Discuss the extent to which globalisation has been beneficial to Africa, China,

America or Britain.

Globalisation is when the world`s separate economies become integrated into one as
trade grows, capital is able to move Irom MDCs to LDCs and labour can migrate the
opposite way. This comes Irom the removal oI barriers to integration bringing us
closer to a single world market. Many AIrican and other 3
rd
world countries will
beneIit Irom job creation through increased trade (exports) and allocative eIIiciency
meeting the demands oI increasing consumers and markets, as they aim to concentrate
investment in industries which they have comparative advantage. Comparative
advantage where a country producing a good or service because it is better at
producing that good/service and also producing it at a lower cost than another
country.

On the other hand globalisation is seen to have some drawbacks in some cases,
because oI western power, this is things such as Laws, regulations preventing Iree
trade, high taxes poor countries cant aIIord. Weak 3
rd
world governments may also be
Iorced to pay high tariIIs on imports and be given limitative quotas on exports. The
reason being that these weak governments are easily exploited by the powerIul
governments oI the west due to the poor organisation and structure oI governments.

Conversely AIrica and other 3
rd
world countries can also gain Irom increased trade as
they can reinvest, increasing GDP Ior sustainable growth such as into inIrastructure
such as telecommunication and railway services, this helps build a base Ior Iuture
growth as western countries may turn to these countries Ior outsourcing jobs which
are wasting resources in the West, Ior example, British companies employing an
Indian Iirm to run a telephone helpline as it is much cheaper than doing it in Britain or
in America creating a HIGH OPPORTUNITY COST as these employees may be over
qualiIied Ior these jobs and could be put to better use as teachers, doctors or
accountant. Globalisation is also good when it allows countries to beneIit Irom Ior the
advantages oI Iree trade. These are things such as comparative advantage once again,
which gives consumers a wider choice oI products and services at the most eIIicient
and competitive prices and encourages innovation. Free Trade brings all the
advantages oI competition. Prices must be kept down to remain competitive within
the market.

In some cases protectionism helps the industrialist proIits by keeping prices up.
Competition encourages productive eIIiciency and innovation, as Iirms must cut costs
to survive and try to produce new and better products to gain market share. Free trade
also allows industries to gain Irom economies oI scale, this is the lower cost per unit
oI output as an industry or Iirm expands. Britain and the USA have beneIited Irom
this tremendously, as it has allowed them to produce pharmaceutical and aeronautical
products very cheaply compared to what they would have had to pay iI they were
unable to sell abroad. Free trade will also be beneIicial to 3
rd
word countries as it
enables them to become productively eIIicient, this is a major reason Ior the
implementation oI Iree trade as these countries will have to reach the highest standard
oI management and quality control is they want to be successIul at selling their
products to the countries in the west.






However some AIrican countries have not gained much, these are usually the small,
poorly managed and dependant countries that produce one crop and are highly in debt.
Some oI these are a part oI the HIPCs (highly indebted poor countries), this
programme promises debt relieI to the poorest countries iI they meet strict conditions
Ior sustained growth and human development. However it has been too slow and
demands too many conditions Ior very little money. Globalisation has helped this in
ways such as allowing these poor countries to trade with Ioreign countries and
thereIore earn Ioreign currency and thereIore purchase medical aid and other useIul
services Irom other countries. AIrica and other poor DCs lose out or make very little
progress as they have colonial structures i.e. they grow cheap Iood or mine minerals
to supply the rich countries and Iail to industrialise. Thus giving them a poor Terms oI
Trade (ToT) and they suIIer Irom price instability. ToT are a comparison oI the price
oI a country`s exports to the price oI its imports. Too many poor countries are over
reliant on commodities such as cheap Iood and minerals. These are usually low value
and Ialling Ior the past 40 years until 2005. They recovered very strongly until the
banking crisis and the credit crunch pushed them back down. Commodity prices
suIIer Irom short run inelastic supply and sudden shiIts in demand. World demand
may pick up but the supply oI commodities cannot match this as nothing can be done
once crops have been planted and it takes time to open new mines so the price
rockets. This will damage globalisation as it will make countries that are producing
low value commodities unable to trade and integrate with the world economy as they
will be unable to trade eIIectively due to higher import prices. When there is an
oversupply like in 2008 due to slumps in conIidence and a world recession, then price
collapses as the supply is there and cannot be stopped. The crop or mine`s output must
be sold even at low prices as nothing can be done once a crop has been planted.
AIrican countries also have so much debt that they are unable to build a market
Iriendly environment to gain structural change into secondary industries. MDCs
should help these countried by providing them with aid and cancelling their debts, we
should also have true Iree trade by reducing our barriers to poor countries, the
globalisation will beneIit poor countries as they will get export led growth.

