Question

Is it true that small countries as a group are coping well with the globalization process, or is it important to distinguish between different kinds of small countries in this regard?

Answer 1

Definition: Globalisation means increased openness of an economy to international trade, capital, technology and free movement of labour.

- In case of small countries, we cannot group them all together to study the effects of globalisation, as the effects are based on a number of factors like - stage of development of the economy, GDP, natural endowments, share in international trade and Balance of trade of the country etc.

- The developed countries promoted globalisation to benefit from access to new markets for their goods and capital investment opportunities across different countries.
- For developing and least developed countries (LDCs) globalisation carries benifits and opportunities as well as costs and risks.

- Developing countries depend on developed countries for capital goods and technology, while developed countries depend heavily on developing countries for raw materials, food and oil, and as markets for industrial goods.

- Globalization increases the inequality between the rich and poor, countries like Africa still have the highest poverty rates. Also the developed countries set up their companies and industries in the developing and least developed counties to take advantages of low wages, large deposits of natural resources, and thus causing pollution and large scale deforestation in countries with poor regulation of pollution, eg the African countries.

- The result of globalization in Africa has thus either been minimal or negative, and the phenomenal increases in global trade had largely bypassed the continent.

- Latin America and the Caribbean have experienced high rates of growth in trade, but less growth in gross domestic product.

- The middle eastern countries are benifited from globalisation but they are mainly dependent on their oil exports for their economic growth and have large imported food bills.There is very little foreign direct investment. So once their natural reserves dry up their economy will collapse unless they diversify their economy.

-On the other hand small countries like Finland and Sweden have developed quickly due to globalisation, based on welfare-state model. South Korea, Taiwan and Malaysia are examples of the fast growing and most efficiently developed nation. Japan has benifited greatly due to globalisation and become a developed country at a very fast rate.

      Thus the experiences and impacts of globalisation have been different for different  countries wheather small or big.

- At the international forums like WTO and UN the smaller- developing and least developed countries have less say in global policies. Hence they have formed regional groupings to bring forward their issues and demands at the international forums eg: G20, G77, Small Island Developing States (SIDS) etc.

- Some countries have come together to form regional groups for their economic development eg: ASEAN, G 15, SAFTA etc.

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