Globalization is a Curse on National Economic
Development
Quotes and Closers:
a) Those profiting from the arrangement have little incentive to change it, while those
most impacted by it are virtually powerless.
b) Globalisation is all about wealth. It knows the price of everything and the value of
nothing. Without borders the world will become – is visibly becoming – a howling
desert of traffic fumes, plastic and concrete, where nowhere is home and the only
language is money.
c) Imagine there's no countries
It isn't hard to do
Nothing to kill or die for
And no religion too
Imagine all the people
Living life in peace
You may say that I'm a dreamer
But I'm not the only one
I hope someday you'll join us
And the world will be as one”
For:
1) Dual Economies: A dual economy is one where there exist two separate economic
systems within a single country, mostly a vastly developed foreign market and an
excessively underdeveloped domestic market. Most developing economies face such
a dilemma and globalization is to blame. Panama, for example, is struggling owing to
its Dual Economy tendencies and has sufficient exports, but a rather struggling
population with over 25% of the people Below Poverty Line(most of them own or
work under domestic markets)
2) Global Impact of Local Cyclic Fluctuations: When the economies of struggling
nations fall, or its currency is adversely affected by investors opting for rather safe
financial assets, there is a collective effect on developing economies. A recent
example is the downfall in the value of the Indian Rupee and the South African Rand
to record low levels owing to the sudden fall in the value of the Turkish currency,
Lira. We are facing an international financial crisis in front of our eyes and there is
practically nothing we can do about it.
3) Environmental Effects: Usually, Foreign Direct Investment leads to multinationals
investing in countries where they see immense opportunities and a scope of
exploitation. Governments of developing countries, who would generally prioritize
economic development over environmental concerns would encourage FDI and tend
to soften ecological regulations for certain large MNCs, thus giving them an incentive
for environmental exploitation. An indigenous example would be the Bhopal Gas
Tragedy in December, 1984, the plant being set up by Union Carbide, a
multinational, which released methyl isocyanate, a highly toxic gas. An estimated
558,125 people have been exposed to the gas, as of now.
4) Negative Wage Spill-overs: Multinationals enter developing nations, hire skilled
labour by offering improved economic and health benefits, whereas the unskilled
labour workforce is left for domestic corporations, thereby almost destroying
indigenous industries. The Indian clothing industry is on the verge of collapse as the
big market players, i.e. the MNCs like Adidas, Nike, Calvin Klein, etc dominate the
market, thereby capitalising on the skilled workforce.
5) Excessive dependence on FDI by host countries: India ranked #1 in the list of
countries that attracted FDI, amassing over $61 billion in FDI in the year 2015,
surpassing China and Japan. In some cases, it allowed 100% FDI with local private
investors and the government having no share. As we have seen in the case of Cuba,
where, owing to the excessive influence of the USA in the economy, its government,
under pressure, had to reform its constitution shifting from its rather communal
approach to a capitalistic one. Hence, following a path as dangerous as this, India
needs to be cautious.
Against:
1) Trade Effects: Globalization influences economic growth by creating a market for
speciality goods in foreign countries and allowing indigenous industries to flourish by
providing them with selling opportunities. Imports allow nations to buy goods which
they can obtain at a lower cost than producing them locally, which results in efficient
allocation of resources and a win-win situation for both the exporters and importers.
For example, India trades oil from the Middle East and neighbouring nations where it
is mined at lower costs and they act as a market for several indigenous goods.
2) Creation of Skilled Labour: MNCs, in opening subsidiaries, franchises, licensed
companies, turnkey projects, etc in host countries, provide a suitable environment
for the unskilled labourers to obtain necessary training in relevant fields of
employment, thus improving the quality of human capital in the nation. There has
been an average upgrade of 67% in the skill-set of Indian human capital since 2010,
according to a recent study carried out by the NITI Aayog.
3) Increased Competition: When we have a large number of producers competing in a
market, there comes into force a better resource allocation plan, better production
techniques, better quality of goods, regular improvements in the features of
products and a reasonable and cheaper price. Globalization has brought foreign
competitors in the market, too, which triggers a sense of increased caution and
resourcefulness. Note that with the arrival of a rather formidable enemy in the
electronics market, a company called Xiaomi, a turbulence emanated in the minds of
already established monopolistic mobile phone companies in India(like Samsung).
Shamshung, pseudonym joke. Competition increased, prices were reduced, better
features and new devices arrived in the market, and the overall cost of electronics
fell down, both for the sellers and consumers. New companies got an incentive to
enter the market which led to capital formation and productive resource allocation.
4) Stabilized Security: “If thou depend’st on thy neighbour, thou shalt never let him
die.” Everyone knows what turbulence would be created in the economies of all
nations if the financial framework of any nation were to fall into ruins. Globalization
is what has connected everyone, and globalization is the force behind our incentives
to save a sinking ship. Today, when the United Arab Emirates is in a state of extreme
financial trouble, the World Bank and its member nations have been taking a lot of
steps to help it.
5) More Wealth Equality Throughout the World: Although many Americans contend
that their standard of living has gone down because of globalization, the flip side to
this is that hundreds of thousands of people around the world now have jobs, have
started their own businesses and can provide comfort for their families. People in
developed and developing nations take things like clean water, shelter and plentiful
food for granted. Our standard of living is so high compared to many nations that
when we can no longer buy frivolous luxuries, we claim that we are poor.
Globalization may have stopped you from buying another flat screen TV, but it also
helped countless people in developing countries put food on their table for their
families.
