impact of globalization on the economic development UPSC| Briefly describe the impact of globalization on the economic development of the world

 Question.

Briefly describe the impact of globalization on the economic development of the world. (UPPSC, 2020, 15 marks)

Answer.

Globalization has made countries closer and more dependent on each other. Globalization has affected society, economy, environment, culture, and politics in both positive and negative ways.

Following are the positive effects of globalization on the economic development of the world:

Globalization gives firms the freedom to buy cheap raw materials from abroad, which provide cheap manufacturing products to consumers, as well as increase earnings and employment to millions of people in the raw material-producing country.

For example,

• Due to globalization, rice prices and demand increased in Vietnam, bringing many rice farmers out of poverty.
• Cotton and mango farmers in India and Pakistan have benefited due to demand from abroad.

Since globalization gives firms the freedom to set up their manufacturing in the region of cheap labor; developing countries benefited from employment and raising the standard of living of the people.

For example,

• Many automobile industries from the United States relocated to Mexico for cheap labor.
• China has benefited the most from the manufacturing shift from America to China.
• Many service-related jobs from abroad are given on contract in India for cheap labor.

Consumers are also benefited from getting varieties of high-quality goods and services at competitive prices.

Following are the negative effects of globalization on the economic development of the world:

The exploitation of Workers:

• Many multinational companies of textiles are established in Bangladesh for cheap labor. It is estimated that the average monthly wage of workers in Bangladesh is less than the salary of a day's work in the United States.

Job Insecurity:

• Many workers in developed countries are not able to compete with the cheap wages of developing countries, due to which there is a risk of losing their jobs.

Rising Income Inequality:

• The gap between rich and poor are increasing in the globalized world.

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