Implications of Globalisation for Palomia - Dissertation Example

The First Task Is Linked To Learning Outcome You Are Required To Write A Report On The Following: Palomia Is A Developing But Landlocked, Country With An Average Per Capita Of $3500 At Market Exchange Rates. Its Population of 20 Million Is 35% Urban Table of Contents Introduction 3 Discussion 4 Importance of Globalisation for a Nation for Economic, Social and Cultural Development 5 Evaluating the Probable Positive Implications of Globalisation for Palomia 7 Evaluating the Probable Negative Implications of Globalisation for Palomia 11 Conclusion and Recommendations 13 14 References 15 Introduction With the emergence of the contemporary world, countries have become more concerned towards maximum economic, social and cultural growth to obtain comparative advantages of international trade and resource circulation. As a matter of fact, every country in the modern day scenario intends to preserve its abilities of continuous development and ensure that the people of the country can be able to enjoy better living standards for themselves in every possible domain. Subsequently, such inclinations also allow countries to compete with other nations in terms of development, gaining a respectable position for itself in the global economic platform. However, it is important to depict that growth and development of any nation is directly or indirectly dependent on the approach of the government and policy makers of the nation towards globalisation. Globalisation, which mainly refers to the integration of a nation with the outer world in terms of economy, industries, cultures and policy making among others, is believed to be one of the major elements accompanied with maximum social and economic development in a nation. Globalisation promotes the free flow of new ideas, products and services and various cultural and social factors (both positive and negative) among the many that exists (Wade, 2009; OECD, 2004). It would be crucial to mention that most of the developed and developing nations of the world have flexible and encouraging policies towards globalisation. In this particular context, the IMF and the World Bank have suggested a developing landlocked nation, Palomia, to become more flexible towards globalisation in order to attain continually augmenting development within the country. In this regard, this particular discussion will mainly focus on depicting the probable implications of globalisation on the country (both positive and negative) and make suggestions accordingly on whether to follow the suggestion in Palomia’s policy-making emphasising development. Discussion In the current scenario, Palomia is identified as a developing nation with substantial growth rates recorded in various domains of the economy. Reportedly, 35% of the total population (i.e. 20 million as was last recorded) is urbanized in Palomia. This aspect further depicts the need for more rapid development in this particular domain, which will again work towards stabilizing the economy of the nation and put the country in a better position within the world scenario. It has been noted that the nation falls under the category of landlocked countries of the world, which further provides it with certain advantages and disadvantages too. The country is engaged with the export of products primarily including raw materials. However, the country has been recently of the view that it needs to diversify as well as increase its export base in order to ensure maximum growth in the economy and ensure rapid development of the nation altogether. In this particular regard, the World Bank and IMF have recommended the country to open their policies towards globalisation, which will further allow it to ensure maximum development in the country. The organizations also urge that with maximum globalisation, the country will be able to have more trade options open for it, more foreign investors entering in the country generating greater Foreign Direct Investments (FDIs) along with better knowledge transfer amid the population of the nation. This will also ensure that the country is engaged with rapid economic growth and development in a comprehensive manner altogether (Wade, 2009). However, in order to implement these policies, it would be crucial that the government of Palomia evaluates the positives and negatives that can have a substantial impact on the country one way or the other. These aspects are described in detail in the later section of the discussion. Importance of Globalisation for a Nation for Economic, Social and Cultural Development Globalisation is one of the most widely depicted concepts in the modern day scenario where countries are eager to gain a reputed position for themselves in the world. The term ‘globalisation’ refers to the approach of the nation towards integrating with the global world with regard to the exchange of ideas and products along with cultural implications. Notably, with the advancement of technology, transportation and information technologies, globalisation has reached to the peak all over the world in the current scenario. Globalisation can also be regarded as the free movement of people, products, funds and other aspects associated with the day-to-day lifestyle choices of humans (Faulkner & Segal-Horn, 2004). According to Wade (2009), with the emergence of globalisation trend, national and international boundaries have shortened to a considerable extent. Globalisation is depicted as one of the major aspects that assure maximum development of a nation in the modern day scenario. It is important to note in this regard that almost all the developing and developed nations of the world have flexible policies towards globalisation and promotes the same to the maximum extent in their region. It is thus deemed to assure development in various domains of a country, which further assures positive changes or developments in both the political and economic domains of the nation. Notably, the approach of globalisation enables a particular country to integrate its local and