Economic Growth and Globalization

The assignment explores the concept of globalization and its effects on economic growth in developing countries. It discusses various strategies such as aid for development, trade openness, foreign aid, and infrastructure channels that have been adopted to achieve high economic growth and poverty reduction. The essay also touches upon the structuration approach of Anthony Giddens and the four dimensions of globalization according to him. It provides a comprehensive overview of the topic, making it suitable for students looking for past papers and solved assignments.

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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
World 3.0.....................................................................................................................................1
Anthony Giddens’ ideas on globalisation. .................................................................................2
The “End of Poverty” movement and the contrary assertion that “Trade NOT aid” is the way
to a more globalised world that mitigates against poverty..........................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Globalisation is the process through which domestic business expands globally in
different countries either by establishing offices in those countries or by delivering products
through export. The modern era is characterised as globalised and dynamic where firms need to
make redundant efforts to sustain in the competitive environment. Business world is rapidly
changing with increase in technologies and accessibilities. Large corporations are now expanding
their businesses in overseas market to maximise profits, sales and customers base. In this, ideas
of Giddens on globalisation is also described to understand the benefits and limitations. The
ideas on globalisation to enhance the comprehensive understanding and analysing of three
individual components that highlights different aspects of globalisation will be discussed in this
essay.
MAIN BODY
World 3.0
For several years’, global thinkers believe that the world is flat and all the nations are
interconnected with each other, sharing their borders and culture with each other. In the era of
internet and digital technologies, one can communicate, share information and interact with each
other irrespective of their countries and nationalities (Ghemawat, 2011). This influences
behaviour of individuals and they think people are living in globalised world. Pankaj Ghemawat,
Professor of Global Strategy at IESE Business School in Barcelona shared a different view and
contradicts on the statement by connoting that “The world we are living is not as globalised as
we think” (Reis, 2015). He further stated that it is semi globalised world where distance in the
geography, culture and other senses remain highly relevant and will continue to do so. Author in
his publications “World 3.0” provided statistics that underpin his statements about semi
globalised world where an individual is living in. He stated that only 2 per cent calls were cross
borders out of total telephone calls placed in the year 2010.
By summing up online calls, the percentage raised to 6 to 7 per cent. When 400 readers at
Harvard Business Review were asked to anticipate the percentage, they predicted much higher
value (30%) (Ghemawat, 2011). Author stated in his book that only 1 to 2 percent of news read
by people regarding international events. Author straightforwardly said that social media
networking sites such as Facebook, Twitter, etc. make people to reach out others who belong to
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any part of the world. He said that only 10 to 15 per cent of total Facebook friends of an
individual were from out of country (May, 2012). Ghemawat refers that people reflect
themselves as expert on globalisation from their own self-beliefs without considering data and
facts. Our community believed that technologies eradicated all the hurdles which restrict one-self
to reach across different national boundaries and also eliminated the global cultural and political
differences. On a range of other measures of globalisation such as rates of Foreign Direct
Investment as a proportion of total global investment activity, again there is a widely distorted
general view of how integrated the world is (World 3.0: Not as globalised as we think, 2012).
The book published by Ghemwat (Name of Author) attempts to reciprocate some misconceptions
about globalisation to provide more precise understanding of how world literally looks. He
argued that while the world has indeed become increasingly integrated, the barriers between
countries remain significant and need to be taken into account.
From many years it is being heard that the word is flat and countries are now integrated
with each other increasingly and effectively. The world is changing very fast with rapid rise of
internet, cheap telecommunication and easy travel that people are living in a completely
globalised world effectively. The tendency to see a choice between two options, integration and
globalisation on the hand in which both integration and regulation coexist one another. The range
of measures of globalisation, such as the foreign direct investment rates as a proposition of
activities related to global investment again there is a wide distorted view about integrated world.
One of the most key thrust of his argument is about globalisation that there is a big connection
between beliefs of people. The level of overestimation also surprise him that people have these
quantities. They usually try to tell people about world that it is a vision of totally integrated
world talking about what the world really is. According to him people are now expert on
globalisation with the help of their own personal experiences and do not bother examining the
facts. Society has bought the new concept of technology that has power to obliterate politics and
cultural differences effectively. There is a psychological dimension towards misperception that
arguing with people who want to believe in globalisation is an exciting idea.
