Globalisation essay part 2
In addition, the economic cooperation is the most advanced between well-developed nations. For instance, the EU emerged as the economic union of western European countries which were and still are the major European economies. The economic cooperation between developed nations leaves developing nations outsiders in the global economic development process.
However, even in well-developed nations, globalisations has failed to eliminate the socioeconomic disparity and the problem of poverty in developed countries persists, especially this problem aggravates after economic crises as was the case of the US economic recession that was followed up by the global financial crisis of 2008. Many researchers (Bhagwati, 2004) argue that globalisation increases the risk of the widening disparity between the rich and the poor because the accumulation of capital leads to the enrichment of the rich, while the poor remains in the inferior position. In fact, globalisation is beneficial for businesses and large corporations but not for employees. More important, in case of employees, globalisation has a destructive impact on them and leads to their pauperisation because companies based in developed countries tend to outsource many services and move productions to developing countries, where the labour force is cheaper. As a result, employees from developed countries remain jobless.
Effects of globalisation on developing nations
Developing countries face the dubious effects associated with the development of globalisation. On the one hand, globalisation stimulates their economic development due to the elimination of fiscal barriers that opens the way for their products to supply to the global market (Weiler, 2002).
On the other hand, developing countries face the problem of their inability to compete with developed ones to compete in terms of technology and diversity of production. The problem is that companies operating in developing countries are often technologically dependent on companies based in developed countries. As a result, they cannot outpace and challenge the position of companies based in developed countries in high tech industries.
In addition, developing countries are predominantly mono-industrial countries, i.e. they have only one main industry which is well-developed and produces the lion share of the national GDP. For instance, Nigerian economy depends consistently on the oil export with other industries being underdeveloped in the country.
Moreover, globalisation aggravates the current disparity between the rich and the poor nations because developing countries are predominantly suppliers of resources, including human resources, whereas developed countries supply high tech products and services (Khor, 2011). As a result, developing countries turn out to be in a disadvantageous position in a long-run perspective because globalisation facilitates and accelerates their exploitation by more developed nations which consume more resources supplied from developing countries, while developing countries retain their backwardness both technological and economic compared to developed nations, while some researchers (Danaher, 1999) insist that this gap grows wider under the impact of globalisation.
The seeming improvement brought by globalisation to employees in developing countries because many companies from developed countries have moved their production to developing countries or outsources many of services they needed. However, such a view on the impact of globalisation on employees in developing countries is also erroneous because the move of production from developed countries to developing ones does not improve conditions of work. On the contrary, often companies recruit employees and pay them minimal wages. Many companies neglect workplace safety requirements and neglect rights of employees. As a result, companies employ children and fail to prevent accidents and casualties in the workplace environment in developing countries.
Effects of globalisation on the world as a whole
Economic problems have become global that means that financial and economic crisis became global. In other words, globalisation makes the world economy more vulnerable to economic crises. In the past, when national governments protected domestic economies by fiscal barriers and when the cooperation between nations was relatively low, the crisis in one country or region affected the one country or region only, while the impact on the world economy was minimal. On the contrary today the economic crisis in one country only may trigger the global economic crisis. Obviously, such interdependence of world economies makes them vulnerable to the high risk of crises, while economic crises become deeper and longer (Gomory, 2002).
Furthermore, changes at the local and regional level affect the global economic development. For instance, a war in the Middle East can skyrocket the oil price, while opening the US oil reserves can cause the drop of the oil price globally. The emergence of international organisations, such as the World Trade Organisation and supranational organisations and agreements, such as the EU, or the NAFTA, became the government response to the emergence of economic globalisation.
In addition, the increased power and role of multinational corporations raises the problem of the government control over business operations. To put it more precisely, many researchers (Stiglitz, 2013) argue that multinational corporations have become more powerful than national governments (Van der Borght, 2000). In response, governments unite their efforts and policies to keep economic development under control because, today, the government performs the role of the mediator between large corporations and citizens. Otherwise, interests of citizens could be neglected by large corporations that means that large corporations could conduct irresponsible environmental policies, for instance, while citizens could not protect their communities and environment without the assistance of the government and government agencies.
Stiglitz (2012) questions prospects of the new economic order established under globalisation. The researcher believes that globalisation may have a destructive impact on the economic and social development of the world because the growth potential of the global market is still limited, while the elimination of national barriers raises the question of the ability of governments and the public to keep control over
large multinational corporations and businesses.
Conclusion
Thus, the process of globalisation stimulates the rise of international business activities and may even stimulate the economic growth. However, in a long-run perspective, globalisation has rather negative than positive effect. Globalisation leads to the growing disparity between developed nations and developing ones. The former have accelerated the exploitation of natural resources and other resources of the latter. Moreover, the social inequality persists even in developed nations, where the rich become richer, while the number of poor increases, especially if an economic crisis strikes.
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