national economic elements with that of the global economy (Wade, 2009). The effect of globalisation can be extensively observed in various areas including the development of infrastructure, economy (as mentioned earlier), society, culture and the political scenario among others. Observably, globalisation entails a nation to integrate with some of the most developed and globalized nations of the world, which can also initiate positive changes for the countries in terms of development. Furthermore, financial institutions including IMF, World Bank and other noteworthy players are also directly associated to support the developing or the developed nations of the world who have been inclined towards the inclusion of globalisation at an extensive rate (Guttal, 2007). This particular aspect will act beneficially towards ensuring economic, infrastructural and cultural developments in a small and developing nation like Palomia. Notably, with the formation of encouraging and flexible policies towards globalisation, a country would be able to ensure the flow of more FDI funds, which not only depicts the probability of ensuring maximum growth but also attracts the investors all over the world to put their money in various developmental domains of the nation. These factors are often asserted to help any nation in dealing with its political and economic risks, hence assuring stability in its economic growth to a certain extent (Meon & Sekkat, 2012). These factors will be crucial to be considered by the concerned authorities of Palomia while depicting their approach towards promoting globalisation in the country to the largest extent. Furthermore, globalisation also enables countries to enhance their trade relations with other nations of the world, enhancing its prospect of involving in international trade in a more comprehensive manner with less trade barriers involved, which can again be considered as an advantage for the economy in Palomia (Faulkner & Segal-Horn, 2004). This particular factor can be affirmed as quite crucial for the policy makers in Palomia, fundamentally owing to the reason that in the present scenario, the country is quite reluctant towards involving in more and more international trade, which again hinders the economic and social development of the nation. However, before promoting globalisation in Palomia, the government will need to evaluate both the positive as well as the negative implications associated with globalisation, which might harm the well-being of the nation to a substantial extent. Evaluating the Probable Positive Implications of Globalisation for Palomia As described earlier, Palomia is one those nations witnessing stable growth over the past years concerning its annual performances. However, as per the suggestions of the IMF and the World Bank, the country should be actively and extensively involved in globalisation so that it can ensure development in various domains of the nation. Contextually, the suggestions of IMF and World Bank can be supported with the fact that globalisation will probably have certain positive impacts on the operations of the country when performing in the global stage. Globalisation in Palomia is quite likely to allow the prevailing businesses in the nation to adopt innovative and effective strategies with the assistance of the ideological benefits that are gained through globalisation or integration with the global business environment (Dunning, 2009). Globalisation in a developing nation like Palomia will also mean that the companies operating within the country could enhance their reputation and penetrate in the global market, which will further attract the attentions of the international financial institutions to invest in those companies. Additionally, owing to globalisation, these companies will be able to align with various local and foreign players, which can again prove beneficial for the rapid development and growth of the business sectors in the country. Therefore, it can be depicted that if the government of Palomia emerges with flexible policies with regard to globalisation, they would directly provide the existing firms of the nation with an opportunity to exploit the benefits provided by the global businesses, which can be considered advantageous on the grounds of facilitate resource allocation and funding prospects (Dunning, 2001). Increased migration of labour can be identified as another benefit that Palomia might be able to experience owing to its greater inclusion in globalisation process. Observably, globalisation removes many barriers with regard to the movement of people amid the nations. Contextually, with the free flow of labour, the people of the nation will be able to generate better employment opportunities, which is again a positive aspect that will impact the economy of the nation in a favourable manner. For instance, with this benefit, globalisation will also reduce inequality of the nation with its neighbouring countries and offer it with comparative advantages internationally. Since Palomia is a landlocked nation, this particular aspect will be quite crucial and beneficial for the long run development of the nation. This particular aspect concerning the impact of globalisation on employment opportunities can also be seen in underdeveloped countries like Bangladesh and Kenya, as these countries have experienced maximum decline in unemployment rate owing to globalisation (Sen, n.d.). Globalisation can also be used by Palomia as an important tool to enhance the flow of foreign investment and channelize its resources in a more productive and profitable manner. With the emergence of globalisation, developing nations are now able to attract foreign investments in the country as per their needs. FDIs are deemed to get augmented owing to globalisation in nation, which further enhances national income, contributing to its sustainable economic growth (Lipsey, 2004). Report emphasising this issue, suggested that with the emergence of globalisation in the scene, the flow of cross-border FDI has exceeded about $700 billion annually