Economic Globalization – A Double-Edged Sword

Economic Globalization – A Double-Edged Sword

By Hui Cao

| While attempting to find a picture to depict the phenomenon of economic globalization, hundreds of images pop up, showing the popularity of the globalized economy. According to Gao Shangquan’s “Economic Globalization: Trends, Risks, and Risk Prevention,” economic globalization refers to the increasing interdependence of the world economy as a result of the growing scale of cross-border trade of commodities and services, flow of international capital and wide and rapid spread of technologies. It is well known that economic globalization is not equally fair among different countries due to differences in power and resources. As for the developed countries, economic globalization brings them more advantages and profits; the developing and undeveloped countries, instead, are often at risk as the developed countries control the rules of an increasingly globalized economy. Thus, economic globalization is often regarded as a double-edged sword.

There is no question that globalization greatly benefits developed countries. For example, developed countries are able to expand their businesses to other countries more easily. That is, economic globalization offers them a larger market, which contributes to higher profits and higher economic development. Furthermore, it is more convenient for developed countries to take advantage of cheap resources in less developed countries, such as lands, labor, and natural resources, to enhance the developed countries’ economy. At the same time, large corporations are moving their factories to less developed countries, outsourcing pollution. In theory, developing countries can make full use of foreign capital, high technology, successful experience, and excellent talents to contribute to the rapid development of their own economy. Economic globalization seemingly helps transfer and optimize national economic structures, as people in developing countries can learn from developed countries directly.

With regard to the risks economic globalization brings, developed countries assume less than other countries, because developed countries are making and controlling the rules of the game of economic globalization. Even though developed countries are accused of sending jobs overseas and ultimately hurting their own countries as their unemployment rates increase, harming the stability of their society, if we pay attention to developing and undeveloped countries, we see that developing countries suffer many more risks, especially if they are not granted freedom of speech. The expansion of foreign companies harms the development of local business and brands, as foreign companies who have the ability to open up international locations are more powerful than local competitors. Lands, labor, and natural resources from developing countries are exploited by developed countries in unfair ways, often leading to wasted resources and unsustainable practices that hurt the local economy. Ultimately, economic globalization sharpens the economic imbalance between developed and developing countries.

Broadly speaking, economic globalization is a double-edged sword for all countries, but developed countries obviously master the advantageous position to gain more benefits as they exploit developing countries. Unfortunately, studies show that economic globalization is an inevitable tendency. This leaves us with the question, how can developing and undeveloped countries meet the challenges presented by increasing globalization?

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