countries. Globalization on its own has a lot of gains and benefits, but due to the influence of some other factors and especially the nature and structure of most developing nations, it impacts negatively despite its advantages. These impacts hold serious challenges for developing countries in the face of needed economic growth and development for these countries. To this end, the leadership of the various nations in the developed world must understand that their major responsibilities lie in the needs of their immediate societies. It is therefore imperative that these countries formulate rational policies and reforms that would guide liberalisation of trade and the complexities of globalization as a whole to conform to their own domestic economic agenda. Globalization itself should not be hindered. But the extent and pace of its progress should be made to reflect the nation’s situation and presenting economic dispensation so that in the long run, the developing country itself would be able to strongly compete in the wider confluence of globalization.


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