during the early years of 2000s worldwide. The reports also depicted that most of the nations having flexible policies with regard to globalisation has better flow of FDI’s in the nation. For example, the government of the UK and Alabama have been quite encouraging towards foreign companies to operate in the country. These aspects further increase the flow of FDI’s in the nation, which has contributed to its economic growth to a substantial extent (Holger & Greenaway, 2003). Globalisation of technology also has a major impact on the economy and the societal domain of developing nations. Observably, with the advent of globalisation, means of communication such as internet, travelling, media and other channels of communication have made knowledge transfer easier and more convenient, which in turn has stimulated urbanisation in various geographic regions. Contextually, with maximum globalisation in the country, Palomia will be able to remain updated with regard to the advanced technologies. This would be possible through the free flow of knowledge amid the country with the other nations of the world. This particular aspect of globalisation will certainly enhance the operations of the business units of the nations, as they can be more innovative in their approach owing to the new ideas that will be flowed from other nations along with making the society more urbanised and economically developed. This particular aspect will also enhance the living standards of the people of the nation, as they will be acquainted with latest and advanced technologies prevailing in the global world. This particular aspect of globalisation in Palomia will impact the social, cultural, educational and economic domains of the nation altogether (Archibugi & Pietrobelli, 2002). Furthermore, free trade owing to globalisation is again an important point of consideration that can directly promote economic growth of Palomia. This can be depicted from the example of America and Europe in 1960s when both the continents were facing major economic decline owing to several barriers in trade and lack of globalisation. Free trade amid two nations can also provide the poor citizens of developing nations with an aid to ensure better living arrangements for themselves. With free trade policies between Palomia and its neighbouring nations along with other global economics, the country will certainly be able to ensure a better living condition for its poor and middle class citizens (WTO, 2000). Illustratively, the graphs below depict about how globalisation can impact free trade, especially on manufacturing sectors of various developing nations around the world. Fig: (Source WTO, 2012; OECD, n.d.) Fig: (Source WTO, 2012; OECD, n.d.) Evaluating the Probable Negative Implications of Globalisation for Palomia A critical understanding to risks associated with globalisation reveals that it can have maximum negative impacts on the operations of any nation, apart from rewarding the above-mentioned developmental benefits. It has the potential to benefit any nation in various domains, which ultimately influences the economic growth of the nation in an unfavourable manner. However, the other side of the coin depicts the negative implications that can harm a developing nation like Palomia to a non-negligible extent. Apparently, globalisation enables free trade amid two nations with the elimination of various geographical boundaries and barriers in terms of governmental policies. However, with the elimination of barriers, free trade is also deemed to get accompanied to unfair trade activities, which are again a threat to the integrity of a nation. With globalisation in Palomia along with the aspect that the nation is landlocked, the probability of unfair trading within the nation becomes high (Bond, 2008). Again experts also claim that globalisation in various developing nations of the world has increased the aspect of poverty due to wealth inequality. It is further depicted that except China, Vietnam, and particular Eastern European countries, many countries are currently dealing with the challenge of reduced income level, which again have led to the augmentation of poverty in these countries. This lack of proper distribution of wealth in economies can be depicted from the fact that from 90’s till today, the income of the world has increased by 2.5%, but at the same time, the poverty level has increased by more than 100 million within the nation (Stiglitz, 2002). This aspect might hinder the government of Palomia towards globalisation in their nation. Experts also argue that globalisation imposes significant impacts on nations through labour drain, as it has been noted that with emergence of globalisation, the flow of labour amid the nations have become easier and smoother, which further provides wider employment opportunities for the people. However, poor countries will find it difficult to hold on their skilled workers, which can be attributed as a potential harm to the developing nation. Furthermore, the free flow of labours amid nations owing to globalisation will also potentially increase the potential flow of illegal immigrants and risks of labour exploitation by foreign economies. This particular aspect can be observed with reference to the rise rate of illegal immigration in the US owing to free movement of labour and Bangladesh too, where labour exploitation is also examined as a consequence of globalisation (Kelly, 2013; Gordon, 2012). This particular aspect might also hinder the government of Palomia towards developing flexible policies for globalisation with an intention to augment its rate of development. Furthermore, it has been noted that the GDP of Palomia is quite low, which depicts it as a small but developing economy. It is evident that the economy is quite likely to be dependent on small companies and their wellbeing. However, with globalisation, competition in the business sector will become quite high as more and more foreign players will enter into the domestic market. This will threaten the operations of the small companies, as they are less