Positive And Negative Effects Of Globalization

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Register to read the introduction… An example of a quality of life indicator is the Human Development Index (HDI) which measures changes in those factors as a result of globalization. Over the last few decades, the HDI of the world’s richest countries have increased as a result of globalization, where growth and development has been attributed to these economies through willingness to embrace market liberalization. However, the HDI of the poorer nations have grown at a slower rate to the richer nation’s which, as some economists put it, shows that globalization is another word for the continual plundering of the poorer and weaker nations by the rich and powerful economies. It has been strongly argued that the benefits of competition go only to those who can compete, and poor countries have to negotiate on unequal terms. In addition, the forces of globalization take no account for social injustices, with Asian sweat shops being a prime …show more content…
The ability of a country to manage its exchange rate, balance of payments and foreign liabilities impacts on the perceptions of traders on world markets. Volatility of foreign exchange markets can contribute to external instability, and globalization has resulted in increased trade, requiring increased currency movements, there for market currencies are more prone to sudden appreciations and depreciations, altering a nation’s competitiveness, and debts levels. The improved access to international finance has detrimentally affected the external balance of many nations, in particular developing nations, as rising interest on massive loans can heavily outweigh the revenue eared, resulting in debt trap scenarios.

Additionally, the global movement toward free trade has resulted in many high income manufacturing nations increasing in there terms of trade through comparative advantage, and increasing there rates of economic growth. However, developing nations’ terms of trade tend to fall over time as prices for primary exports fall. This result in long term trade deficits and a worsening CAD that results in a deteriorating external balance, which generally maintains the income divide between the rich and poor nations with in the global

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