Economic Globalization In Developing Countries

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Economic globalization refers to the increasing interdependence of world economies 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. Nowadays the economic globalization is growing rapidly. The fast globalization of the world’s economies is mostly because of the rapid development of science and technologies. The key players of the economic globalization is no other than multinational corporations. A multinational corporation is an enterprise that engages in foreign direct investment (FDI) and owns or controls value adding activities in more than one country. It cannot be denied that multinational corporations play an important role in…show more content…
Thus, economic globalization in the form of multinational corporations can prompt to exploitation of the local labor force, channeling the critical resources away from the country itself into foreign exports, and make the developing countries depend too much on developed or wealthy countries. That is why, there is some concern regarding economic globalization. Economic globalization has successfully increased the gap in wealth between developed and deveoping countries. Other than that, because developed countries’ economy have large sums of wealth available for investment in developing countries, there is concern that foreign direct investment (FDI) may create bubble markets in developing countries. As what this paper has stated before, economic globalization may result in unequal economic relations of dependency between developing and developed countries. Instead of acting independently on behalf of the people in the country, the governments of developing countries give more interests to multinational corporations and other countries on whom they rely on. The government of developing countries may think that without these forms of economic connection, their countries could not…show more content…
It is the sum of equity capital, reinvestment of earnings, other long-term capital, and short-term capital as shown in the balance of payments. Multinational corporation and foreign direct investment play a large and growing role in shaping the economic of the world. Most foreign direct investment is taken by multinational corporations, who hope to get a lot of benefits. In foreign direct investment, multinational corporations can take advantage of lower labour costs in other countries, they can also take advantage of proximity to raw materials rather than transport them around the world, next they can reduce transport costs, and the most important thing is they can avoid tariff barriers and other non-tariff barriers to trade. That is why nowadays multinational corporations are more beneficial than trade. Multinational corporation truly has greater influence in increasing the national economy rather than trade. Why? It is because multinational corporations affect national economy by causing governments to compete with each other to be more attractive and interesting enough for multinational corporations invest in their country. Multinational corporations often hold power over local and national governments through a monopoly on

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