Beka Kervalishvili
English 0802 and 812
Dr. Alesha Gayle
12 April 2015
The world will not progress without economic globalization
The phenomenon of globalization still startles economists, politicians and scholars. This process seems to be the inevitable tendency that the world has been striving for and has changed the world. However globalization has become the most incremental part of economic development of third world countries, with advantages that far outweigh the drawbacks. The technological advancement in the recent decades has spread the wings of globalization across the corners of the world. As the civilizations clash and the cultures intertwine with one another there always is some level of backlash towards change, however the reality in the developing countries always speaks in advantage to progress. The goal of the economy is to maximize the effective usage of the resources available. This concept is valid both within the borders of the country or on the global stage. As each country strives to make the best use of resources globalization allows the scale to be broadened within the boundaries of our planet. The forces that rule economy within the country are the same in the global marketplace.
Globalization has a tremendous impact on the economies of the developing countries by providing access to foreign investments. The globalization of capital provides the major source of investment for transition economies worldwide.
Acknowledging the importance of foreign capital, many governments create a suitable environment to attract foreign businesses as they are not affected by the crisis in certain

regions. Statistics show that “in 2001 alone 208 changes have occurred in legislation pertaining to direct foreign investment in 71 countries. Over 90% of the changes were directed at setting up more welcoming investment background”(Lonescu 80). For the same year there were 2100 bilateral investment agreements signed between countries, which benefited all parties (Lonescu 80). In theory effective resource management within the country should provide for the best results. However reality proves that without significant foreign investments, performed by transnational corporations, developing countries exports tend to be modest, due to low competitiveness on the global market
(Lonescu 81).
Another clear advantage of globalization is foreign trade. Throughout history of mankind merchants had traveled the world across the narrow paths, from civilization to civilization, long before globalization emerged. Nations realized the importance of foreign trade at the early stages of development when exchange of good was limited to neighboring geographical locations. As the country strives to efficiently produce goods, one way to excel is by producing in large quantities and then exchanging it for the products produced in a different country to minimalize the quality and quantity offered to its citizens. Keynes, one of the founding fathers of modern economic thinking suggests
“domestic prosperity [is] directly dependent on a competitive pursuit of [export] markets”
(349). According to the data provided by the International Monetary Fund developing countries now account for one third of the world trade compared to less than 25% in the
70s. Contrary to popular belief, trade increased by globalization does not only increase between powerful and week nations, but among third world countries and is not restricted to resource experts either. IMF data indicates that many developing countries have

greatly increased exports in manufacturing sectors, some reaching to 80% of total export.
Moreover, trade between developing countries has grown rapidly, with 40% of their exports now going to other developing countries (IMF).
To sustain economic growth international trade liberation, key part of globalization, is absolutely necessary, as the needs of population increase day by day. There has not been a country in the recent history, which has achieved economic success resulting in substantial living conditions of its citizens without open borders. The World Bank indicates that in the developing countries that actively participated in international trade “ the number of people in absolute poverty declined by over 120 million (14 percent) between 1993 and
1998”(IMF). In fact the same study suggests that the benefits of open trade outweigh the drawbacks for the economy by a thousand times.
Globalization also spreads technology across the world. Even in such simple cases as everyday household items, the evidence of positive trends is apparent. Transnational corporations bring the latest technology and knowledge to less developed regions, thus promoting advancement in third world countries. Chinese companies are building several high-tech manufacturing zones in northern Zambia, which are “the first of its kind in
Africa”(Carmody and Hampwaye 88). Technology as the major ingredient of production process has a significant affect on production costs and ability of the goods to compete at the global marketplace. Thus transnational companies not only bring cheaper products, but better quality as well. The results are especially evident in mass produced items where the sophisticated levels of machinery perform tasks curtail to production. Increased technological presence also provides needs and the ability for better education, as well as corporations themselves provide various trainings for their employees. Transfer of

