The Impact of Globalization in the Developing Countries

Introduction

Globalization is a process of global economic, political and cultural

integration. Globalization is playing an increasingly important role in the
developing countries. It can be seen that, globalization has certain advantages such
as economic processes, technological developments, political influences, health
systems, social and natural environment factors. It has a lot of benefit on our daily
life. Globalization has created a new opportunity for developing countries. Such as,
technology transfer holds out promise, greater opportunities to access developed
countries markets, growth and improved productivity and living standards.
However, it is not true that all effects of this phenomenon are positive. Because,
globalization has also brought up new challenges such as, environmental
deteriorations, instability in commercial and financial markets, increase inequity
across and within nations.

Components of Globalization

The components of globalization include GDP, industrialization and the Human

Development Index (HDI). The GDP is the market value of all finished goods and
services produced within a country's borders in a year and serves as a measure of a
country's overall economic output. Industrialization is a process which, driven by
technological innovation, effectuates social change and economic development by
transforming a country into a modernized industrial, or developed nation. The
Human Development Index comprises three components: a country's population's
life expectancy, knowledge and education measured by the adult literacy, and
income.2

The Economic Impact on Developed Nations

Globalization compels businesses to adapt to different strategies based on new
ideological trends that try to balance the rights and interests of both the individual
and the community as a whole. This change enables businesses to compete
worldwide and also signifies a dramatic change for business leaders, labor and
management by legitimately accepting the participation of workers and
government in developing and implementing company policies and strategies. Risk
reduction via diversification can be accomplished through company involvement
with international financial institutions and partnering with both local and
multinational businesses.

Globalization brings reorganization at the international, national and sub-national

levels. Specifically, it brings the reorganization of production, international trade
and the integration of financial markets. This affects capitalist economic and social
relations, via multilateralism and microeconomic phenomena, such as business
competitiveness, at the global level. The transformation of production systems
affects the class structure, the labor process, the application of technology and the
structure and organization of capital. Globalization is now seen as marginalizing
the less educated and low-skilled workers. Business expansion will no longer
automatically imply increased employment. Additionally, it can cause a high
remuneration of capital, due to its higher mobility compared to labor.

The phenomenon seems to be driven by three major forces: the globalization of all
product and financial markets, technology, and deregulation. Globalization of
product and financial markets refers to an increased economic integration in
specialization and economies of scale, which will result in greater trade in financial
services through both capital flows and cross-border entry activity. The technology
factor, specifically telecommunication and information availability, has facilitated
remote delivery and provided new access and distribution channels, while
revamping industrial structures for financial services by allowing entry of non-
bank entities, such as telecoms and utilities.

Deregulation pertains to the liberalization of capital account and financial services

in products, markets, and geographic locations. It integrates banks by offering a
broad array of services, allows entry of new providers, and increases multinational
presence in many markets and more cross-border activities.

In a global economy, power is the ability of a company to command both tangible

and intangible assets that create customer loyalty, regardless of location.
Independent of size or geographic location, a company can meet global standards
and tap into global networks, thrive and act as a world-class thinker, maker, and
trader, by using its greatest assets: its concepts, competence, and connections.

CONCEPT OF GLOBALIZATION
Globalization can be seen as one of the most important force that has impact on the
economy. It is accepted that the world economy has become more integrated due to
the
process of globalization (Neuland & Hough, 1999). Redding (1999) defines
globalization
as the increasing integration between the markets for goods, services and capital.
Globalization in the broadest sense implies integration of economies and societies
across
the globe through flows of technology, trade and capital. Integration of production,
accelerated cross-border investments and more trade are the logical outcomes of
this
process. While most people seem to agree what globalization is in general, there
are no
precise or optimal measures of globalization. Given the inherent fuzziness of the
concept,
moreover, it is unlikely that a perfect measure will emerge. This makes it very
difficult to
measure the impact of globalization on anything. However, this does not make the
analysis
redundant. Where measures are required, it seems best to treat particular
(quantifiable)
aspects separately, acknowledging that this does not amount to a complete analysis
of
globalization.
Robertson (1992) is probably one of the most quoted on the subject of
globalization and has defined the concept as referring to a compression of the
world as a
whole and as a concrete global interdependence and consciousness of the global
whole.
Contained within this definition is the explicit understanding that although global
compression has been ongoing for many centuries, the relatively new phenomenon
of
globalization adds to this the intensification of a global consciousness, is the most
important element of his definition.
The Chittagong University Journal of Business Administration, Vol. 23, 2008, pp.
313-330
3
Hrist (2002) defined globalization as the increasing extent, intensity, velocity and
impact of world-wide interconnectedness, which has existed for some hundreds of
years.
Globalization, for him, is not an end state, or a single thing, any more than is
democracy or
industrialization that is being re-contextualised in a more complex world of
economics,
politics, culture and migration. By acknowledging this dimension a more precise
definition of globalization can be offered. Accordingly, globalization can be
thought of as “a process (or set of processes) which embodies a transformation in
the spatial organisation of social relations and transactions – assessed in terms of
their extensity, intensity, velocity and impact – generating transcontinental or
interregional flows and networks of activity, interaction, and the exercise of
power” (Held, McGrew, Goldblatt, &
Perraton, 2003; p 68).
Globalization is different from internationalization, a term that carries a specific
emphasis on the dismantling of national barriers to the flows of information,
goods,
services, capital, technology, values and culture (Chittiwatanapong, 1997).
Therefore, the
term globalization refers here, in this study, to the trend reduction in barriers to the
international movement of goods, services, capital and technology.