The majority of cross border interaction from the US take places with its direct
neighbour. He recommended firms that they are deciding where they need to expand their
business or operational activities. This depends on where they are coming from. They should
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relate to their own values and culture that future of business lies on more regional interactions
effectively. In addition to this, globalisation seems to be truly at work in the sector of education
department that the presence of international students on many campuses. Apart from this,
whenever, it comes to online news, an average person just 1 or 2 percent read foreign sites and
news.
Pankaj Ghemawat has exposed the common data about globalisation. He has made
complete focus on people who thinks themselves as expert on globalisation from their own self-
beliefs without considering data and facts. Our community believed that technologies eliminated
all the problems which restrict one-self to reach across different national boundaries and also get
rid of the global cultural and governmental differences of the nation. Society has implemented all
the new culture in their own way without knowing what will be its future results and effect. This
has made great impact on globalisation of nations and entire world. Major effect has come on
educational sector of countries and on the western culture that has been adopted by every nation.
Anthony Giddens’ ideas on globalisation
Anthony Gidden is Director of London School of Economics and Political Science and
also served as an advisor to both Prime Ministers, Tony Blair of Britain and American Former
President Bill Clinton. He defines globalisation as an augmentation of relations between society
living in different countries by creating nexus in such a manner that domestic occurrence is
designed by events and shared adequately with the help of enrichment of sources of
communication and internet to people living miles away (Giddens, 2018). To enhance
understanding about globalisation, Gidden proposed four dimensions of globalisation. The first
dimension is the World Capitalist’s Economy. The core focus of strengths in the world's
financial state are the capitalists’ where the enterprise in the capitalists economy is the primary
form of production.
The economic enterprises in the capitalist’s economy maintains an insulation between
economic and political orders as local and global fiscal policies of these states enact different
forms of financial and economic regulations (D'Andrea, Ciolfi and Gray, 2011). This allows
ample of growth opportunities to different enterprises in various countries to establish their
business in the capitalist’s economy. The influence of any specific territory within international
system is robustly maintained by its level of wealth.
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The second dimension of globalisation is nation-state system which has lengthy
involvement in the reflexivity traits of modernity as a whole. The presence of supremacy ought
to be comprehended that reflexivity is supervised. Supremacy is connected to the substitution of
frontiers by border in the early enhancement of nation state order.
World military weaponry is the third dimension of globalisation where the stupendous
catastrophic powers of contemporary armoury is possessed by almost all states and countries.
Many economically weak Third World countries are militarily powerful.
Industrial development is the fourth dimension of globalisation. The most significant
aspect of this dimension is the division of labour which involves differentiation between more
and less industrialised areas of the world. Industrial development emerged from the policies and
practices that adopted by different countries to enhance their economy and increase share of
culture (Lingard, 2013). Diffusion of technology became one of the major elements for
internationalising implications of industrialism. Technologies drastically impact on the growth
and development of industries and it also provides path through which domestic industry can
expand into international markets (Tejada, 2007). Machineries further bolsters companies’
productivity and profitability as with the help of information systems and communication
devices, organisations are now able to make international transactions in effective and efficient
manner.
Globalisation is defined by Giddens as the intensification of world-wide social
interactions and relations linking distant localities in a way that local happenings are shaped by
events occurring many thousands of miles away and vice versa effectively. Giddens sounded a
note of various cautions that are about learning from the past mistakes. In this world, no one
should be overly sanguine about the rosy prospects of globalisation while ignoring the facts that
are concerned to accomplish the goals. The globalisation concept refers to the procedure of
intensification of political, economic, social and cultural relationship across international
boundaries. It is aimed that the socio-economic and political theory across this global world is
depended on transcendental homogenization. It is a process in which the integration and
interaction among people, government, companies and other countries driven by international
investment and trade which is aided by information technology effectively and efficiently.
Globalisation includes each and every step required to reach the global market in contrast to
localisation and internationalisation. There is a general definition given for the globalisation that
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is usually something like a procedure which involves making a link between nation of world to
closer together effectively.
Apart from the benefits of globalisation, there are some negative effects also associated
for developed countries. In addition to this, the positive effect includes technology, trade, capital
flows, investment, employment, education culture and business structure. The effective side of
globalisation is refers to the opportunities and efficiencies that are created by the open markets.