technologies, as a part of globalization also increases employment in developing countries. The investments in Zambia will “house up to sixty Chinese companies, employing sixty thousand people”(Carmody and Hampwaye 88). The investment in manufacturing zones would exceed $800 million. Which in itself will increase other fields of economy as well, due to the high marginal effectiveness of the investments. The effect of the investment creates demand in economy according to geometric progression, thus the effect of the above mentioned $800 might generate hundred times more currency flow, providing jobs and income for thousands of people in various industries. The same source indicates that in 2009 another foreign mining investment of $3.5 billion was announced in Lusaka, Zambia; therefore increasing productivity, work conditions, compared to the levels before foreign investments and creating jobs in the industry. The most persistent demand Nike is given by the employees is actually expansion so that their relatives may get a job as good as theirs (Norberg 205). In communist Vietnam, the government realized the benefits of transnational corporations and opened its borders to the world economy. As a result Norberg argues that “in 10 years 2.2 million children have gone from labor to education”(206). This will have tremendous effect on the future economy of Vietnam, as those 2.2 million children will have an education that will change the nation for the better. Globalization effects may not be immediate, however in the long run it is clearly beneficial.
Some critics may argue that globalization farther promotes poverty and abuse of the poor by the rich. However historical data would argue otherwise, the World Bank indicates “ Countries that have opened their economies in recent years, including India,
Vietnam, and Uganda, having experienced faster growth and more poverty reduction”().

However the countries that remained less open did not experience similar growth.
Norberg estimates that “On average, multinationals in the least developed countries pay twice as much as domestic companies in the same line of business. If you get to work for
American multinational … you get eight times the average income”(206). Therefore how can globalization promote poverty if it is actually increasing the income of the country?
The critics of globalization emphasize on the efficiency argument, the assumption that state expenditure for welfare may decrease due to globalization, however omitting the compensation argument which shows that “ transnational states with democratic institutions experience welfare state expansion” (Jiang 435). Often the critics ignore the role of the government in the economic process, and often failure of certain countries to further benefit resources of globalization falls on ineffective regulations of the governments. Globalization is the resource that if used properly drastically increases economic prosperity, however if in the wrong hands may be the source of corruption.
Therefore the state needs to provide structural institutions that will deliver the benefits to the population.
The main general misunderstanding about globalization effects resides in the structure of the comparison. Any object or situation can only be measured in comparison to the other. To measure effects of an improvement, it needs to be compared to the previous state of being and globalization has improved most aspects of economy.
. To conclude globalization has proven to be the force that can challenge the poverty and promote economic stability across the world. The data provided by IMF and
World Bank proves advantages of global economies. Without globalization citizens will not benefit the various products that they use in everyday life. For the most of the

population life without cars, computers and all the other imported goods simply would not be imaginable. If the socialist countries and totalitarian governments can admit the benefits of economic globalization, there should not be any doubts among the people in democratic countries.

Works Cited
Ionescu, A. (2007). Globalization vs. Developing Economy.
Romanian Economic and
Business Review, 2 (3), 77-82.
Potrafke, Niklas. "The Evidence on Globalisation." The World Economy 38.3 (2015):
509-52.
Carmody, Pádraig, and Godfrey Hampwaye. "Inclusive Or Exclusive Globalization?
Zambia's Economy and Asian Investment." Africa Today 56.3 (2010): 84-102.
Jiang, Ting. "Globalization and Welfare Spending Across 21 Transitional Economies."
International Journal of Comparative Sociology 55.5 (2014): 429-53.
Lee, Ki-hoon, and Byung Min. "Globalization and Carbon Constrained Global Economy:
A Fad Or a Trend?" Journal of Asia Pacific business 15.2 (2014): 105-21
Pohoryles, Ronald. "The First Anniversary of "Occupy": Globalization of the Economy,
Globalization of Dissent and the Civil Society." Innovation: The European
Journal of Social Science Research 25.3 (2012): 299-302.
"Global Trade Liberalization and the Developing Countries -- An IMF Issues Brief."
Global Trade Liberalization and the Developing Countries -- An IMF Issues
Brief . International Monetary Fund, 1 Nov. 2001. Web. 14 Apr. 2015.