Mr Daniel Costa

Topics: Developing country, Poverty, Developed country Pages: 8 (2668 words) Published: December 12, 2012
What have been the main effects of globalisation on Less Developed Countries (LDCs)?

Globalisation can be seen as one of the most important force impacting on every economy in the world and is a complex and illusive process that brings about vast definitions and interpretations, making it a subject of intense debate and much controversy (Lambie, 2007) . Since the 1980s, Globalisation denotes the increasing connection and integration of the world economy, bringing new opportunities to Less Developed Countries (LDCs). Greater access to developed country markets through increasing trade, reductions in transportation costs and technology transfer have implied a fast downgrading of the concept of 'distance' (Lee & Vivarelli, 2006), which intended to improve productivity and higher living standards to help the less skilled in developing countries, who are assumed to be a great majority of the population (Balakrishnan, 2004). Yet this definition of Globalisation is misleading and simplistic for any person and especially for Less Developed Countries to accept, as they are the ones experiencing the negative effects of this process. Globalisation in LDCs has shown vast evidence of its impact on growing inequality in terms of employment and income distribution across and within nations, inconsistency in financial market and environmental deteriorations, hence why is a concept seen as benefiting the well developed countries at the expense of the less developed part of the world (Seifu, 2007). The main effects of globalisation on Less Developed Countries whether positive or negative is highly debatable between opponents and supporters of globalisation. For example, supporters of globalisation point out the link there is between increasing trade and economic growth and they conclude that trade is good for growth and consequently good for the poor in terms of employment and the reduction of poverty levels. On the other hand, opponents argue that globalisation has an uneven effect on LDCs by producing negative counter-effects on previously protected sectors, also marginalising entire regions of the world economy and possible increases in within-country income inequality (Lee & Vivarelli, 2006). This essay will attempt outlined and discuss the main effects of globalisation on LDCs with regards on employment, within-country income inequality and poverty. Globalisation impact on labour

One of the most important effects of globalisation on LDCs is on labour. With the main issue being the impact on unemployment. Before the beginning of globalisation, the division of labour in the world was mainly established on the manufactured goods being produced in the countries with industrial powers and primary goods produced in LDCs, often with the use of semi or pre-capitalist forms of labour. This process was the result of the remains of colonialism, which was transformed with the expansion of Multinational corporations due to their increase control of the world economy (Lambie, 2010) (London: Pluto Press). Currently with globalisation, borders have become more accessible and capital looking for lower production costs, which has led to the restructuring of the international division of labour (Lambie, 2010) (London: Pluto Press).

According to the comparative advantages theory, trade and Foreign Direct Investment should take advantage of cheap labour in LDCs and as a result initiate a trend of specialization in domestic labour-intensive activities and therefore create an expansion in local employment (Lee & Vivarelli, 2006). However, the globalisation effect on employment through increasing trade is not always positive for LDCs. As employment through increasing trade depends on how productive the country is in traded goods sectors and in non-traded sectors. This means that export may give employment growth, but import may displace previously protected domestic firms, leading to redundancy (Lee & Vivarelli, 2006).

Moreover, it is...
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