Business is able to communicate effectively and efficiently with their suppliers, consumers,
managers, inventories and network of distribution. According to him, globalisation is an
effective interaction between companies, people and government worldwide that is also known
as integration process associated with the cultural and social aspect. Manufactured risk is one of
the emergence of globalisation which are man made and also having arisen as a result of
scientific knowledge with the help of new technologies developed through advances in scientific
knowledge. Giddens says that people have a little experience about how to deal with these issues
and new threats. According to them, possible effects that modifies generic structure of basis stuff
of food, not even know exactly how much of global warming is due to human influences.
Giddens has also outlined the vision of government and has emphasised on Non
government organisation(NGO) as it has formed an extra form of power in the economy of the
world. The traditional image of companies who has major role in running the world does not
consider global changes in economy rapidly. Manufactured risk is one of the emergence of
globalisation which are man made and also having arisen as a result of scientific knowledge with
the help of new technologies developed through advances in scientific knowledge. Technology is
also a factor which is covered by Giddens. Diffusion of technology became one of the major
elements for internationalising implications of industrialism. It was agreed that in a society
people requires engaging themselves in identity construction. Those who succeed in creating a
powerful and wealthy changes in the world are the ones who can defend in front of the world.
These people are highly able to deal with negative consequences. They motivate other in dealing
with expert advice. The most important feature of this magnitude is the division of labour which
involves differentiation between more and less industrialised areas of the world.
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The “End of Poverty” movement and the contrary assertion that “Trade NOT aid” is the way to a
more globalised world that mitigates against poverty
Trade not aid is the strategy which is used by developing countries which is based upon
idea where developing nations believe that if they trade more at large with developed countries
than they would have more sustainable income which eradicate their dependencies on external
aid to undertake developmental projects. To eliminate the poverty in developing countries Their
government export their rich products to wealthy country which provides export revenues to
eliminate poverty in developing countries (Lamsal, 2012). This not only helps in reducing
poverty within country but also raises the standard of living within society. Globalisation indeed
reduces barricades in the trade practices between countries. It nourishes and improves the ways
by which any country can trade its products and services to another country.
Openness in trade is considered as central and remarkable for growth and development of
developing as well as developed countries since 20th Century (Stiglitz and Charlton, 2013).
Economists believe that openness in trade will help to develop country to fight against poverty. It
provides natives of domestic countries' employment opportunities where they can work to
produce rich resources within countries that can be exported to international wealthy countries.
To mitigate against poverty, the strategy of Trade not aid can be implemented by the government
of developing countries (Smith, 2018). By reducing trade tariffs, barriers in trade and enhancing
free flow of goods and services from one country to another is effective enough for government
of developing nation to fight against poverty. This is done by enhancing the national economy of
the country through trade practices. Poverty is considered as one of the major challenges that
affects state’s governance policies (Vijil and Wagner, 2012). It influences the reputation of a
nation and it also degrades their growth and development.
Trade not aid is an effective strategy which has been adopted by different developing
nations of African and South American continents such as Uruguay, Ghana, Mozambique, etc.
The prosperity and contacts promoted by trade foster peace and at the time when trade rules
affect major economic sectors, such as West African banana growers, they must be negotiated
carefully (Sakyi, 2011). By free flow of trade practises and enhancement in globalisation,
developing countries are now focusing on increasing exports of rich resources produced by them.
This helps them in earning sustainably which further assists in reducing poverty level in the
country (Amin, 2014). Thus, trade not aid strategy helps in fight against insufficiency in
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developing nations by enhancing the free trade practices and exports of resources from one
country to another.
The logic of Trade not aid refers to the culture of dependency that foreign aid to develop
economies is wasteful and also able to create a dependency culture. Aid recipients may feel
lower self-esteem that is damaging in a long run. Aid is also subjected to vested interests and
fails to make real development in living standards. For an example, government aid is often tied
to bilateral agreement with expectations of demands for purchasing exports. In addition to this,
increasing the best way for developing economies is helpful towards improving economy level
towards welfare and sustainable enhance in welfare of economy. There are some ways in which
Trade not Aid could be implemented such as supporters of trade not aid seek to remove any tariff
barriers along with obstacles to free trade and opening markets for competition. In addition to
this, reducing power of trade unions is also an option. Cracking down corruption, lower
corporation, income taxes to increase and invest in export business.
