Globalization and Economic Development: Role of Emerging Countries in Worlds Economy

Role of Emerging countries in Worlds Economy

The emerging countries continuously try to globalize so that they can transform their economic resources and other societies to some other international countries for the sake of the improving their current status with a more developed status. There is a number of agencies which remain active for the sake of globalization. These include the official government and media of emerging countries, and international organizations such as World Bank and United Nation. Some of these organizations are engaged in solving the global problems including poverty, illiteracy and human rights. Emerging countries can participate well in the economic growth of the world, but unfortunately, they are welcomes only in specific countries rather than accepting in all countries.

Several Asian countries have been engaged in globalized economic development plans, while many African countries minimized their participation internationally (Binswanger & Lutz 2003). The Asian countries have exported multiple goods and services across the borders, but African countries participated in the export of agricultural products only to other countries (Borensztein et al. 1994). These countries less or more participating in the development of world’s economy (Arndt, 1999; Chussodovsky, 1997).

During the year 1994, the emerging countries significantly participated in the global economy and resulted in twenty four percent of world import. This contribution was increased further and more than thirty percent shares in the year 2010 were due to the emerging countries. On the other hand during this year, they exported the manufacture products worldwide up to twenty two percent. The overall role of emerging countries towards world economy can be seen in Figure 1.

The trading outputs capitals and world shares have shown that from the last two decades, emerging countries are putting an impact on the industrial countries which are imparting more significant effects on the world’s economy. According to some experts, if the emerging countries could able to continue their progress on the same pattern, they might play a vital role in raising the world’s economy in the next 15 to 20 years. As discussed before, that these countries are accepted only in some specific countries, but their recent growth rate has influenced many developed countries to welcome them for import and export.

Political Effects of Emerging Countries on World’s Economy

Every country wants to grow nationally and internationally, but there is a number of hurdles which a country needs to pass. The repute of the country can bring many changes in its prospect and relations with other countries which may result in the exchange of goods and services etc. According to the economist specialists, the political effects of the emerging countries can influence the world’s economy. Sometimes it is a big threat to the economy if the political environment of a country is unstable. None of the developed countries say welcome to that country where political instability exists. It put bad impression worldwide and may lead to discontinuity of the import or export of goods and services.

For emerging countries it is to focus more on the business and wellness associated with world’s economy rather than become a victim of unstable political actions. Many pieces of evidence are available highlighting the fall in economic growth of the world based on these issues. (Alesina, 1996) evaluated this factor by investigating the 113 countries between the years 1950-1982 and showed that growth of GDP was remarkably low due to the collapse of the government. Similarly, a recent research on this factor highlighted that the emerging countries usually have issues of government collapse and sometimes it affects the repute of that country badly. (Aisen and Veiga, 2006) explained that the political instability results in unwanted changing of parliament members and rulings on the economic policies which ultimately affect the repute of the government and country. Under those circumstances, trading growth will be minimized as a matter of political issues which ultimately will affect the world economy.

Figure 1. Role of developing countries in world’s economy

Role of manpower of Emerging countries on Worlds Economy

Most of the world’s economy is based on industrialization and for running the industries, manpower is required. In some cases, it has been seen that developing countries like Pakistan, India, Bangladesh, China etc have technically strong manpower especially, Project Planners, Production Engineers, Boiler Engineers, Automation Engineer, Execution Staff etc which have skills to work and generate the revenues.

Many of the countries especially in the Middle East, the locals are lacking these skills and not able to run industries, therefore under such case, the leadership hires the highly skilled person across the borders which may work for them and generate the revenue for their country. In many cases, it was seen that this manpower participated in a better manner as compared with the national employees and these employees learned a lot from the expatriates.

Globalization in the World

The globalization is not a term as it has a history of import and export of goods, services and finance. The super stores are the common example of a globalized environment where we can find a number of branded things manufactured in different countries but selling on one point. At present more than $ 1.5 Billion transactions are taking place in foreign markets. When we talk about the world economy, it is affected by goods, services provided and funds invested globally.

The scope of globalization has increased with time as it is considered phenomena or a force which unite different countries for the sake of business and improving the world’s economy. Some of the aspects of globalization are discussed here. Many political and businessmen argue for the adaptation of globalization. In their opinion, it may bring better educated manpower, flexibility and diversity in culture with prospective economic betterment.

Globalization and Economic Development

Economic development refers to the economic improvements which provide quality life and opportunities, education, human rights and less poverty. Another aspect of this economic development is the suitable supply of the required stuff and services (Henderson, 2007). Bell, 1987) expressed this development as the potential development of the entire population rather than considering only the improvement in economic growth. The globalization has given a new direction to the world’s economy by providing money exchange, capital, traveling of people and information exchange across the borders.

It has given a big change to the business by moving from the local to the international markets. The American economists divided this development into following five segments. The specialist in the fields of corporate and free markets highlighted the significance of the globalization. They said that globalization can bring back the economic balance among the different countries. Before the globalization period, the most dominant exporter was the USA, but after the globalization, the trend was completely changes and many other countries appeared as exporter which can be seen in Table 1 (Hills, 2009).

