University of Paderborn
Faculty of Arts and Humanities
Seminar of Globalization and EFL-Teaching
Winter term 2003-2004, Semester 6

Globalization – Social Issues: Developing countries –
Victims or Beneficiaries?

by: Christina Fennen

Table of contents

1. Introduction 2

2. Globalization – an overview 3

3. Negative effects of globalization on developing countries 4

3.1 Global competition and the arrival of EPZs 4
3.2 Why are EPZs set up and are they really effective? 7
3.3 Race to the bottom 9

4. Are there any positive effects 12

4.1 The rationale of increased competition and inequality 12
4.2 A tale of two countries 14
4.3 Child labour or child prostitution 16

5. Solutions 17

6. Conclusion 18

7. Bibliographical Reference 21

1. Introduction

Globalization has become one of the most controversial topics of the early twentyfirst century. It has particularly aroused discussions concerning less developed countries and the question of whether they are victims or beneficiaries of the process. On the one hand there is a long list of reports in which large corporations are accused of abusing the opportunities provided by globalization in order to exploit developing countries, whilst on the other hand there are advocates who claim there are great advantages of globalization such as economic growth, increases in standards of living and reduction of poverty and unemployment for developing countries. Consequently, the consumer is torn between the arguments put forward by the two sides. He finds himself in a conflicted shopping situation in which he weighs positive against negative effects of globalization before buying products that are probably the result of global exchanges. As we are all consumers, the question of whether developing countries benefit or suffer from globalization concerns us all. Therefore, in the following I am going to discuss in detail the impact of globalization on developing countries by examining the arguments put forward by critics and advocates. The purpose of this paper is to help the conflicted consumer to increase his knowledge about globalization and developing countries and his ability to evaluate the issue by taking into consideration numerous aspects.

I will start by giving a brief overview of globalization in chapter two in order to clarify the meaning of this complex term and how it will be used with regard to this paper. Further on, I will discuss the negative effects of globalization on developing countries as presented by critics such as Naomi Klein, author of the bestseller “No Logo”. In this chapter special emphasis will be put on the problem of Export Processing Zones that arises in the context of multinationals shifting their production abroad to developing countries and whose benefit is quite questionable. The negative views will be contrasted by the arguments put forward by the advocates of globalization in section 4. The examination of the positive effects is supported by two figures which provide statistical evidence for the statements. Both sections about the positive and negative impact on developing countries include quotations and reports based on real life experiences in order to give my paper a more realistic character. At the end of the paper I will suggest some possible solutions that could help developing countries better benefit from globalization.

2. Globalization – an overview

The term "globalization“ has become a fashionable expression for describing the atmosphere in today’s world. It is used with regard to various aspects and processes that affect our lives. Sociologists see globalization as a "decoupling of space and time“¹ as during the last decades technology has made it possible to reduce the time necessary to connect geographical locations and overcome long distances. This not only means faster travel, enabling earlier arrival in another part of the world but also almost instantaneous communication and exchange of information. Globalization in this sense means the compression of time and space that makes the world appear a very small place. This enhanced connection between various parts of the world also has an impact on the culture of different countries and regions. Cultural styles integrate and become more similar to one another so that on the one hand humanity becomes a single unified community in which main sources of social conflicts are eliminated but on the other hand precious cultural heritages are endangered. Most of all the term "globalization“ is used to refer to a political and economic phenomenon. International cooperation such as the General Agreement of Tariffs and Trades (GATT) in 1947 has been established in order to promote policies reducing trade barriers all over the world. Along with this goes the ongoing pursuit of free market policies with the aim of reducing the influence of governments on the national market situation. This political development has resulted in an increased international integration of national markets for goods, tradable services and financial assets connecting the world’s countries more intensively and enhancing their dependence on each other. This international trade which is currently growing at a rate of 6 % per annum is proof of this development.

Certainly there are many more aspects that are connected with globalization and therefore it is difficult to find a single appropriate definition for this complex term. Nevertheless it could be concluded from the information from above that globalization refers to the phenomenon involving the rapid increase in social, cultural, economical and technological exchange between the world’s countries. In this paper emphasis will be put on the political and economical dimensions of globalization. First of all the rationale of globalization intensifying global competition and resulting in multinational corporations that produce and sell on a worldwide basis will be explained. This idea also forms the basis for the ongoing discussion about globalization as this process has “both produced winners and losers“². Hence, chapter three and four are going to discuss the question of how far developing countries are victims or beneficiaries by examing the negative and positive effects of globalization.

3. Negative effects of globalization on developing countries

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1Globalisation Guide: What is globalisation?

2 Masson, P. : IMF Policy Discussion Paper, Globalization: Facts and Figures. p.2