Critically examine the impact of globalization on the developing countries of the world. (2010, 2020, 2023, 20 Marks)
Globalisation is the speeding up and deepening of economic, political and cultural interconnection across borders; Anthony Giddens called it action at a distance. Seen from the Third World, a term Alfred Sauvy coined in 1952, the question is not whether connection grew but on whose terms. Most of the South entered a world economy whose rules were written before it was independent.
The liberal case: real gains
- Growth and poverty reduction: Jagdish Bhagwati (In Defense of Globalization, 2004) holds trade-led growth to be the strongest anti-poverty tool. More than a billion people left extreme poverty between 1990 and 2015, mostly in East and South Asia.
- New paths: global value chains let a country join one stage of manufacturing without building a whole industry, and services offshoring gave India the path Thomas L. Friedman’s The World Is Flat (2005) made famous.
- Capital and competition: FDI brought technology; opening broke protected monopolies and widened choice.
- Remittances of about $685 billion (2024) exceed FDI and aid combined; global networks also carried rights movements and claims to dignity.
The critical case from the South
- Structural asymmetry: Raúl Prebisch and Hans Singer showed that primary exporters face declining terms of trade; Andre Gunder Frank called the result the “development of underdevelopment”, and Immanuel Wallerstein mapped a core-periphery order in which new states competed with long-industrialised ones.
- Stalled poverty and rising inequality: on the World Bank’s new $3-a-day line, 847 million people (10.4%) were still extremely poor in 2024, and poverty is rising in Africa. Oxfam (2026) finds the richest 1% hold 43.8% of global wealth. Dani Rodrik identifies premature deindustrialisation: factory jobs peak while countries are still poor.
- Race to the bottom: capital moves to the cheapest labour and loosest rules; the Rana Plaza collapse (2013) is the emblem, and feminist scholars note the feminisation of low-wage export work.
- Lost policy space: structural adjustment, TRIPS and investment treaties removed tools rich countries once used. Indian cotton farmers paid steep trait fees for Bt seed until the government capped them in 2016.
- A governance gap: Keith Griffin (2003) traces the harm to the absence of institutions able to govern global markets; Mexico’s crises of 1982 and 1994 and Asia’s in 1997 hit the South hardest.
- Culture and ecology: homogenisation and environmental damage complete the post-colonial reading of globalisation as neo-colonialism.
Why outcomes diverged
| Region | Strategy | Outcome |
|---|---|---|
| East Asia, China | Selective, sequenced opening by a developmental state | Structural transformation |
| Latin America | Rapid liberalisation after the debt crisis | Slow growth, volatility |
| Sub-Saharan Africa | Adjustment without industrialisation | Commodity dependence |
Deepak Nayyar (Catch Up, 2013) shows that the developing world’s catch-up was real but concentrated in a small group of mostly Asian economies. The deciding variable is state capacity to choose what to open and when. India’s gradual reform after 1991, with a cautious capital account, sheltered it in 1997 and cushioned it in 2008. Investment still favours the North: developing economies’ FDI rose 2% in 2025 against 11% for developed ones.
The present conjuncture
The US tariff wave of 2025–26 (50% on India at its peak), the EU’s CBAM (definitive from 2026) and interest bills exceeding health or education spending in countries home to 3.4 billion people show rule-makers retreating from their own rules. Yet South–South trade reached about $6.8 trillion in 2025 (UNCTAD): the South is building its own circuits.
Conclusion
Globalisation was neither the engine liberals promised nor the trap dependency theorists predicted. As Joseph E. Stiglitz (Globalization and Its Discontents, 2002) argued, the problem lay in how it was managed in an unequal world. Amartya Sen’s verdict holds: the remedy is fairer distribution of gains through domestic capability and global reform, not retreat.