Advantages and Disadvantages of Globalization on Development in Developing States

Topics: Globalization, United Nations, Development Pages: 7 (2015 words) Published: December 3, 2012
Advantages and Disadvantages of Globalization on Development in Developing States
Globalization brings more economic advantages to developing countries than disadvantages, even though this statement is arguable for many. But the simple effect of enabling developed countries and developing countries to compete in the same “Global arena” is already a gain, not only for DCs but for LDCs as well. The increased interaction among actors promoted by Globalization facilitates free trade which in turn provide LDCs with higher incomes and better socio-economic standards of living. The degree of development achieved and the areas in which benefits are present vary from country to country, but exist in all of them without mistake.

On the other hand, it is evident that there are disadvantages that come with Globalization, disadvantages that grieve on countries that are not able to attract foreign investment. Some of the arguments on the negative effect of Globalization include exploitation of minorities by the MNCs, centralized wealth to a few countries, adverse reaction of depression in one country to another, widening of income gap, among others. We also need to consider environmental, health and other social issues which are greatly detrimental for less-developed countries due to lack or poor domestic and international policy planning in these specific areas.

Many of these disadvantages can gradually be corrected or lessen by the implementation of market reforms and the evolution of domestic and international institutions.
Increased interaction among developed and developing countries fosters an environment that supports economic growth. Free trade enables opens opportunities for more and new business opportunities. An International economic system supports countries to sell the goods and services they can produce better, enabling economies to raise to the internationalized level – Comparative Advantage. The competitive nature of the system also promotes technological and entrepreneurial development. In turn, all these economic factors transforms into greater incomes and enhanced living standards for developing countries taking action in the Global Market.

China is an excellent example of developing countries that have greatly benefited from Globalization. “China’s economic successes are associated with liberalization and globalization and each aspect of globalization has brought China further successes.” It went from being a greater challenger to globalization and its institutions to enthusiastically joining the globalized system. China received $60.6 billion of foreign direct investment in 2004 and trade in 2004 was equal to 70% of its GDP. Gradual changes into an Export-led economy and the globalization of institutions enabled a startling economic growth. (Overholt 1-6)

Another benefit of better interaction among international actors is a better understanding of goodwill among DCs and LDCs countries. Developed nations assist third world countries through Humanitarian assistance or Food Assistance and Development Aid. The U.S. government has provided over $321 billion in assistance since World War II to help decrease Third world poverty. (Majewski)

Third World countries improve living standards in the through foreign investment, a form of capital flow that benefits the host country creating more jobs which in turn increase income and living standards. FDI triggers technology spillovers, assists human capital formation, contributes to international trade integration, and helps create a more competitive business environment. (OECD 1-4) MNCs and MNEs open new opportunities for developing countries to participate and benefit from Global competition. The development of a good FDI-Assisted strategy can greatly increase employment for MNEs host countries. (Narula 1, 142)

Globalization has also brought better health solutions coming from developed countries: Medical products, vaccines, and technologies. Developed countries...

Cited: Digdowiseiso, Kumba. “How MNCs threaten our environment”. The Jakarta Post, 2010.
Majewski, John. "Third World Development: Foreign Aid or Free Trade?" The Freeman. Foundation for Economic Education, n.d. Web. 21 Nov. 2012. <>
Narula, Rajneesh and Dunning, John H. “Industrial Development, Globalization and Multinational Enterprises: New Realities for Developing Countries,” Oxford Development Studies Vol. 28 No. 2, 2010. 28:2, 141-167. Print.
Nikiforuk, Andrew. “Pandemonium: How Globalization and Trade Are Putting the World at Risk.” St. Lucia: University of Queensland Press, 2006.
United Nations. “United Nations 2005 Report on World Social Situation Finds Much of
World Trapped in Inequality Predicament.” New York: Department of Public Information, 2005.
USAID. "Global Health Strategic Framework: Better Health for Development." U.S. Agency for International Development, 2012. Web. 19 Nov. 2012. <>
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