Role of globalization on developed countries


The importance of international trade and globalization cannot be undermined because to survive in the present economic scenario; no nation can live in isolation. If one country has a demand for raw materials, then another has demand for capital goods, while another has a need for cheap labor. Thus, to keep continuity in the demand-supply chain and for proper supply chain management, international relations are of paramount importance. Moreover, globalization impacts both developed and developing nations. Developed nations tend to gain from globalization because it gives the nation's access to cheap and skilled labor. Additionally, the requirements for raw materials are also fulfilled by international trade between developed and developing countries. This has been made possible because of globalization. The role played by developed countries in globalization, and its subsequent impacts are as follows:

Better job opportunities

One of the most significant impacts of globalization is better job opportunities. The developed nations have offered this. Companies, especially software firms, are always on the lookout for skilled and cheap labor. This is often provided by developing Asian nations. Subsequently, this has led to a better standard of living for the citizens of these countries. Also the overall economic development of these nations.

Additionally, the investments made by the developed nations have also produced excellent returns. Hence, the developed countries have also stood to gain by acquiring skilled labor from developing Asian nations. The most significant advantage that developed nations have reaped from globalization is the availability of skilled labor at a lower investment. Moreover, capital investment, too, has increased in developing nations by the developed countries. This means better job opportunities, even for skilled factory workers. As consumer products are being manufactured in developing nations to be exported to developed countries, job opportunities in developing nations have also increased. Thus, developed nations play a crucial role in creating an increased number of job opportunities in developing nations and improving the standard of living in these countries. 

Foreign direct investment

Increased foreign direct investment means more significant trade opportunities between developed and developing nations. While investing in developing countries, companies often receive benefits like tax holidays, differential tax accounting, discounts on export and import duties, and other similar amenities. This means the revenue earned from FDI by the developed nations will be higher. The investment made by the developed countries will produce better returns and higher growth rates. FDI and globalization correspond with each other. Statistics show that over a more extended period, both of these tend to beneficial for the developed and developing nations. The investments made by the developed nation help improve the economic condition of the developing country. In contrast, the revenue earned by way of the investment can help make the developed nation wealthier. Thus, FDI can prove to be beneficial for both countries.

Liberalization and free trade

An essential part of globalization is liberalization and free trade. This ensures that international laws guide trade between nations. These trade laws are in place to safeguard the rights of both the developed and the developing countries. The developed nations stand to benefit from increased trade between nations. It means an easy movement of goods, services, capital as well as the technology between countries. The most significant impact of globalization is to make it easier for the movement of goods and services, in other words, to allow nations to reap the benefit of free trade. From an economic standpoint, free trade means a more significant advantage for the developed nations. These countries stand to benefit significantly from free trade, because it reduces market volatility, brings a balance between demand and supply, and also helps in generating new business. Smaller businesses begin to thrive as bigger business houses start outsourcing many in-house works to a smaller companies. This helps improve and strengthen the economy of the developed nations further. Thus, developing countries stand to benefit from liberalization. With the help of free trade, there is increased foreign investment. More significant foreign investment provides the economies of developing nations with much needed financial support. This support can improve the socio-economic condition of developing countries significantly. Thus, liberalization and free trade, which are two crucial factors of globalization, impact both the developed and developing nations positively.

Economic integration

Globalization calls for economic integration amongst participating nations. In other words, with the advent of globalization, countries have had to come up with monetary and fiscal policies that have proven to be beneficial for both the 'producer' and the 'consumer.' For developed nations, these policies are essential, especially if these countries are looking to invest in a developing country. These integrations and fiscal policies can these countries improve their productivity. Sometimes globalization can also mean the developed nations are forming a union of their own and moving together as a single body. An impact of this form of economic integration can be seen in the formation of the European Union. The formation of the European Union has led to the ease of movement of goods, capital, and labor force across the borders of the participating European countries. However, this also has harmed individual nations. Some socio-economists argue that it has led to over-dependence on the European Union regarding economic decisions . It has led to the eroding of the idea of self-sufficiency and self-reliance, which all nations should aim for. Thus, economic integration, which is often perceived as a positive impact of globalization, can also produce some negative results unless all aspects of it have been evaluated carefully.

Thus, globalization and free trade have numerous positive impacts on the developed nations as it helps to make the economies of these countries stronger. These trade laws are designed to be beneficial to the participating nations. For developed nations, it is essential to reduce the cost of production, which can be done by acquiring a skilled labor force from developing countries. This can be done with globalization and free trade. Thereforeglobalization, globalization has impacted developed nations significantly and will continue to do so.

Reference URL


1005 Words


Jun 25, 2020


3 Pages

Looking for a professional

Order Now