MDCs could also help LDCs to industrialise by allowing Ior Ioreign direct investment
(FDI), this is beneIicial as iI western companies build Iactories in these countries it
will provide jobs Irom abroad, it should also act as an injection into the economies
circular Ilow Irom abroad. It should also cause a local multiplier eIIect which is the
enlarged impact on national income oI a small change in an injection or spending.
However this also brings things such as exploitation oI workers, the employer may
pay their workers very little money, and make them work in very dangerous
conditions. Foreign industries may cause small LDCs to become overly dependant on
them, the Ioreign company may also begin to bribe local politicians in order to change
local policies. The Iirm may drain nearly all oI its proIits back to the west and spend
little bringing any lasting beneIit to the area. This leaves weak multiplier eIIects and
also will produce little to solve the local savings and investment shortage, and doesn`t
train up local workers. However Ior this to even work the country will have to open
up to exploitation such as this like the NICs.

China oI has gained Irom globalisation, China has gained Irom its comparative
advantage (CA) in the secondary sector through careIul expansion oI its industry. CA
is where one country is able to provide a product or service and a lower cost per unit
than another country. This was then Iollowed by export led growth, by selling their




cheap land and labour abroad. China`s addition to the world economy aIter being a
closed economy Ior many years brought competition and hence allocative and
productive eIIiciency. With a low exchange rate and macro stability and a good
government concentrating on good human investment and inIrastructure, China
gained an export boom which then created local multipliers. A second wave oI
industry grew, which generated proIits to be ploughed back in, people saved Irom
their wages and China gained the capital growth so essential to liIt its people out oI
poverty through Iast growth. China achieved this by allowing MNCs (multi-national
corporations) to exploit them, however this was only a little as China was big enough
to set tough bargains and its leaders were well organised and eIIicient Ior the nation`s
good. China could have looked at the UK and USA`s policies and how their
government worked. They experienced EOI (export orientated industrialisation)
which was done through a Iree market approach and small positive government
intervention to provide the social inIrastructure Ior growth and human development.
This was helped by globalisation as China was able to sell it`s output abroad and also
purchase various machinery and technology as they earned Ioreign currency. China
could have looked at the UK and USA`s policies and how their government worked
and thought that they needed to have that as well, this is on oI the eIIects oI
globalisation.

China entering the world market has mostly done us all good. Globalisation is good
provided it produces the gains Irom Iree trade, whether we gain lower import prices
Irom labour and land intensive goods. Whether we can shiIt our resources upmarket
into higher value products like aerospace and so gain Irom CA the same as China.
China`s ToT stayed good because it broke into manuIacturing, where prices hold Iirm,
whereas AIrica still suIIers Irom bad deal on which they trade. China could not be
bullied at the WTO into bad trade deals, it has no 3
rd
world debt to repay at high
interest rates, but instead the USA owes China $bn. The key to this is that China
brought in the right institutions, the preconditions Ior growth and gave incentives Ior
the growth oI investment and Iree markets. Thus private enterprise produced the
products consumers wanted around the world and so could compete very well with its
low cost, educated labour Iorce. AIrica lacks this crucial requirement Ior sustainable
growth Ior Iar too long. AIrica`s poorest countries have debt and geography against
them, dry and isolated inland countries. Social breakdown, weak and corrupt
governments and also completely reliant on one or two commodities to earn Ioreign
currency and provide employment. Mostly until now much oI AIrica has remained at
stage one or zero Ior development as subsidence primary producers have the lowest
level oI value and productivity. For 40 years they remained closed and planned
economies with little value to exports. These then suIIered Irom weakness and
allowed themselves to be exploited too much by MNCs. Globalisation has taken their
mineral resources and so does not beneIit them in the long run. Their development is
unsustainable as when they do develop a good economy their resources such as gold,
diamond and minerals will be take by western MNCs while they are still cheap. Glob
will beneIit these poorest countries only iI we help them and iI they have good
governance in order to help create a strong and supported Iree market sector.

Some AIrican countries such as Ghana and Uganda are creating growth preconditions
and starting to pick up. These might Iollow the path oI China just like other countries
such as Brazil and Turkey have. It takes more than Globalisation to do this, as it
requires MDCs like Britain and America to provide good aid and guidance to the




LDCs. These AIrican economy could also try Ior EOI, however this can only be
achieved iI the government approaches it in a good way. The economy could also try
ISI (import switching industrialisation), this aims at producing imported goods in the
domestic economy. However this produces many inIant industries and will not be
good Ior a small country as it will be too diIIicult to maintain these inIant industries
and enable them to compete against Ioreign industries.

Overall globalisation can be beneIicial iI all the gains oI Iree trade are allowed Ior.
However it can be damaging iI MDCs try to exploit LDCs and take their natural
resources, leaving them with very little once they have developed. It also depends
whether the government are organised and their aim is Ior good economic growth and
setting the preconditions Ior this. Thus there are many requirements Ior globalisation
to be beneIicial to everyone. AIrica will need to allow Ior some exploitation in the
short run iI it wants to gain exports and Ioreign currency in the long run.