Analysis on Benefits on Developing Countries from Globalization Economically

ESSAY: Analysis on Benefits on Developing Countries from Globalization Economically

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Introduction

Globalization is defined as the growing economic interdependence of countries worldwide developed by variances of crossborder transactions in goods and services and by the higher mobility of production such as a more rapid and widespread international diffusion of technology (IMF, 2006).

The process of globalisation mostly influence developing countries. There are some driving forces behind economic globalisation which are reduction in transport and communication costs, reduced policy barriers to trade and investment, an increase in availability to gain technology, and the transmit speed across national boundaries. The aspects of economic globalisation are liberalisation of international trade, finance and production activities and growing power of transnational corporations (TNCs) and international financial institutions (Khor, 2000). Globalisation has some functions related to increase in international trade, financial flows and foreign direct investment (FDI) and so on. The essay would discuss globalization economically benefit developing countries through four aspects on both forces and threats.

Main Body

1. Positive Impacts of Globalization on Trade Liberalization

Globalisation can accelerate economic growth and reduce poverty by trade liberalization such as promoting foreign direct investment (FDI) and by fostering competition and macroeconomic stability, thus allowing developing countries to exploit their economies of scale (Bhagwati, 2004 and Loungani, 2005).

FDI plays an important role on promoting economic growth. Besides of benefiting to domestic investments, it assists in innovation and technology transfers, enhances the foreign technology absorptive capacity, promotes international trade

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