In recent decades many world markets increased their interaction with each other and contributed to the global economic growth. Free trade emerged and new technology made transportation and production of goods easier and faster. For example, according to an infographic, The iPhone 6 Supply Chain Saga, published on the website comparecamp.com, the iPhone 6 was designed and researched in USA, assembled in China, received the required materials from 785 suppliers in 31 countries and was sold to customers all around the world.
Altogether globalization increased the welfare for Austria, Germany, United States and many other developed countries. People in these countries can buy jeans and clothes for low prices, because they were produced in a country with lower income. They can afford the new version of the iPhone due to higher income level, whereas the majority people in developing countries have a difficult time to provide food for their family. The aim of this paper is to highlight the positive and negative impacts of globalization on developing countries.
Firstly, the term “Globalization” will be defined and then a concise insight on the history of this phenomenon will be given. Followed with the benefits and drawbacks of globalization on developing countries, with a specific focus on the fields: economic growth, heath system and education.
Hirst, Thompson and Bromley (2012) declare that “we live in an era …, in which national cultures, national economies, national borders and national territories are dissolving”. This all is happening due to globalization, which gained a significance in the second half of the 20th century, with the goal to increase growth and welfare for the nations. A movement of increased Integration of global economy, politics and culture (Toukhy, 1998, p. 222). Robertson (1992) describes that globalization “refers both to the compression of the world and the intensification of consciousness of the world as a whole” (p. 8). He mentions that this phenomenon began several centuries ago, but it was placed emphasis on in recent decades. The theories on when globalization began are too widespread, but according to the platform www.globalisierung-fakten.de these theories can be generally divided in to three standpoints:
1. The phenomenon of globalization emerged after the WWII
2. The history of globalization began already in the 15. Century with the expansion of Europe.
3. Globalization is a integration process of the humans, which they possess since they existence.
However specially after the WWII, globalization gained huge importance when technological inventions made communication, transportation and manufacturing easier, cheaper and time-saving (Toukhy, 1998, p. 222).
3. Advantages and Disadvantages of Globalization
There are different reactions to globalization around the world; some see it as a good thing and others oppose of it. According to Hamdi (2013, p.142), globalization has positive impacts on many different sectors of developing countries for example the economy, health system, technology and politics. However, there are many drawbacks that can be observed due to globalization. Such as the increased income inequality and global warming, as the result of increased transportation and production ( Borghesi & Vercelli, 2003, p. 78-79). However we will see later on that there are also disadvantages in health and education systems.
In the next paragraphs I will focus on the advantages and disadvantage of globalization on emerging nations in the fields: Economic Growth, Health System and Education.
3.1 Economic Growth
Globalization has a great impact on the economic growth of a country, this was observed in the last decades not only in developed nations but also in developing states like India and China. There are empirical evidences illustrating increasing wages, better working conditions, competition and cooperation in developing countries. Moreover, by opening the trade barriers, the possibility to invest in foreign countries emerged, which created jobs, introduced new technology and improved infrastructure (Lukas,2003, p. 89). Sachs and Warner (1995, p. 36) state in their paper that openness and growth are interconnected. They found, for example, that in the years between 1970 and 1989 developing countries with open economies had an average grow rate of 4.5 percent per year, while countries with closed economies had a grow rate of 0.7 percent per year. The same can be observed in developed countries.
Furthermore, globalization created a rapport between developing and developed countries, through their dependence to each other, for resources, technology and information. The advantages that can be derived from this are better communication and lower risk of war that lead to growth economy (Hamdi, 2013, p. 142).
However there are disadvantages which are clearly visible, for example some researchers declare that they observe a high increase of inequality between the rich and the poor. These changes mainly occur between countries, because the economy of an developing country grows slower whereby their population grows rapidly (Borghesi & Vercelli, 2003, p. 81-82 ). Another reason for a disadvantage is that companies of economically advanced countries capitalize of the low wages and no pollution regulations of developing countries to establish factories. (Hamdi, 2013, p. 143)
3.2 Health Systems
According to article 25 of the Universal Declaration of Human Rights (1948), every human has the right for healthcare, along with food, clothing and housing. Every government, of developed and developing nations, is legally obliged to provide these fundamental human rights to its population. However, many developing countries do not involve in this obligation and primarily depend on organizations, e.g. World Health Organization (WHO), and developed states (Reading, 2010, pp. 370 – 372).
