Question

2. As a student of international business management critically discuss five major problems of globalization facing developing countries how such problems should be overcome

Answer 1

Following are some major problems which the developing countries are facing:-

A. Threat of foreign companies for domestic companies as developed country's corporates have better technology to produce goods and service which can work as a threat to the domestic companies.

B. Misutilisation of resources by the foreign firms of the developing countries as they can have better technology to make better use of those resources as compared to the domestic firms.

C. The sale of cheaper products in the developing countries can also hamper the growth of domestic firms as customers are ready to purchase cheaper products.

D. Widening of gap between poor and rich due to vicious circle of poverty. As some products are those which they can sell only the rich people which also impact the psychology of lower class people.

E. Balance of payment deficit as more and more demand for foreign products arise which will create disequilibrium in the BOP.

Solution for these problems can be:-

A. Import substitution for domestic companies-:

As domestic government should provide subsidy and incentives to the domestic firms so that their products can compete with foreign products.

B. Some kind of legal protection to the domestic firms can also help.

C. Imposing tariff or non- tariff barriers on the imported goods.

D. Reserving some essential products for the domestic firms.