A positive development here is the introduction of more flexible rules of origin agreed recently in the WTO and called for in the SDG target Also, the trade-related support for LDCs through the SDT provisions often lack enforcement mechanisms and are based on voluntary assistance. Fewer problems are encountered with regard to technical assistance from the WTO and longer transition periods for implementing certain WTO obligations.
LDCs also face difficulties in obtaining information about the range of available support. In response to the need for a single source of information on all these measures, the UN has developed the LDC information portal , which also provides access to research and analysis related to their use. Even when LDCs do have relatively good access to international markets, special and differential treatment needs to be complemented by other interventions.
Often, the main reason why exports are so low in LDCs is that domestic supply is constrained rather than that international demand or market access are inadequate. Many LDCs simply are not capable of producing goods and services in sufficient volumes, consistency or quality to be able to take advantage of export-led economic growth. In this respect, expanding productive capacity in LDCs is the overwhelming priority in sustainable development.
As highlighted by the Committee for Development Policy CDP , developing productive capacity requires integrated policies in five areas: i development governance; ii policies for creating positive synergies between social outcomes and productive capacity; iii macroeconomic and financial policies that support productive capacity expansion and increase resilience to external shocks; iv industrial and sectoral policies and v international support measures, particularly in the area of trade.
As the success of a few LDCs in labour-intensive manufacturing shows, the right mix of domestic policies and international support can help to overcome supply-side constraints such as inadequate infrastructure related to domestic production and for the transportation of exports; lack of credit and skilled labour; high costs of inputs; as well as inefficient customs procedures. Institutional capacity gaps are another critical impediment to increasing LDC exports. LDCs need to improve inter-ministerial coordination on trade policies as well as connections with the private sector.
These include investment particularly foreign direct investment , the spread of technology, strong institutions, sound macroeconomic policies, an educated workforce, and the existence of a market economy. Furthermore, a common denominator which appears to link nearly all high-growth countries together is their participation in, and integration with, the global economy. There is substantial evidence, from countries of different sizes and different regions, that as countries "globalize" their citizens benefit, in the form of access to a wider variety of goods and services, lower prices, more and better-paying jobs, improved health, and higher overall living standards.
As much as has been achieved in connection with globalization, there is much more to be done. Regional disparities persist: while poverty fell in East and South Asia, it actually rose in sub-Saharan Africa. Proponents of globalization argue that this is not because of too much globalization, but rather too little.
Globalization and the Least Developed Countries: Potentials and Pitfalls
And the biggest threat to continuing to raise living standards throughout the world is not that globalization will succeed but that it will fail. It is the people of developing economies who have the greatest need for globalization, as it provides them with the opportunities that come with being part of the world economy. These opportunities are not without risks—such as those arising from volatile capital movements. The International Monetary Fund works to help economies manage or reduce these risks, through economic analysis and policy advice and through technical assistance in areas such as macroeconomic policy, financial sector sustainability, and the exchange-rate system.
The risks are not a reason to reverse direction, but for all concerned—in developing and advanced countries, among both investors and recipients—to embrace policy changes to build strong economies and a stronger world financial system that will produce more rapid growth and ensure that poverty is reduced. The following is a brief overview to help guide anyone interested in gaining a better understanding of the many issues associated with globalization. Economic "globalization" is a historical process, the result of human innovation and technological progress.
It refers to the increasing integration of economies around the world, particularly through the movement of goods, services, and capital across borders. The term sometimes also refers to the movement of people labor and knowledge technology across international borders. There are also broader cultural, political, and environmental dimensions of globalization.
The term "globalization" began to be used more commonly in the s, reflecting technological advances that made it easier and quicker to complete international transactions—both trade and financial flows. It refers to an extension beyond national borders of the same market forces that have operated for centuries at all levels of human economic activity—village markets, urban industries, or financial centers. There are countless indicators that illustrate how goods, capital, and people, have become more globalized. The growth in global markets has helped to promote efficiency through competition and the division of labor—the specialization that allows people and economies to focus on what they do best.