Table 1. Changes in Global Trading

Countries Shares/Outputs (1963) % Shares/Outputs (2004) % Shares/Global Trading (2004) %
United States 40.30 20.90 10.40
Germany 9.70 4.30 9.50
France 6.30 3.10 4.80
United Kingdom 6.50 3.10 4.70
Japan 5.50 6.90 5.70
Italy 3.40 2.90 3.80
Canada 3.00 3.20 3.40
China 13.20 5.90

Traditional Segment

The traditional segment is mainly based on agricultural resources whose regulation is carried out by the meeting the production targets in appropriate ways.

Transitional Segment

This is the segment whose purpose is to provide maximum production which can enhance trading capacity. In this segment, strong and advance transportation play important role in raising the trading power and hence results in economic development. According to the Gundlach and Nunnenkamp, 1994), the recent globalization period resulted in higher trading as compared with production and this trading is more prominent than any other prominent.

Take off Segment

This segment is considered as a driving source for industrialization. This segment also influences the social and political sectors. This could provide the strength to the political sector as well as social sector.

Potential of maturity Segment

The chances of investment increases by bringing advancement in technology. This could bring potential opportunities to the country, ultimately making the economy stronger than usual actions.

Mass consumption Segment

As understood from the meaning of mass consumption, more and more products are launched and different groups are focused on the business. This leads to high economic developments.

Economic Indicators

The economic developments of a country can easily monitor by the consideration of various factors. Some of them are mentioned below.

  • GDP: This is a significant factor in knowing the economic development as it is related to the estimation of the total value of products and services which a country is providing.
  • GNP: This factor is based on the total value of products and services provided in one year. This production is referred to the labor and residents.
  • PCI: this factor calculates the economic development based on a calculation of summation of the income from all the sources dividing by the total population.

Likewise the economic development, there are some effects of globalization on the world’s economy which are discussed below.

Effect of Globalization on Worlds Economy

Some of the researchers criticized the globalization, they said that it may result in injustice with the poor people, they may get more poverty and on the other hand, the rich people will make more money. Similar groups of people gave the example of European middle class who has been cleared by globalization effects.

Economic Crises due to Less availability of Jobs

The countries such as Spain and Greece faced financial crises because of globalization. It has been seen that a number of migrants are working in Europe and having benefits covering their health insurance, luxury life, holiday tours and pensions. These migrants had replaced the locals and the young guys searching for the jobs were depending on parents or other family members. The availability of fewer jobs for the young European fall down the economy and they faced financial crises.

Effects of Globalization on Emerging Countries

The participation of the emerging countries in the global economy put them on the high risk of financial crises. The main problem for these countries was the old technology, simple products and services which were not recognized by the globally active giants. Among the emerging countries some of the poorest countries exported the low quality products as competitors of one or two exporters and resulted in low export rates.

These countries could generate the good revenues inside the country but their participation in the global market put them on financial crises. One of the significant examples of such globalized market is the Walt Disney, whose major revenue is generated from the United States based theme parks as compared with internationally running parks. For Disney, it would not be a problem as they are Giant in business and the American economy is much stronger than other countries. On the other hand, for a emerging country, the organizations are not that strong that they can generate the revenue internationally by competing for the local markets. According to the (Porter, 1990), emerging countries have the low scope of business in international markets due to their unattractive products and services. The past years have shown a decline of trading and several cases are seen where commodities suffered business instability.

Among all the exported products, the agricultural products have shown negative growth due to export into the developed countries. These developed countries have less population which affected the export of these products. Emerging countries are the most affected countries of globalization because when the similar agricultural products are export from some other countries with low price, its affect whole business and unfortunately they have to cut down their prices or face the loss. Similarly, with manufactured products the emerging countries are not able to compete globally as their production is based on old technology and quality management systems which are nor recognized globally and hence results in low business (Chussodovsky 1997).

There are contradictional observations and finding of the globalization. Some of the researchers and specialist consider it beneficial, while others count it as a base for several global problems.

References

Aisen, A. and Veiga, F.J., 2006. Does political instability lead to higher inflation? A panel data analysis. Journal of Money, Credit, and Banking, 38(5), pp.1379-1389.

Alesina, A. and Perotti, R., 1996. Income distribution, political instability, and investment. European economic review, 40(6), pp.1203-1228.

Arndt, S.W., 1999. Globalization and economic development. Journal of International Trade & Economic Development, 8(3), pp.309-318.

Binswanger, H. and Lutz, E., 2003. Agricultural trade barriers, trade negotiations, and the interests of developing countries. Trade and Development Directions for the 21st Century, Cheltenham, UK.

Borensztein, E. and Reinhart, C.M., 1994. The macroeconomic determinants of commodity prices. Staff Papers, 41(2), pp.236-261.

Chossudovsky, M., 1998. Global Poverty in the late 20 th Century. Journal of International Affairs, pp.293-311.

Henderson, W.D., 2007. -The Globalization of the Legal Profession. Indiana Journal of Global Legal Studies, 14(1), pp.1-3.

Nunnenkamp, P., Gundlach, E. and Agarwal, J.P., 1994. Globalisation of production and markets. Kiel, Hamburg: ZBW-Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft.

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