In the 21st century, globalisation is a common word of which everyone is aware of and has been described by Shenkar and Luo (2007) in their book as the speeding up and allowance of interdependence of economic and business activities across various countries with implications referring to progress, development of stability, integration and cooperation of various activities among nations.
Advantages of Globalisation for Developing Countries-
1. Free trade - It is a policy which allows countries to trade without imposing any taxes, duties on the imported/exported goods and those countries which have resolved to free trade can utilise the goods and services of the other country to increase the social welfare of the people at a comparatively lower price.
2. Transnational Regulatory Framework- With globalisation, global networks are seemingly getting more control over the economies of nations and so are taking the responsibility for the welfare of both the individual national and the global network. For instance we can talk about the Latin American, African, Asian countries which have been provided with loans from institutions like International Monetary Fund which are intended to aid in debt relief and other developments in the country for its welfare.
3. Competition to domestic economy- With Globalisation, foreign trade and direct investments come into place which increases the pressure for the domestic companies to bring their products and services up to the level of the foreign goods and thus promotes domestic reform and also opens an opportunity for the domestic players to step out and make their products global and thus bringing economy for the country.
4. Migration- Globalisation have resulted in migration of highly skilled work force from developing countries to developed countries due to the lack of job and security in home country and these migrants send remittance back to their country and thus can be seen as a boost of economy for the developing countries and skilled work force for developed countries.
Disadvantages of Globalisation for Developing Countries-
Collapse of Domestic Industries- With the removal of trade barriers in the process of free trading have resulted to the collapse of domestic industries. When IMF provides loans to countries in debt it sets certain structural adjustments along with loans and one of which is removal of any trade barriers and tariffs. Although the intention for such a policy is to bring wealth to all nations with horizontal distribution of capital, it leaves the country’s growing