Global markets also offer greater opportunity for people to tap into more diversified and larger markets around the world. It means that they can have access to more capital, technology, cheaper imports, and larger export markets. But markets do not necessarily ensure that the benefits of increased efficiency are shared by all. Countries must be prepared to embrace the policies needed, and, in the case of the poorest countries, may need the support of the international community as they do so.
The Pros And Cons Of Globalization
The broad reach of globalization easily extends to daily choices of personal, economic, and political life. For example, greater access to modern technologies, in the world of health care, could make the difference between life and death. In the world of communications, it would facilitate commerce and education, and allow access to independent media. Globalization can also create a framework for cooperation among nations on a range of non-economic issues that have cross-border implications, such as immigration, the environment, and legal issues.
At the same time, the influx of foreign goods, services, and capital into a country can create incentives and demands for strengthening the education system, as a country's citizens recognize the competitive challenge before them. Perhaps more importantly, globalization implies that information and knowledge get dispersed and shared.
Innovators—be they in business or government—can draw on ideas that have been successfully implemented in one jurisdiction and tailor them to suit their own jurisdiction. Just as important, they can avoid the ideas that have a clear track record of failure.
CHALLENGES OF ECONOMIC GLOBALIZATION
Joseph Stiglitz, a Nobel laureate and frequent critic of globalization, has nonetheless observed that globalization "has reduced the sense of isolation felt in much of the developing world and has given many people in the developing world access to knowledge well beyond the reach of even the wealthiest in any country a century ago. A core element of globalization is the expansion of world trade through the elimination or reduction of trade barriers, such as import tariffs.
Greater imports offer consumers a wider variety of goods at lower prices, while providing strong incentives for domestic industries to remain competitive.
Exports, often a source of economic growth for developing nations, stimulate job creation as industries sell beyond their borders. More generally, trade enhances national competitiveness by driving workers to focus on those vocations where they, and their country, have a competitive advantage. Trade promotes economic resilience and flexibility, as higher imports help to offset adverse domestic supply shocks.
Greater openness can also stimulate foreign investment, which would be a source of employment for the local workforce and could bring along new technologies—thus promoting higher productivity. Restricting international trade—that is, engaging in protectionism—generates adverse consequences for a country that undertakes such a policy. For example, tariffs raise the prices of imported goods, harming consumers, many of which may be poor. Protectionism also tends to reward concentrated, well-organized and politically-connected groups, at the expense of those whose interests may be more diffuse such as consumers.
It also reduces the variety of goods available and generates inefficiency by reducing competition and encouraging resources to flow into protected sectors. Developing countries can benefit from an expansion in international trade. Ernesto Zedillo, the former president of Mexico, has observed that, "In every case where a poor nation has significantly overcome its poverty, this has been achieved while engaging in production for export markets and opening itself to the influx of foreign goods, investment, and technology.
In the late s, many developing countries began to dismantle their barriers to international trade, as a result of poor economic performance under protectionist polices and various economic crises. Development policy. Economic growth.
International trade. Trade policy.
Rural development -- Developing countries. Agriculture -- Economic aspects -- Developing countries. Developing countries. Summary This book evaluates the policies of least developed countries LDCs and the decisions that they now face against the backdrop of the changes in the structure of the global economy and in the globalization process itself.
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It analyses possible scenarios and alternative trade and growth policies that are likely to affect the LDCs and their poor population, in order to draw lessons for future policies. The book has 6 chapters and a subject index. Introduction II. The Critics of Globalization IV. In Defense of Globalization IV. Has Globalization been? Good for the Poor?? The Changing Faces of the World? Pro-poor Policy V. Concluding Remarks Iii Has Globalization been? Iv Have the Policies of Economic Development been? What Has Remained of the? Washington Consensus?? Outward- vs.
East Asian Miracle? Should Government Interventions be Prohibited? Limitations of the East Asian? Food Insecurity: Production or Income Shortfall? Why is Africa Falling Behind?