Globalization is the process of connecting different economies of different countries to create a freely interacting global economy. This may be achieved through trade, communication, and finance systems. It can involve free movement of people from one country to another and reduced taxes and tariffs for traders as they import goods and services. Foreign investments and exchange programs in the education sector should also be encouraged to improve creativity and innovation. Development in many countries depends on their strategies of outsourcing since every country is endowed with different resources. Nations of the world are divided into first, second, and third world countries depending on the development of their economies. Most first world countries have a technological advantage. Technology has made the world a global village through communication, research, and innovation. Third world countries are poor at outsourcing and tend to depend on few resources in their countries. Globalization contributes to the development of many economies because it allows a country to increase its amount of raw materials as well as its market.
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This paper focuses on the development of different countries and outlines positive and negative impact of globalization. Since globalization directly relates to development, this paper elaborates on different ways in which globalization leads to development.
Indicators of development include per capita income, life expectancy, and the level of literacy in a country. Development in the first world countries has been fuelled by outsourcing, the formation of the European Union, and by multinational corporations such as the World Trade Organization. Fischer (2003, p. 26) asserts that first world countries according to their Gross National Income include USA with 41,557 dollars, Norway with 41,941 dollars, and Luxembourg with 66,881 dollars. Third world countries include countries of Africa, Latin America and Asia. These countries have a very low per capita income and high illiteracy level. Different countries have different development levels. This is because of the different distribution of resources and literacy levels. An economy cannot operate at full employment. For instance, in third world countries most people live below the poverty line, which is defined as earnings below one dollar per day.
Globalization influences development of different countries through improved communication, trade between countries, and enhancement of peace and security among the citizens of different nations. However, development has also been affected negatively by globalization since many developing countries are still underdeveloped due to dumping of goods. Qin-Hilliard (2004, p. 59) asserts that dumping refers to selling of goods to other countries at a price lower than the selling price of domestic producers. For example, cheap clothes that are exported from developed countries have affected textile industries in developing countries. This has led to the collapse of most of textile industries due to decreasing market size. This is also because most people prefer cheap second hand clothes.
Globalization has led to increased free trade between countries as traders are able to move to different counties with fewer restrictions. This encourages production, foreign investment, increases the market of commodities and boosts creativity and innovation as people interact. In most developed countries the laws regarding movement of people from one country to another have been made less strict in this way boosting international communication. Scholte (2005, p. 22) affirms that due to technological advancements, people are able to trade electronically. This encourages marketing and promotion of products and helps in the exchange of ideas among students. For example, the World Trade Area encourages movement of people and their goods to different countries. Economic growth caused by increased trading leads to the shift of the Production Possibility Frontier from PP1 to PP2 as illustrated in the graph below.
Globalization leads to the establishment of fast and effective rapport among citizens from different countries hence promoting peace and harmony among them. This creates a favorable environment for tourists and investors who contribute to foreign exchange. This boosts the economy of the country and promotes development. Security also encourages many investors to invest in different countries because it makes them be sure that their money will not be lost due to war or political wrangles. For instance, the United Nations, which has branches in different parts of the world, has played a major role in helping developing countries during times of war and natural calamities. This has been achieved with a help of the United Nation Commission program for refugees, which helps to settle displaced people. It also has the Security Council that helps to maintain peace and security among countries.
Globalization has enhanced communication among nations. It allows information to be used in schools, companies, governments, and businesses. Scholte (2005, p. 22) confirms that education is one of the key contributors to development. A country with many literate people will be able to maximize little resources they have to produce goods and services. Governments also need to communicate with each other to maintain peace and advise each other on governance. Lasson (2001, p. 25) asserts that businesses rely on information from other successful firms to improve their products and motivate their workers. Most countries have developed with a help of knowledge they acquired from the Internet and scholarly information from different countries. For instance, with a help of electronic waves that connect different systems such as the Internet and mobile phones, people are able to communicate and exchange ideas in a fast and cheap manner.
As much as globalization has its advantages, there are several negative effects associated with it. For example, economic fluctuations in country A may affect the country B, especially if the country B depends on goods from the affected country A. For instance, inflation in an exporting country affects the prices of the imported goods in the other country. Stiglitz (2003, p. 100) affirms that production in different countries depends on political and social factors. Interdependence of countries caused by globalization can lead the country into recession if its trading partner is affected by political wrangles and changes of seasons. Fluctuations of interest rates of one country may also affect its trading partners.
Another negative effect of globalization is that interaction among citizens from different countries may lead to the spread of harmful diseases and exchange of unfavorable culture. As people interact, they exchange their ways of life. Therefore, people who have viral diseases may spread them to others as they interact. Furthermore, different people have different cultures. Some may favor our nation while others may not. For instance, foreigners may bring about the culture of theft, prostitution, and laziness, which will discourage people from seeking employment and engaging in productive activities. For instance, HIV and AIDS can be spread to many people because of having unprotected sex with foreigners.
Globalization is believed to infringe national and individual freedom since organizations such as the World Trade Organization tend to impose laws that the country may not be comfortable with. Waters (2001, p. 57) asserts that by encouraging free movement of people, the government may not have full control over goods and services that enter and leave the country. Therefore, this encourages smuggling and dumping of goods. This also affects the growth of small industries since products from other countries may be cheaper than those produced domestically hence reducing the market for domestically produced goods.
In conclusion, it should be said that globalization has led to the development of many countries. Developed countries have embarked on outsourcing of both information and resources to fuel their development. Globalization helped to improve communication and trade among countries as well as it helped to maintain peace among citizens of different nations. However, it has also led to the spread of diseases and unfavorable cultures among traders and tourists. Economies of most countries depend on tourism and trade. Governments get substantial income from these sectors to develop the economy and offset their budget deficits.