Reasons Why Globalization Affect Different Economies Differently, Research Paper Example

Different scholars define globalization differently. Pologeorgis (1) defines globalization as a process targeted at expanding business operations on a global scale. He adds that it is facilitated by global communications because of advancements in technology, and cultural, political, environmental, and socioeconomic developments. Ibrahim (85) defines globalization as the processes concerned with strengthening of economic, social, cultural, and political relations across the international borders. It is also viewed as a process that systematically restructures interaction among countries by breaking cultural, commercial, communication or any other barrier (Samimi and Jenatabadi 1). Put differently, it denotes the changes in the world economies and societies resulting from the intensification of cultural exchange and international trade. In fact, globalization is a process of diversification, which is in itself a strategy that increases the range of cultural and business products and services across international borders. The strategy strengthens cultural and economic institutions by lowering the risk factors for businesses, spreading cultures in different regions, intensifying cross-border interaction, capitalizing on new market opportunities and acquisition of businesses both vertically and horizontally (Manteu 73-9).

Within the context of this paper, globalization is seen as the movement of products, people, ideas, and languages across the globe and dominance of multinational companies and disintegration of cultural identities across international borders. This paper argues that the process of globalization systematically restructures cultural and economic progress among countries differently, as it breaks cultural, commercial, and communication barrier differently.

Varying levels of economic development means that different countries experience different phases of globalization. Hence, the effects of globalization on economies with different levels of development would be different. Ibrahim (87) supports this perspective. He argues that less developed countries (LDCs) in Africa, unlike the more development countries (MDCs) in Europe and North America, have had their positioned weakened significantly, as they have tended to lose the race for economic development and human development to the MDCs on account of their low levels of development (Ibrahim 85). Because of their poor infrastructure, authoritarian regimes and social and political instability, the LDCs have weakened capacity to benefit optimally from globalization compared to the MDCs (Jega 1-4). It is based on this premise that, Ibrahim (87-9) asserts that globalization has had far-reaching negative consequences in LDCs than MDCs, as it has strengthened economic marginalization of the African economies in addition to their reliance on a small number of primary goods whose demand and prices are determined outside their borders. In turn, it has precipitated poverty in the LDCs in Africa and wealth in the MDCs in Europe and North America (Samimi and Jenatabadi 1).

Different political systems used in different economies also mean that globalization would have varying effects on different economies. Additionally, different levels of political influence on the international front mean that countries with greater influence have a greater capacity to leverage the positive effects of globalization (Ocampo 1). Ibrahim (87) supports this idea. He remarks that the cold war, which resulted from the processes of globalization, had substantial impacts on countries with low political leverage in Africa. Ibrahim (87) explains that between 1960 and 1970 during the peak of cold war, many authoritarian regimes emerged in Africa and Latin America largely because of two blocks of power (United States and USSR), which struggled to lure African countries into their camps. The two blocks of power issued finances to the African and Latin American countries with strings attached. In turn, it significantly minimized African countries’ negotiating power on the international front and capacity to leverage international systems (Brune and Garrett 5-9; Mapuva 398). Overall, unlike the more developed economies, such as Britain, France, Germany and the United States, which have greater negotiation power on international front, the African and Latin American economies have experienced erosion of sovereignty, particularly on financial and economic matters. On the other hand, countries with authoritarian regimes or undergoing wars, such as Somalia are less likely to benefit from globalization than those with democratic regimes, which have environments that intensify free trade. At the same time, higher taxation and investment restrictions in some economies may discourage positive impacts of globalization (Manteu 73-9).

Different levels of technological advancements among different economies also imply that different economies will experience different impacts of globalization. Better technological advancements mean that people can communicate on a wide scale. It also implies that the labor movement is intensified, and movement of goods in free trade is advanced. This facilitates rapid economic development (Ibrahim 85). According to Mrak (3), technological change currently witnessed affects the scope of labor and product flow across countries. Essentially, countries with the improved transportation network and communications technology reduce the cost of production, which intensifies competition and stimulates investments and better distribution and access to manufactured products. Dahlman (29-35) also promotes these ideas. The researcher traced the growth of competitiveness and economic growth of different economies across the globe in reference to the effects of globalization. He concluded that different levels of technological advancement were responsible for different impacts of globalization. Dahlman (29) summarized that the main global trends have made it difficult for developing economies to replicate the rapid growth of the developed economies due to globalization and established technology is a significant element of globalization. The technology had accelerated positive effects of globalization on the more developed countries than the developing countries, which have low technological advancement. Greater technological advancements, such as better capacity to harness fossil fuel, communication using the internet, faster transport and lower levels of mortality rate have set the pace for advanced standards of living, which is the hallmark of the developed economies. For instance, some countries in Asia, such as Japan, Singapore, China and Republic of Korea, have transitioned from developing to developed economies due to better technological advancements compared to African economies.

