Discuss whether globalization will always bring benefits to a given economy
“Globalisation is not a monolithic force but an evolving set of consequences – some good, some bad and some unintended: It is the new reality”. CITATION Joh18 l 1033 (Larson, n.d.)
The notion of globalization, or rather the phenomenon of globalization has a plethora of definitions of divided views and opinions and is one of the most extensively discussed and debated topics to date. According to the IMF, “the growing economic interdependence of countries worldwide through increasing volume and variety of cross border transactions in goods and services and of international capital” can be identified as globalisationCITATION Int18 l 1033 (International Monetary Fund, n.d.). This process further results in the removal of barriers for the free flow of knowledge, technology and other resources, tangible and intangible which would eventually bridge the disparities and gaps between developed countries and developing countries with resources and potential. The following essay attempts to weigh the pros and cons of globalisation with reference to India and address the issue whether globalisation is always beneficial to an economy.
India is a South Eastern country with a population of 1.3 billion CITATION 20118 l 1033 (2018 Index of Economic Freedom, 2018) spread across a land area of 3,287,240 sq. km being the seventh largest in the world. As of 2017, India is the world’s sixth largest economy with a nominal GDP of USD 2.45 trillion and ranks third in GDP in terms of purchasing power parity (PPP) at USD 9.49 trillion.CITATION Pra17 l 1033 (Investopedia, 2017) The economic reforms popularly known as LPG (Liberalisation, Privatisation and Globalisation) in 1991 was specifically aimed at making India a fast-growing economy and globally competitive, and these reforms by the Indian government can be identified as the pivotal point of globalisation of the Indian economy CITATION Rag17 l 1033 (Raghunath, 2017)One of the major advantages of globalisation towards the economy of India is the boom of its GDP over the years. A salient reason for the growth rate to increase can undoubtedly be the effect of foreign direct investments (FDI). FDI is an investment made by an organization in one country in a business activity in another country. CITATION MKD08 l 1033 (Dutta ; Sarma, 2008) India, as a result of the removal of restrictions through the LPG reforms, have witnessed an inflow of FDI’s from USD 2.3 billion in 2001-02 to a value of USD 42 billion over the past decade, which was 1.9% of GDP in 2016-17. CITATION Pra17 l 1033 (Investopedia, 2017) The GDP growth rate during the decade 1980-1990, that were at 5.6% and has increased to 7% in the period between 1993-2001. The Economic Growth of the country as at the end of the first quarter of 2018 is at an astounding rate of 7.7% which is even higher than of China, as a result of rapid growth in agriculture, manufacturing, and construction sectors by 4.5%, 9.1% and 11.5% respectively. CITATION Mar18 l 1033 (Trading Economics, 2018). Furthermore, IMF predicts India to be the fastest growing economy by 2018-2019.
The substantial decrease of unemployment can be noted as another beneficial result of globalisation, especially to a developing country. As a result of the inflow of investments and the establishment of Multi National and Trans National Corporations across the country for which people are hired for. CITATION Rah12 l 1033 (Rahul, 2012) Moreover, regardless of the industry, Outsourcing has become one of the topmost trends in business and India has been able to acquire 56% the Global outsourcing market by 2015. CITATION Bus17 l 1033 (Business online India, 2017) Since the world is now moving towards a more knowledge-intensive system, most developed countries such as USA, UK prefer India as one of the most desired destinations for such outsourcing services. For instance, by 2007, it was estimated that, about 80% of the world’s largest companies reach out to India for outsourcing, where one million English speakers and 1.5 million university graduates join its low-cost workforce every year. CITATION Reu07 l 1033 (Reuters, 2007)Technological advancements are yet another positive impact of globalisation to the Indian economy. Apart from the obvious reasons such as improvement of technological based industries, one important effect of technological development is the reversal of brain drain. India has the estimated biggest diaspora in the world of around 30 million Indians around the globe. CITATION Vil17 l 1033 (Villaruel ; Mirasol, 2017) And a considerable portion of this are high skilled labour, and intellectuals that left the country for better opportunities. The recent years have shown a trend of overseas Indians returning to India to be placed in business activities or to contribute for research purposes. For instance, most international companies based on pharmaceuticals, IT, automobiles have been shifting their research and development to India and this results in most Indians to return to lead such projects CITATION The17 l 1033 (The Economic Times, 2017). And this may result in furtherance of many industrial developments.
