What Impact Has Globalization Had on Developing Countries - Essay Example

Name Class Unit Assignment 2 Topic: What impact has globalization had on developing countries? Provide a detailed analysis of one country to illustrate the possible impacts. Globalisation has led to a great increment in the global trade. Developing countries have benefited a lot from globalisation with their economies growing rapidly. Globalisation has led to integration of economies through trade. China is one of the developing countries that have benefited a lot from globalisation. A detailed analysis of Chinese economy will help to understand the impacts of globalisation in developing countries. Annotated bibliography Kan, H. (2014). Globalisation and environmental health in China. The Lancet, 384(9945), 721- 723. “Globalisation and environmental health in China,” is an article that appears in a peer reviewed journal of The lancet. The author is a well-known writer in matters relating to environmental pollution and global warming. The article looks at the impacts of globalisation on China environmental health. The article use peer reviewed journals and other publication on China environment issue. Based on the research, the article finds out that China requires global collaboration to curb environmental pollution. Pollution in China is a threat globally. The article finds out that developed countries plays part in China pollution through trade. The article is very vital in analysing negative impacts of globalisation in my essay. It will help in identifying how globalisation has led to pollution in China. It will prove that while China has enjoyed positive impacts of globalisation, there are negative aspects such as poor environmental health. Chan, C. K., & Peng, Z. (2011). From iron rice bowl to the world’s biggest sweatshop: globalization, institutional constraints, and the rights of Chinese workers. Social Service Review, 85(3), 421-445. The article is found in a peer reviewed journal of Social Service review. The authors are renowned researchers who have written several articles in peer reviewed journals. The article use peer reviewed sources to carry out the research. The authors prove that China free market led to influx of FDI which accelerated economic globalization in the country. The article discusses the suppression of the Chinese workers under the country integration into the global economy. The article establishes that China quest to lower their production costs have led to suppression of workers’ rights. From the research, the article shows that china changed from a country that protected its workers to one that suppresses them through globalisation. The article is very important for my essay. It will help in determining the impacts of FDI in Chinese economy. The article will also help in determining how globalisation led to rise of sweatshops in China through suppression of workers’ rights. Xue, J., Luo, C., & Li, S. (2014). Globalization, Liberalization And Income Inequality: The Case Of China. The Singapore Economic Review, 59(01), p. 1450002-1-1450002-21 The article appears in the peer reviewed journal of The Singapore Economic Review. The authors are well versed in the topic of globalisation. Jinjun Xue is a based at Graduate School of economics in Nagoya University Furo-cho in Japan. Both Chuliang Luo and Shi Li are based on Beijing Normal University in China. The article utilises peer reviewed journals and other academic sources to analyse the topic. The authors analysis on effects of globalisation, liberalisation and income inequality in China. The article finds out that economic liberalisation in China led to rapid economic growth while at the same time leading to an increase in income inequality. The country has high level of income inequality due to globalisation. The article provides an important material in my essay for understanding how globalisation leads to income inequality. It will help in identifying how China rapid growth led to high inequality in the essay. Assignment 3 Introduction Globalisation refers to the close integration of the economies through trade. The process of globalisation has led to increased competition in the markets and investment (Kaplinsky, 2013). Globalisation involves countries having closer economic relationships. Globalisation has had great impacts on the developing countries which include China, India, Brazil and Russia. China has moved from being one of the greatest opponents of globalisation to be an advocate of globalisation. China economic success is attributed to globalisation and trade liberalisation (Wei & Liefner, 2012). The advantages of open economy are felt in the country. This essay will analyse the impacts of globalisation in developing countries and provide a detailed analysis of China to illustrate possible impacts. Globalisation and emerging economies For the developing countries, globalisation has both positive and negative impacts. Through fast flow of communication, the knowledge gap is closed. Globalisation has acted as an opportunity for new era of economic growth for the developing countries. With globalisation, there has been economic development in the emerging economies (Michie, 