competent in terms of advanced technologies and economies of scale, resulting in challenges for the country to maintain its economic independency (UNCTAD, 2013; Wolf, 2003). This might also harm the interest of the government of Palomia towards globalizing the nation. The environmental cost of globalisation is another crucial aspect that might replicate globalisation as a not so beneficial choice for Palomia. Notably, with free trade policies to promote globalisation, many foreign companies are likely to enter into the country to operate on a larger scale. Their extensive operations can further lead to the emission of harmful gases and components that might affect the wellbeing of the environment and the people in a negative manner (OECD, n.d.). Conclusion and Recommendations Based on the overall analysis of the paper it can be comprehended that globalisation has emerged as one of the most widely practiced notion to facilitate economic growth with better flow of resources and capital. Maximum number of nations around the world can be observed to practice open and encouraging policies towards globalisation so that they can ensure maximum economic growth and a respectable position in the world, along with facilitated comparative advantages of international trade. Notably, development and globalisation are closely interlinked with one another. With globalisation, a country could be able to experience growth and development in various domains including the business sector, the employment sector, the investment sector, the technological sector and the educational sector among others, as it eliminates geographic and economic obstacles in knowledge sharing and cultural barriers, which further stimulates resource and capital flow within the international context. However, similar to that of the advantages associated with globalisation, it also might impose certain negative impacts on the operations of a country like Palomia. As revealed in the study, changes witnessed due to globalisation, if not handled effectively and cautiously, might lead to increase in poverty due to wealth distribution inequality, illegal immigration, illegal trading along with negative impacts on the environment and the society altogether. Hence, it can be concluded that globalisation has both positives and negatives associated with it, which might impact any nation in both the direction depending on the effectiveness of its approach towards the same. Conclusively, it can be recommended to the government of Palomia that in order to ensure proper growth and development in the economy, the nation will need to have a more flexible approach towards globalisation as per the suggestions of the IMF and World Bank. However, in the process of encouraging globalisation in the nation, concerned authorities should also consider the negative implications of globalisation and approach accordingly with specific, definite and globally accepted legal framework. References Archibugi, D. & Pietrobelli, C., 2002. The Globalisation of Technology and Its Implications for Developing Countries Windows of Opportunity or Further Burden? Technological Forecasting & Social Change, Vol. 70, pp. 861–883. Bond, P., 2008. Global Uneven Development, Primitive Accumulation and Political-Economic Conflict in Africa: The Return of the Theory of Imperialism. Journal of Peace building & Development, Vol. 4, No. 1, pp. 1-14. Dunning, J. H., 2001. The Eclectic (OLI) Paradigm of International Production: Past, Present and Future. International Journal of the Economics of Business, Vol. 8, No. 2, pp. 173-190. Dunning, J. H., 2009. Location and the multinational enterprise: John Dunning’s thoughts on receiving the Journal of International Business Studies 2008 Decade Award. Journal of International Business Studies, Vol. 40, pp. 20–34. Faulkner, D. & Segal-Horn, S., 2004. The Economics of International Comparative Advantage in the Modern World. European Business Journal, pp. 20-32. Guttal, R., 2007. Globalisation. Development in Practice, Vol. 17, No. 4-5, pp. 523-531. Gordon, R. J., 2012. IS U.S. Economic Growth Over? Faltering Innovation Confronts The Six Headwinds. National Bureau of Economic Research, pp. 1-25. Holger, G. & Greenaway, D., 2003. Much Ado about Nothing? Do Domestic Firms Really Benefit From Foreign Direct Investment? Econstor, pp. 1-39. Kelly, A., 2013. Bangladeshs Garment Workers Face Exploitation, But Is It Slavery? Modern-Day Slavery. [Online] Available at: http://www.theguardian.com/global-development/poverty-matters/2013/may/16/bangladesh-garment-workers-exploitation-slavery [Accessed March 06, 2014]. Lipsey, R. E., 2004. Home- and Host-Country Effects of Foreign Direct Investment. National Bureau of Economic Research, pp. 1-51. Meon, P-G. & Sekkat, K., 2012. FDI Waves, Waves of Neglect of Political Risk. World Development, Vol. 40, No. 11, pp. 2194–2205. OECD, 2004. Getting to Grips with Globalisation. Home. [Online] Available at: http://www.oecd.org/about/31499355.pdf [Accessed March 06, 2014]. OECD, No Date. Globalisation, Transport and the Environment. Home. [Online] Available at: http://www.oecd.org/about/31499355.pdf [Accessed March 06, 2014]. Sen, K., No Date. Globalisation and Employment in Bangladesh and Kenya. University of East Anglia, pp. 1-32. Stiglitz, J., 2002. Globalisation And Its Discontents. Norton & Company, Inc. UNCTAD, 2013. Strengthening The Links Between Intra-Oic FDI And Regional Integration. Home. [Online] Available at: http://unctad.org/en/PublicationsLibrary/webdiaeia2013d11_en.pdf [Accessed March 06, 2014]. WTO, 2012. Mis‐thinking globalisation: The case for WTO 2.0. Home. [Online] Available at: http://www.wto.org/english/forums_e/public_forum12_e/session41_baldwin_e.pdf [Accessed March 06, 2014]. WTO, 2000. Trade, Poverty and the Human Face of Globalisation. Home. [Online] Available at: http://www.wto.org/english/news_e/spmm_e/spmm32_e.htm [Accessed March 06, 2014]. Wade, R., 2009. Is the Globalisation Consensus Dead? Antipode Vol. 41, pp. 142–165. Wolf, M., 2003. The Morality of the Market. Foreign Policy, pp. 47-50. Read More