The WHO Report 2014 found that it is common for governments of developing countries to have a low expenditure on healthcare, e.g. Pakistan spent in the year 2000 three percent of their gross domestic product on health system, in 2011 while United States had over fifteen percent. This issue is the result of the privatization that came along with globalization. Private healthcare dominates developing countries, which lead to the situation that their governments are not meeting the requirements of their obligation to international and domestic law and countries are suffering as a result. (Reading, 2012, p. 373 – 375)
However, Reading (2012) points out that privatization of healthcare can benefit the county, if the government takes on the monitoring of the private sector (p. 375). The Impact of Globalization in the Developing Countries (2013, p. 143) mentions further advantages on health systems of developing nations, such as the increasing living standards and life expectancy. According to WHO (2004) between the years 1950 to 2002, the average life expectancy at birth of high-mortality developing countries increase by 17 years and the one of low-morality developing countries by 26 years. Hamdi (2013) remarks that the reasons behind this changes are due to globalization that contribute, on one hand, to the economic growth and, on the other hand, to the developed science and medicine, which discovered many deadly diseases, such as AIDS, Swine flu etc., in the last decades and found ways to fight them (p. 143).
The people in advanced country, education is taken for granted whereas in most developing countries the educational system is not clearly regulated / structured. Hamdi (2013, p. 143) states that globalization benefited the education system in developing countries, which grew throughout the last years. This, for example, can be observed in the decrease of illiteracy rate. A report of UNESCO (2017) shows that from the years 2014 to 2016 the number of adults reported as illiterate dropped from 758 million to 750 million.
However, Globalization can also impact the economy growth of developing countries negatively. This can be observed through “Brain-Drain”, which Lowell and Findlay (2001, p. 6) highlight as the phenomenon of high emigration of people with higher education. According to Hamdi (2013) more and more qualified workers, mostly from such sectors like science, IT and medicine, leave their country with the goal to earn higher income and enjoy “greater lifestyle prospects” in developed countries. Lowell and Findlay (2001, p. 4) describe (emphasise) that high number of skilled emigration leads to a decrease in the number of educated employees and in economic growth, which will then result in increase in poverty and inequality between the rich and poor. However some researchers argue that there can be benefits through Brain-Drain, which they call Optimal Brain-Drain or Brain Circulation. In Migration Of Highly Skilled Persons From Developing Countries, Optimal Brain-Drain is defined as “just the right amount of skilled emigration”(Lowell & Findlay, 2001, p. 6). Additionally, Brain Circulation is when migrants who emigrated to pursue an education or a carrier in an advanced county, return to their motherland to work. The economists state that returned migrants will increase the productivity and effectivity of the nation with their gained experiences and knowledge from a more developed country (Lowell & Findlay, 2001, p. 5 – 7).
The beginning of globalization goes several centuries back but many economists agree that only in the last decades it has strongly accelerated as a result of new technology for information and communication emerged. This phenomenon has various advantages and disadvantages depending on our concerns. This paper presents the effects globalization on developing nations, with the focus on the issues: economic state, health system and education. Globalization has benefited the economy of many developing countries, their economy is growing and flourishing. But these processes are progressing slowly so that they cannot keep up with developed countries and the income inequality is rising. Organizations such as WHO, NGO and Doctors Without Borders, which emerged in the process of globalization, opened new possibilities to increase the overall life expectancy and living standards in developing countries by trying to eliminate diseases and provide education. However with globalization privatization and emigration of skilled people increased. My studies illustrated one great observation; Globalization has many different impacts on every sector of a developing country but altogether these effects have in one way or another a great impact on the economy of this country.