On the other hand, there are some criticism of trade not aid that Joseph argued that aid is
important in order to deal with global inequality and also to enable the poorer developing
economies in order to provide proper benefit from the potential of trade. The agenda also reflect
the realisation that necessary investments are particularly large for the developing nations in
order to meet small necessities effectively. Developing countries are not able to provide benefit
from free trade but their competitive advantage may lie in the primary products and services that
are subjected to fluctuating commodity prices. In addition to this, it is analysed that not all
nations are same or beneficial from the growth of trade but that does not mean that the similar
model could be transferred from tariff barriers.
Free flow trade practices and improvement in globalisation, developing countries are now
focusing on better exports of high resources which are produced by them. There are many
changes adopted in last six years, these has resulted in high economic growth and emplacement
to the people. Trade not Aid could be enforced such as supporters of trade not aid seek to
remove any tariff barriers along with obstacles to free trade and opening markets for
competition. Lack of power is not all about loss of income and money, it's about power as well.
So in order to fight against poverty Trade not aid can be implemented by the government of
developing countries. It will reduce trade tariffs, barriers in trade and enhancing free flow of
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goods and services from one country to another is effective enough for government of
developing nation to fight against poverty.
CONCLUSION
To sum up, it can be concluded that globalisation is the process of free flow of goods and
services from one country to another. It plays crucial role in sharing of culture, beliefs and
characteristics of different nations. The report sheds light on the view of Pankaj Ghemawat book,
World 3.0 in which he included facts regarding why the world is not globalised as an individual.
The ideas of globalisation and its dimension proposed by Anthony Giddens has been described
succinctly here. In addition to this, Giddens provides views on globalisation that there are both
positive and negative effects of globalisation. The role of Trade Not Aid strategy in eliminating
poverty in developing countries has been also discussed in this essay explicitly. Furthermore,
There are many changes adopted in last six years, these has resulted in high economic growth
and emplacement to the people.
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REFERENCES
Books and Journals
Amin, S., 2014. Aid for development. In Samir Amin (pp. 125-137). Springer, Cham.
D'Andrea, A., Ciolfi, L. and Gray, B., 2011. Methodological challenges and innovations in
mobilities research. Mobilities, 6(2), pp.149-160.
Ghemawat, P., 2011. Globalization in the World We Live in Now: World 3.0. Harvard Business
Review.
Ghemawat, P., 2011. World 3.0: Global prosperity and how to achieve it. Harvard Business
Press.
Giddens, A., 2018. Globalization. In Sociology of Globalization (pp. 19-26). Routledge.
Lamsal, M., 2012. The structuration approach of Anthony Giddens. Himalayan Journal of
Sociology and Anthropology, 5, pp.111-122.
Lingard, B., 2013. It is and it isn’t: Vernacular globalization, educational policy, and
restructuring. In Politics, Policies and Pedagogies in Education (pp. 100-118).
Routledge.
Reis, N.R., 2015. WORLD 3.0: GLOBAL PROSPERITY AND HOW TO ACHIEVE IT Pankaj
Ghemawat (2011), Boston (MA): Harvard Business Review Press, 386 p. Revista Ibero
Americana de Estratégia, 14(2), pp.137-139.
Sakyi, D., 2011. Trade openness, foreign aid and economic growth in post-liberalisation Ghana:
An application of ARDL bounds test. Journal of Economics and International
Finance, 3(3), pp.146-156.
Smith, K.E.I., 2018. What Is Globalization? In Sociology of Globalization (pp. 3-10). Routledge.
Stiglitz, J.E. and Charlton, A.H.G., 2013. The right to trade: Rethinking the aid for trade agenda.
Commonwealth Secretariat.
Vijil, M. and Wagner, L., 2012. Does aid for trade enhance export performance? Investigating
the infrastructure channel. The World Economy, 35(7), pp.838-868.
Online
May, T., A., 2012. 11 stats that suggest our world may not be as globalized as we think.
[Online]. Available through:<https://blog.ted.com/11-stats-that-suggest-our-world-may-
not-be-as-globalized-as-we-think/>
Tejada, G., 2007. The four dimensions of globalisation according to Anthony Giddens. [Online].
Available through:<http://www.glopp.ch/A3/en/multimedia/giddens.pdf>
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World 3.0: Not as globalised as we think. 2012. [Online]. Available
through:<http://thinkbusiness.nus.edu/article/globalisation-pankaj-ghemawat/>
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