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Globalization has many impacts on economies of developing nations. In most cases the effects are recorded as positive as it has been witnessed many countries like India, and Vietnam and China while still developing nations. First of all, it promotes economic development as it has been viewed in Asian countries that have experienced greater income growth. It has been established that 24 countries with an approximate population of about 3 billion people are gaining momentum to catch with the developed west, key among them are India and China as already mentioned (Manzella, 2006). These countries realized higher earnings during the last two decades. Contrary to this, those countries which have not adopted proper policy to embrace globalization have never lived to see this benefit. For instance, the least Asia’s least globalised countries such as Iran, North Korea and Pakistan were not able to advance their incomes.
According to studies, during 1970s and 1980s there was a significance difference in economic growth due to income between those countries that were free to trade of 4.5 % compared to 0.7 of those ones who were ones not open for trade. This has an implication that globalization enhances economic development. Consequently, this reduces poverty levels as statistics indicate that the rate of people living severe poverty, particularly in the Pacific and East Asia decreased by 41% (Park, 2002).
There is also high efficiency in production hence acting as one way of economic development. The high efficiency is brought about due to minimizing the production of some goods while at the same time maximizing the amount of producing another one. due to globalization, there is a free trade policy improved transfer of technology and information. Both improved technology and transmission of information across nations greatly improves production in a country that has embraced globalization (Park, 2002). Over the last five decades, trade barriers have been mitigated by international treaties that saw a reduced cost of exporting manufactured goods. In other terms, due to globalization, there is an improved access to goods from various producers in different countries hence a better chance to manufacture and sell a variety of goods.
Through taking advantage of global trade, there are benefits drawn from free trade among the involved nations through specialization of producing the particular goods they enjoy relative advantage. Free trade ensures that countries basically focus on production of goods that offer them full benefits. The surplus in production will hence be sold to the countries who require them There is also a minimization of cost and improved product standards and a more effective resource allocation; advantageous to all the involved nations’ economy.
Additionally Manzella (2006) asserts that there is an increased output in the economy of the developing countries. A good example is in Asia where their total exports fundamentally increased among those countries practicing globalization. The period running from 1980 to 1998 saw many Asian countries like Singapore, Malaysia, Indonesia and Thailand enormously increase their total exports of goods manufactured. of all these, Indonesia was the most outstanding one after gaining to 45 % form 2 % of manufactured goods exports. This is enough evidence demonstrating how globalization has helped economies through improving production efficiency.