The Globalization Mania And Developing Economies

Essay by supersaadiCollege, UndergraduateA+, March 2009

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The globalization mania has undoubtedly become the buzz word in today's world of economics and its impacts on developing economics raise a number of policy and research issues that need to be understood thoroughly that whether globalization is an inevitable reality or just another schism of the developed economic super powers. Nevertheless a strong momentum that globalization has generated in the areas of trade, foreign direct investment and other capital flows and commodity markets, provides assessment of global economic prospects as they affect developing countries and analyzes the link between developing countries and the world economy.

The increasing integration of developing countries with global economy explores the opportunities and challenges that arise from such integration. The participation of developing countries in the accelerated pace of integration over the past decade has shown large disparities while some developing countries have rapidly expanded their activities in the world trade capital markets, many other have not, and become less integrated with the global economy.

Many countries of the world lagging in global integration are among the poorest because there is close relationship between growth performance and integration. Rapid growth tends to promote a more open economy and lagging integration is a sign of certain policy deficiencies, moreover integration of economy can be a means to higher growth rate via better resource allocation, greater competition, transfer of technology and access to foreign savings.

The pace of integration among developing countries has been very uneven, though, in the aggregate developing countries kept pace with the world rate of trade integration. The ratio of trade to GDP fell in 44 out of 93 developing countries in the last decade. Similarly the distribution of foreign direct investment was also distorted in eight developing countries accounted for two thirds of foreign direct which inflow in 199093, while half...