The Impact of Globalisation on Developing Economies

Developing Economies in a Globalised World

Core, Semi-Periphery, and Periphery Model

• Core Regions:
  • Dominate global trade, control advanced technologies, and maintain diversified economies.
  • Examples: USA, EU, Japan.
• Semi-Periphery Regions:
  • Emerging economies like India, China, and Brazil.
  • Act as intermediaries, exploiting peripheral regions while being influenced by core nations.
• Peripheral Regions:
  • Provide low-value exports such as raw materials and are heavily dependent on core regions for investment and technology.
  • Examples: Sub-Saharan Africa and parts of Southeast Asia.

Globalisation's Impact on Developing Economies

• Developing economies are primarily integrated into global markets through:
  • Resource extraction (oil, minerals, agricultural products).
  • Labour-intensive manufacturing (e.g., textiles).
  • Service outsourcing (e.g., IT in India).

Positive Impacts of Globalisation on Developing Economies

Economic Growth

• FDI from MNCs boosts industrialisation and creates jobs.
• Example:
  • India's economic liberalisation (1991) opened key sectors like telecom, insurance, and IT to foreign investment, increasing GDP growth from 3% in the 1970s to 6% by the 2000s.

Infrastructure Development

• Globalisation leads to improved transport, communication, and energy networks.
  • Example: In India, investments in ports and roads enhanced connectivity, aiding trade and investment.

Job Creation

• MNCs establish manufacturing and outsourcing industries, providing employment opportunities.
  • Example: India's IT sector employs millions, driven by outsourcing from the USA and EU.

Poverty Reduction

• Increased trade and investment help raise living standards.
  • Global Context: Extreme poverty declined from 35% in 1990 to less than 10% by 2019 due to globalisation.

Technology Transfer

• MNCs introduce advanced technologies and practices, improving productivity in agriculture, industry, and services.

Negative Impacts of Globalisation on Developing Economies

Exploitation of Resources

• Over-reliance on resource extraction causes environmental degradation.
  • Example: Deforestation in the Amazon for agriculture and mining【132†source】.

Labour Exploitation

• Workers in peripheral regions often face low wages and poor working conditions.
  • Example: Sweatshops in Bangladesh's textile industry supplying fast fashion brands.

Economic Inequality

• Benefits of globalisation are not evenly distributed:
  • Core regions profit from high-value industries, while peripheral regions rely on low-value exports.
  • Within countries, urban areas benefit more than rural regions.

Cultural Erosion

• Global brands and media overshadow local traditions and cultures.
  • Example: Western fast-food chains dominate in cities across developing nations.

Environmental Damage

• Industrialisation in developing countries often lacks proper environmental regulation.
  • Example: Oil extraction in Nigeria's Niger Delta has caused severe pollution.

Dependence on MNCs

• MNCs often repatriate profits to their home countries, leaving host countries with minimal long-term benefits.

Case Study: Globalisation and India

Economic Reforms (1991)

• India liberalised its economy, reducing tariffs and allowing FDI in key sectors.
• Results:
  • Rapid economic growth, averaging 6-7% annually.
  • Expansion of the IT and telecommunications sectors.

Outsourcing Industry

• India became a global hub for IT and business process outsourcing (BPO).
  • Example: Companies like Infosys and TCS provide services to global firms.
• Benefits:
  • Job creation and rising middle-class incomes.
  • India exported $150 billion worth of IT services by 2020.

Challenges

• Urban-Rural Divide: Urban centres like Bangalore thrive, while rural areas lag behind.
• Environmental Impact: Industrialisation has led to rising pollution and deforestation.

Strategies for Sustainable Globalisation

Environmental Protection

• Enforcing environmental safeguards for industries.
  • Example: India introduced regulations on industrial waste management.

Inclusive Development

• Invest in education and rural infrastructure to reduce inequalities.

Fair Trade Policies

• Support for local industries to compete with global players.

Corporate Responsibility

• MNCs adopting sustainable practices, such as reducing carbon emissions and improving labour conditions.