Globalization And Developing Countries

Global trade is becoming more common and many countries are able to access foreign products and services easily such as electronic products because of globalization. World Trade Organization (WTO) which is an international organization for inspecting the global trade agreement or dealing and negotiating international trading problems between countries. WTO replaced General Agreement for Tariffs and Trade (GATT) in 1995. (World Trade Organization 2009)

Globalization has been providing large impact to developing countries either in economic growth or economic development. Developing countries , also called less developed countries, are countries that have no self-sufficiency which means countries that have abundant resources, but due to political

There are few benefits come under trade liberalization to the term of economic development will be discussed.

Poverty Reduction

First benefit of free trade or low-tariff or taxes in global trade in developing country will be poverty reduction according to many researches. Literally income of poor in developing countries will increase in the result of increasing in export or import.

Some advanced countries set high tariff or restriction to protect domestic industries but once they lower down the tariffs or remove restriction, export from developing countries will increase eventually. Developing countries access new market and increase export result in create more jobs, increase income of poor, increase in foreign direct investment. Economic development will basically have a step forward with effect of trade

This will result in increases standard of living for the poor people and reduce the cost of Malaria that about 1 percent GDP per year for Africa. Economic will grow smoother with healthy people in country and healthy people can produce more efficient.

Government Revenue

Developing countries usually have high tariffs or taxes to protect their domestic industries. Global industrial trade would be less if it has quantitative restriction or high tariff. In order to increase global industrial trade, government would have to waive or reduce tariff or restriction. Government revenue might be affected depend on the situation of international trade and it could be positive, neutral, negative effect to economic development. (Sharer and others, 1998)

Negative effect would be government revenue decreases if industrial trade with lower tariffs or taxes removal, so government might have to cut down social expenditure or establish new taxes to maintain economic stability. In this kind of situation, new taxes and social expenditure cut down should not directly affect economic welfare of poor household to minimize the adverse effect to