2011). To have economic development, economic growth must be attained. This is based on an increase in input in major economic sectors which includes manufacturing and natural resources. Measures of economic development are gross domestic product (GDP), Gross national product (GNP), and Net National Product (NNP) (Kaplinsky, 2013). Globalisation has helped the developing countries to have effective utilisation of resources which have led to economic growth. This is through creating an enabling atmosphere through globalisation. Despite the positive effects of globalisation, it has been criticised for income inequality, sweatshops and pollution. While some of the developing countries have taken full benefits of globalisation, other has borne the costs associated with it. China is one of the countries that have benefited enormously from globalisation (Wei & Liefner, 2012). China and globalisation The Chinese government started economic reforms in 1978. This was a major step towards globalisation. The reforms involved creation of Special Economic Zones (SEZ) and making the economy more open. Chinese government took a new direction in their policies which made the company more open for investors (De Haan, 2011). In this period, the country was able to achieve high economic growth. China rose from low income to lower middle class income in 1999. This was due to increasing per capita income. From 1992, China experienced a rapid adoption of globalisation. The country ignited market oriented reforms and embraced the tenets of globalisation of economy. There was an increase in privatisation of state owned enterprises. After joining WTO in 2001, the country was able to engage with world markets (Wei & Liefner, 2012). The country reduced tariffs and opened its economy for more imports and eliminated all import quotas. Positive Impacts of globalisation Foreign trade Since China government opened its boarders for free trade, the flow of foreign goods across boarders have been enhanced. In 1978, China opened its national boarders and started abolishing trade restrictions (Wei & Liefner, 2012). The volume of foreign trade in China increased from US$ 20.64 billion in 1978 to US$ 620.8 billion in 2002. This made foreign trade to account for 65% of the country GDP. The country was growing fast with a GDP growth of 35% annually. In 2004, the country trade volume increased to 1.1 trillion US$. The country had a growth rate of 30% (Keller, Li & Shiue, 2011). This made China to become the third largest trading country behind United States and Germany (De Haan, 2011). China have benefited from an increase in exports which can be found globally. Chinese economy has been able to provide the world market with high quality low priced products. China has become a large market for foreign goods. The high demand in the country has led to a rise in economic growth (Wei & Liefner, 2012). Through foreign trade, China economy has grown through three aspects. The first aspect is international specialisation. This is through the country engaging production in the goods and products which it have a comparative advantage. This has enabled China to obtain higher amount of goods and services that they would through domestic production. The second aspect is an increase in aggregate demand. An increase in aggregate is caused by increase in exports (Wei & Liefner, 2012). This helps a country to increase their national output. Lastly, China have benefited from an increase in production brought about by investment in modern technology. Increase in FDI Foreign Direct Investment (FDI) has been a major source of physical capital flow in Chinese economy. FDI have helped a lot in promoting Chinese economic growth. Since the economic reforms in 1978, the number of FDI has been very high in China (De Haan, 2011). Through FDI, China has gained financial and physical capital. FDI have enabled China to gain technology, capital and skills. Foreign investment in the country has acted as a driver towards economic growth. This has helped China to export capital to less developed and developed countries. There has been high number of foreign companies outsourcing production in China (Wang, Hong, Kafouros & Boateng, 2012). This has led to job creation in the country. Transfer of information and technology China has been a beneficiary of transfer of information technology. This has been of major benefit as the country has gained expertise to update their technology (Wei & Liefner, 2012). Through acquisition of this knowledge, China has become an exporter of technology to less developed countries. Sectors such as automotive manufacturing and communication technology in China have expanded a lot. China has been able to improve sectors such as military through technology. An increase in technology investment leads to a rise in country GNP. In modern economy, technology plays a vital role (Wang & Hong, 2012). The enhanced technology in China acquired through globalisation has been a source of comparative advantage in trade. Negative impacts of globalisation Income inequality Despite the positive impacts globalisation had on China, not everyone has benefited. The country faces a major problem in income distribution (De Haan, 2011). Due to pressures from international competition, there has been an increase in polarisation. There has been a decline in social welfare and increase in income gaps between regions. Prior to globalisation, Gini coefficients in the country were 0.2 in the urban regions and 0.21 in the rural areas. After globalisation, Gini coefficients in China have risen rapidly to over 0.474. There is high inequality between the urban and rural areas. A low Gini indicates a more equal distribution of income while a high Gini indicates more unequal distribution. The growth of the FDI in China led to economic growth but at the same time brought negative income distribution. Since China opened to global economy, inequality has been on rise. Technology imports also increases inequality in incomes between skilled and unskilled workers (Xue, Luo & Li, 2014). Environmental pollution Another negative impact of globalisation in China is environmental pollution. Globalisation has led to an increase in CO2 emission and electronic waste. Research has proved that over half of the Chinese ground water is polluted. With globalisation, increase in production has led to more waste being generated. Pollutants from China are spreading globally through human and natural means. China faces a serious environmental pollution issue. The country failed to balance between economic development and environment (Kan, 2014). This poses a problem to China and global environmental health as evidenced through extreme weather and emerging infectious diseases. Rise of Sweatshops Globalisation led to rise of sweatshops. The country SEZs turned into sweatshops where workers are exploited. The employees’ works in unsafe conditions and their rights suppressed in the sweat shops (Kaplinsky, 2013). The country labour unions are weak making them unable to protect the workers interest. The main labour union is managed by the government instead of workers. Government officials running the labour unions are reluctant to defend workers right due to fear of losing FDI. The government plays a passive role in defending workers’ rights in order to support multinationals. This have made multinationals to maximise their profits through offering workers low salaries and poor working environment (Chan & Peng, 2011). Conclusion Globalisation has both positive and negative impacts in developing countries. Since China opened its market for global trade in 1978, there has been rapid economic development. the country have been able to compete in the global market. Accession to the global market reached climax with China joining WTO. The country has been able to benefit from an increase in foreign trade. China is now the third largest trading country behind United States and Germany. The country has been able to increase their exports and the flow of imports have been very high. FDI have been a major source of capital flow in China. This has been a major drive towards economic development. Globalisation has enabled the country to benefit from transfer of technology. The transfer leads to the country gaining technology capabilities from developed countries. China has suffered from inequalities brought by the globalisation. the Gini coefficient have been rising in the country implying increasing inequality. Globalisation has also increase in environmental pollution in China. There have also been rise of sweatshops leading to poor working conditions of some employees working for multinationals. This shows that globalisation have both positive and negative impacts on developing countries. References Chan, C. K., & Peng, Z. (2011). From iron rice bowl to the world’s biggest sweatshop: globalization, institutional constraints, and the rights of Chinese workers. Social Service Review, 85(3), 421-445. De Haan, A. (2011). Will China change international development as we know it?. Journal of International Development, 23(7), 881-908. Kan, H. (2014). Globalisation and environmental health in China. The Lancet, 384(9945), 721- 723. Kaplinsky, R. (2013). Globalization, poverty and inequality: Between a rock and a hard place. John Wiley & Sons. Keller, W., Li, B., & Shiue, C. H. (2011). China’s foreign trade: Perspectives from the past 150 years. The World Economy, 34(6), 853-892. Michie, J. (Ed.). (2011). The handbook of globalisation. Edward Elgar Publishing. Wang, H., & Hong, Y. (2012). Globalization and its impact on China's technology innovation system. Journal of Technology Management in China, 7(1), 78-93. Wang, C., Hong, J., Kafouros, M., & Boateng, A. (2012). What drives outward FDI of Chinese firms? Testing the explanatory power of three theoretical frameworks. International Business Review, 21(3), 425-438. Wei, Y. D., & Liefner, I. (2012). Globalization, industrial restructuring, and regional development in China. Applied Geography, 32(1), 102-105. Xue, J., Luo, C., & Li, S. (2014). Globalization, Liberalization And Income Inequality: The Case Of China. The Singapore Economic Review, 59(01), p. 1450002-1-1450002-21. Zhang, X., & Zhang, K. H. (2003). How does globalisation affect regional inequality within a developing country? Evidence from China. Journal of Development Studies, 39(4), 47- 67. Read More