The varying endowments with resources and ready markets for goods across different countries mean that the effects of globalization would vary. Indeed, the objective of globalization, according to Pologeorgis (1), is to offer organizations a superlative competitive advantage at lower operating costs, and to acquire greater amounts of raw materials, more accessible labor and number of consumers. Such a strategic approach is acquired through diversification of resources, creating and developing new opportunities for investment by accessing additional resources, raw materials, and markets. Therefore, countries with a greater number of natural resources experience greater levels of Foreign Direct Investments (FDIs) compared to the countries with fewer resources. In Mrak (4) view, this is since countries with a greater number of natural resources that are more valuable, political stability and ready market for finished goods attract the majority of the international investors. Mrak (4) explains that large multinational corporations are more likely to be attracted to locations with ready supply of raw materials and cheap labor, as well as a ready market for finished products. For instance, most African economies that currently have the highest number in the region, such as Kenya, Ghana, Angola, Nigeria, and South Africa, also have greater levels of resources. For instance, Nigeria, which has one of the largest populations of more than 120 million people, providing cheap human resources and ready market for finished goods (Mete and Janet 174). As a result, it has attracted more FDIs looking for cheap labor and ready market. The same applies in the case of China. The reason China has one of the greatest numbers of FDIs in the world is partly because it has a high population, which provides cheap labor and ready market for finished goods. Essentially, therefore, China benefits more from globalization compared to other economies, such as Nepal.

Economies that practice liberalization and de-regulation, and experience political and economic stability are likely to have greater levels of positive globalization effects. Mete and Janet (174-6) suggest that liberalization and deregulation are key policy objectives of globalization. Crimes and armed banditry and inflation, on the other hand, inhibit FDI (Dappa and Thom-otuya 1). He further argues that liberalization and deregulation facilitate and promote free trade and, therefore, trading activities of an economy to other economies of the world. In his view, among the reasons why Nigeria has benefited greatly from globalization than other African countries is the government’s decision to repeal the Nigerian Enterprises Promotion Act in 1995, which had until then restricted foreign goods from entering the country. Mete and Janet (174-6) further argue that most items in the import prohibition list were reduced while the government opted to use tariff structures for the protection of end-user product pricing. In 1998, for instance, Nigeria reduced import prohibition list to merely 11 items, which mostly consisted of food crops. Because of this, Nigeria increased free trade in the country, opened up the economy for the growth of multinational companies, increased the free movement of labor and strengthened capital flows. This intensified globalization in the country compared to other economies, such as Zimbabwe, which restricted foreign trade.

Conclusion

Globalization affects different economies differently. The process of globalization systematically restructures cultural and economic progress among countries differently, as it breaks cultural, commercial, and communication barrier differently. Different political systems used in different economies also mean that globalization would have varying effects on different economies. Additionally, different levels of political influence on the international front mean that countries with greater influence have a greater capacity to leverage the positive effects of globalization. Next, different levels of technological advancements among different economies also imply that different economies will experience different impacts of globalization. Better technological advancements mean that people can communicate on a wide scale, as well as the labor movement is intensified, and movement of goods in free trade is advanced. Additionally, varying levels of economic development means that different countries experience different phases of globalization. Hence, the effects of globalization on economies with different levels of development would be different. The varying endowments with resources and ready markets for goods across different countries also mean that the effects of globalization would vary. Lastly, economies that practice liberalization and de-regulation, and experience political and economic stability are likely to have greater levels of positive globalization effects.

Works Cited

Brune, Nancy and Garrett, Geoffrey. “The Globalization Rorschach Test: International Economic Integration, Inequality and the Role Of Government.” Annual Review of Political Science, 1.1 (2005): 1-33

Dahlman, Carl. “Technology, globalization, and international competitiveness: Challenges for developing countries.” United Nations, nd. 6 May 2015, <http://www.un.org/esa/sustdev/publications/industrial_development/1_2.pdf>

Dappa, TG, and Thom-otuya, Ben. “The Effects of Globalization on Developing Economies: The Nigerian Experience.” Sophia: An African Journal of Philosophy 12.2 (2010): 1

Ibrahim, Alhaji. “The Impact of Globalization on Africa.” International Journal of Humanities and Social Science 3.15 (2013): 85-93

Jega, Musa. “The Effect of Globalisation on The Development of Underdeveloped Economies,” n.d. 6 May 2015, <http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.197.744&rep=rep1&type=pdf>

Manteu, Cristina. “Economic Effects of Globalisation: Lessons from Trade Models.” Economic Bulletin Banco de Portugal, (2008): 73-87

Mapuva, Jephias. “The Impact of Globalization on South Africa’s Economic Development.” Journal of Sustainable Development in Africa 12.2 (2010): 390-413

Mete, Feridun and Olusi, Janet. “Analyzing The Impact Of Globalization On Economic Development In Developing Economies: An Application Of Error Correction Modelling (ECM) To Nigeria.” Applied Econometrics and International Development 6.3 (2006): 173-182

Mrak, Mojmir. “Globalisation: Trends, Challenges and Opportunities for Countries in Transition.” United Nations Industrial Development Organisation, 2000.

Ocampo, Jose. “Rethinking Global Economic and Social Governance.” Journal of Globalization and Development 1.1 (2010): 1-27

Pologeorgis, Nicolas. “How Globalization Affects Developed Countries.” Investopedia, 2010.

Samimi, Parisa and Jenatabadi, Hashem. “Globalization and Economic Growth: Empirical Evidence on the Role of Complementarities.” PLoS One, 9.4 (2014): 1