What are the main challenges faced by the developing countries in the era of globalisation? (2022, 10 Marks)
Globalisation offers developing countries markets, capital and technology, but on terms they did not write. Jorge Heine and Ramesh Thakur (The Dark Side of Globalization, 2011) show how the same open networks also carry a “transnational uncivil society” of crime, trafficking and terrorism, which weak states are least able to police. The challenges fall into six clusters.
1. Structural and economic
- Unequal terms of trade for commodity exporters (the Prebisch-Singer problem) and price volatility.
- Premature deindustrialisation (Dani Rodrik) and capture in the low-value middle of the “smile curve”: assembly without the design, brands or intellectual property at either end.
- Inequality within and between states, as gains flow to skilled labour and capital.
2. Institutional and policy space
- Weighted voting leaves little bargaining power: the US alone holds about 16.5% of IMF votes against an 85% supermajority rule.
- WTO rules on subsidies, TRIPS and investment arbitration shrink policy space. The Appellate Body has been unstaffed since 2019, and MC14 (Yaoundé, March 2026) closed without a declaration.
3. Financial
- Volatile capital and sudden stops, as in 1997 and 2008.
- A debt squeeze: developing countries paid about $921 billion in net interest in 2024, and 3.4 billion people live where interest exceeds health or education spending (UNCTAD).
4. Technological
- A digital divide: 2.2 billion people remain offline (ITU, 2025), while AI compute is concentrated in a few firms.
- Brain drain of publicly trained professionals.
5. Ecological and geoeconomic
- Climate costs fall on those who did least to cause them; the EU’s CBAM, definitive from January 2026, is read as green protectionism.
- Weaponised interdependence: the US raised tariffs on India to 50% in August 2025 before an interim deal in February 2026, and Iran’s Hormuz restrictions from March 2026 exposed India’s energy dependence.
6. Socio-cultural and political
- Cultural homogenisation, George Ritzer’s McDonaldisation, and identity backlash against it.
- Shrinking democratic space, as markets and rating agencies discipline elected governments.
Way forward
At home: state capacity, skills, safety nets and sequenced opening, as East Asia managed. Abroad: quota reform, a working debt architecture, real special and differential treatment, and coalitions such as the G-33, BRICS (whose New Delhi Declaration of September 2026 demanded IMF, World Bank and WTO reform) and the Voice of the Global South Summit.
Conclusion
The core challenge is not openness but asymmetry: joining a system others designed. Countries that kept the capacity to choose what to open, and when, turned these challenges into opportunities, as India’s cautious capital-account reform and services-led growth show.