Assess the Impact of Globalisation on a Developed Economy and a Developing Economy.

Topics: Globalization, International trade, International economics Pages: 7 (2224 words) Published: February 19, 2011
Assess the impact of globalisation on a developed economy and a developing economy.

Word count: 2064 words

During the past 20 years, the world economy has become increasingly connected and integrated, We could find that our times has already entered globalisation era, as the degree of the globalisation is strengthened, the countries all over the world, while sharing their benefits, will unavoidably take risks altogether, which has been one of the most hotly-debated topics in international economics. Having a look to Robertson’s definition of globalization: “Globalization as a concept refers both to the compression of the world and the intensification of consciousness of the world as a whole...both concrete global interdependence and consciousness of the global whole.” (Robertson 1992:8, cited by Waters, 1995:6), we find that globalization makes the whole world looks like a economic unity. But it still has different influence on different historical stages of economic development, which mainly be divided into developed economy and developing economy.

For developed countries, the direct economic interest provided by globalization is the greater market whatever for labor or sales or investment, which brings generous profits, and globalisation can promote the economic and technical cooperation between developed countries and the others. The main positive effects are listed below: Firstly, globalisation provides broader range of economic activities to the developed countries. So that they can play an increasingly critical role in the world economic stage depend on their advantages, and then expand their influence to obtain maximum economic interest. Secondly, the accelerated development of globalisation promoted the formation of the world's multilateral trading system, which strengthens the international trade’s effects on global economy. And the developed countries not only become the biggest beneficiaries but also the cornerers in international trade. It’s because that these countries’ development and application of science and technology can be derectly used to progress the growth of international trade. And their increasing foreign direct investment simultaneously becomes the main driving force of global trade. As Nicolas Pologeorgis (2010) argued that Foreign Direct Investment's impact on economic growth has had a positive growth effect on wealthy countries and an increase in trade and FDI resulted in higher growth rates. At the same time, the expansion of developed countries’ foreign trade reinforces the integration of regional economy and trade, which will benefit the collaboration of the developed countries. Take EU and NAFTA as examples, they are both the influential regional trade blocs whose main members are developed countries. Thirdly, Economic globalisation greatly promotes the development and global expansion of the multinational corporations in developed countries. As the primary carrier of International economic relations, TNCs control the major trade of raw materials and fuel. Moreover, 40% of the global production, 50%-60% of the international trade, 60%-70% of the international technology trade, 80%-90% of the research and development, 90% of the international investment are dominated by Multinational Corporation. Globalisation promotes the rapid expansion of developed countries’ multinational corporations, and TNCs further accelerated the growth of economic globalisation. In this process of reciprocal causation, the multinational corporations play an increasing important role, especially in of foreign direct investment; they act as the dominant force. Data shows that more than 90% of the multinational investment comes from developed countries, morever, 1% of the largest multinational companies control the 50% of the total world foreign direct investment. The developed countries’ foreign direct investment increases from approximate annual 145 billion US dollar in...
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