The Doha round appears to resemble a dark-bright coloured picture (Guardian, 2008). In the meeting, world economic leaders were discussing a number of global economic issues related to "trade liberalisation". At the same time, hundreds of thousand protestors gathered outside in an attempt to send warning messages to those leaders. This picture proves a double-faced globalization. On the one hand, more foreign investment and technology transfer have provided developing countries with new jobs and skills, and supported their economic development. According to the World Bank, an extra trade of £145 billion could be generated by 2015, helping to lift some developing countries out of poverty and end the food crisis (Balakrishnan, 2008). On the other hand, workers in these countries have been exploited dramatically with more hours and bad working conditions, but the wealth has been brought back to multinational companies (Pilger, 2006). It would appear that this system has negative impacts mainly on working people in developing countries. Moreover, this has created a wider gap and inequality between the rich and poor, developed and developing countries. In this essay, I will discuss the costs that globalisation has brought to developing countries and also its effects on international relations.
In the globalisation process, developing countries have been continuously requested to further open markets, making their industries vulnerable to foreign competitors. In fact, their newly-established manufacturing industries are likely to face difficulties in competing with giant foreign partners. It is clear that domestic products are less competitive in price, quality and post-sale service due to the low productivity. This can be proved by the US Department of Labour’ statistics (USDL) that hourly compensation costs for production workers in 2006 are $0.1 in the USA, compared with $7.3 in Canada, $17.8 in Brazil, $5.3 in the UK, $17.1 in Singapore and $16.2 in the Philippines (USDL, 2006). Consequently, domestic companies have been forced to merge into foreign companies; therefore, they lost homeland markets.
Another problem is that developing countries are becoming a dumping ground for out-of-date and dirty technologies. Firstly, most transferred technologies should suit these countries’ low standard of production and are beneficial to developed countries; therefore, they have been accepted for granted. Secondly, these technologies may be parts of package aids and investment projects. This is a common way of transferring dirty technologies by developed countries in order to prolong the production circle for more benefits. This case was mentioned by Mr. Phan Dang Tuat, Director of the Institute for Industrial Policies and Strategies of Vietnam, that Vietnam has been transferred and will import many toxic industries, specifically those relating to steel and cement (Vietnamnet, 2008). As a result, this prevents developing countries from improving their productivity and makes them lag behind technologically.
It would appear that not only developing countries are lagging behind, but also considered as lucrative baits to exploit by multi-nationals. On the one hand, they have moved their business to these countries to multiple benefits by paying low wages. They have also had preferential treatment from developing countries’ governments when they first established manufacturing factories. Another thing they expect is to use cheap raw materials in these countries. On the other hand, they have opportunities to exploit workers with longer hours and bad working conditions. GAP is an outstanding example of this kind as it built textile factories in Indonesia where people worked under the heat of 40oC or more with 12 to 18 hour shifts (Pilger, 2006). It would appear that the promising wealth brought by Globalisation is not for working people.
It can be seen that the working people are not beneficial from the investment flows which have been poured into developing countries with several irrefutable conditions. As a matter of fact, these countries need foreign investment, so they may accept unexpected imports of well-paid skilled labours and specialists, even assigned contractors. Otherwise, governments in developing countries are likely to be in a position to make concessions to foreign investors in order to attract more capital for national development. This point was described by Martin Khor that governments of developing countries had no choice for their policies on foreign investments, but had to accept the rules of multilateral investment (Khor, 1998). Even unintentionally accepting these rules, developing countries are considered losing “sovereignty rights” inside their land.
Another example is that the relationship between developing countries and their creditors has changed much more than ever before. According to Mohan Malik, “Multilateralism is a multi-player game played in a spirit of give-and-take” (Malik, 2006). Therefore, the foreign creditors like Japan, China and the USA… will be looking forwards to getting something back after they offer AIDS, ODA or low interest loans to developing countries. In fact, China has been considered a Saviour in the eye of African countries with its “cheque-book diplomacy” in recent years (Mail & Guardian online, 2007). It is not surprised that a rising China will be able to take over the US position in Africa. Otherwise, there is a rumour that in the race to be a permanent UNSC member, instead of India, Japan may have been chosen by many developing countries in the Asia-Pacific due to its long ODA history. Perhaps, it is only a political game to which investment loans have made no small contributions.
In contrast, there are some positive views on benefits that globalisation brings to developing countries. Firstly, many jobs have been created for people in these countries. Secondly, developing countries have extended markets to export their domestic products at relevant prices. Thirdly, their consumers profit from lower prices and more choice of goods, especially consumer products. And last but not least, the investment and capital flows are freely put into circulation by developed countries, making great contributions to the rest of the world’ development.
In conclusion, globalisation has caused a number of negative impacts on developing countries because it requires them to further open markets, making domestic industries uncompetitive with foreign partners. Moreover, these countries have the out-of-date technologies transferred and working people exploited. They also accept some conditions against their will and resign themselves to worse international positions. However, it is undeniable that globalisation has created some favourable conditions for these countries to reach targets of national development. Based on the above findings, we need further investigate the solutions that help developing countries to protect themselves and integrate well into the world economy.
REFERENCE:
1. Balakrishnan A., “The Doha round of WTO talks”, viewed 10th Jan, 2009
www.guardian.co.uk/business/2008/jul/21/globaleconomy.wto
2. Khor M., “The need to regulate foreign investment” (Third World Resurgence No.90/91, Feb-March 1998), viewed 16th January 2009
http://www.twnside.org.sg/title/mai1-cn.htm
3. Mail & Guardian online, 2007, “China denies cheque-book diplomacy in Africa”, viewed 16th January 2009
http://www.mg.co.za/article/2007-01-09-china-denies-chequebook-diplomacy-in-africa
4. Malik M., “Multilateralism Shanghaied”, July 14th 2006, viewed 21st January 2009
http://www.strategycenter.net/research/pubID.115/pub_detail.asp
5. Pilger J., “The New rulers of The World”, August 7th 2006, BBC - viewed 10th Jan, 2009
http://video.google.co.uk/videoplay?docid=-7932485454526581006&ei=WB1nSa_IO4nojgKqz-DBCg&q=john+pilger
6. Vietnamnet, “Vietnam accepts “dirty” industries” 28/11/2008 (GMT+7), viewed 15th January 2009
http://english.vietnamnet.vn/tech/2008/11/815859/
7. United States Department of Labour (USDL), “International comparisons of hourly compensation costs in manufacturing, 2006”, viewed 15th January 2009
http://www.bls.gov/news.release/pdf/ichcc.pdf
8. Wagner H., “Implications of Globalisation for Monetary Policies”, viewed 15thJan 2009
http://www.imf.org/external/pubs/ft/wp/2001/wp01184.pdf
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