Although the above facts and statistics suggest that globalisation could be a utopian concept to an economy, it is not without demerits.
According to Stiglitz, the practice of globalisation has resulted into making poor societies more unequal rather than less unequal CITATION Sti03 l 1033 (Stiglitz, 2003) Thus, one major downfall of globalisation is the increase in the unequal allocation of resources, chasms in income distribution and poverty. The gaps in standard of living between the urban and rural areas and between persons have turned from bad to worse along the years and is recorded as the worst economic disparity in the world. Statistically, in 2000 the richest 1% of the country owned 36% of the National income which has increased to 53% by 2016. The top 10% owns 76.3% of the National income while the poorest half of the country are struggling with a mere 4.1% of the income and, therefore is known to be one of the ten richest countries of the world- and one of the poorest. CITATION Wor16 l 1033 (World Economic Forum, 2016)Another socio-economic disadvantage of globalization is the increase of child labour. This has not been an issue only within India but is common to most developing and under developed countries. The ILO (International Labour Organisation) Minimum Age Convention of 1973 No. 138 specifies fifteen years as the benchmark age, above which a person could work under normal circumstances. There are many reasons for the prevalence of child labour. One main reason is unarguably poverty. As stated above, the linkage between globalisation and poverty can be further extended to the concern of child labour as it persuades children into the labour market. Additionally, the comparative advantage India holds for sectors such as agriculture and the opportunities of export income have surged a demand for cheap child labour. As per Census 2011, the total child population in India in the age group 5-14 years was 259.6 million. Of these, 10.1 million (3.9% of total child population) are working, either as ‘main worker’ or as ‘marginal worker’. CITATION ILO17 l 1033 (ILO, 2017)Environmental pollution has been yet another inevitable result of globalisation. Since 1991 some of the world’s largest mining companies such as Rio Tonto Zinc, Alcan and Meridian, Norsk Hydro, De Beers and Phelps Dodge have invested in India due to its resourcefulness, and between 1993-94 and 2008-09 mineral production in India has risen by 75% which has manifested in a rapid upsurge in deforestation.CITATION Ash l 1033 (Ashish Globalisation Brochure, n.d.) India, during the last decade, has known to be a biggest importer of hazardous and toxic waste from industrial countries. Import of waste and PVC Scrap that was at 33 tons in 1996-97 have increased to 12,224 tons by 2008-09 and plastic wastes alone have increased by 400%, from 101,312 tons to 465,921 tons in a short span of 2003-2008. CITATION Ash l 1033 (Ashish Globalisation Brochure, n.d.). And as per the 2015 United Nations Environment Program, up to 90% of the world’s electronic waste is dumped in India.
The effect of Globalisation on the Indian economy has been overwhelming. Considering the above facts and statistics it is apparent that, India being a developing country faces both merits and demerits of globalisation. It is noteworthy that, although elements such as Economic growth, employment, inflow of FDI’s have been positively impacted, it has been oblivious to much important issues that directly impact the sustainable development of a country. The form of globalisation needed for a country is not one that makes the rich richer, but that makes a better standard of living for everyone collectively. Since India is at the peak of Economic growth certain policy changes may be helpful to achieve the sustainable development goals that are seemingly far. For example, a regulation or ban on waste imports and other environmentally hazardous habits and a sound legal framework to regulate unhealthy practices such as child labour has arisen. Moreover, the need to strike a balance between growing the country while uplifting the neglected parts of the community is thoroughly felt.
Although globalisation is ideally supposed to be an economically utilitarian concept, in reality it has been quite the opposite. In theory the concept suggests bringing the world together and bridging disparities where as in reality the disparities are occurred inter and intra country wise as a result of globalisation itself. The ultimate goal of any economy is to achieve economic development which means the improvement of the standard of life, sustainable use of environment along with the increase of the GDP which is a much broader concept than mere economic growth. India is currently positioned in the 130th rank in the Human Development Index and more than 33% of the Indian population are still below the Official Global Poverty line. Furthermore, India is ranked 177th out of 180 countries in the Environmental Performance Index CITATION Tim18 l 1033 (Times of India, 2018) which is a clear indication of India’s high environmental pollution rate which are all detrimental towards development. The above essay discusses how globalisation has worsened the development goals such as equality, standard of living, and environmental sustainability in India and hence, it can be concluded that, globalisation does bring benefits to an economy in certain aspects, albeit not always.
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