Economic development in poor countries
Economic development in poor countries
Seen by some as the greatest opportunity to enlarge the free market or by others as the greatest danger that humanity has ever encounter, the problem of globalization has urged the great spirits of humanity to debate its impact upon the entire human community. For the super-powers of the world globalization is a well-known and acceptable phenomenon. It could be because the economy of the G8 has been statistically improved since we are all one. Anyhow, all the rich and average countries of the world start to embrace and lead a strong propaganda in favor of it.
What about the poor countries that are not entitled to an opinion about the invasion of their countries? The impact of globalization in these countries can be irreversible and determinant for their future. The first major impact is evidently the economical one. For the industry and the internal market, globalization could mean a total freezing of any chance to survive on the free market. Obviously the products from the developed countries tend to be of a better quality and the prices are often smaller than the national brands. This is a double blade possibility.
Either the economy of the poor countries will collapse and will be destroyed forever, or there is the chance that the main national producers would start introducing the necessary quality into their products. Anyhow at first, the national economy will suffer and the poor countries will become poorer than before. On the other hand, the second-hand products have full access to these countries. They may seem to be a good thing, especially because the people do not have the possibility to afford new goods, like cars, electronic gadgets and even clothes.
As everything is free to merchandise, there is the risk of becoming ‘junk’ country that can be used as a garbage bin for the products unusable in more developed countries. Anyhow the less developed countries should be careful about anything that gets in. Even if the tendency is to accept all the things that come from the rich countries, there must be prudency and conscious choice. We must admit that it is very hard to choose what to adopt when the general tendency is to promote globalization. Each country must analyze its economical situation to see if it is compatible enough.
One way or the other, they will have to cope with any situation given. The new global order has also been characterized by increased financial volatility Analyzing from the Third World debt crisis of the early 1980s to the Mexican breakdown of 1994-95 to the current Asian debacle, financial crises have become more and more threatening. With increasing privatization and deregulation, the discrepancy between the influence of financial forces and of the governments and increases the potential for a global breakdown steadily enlarges.
If this is the case, we must analyze the current crisis through which the entire planet is suffering from. It is a real and down-to-earth example of how an earthquake in the economy of the great can affect the less unfortunate. The crisis involves the US economical superpower together with the Asian market and the EU developing economical system. For USA, the crisis is marked by stock fluctuations and an unstable market. The price of oil drops rapidly and several industries are brought to bankruptcy. Now, the world’s superpowers can deal with the crisis easily.
For example, the rescue project for the US is merely under 1% of the GDP. As the economy of the country is weaker, the percentage involved is growing. The case of Germany speaks out, as the investment for getting out of the crisis will affect more than 25% of their GDP. Now if this is the case of a developed country then a poor country could enter in a financial collapse just by trying to maintain them to a level of decency. The current crisis is a real challenge for the globalization system and conception. It affects us all but for sure it can kill some economies and bring them down for good.
The truth is that the entire world begins to be linked to some economic giants and when they start collapsing, everyone goes together with them. Another issue of globalization is the free work-market. It is a positive thing that people can work wherever they want and wherever they are appreciated for their qualifications. There is also the risk of economical nomads. These economical nomads are represented by the companies that tend to move their factories in the poorer countries; for the single reason that there the wages are smaller as the production stays the same.
This nomadic attitude appears to be beneficial for the company itself, but closing a factory in one country in order to re-open it in another is definitely a hit for the economical situation of entire regions. There is the example of Nokia that speaks out clearly this approach. Nokia Company closed a factory in Germany to open one in Romania. The only reason was that a Romanian employee could be paid with wages from 300-1000 euro, as a German was paid with amounts from 3000 euro and up. The economical balance changed for both Germany and Romania.
Anyhow, it is a fact that when the wages become larger, the company will move out in another poorer country. On the other hand this discrepancy between wages for the same production turns out to be the premises for the enrichment of a certain elite. Income inequality rose markedly both within and between countries. In the United States, the median real wage rate was lower in the latter year. Inequality rose to levels of 70 years earlier, and underemployment, job insecurity, benefit loss, and worker speedup under “lean” production systems all increased. Insecurity is functional.
As it is the greatest weapon that can be used to form certain groups of interest that tend to manipulate all the economical situation to their own convenience. The gap in incomes between the 20 percent of the world’s population in the richest and poorest countries has grown from 30 to 1 in 1960 to 82 to 1 in 1995, therefore the Third World conditions have in many respects worsened. Incomes have fallen in more than 70 countries over the past 20 years. Some 3 billion people, that mean half the world’s population, live on fewer than two dollars a day. Other 800 million suffer from malnutrition.
In the Third World, unemployment and underemployment are common. Massive poverty survives side-by-side with the influential elite. More than 75 million people a year are seeking asylum or employment in the developed countries. The Third World governments allow virtually unrestricted capital flight and seek no options but to attract foreign investment. The premises that have made globalization possible are the very conditions that are now threatening it. The communication breakthroughs that enable global mass production can also expose its horrors: unemployment, dropping wages, social and economical insecurity.
The tools that make possible overnight wealth for a handful of global speculators also make possible overnight global financial panic. Globalization should be handled like a very fragile pot that can break into many pieces any moment. As for the poor countries, they are the only ones who can decide whether globalization has a positive effect or a negative effect. Well, that is theoretically speaking. Practically, they have no choice. Sooner or later the wave will get them and they will all have to suffer the consequences. The general consideration of the entire world could be finding efficient ways of preventing the worse to happen.
Until then, the socio-political factors will decide if in real life everything functions like we know it in theory. References: 1. The Threat of Globalization, Edward S. Herman, New Politics vol. 7, no. 2 (new series), whole no. 26 Winter 1999; 2. Progressive Globalism: Challenging the Audacity of Capital, William K. Tabb, Monthly Review, February 1, 1999; 3. Statement on Globalization, UN Committee on Economic, Social, and Cultural Rights, May 11, 1998; 4. The Three Rounds of Globalization, Ashutosh Sheshabalaya, The Globalist, March 14, 2000; 5. Globalization on Trial, Rumina Sethi, Tribune (India), June 27, 2004.
University/College: University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
Date: 24 November 2016
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