The Effect Of Globalization On Developing Countries

Why are some Nations poor and others rich, what causes the unnatural and unfair distribution of economic wealth amongst the modern states? Find out

The free market is one of the core tenets of modern democracy; it dictates that the country in question encourage what is usually termed lightly as “foreign investments,” a concept that will ultimately generate wealth and economic growth for the country. Adam Smith couldn’t have put it better when he wrote in his masterpiece The Wealth of Nations, “Were a nation either by combination or by any other sort of violence stop the importation of manufactures thereby giving rise to such of their own countrymen monopoly by diverting any considerable capital into this employment, they’ll retard instead of accelerating the further increase in the value of their annual produce and would obstruct instead of promoting the progress of their country towards real wealth and greatness.”

Smith, a champion of capitalism and the free market system, explicitly cautions against tariff raising and protection of internal industries using state capital. Of course, history has proved that the opposite has always worked better; some of the biggest European and even the American economies all abandoned this system for state-sponsored privatization and only embraced/championed the free market system after they had selectively built up enough industries to challenge economic domination, think China, think Japan, think South Korea, these Countries all followed the internal protection system.

The challenge for most African Countries is that to protect their internal industries, one has to exercise some sort of autonomy as well as endure the obvious downgrade in quality which is what Smith was scared of. Think of it this way; I have a six-year-old son who clings to me like a parasite; I clothe him, feed him and school him, spending valuable resources without getting anything substantial back in return. Won’t it be economically better if he got a job? Then I won’t have to be responsible for his entire well-being, he makes money, and I save money! However, as we all see, this argument is flawed because, as a parent, I am willing to risk a substantial amount of resources on an unsure investment because I believe that if I keep the six years old boy for another eighteen years, I could empower him more to become a lot more productive than he was at six!

The power of saying no is not as easy as the above analogy; for instance, the government could be as farsighted as a good parent, but what about the private sector? They are in this game to make gains first and not grow the Nation at the detriment of their own well-being. In Nigeria, for instance, the quality of public education has been on a downward spiral substantially for more than three decades now; most public universities have rarely ever had a complete uninterrupted educational calendar, subsequently pushing half-baked graduates into the labor market. Meanwhile, the first world countries are churning out experts in science and technology every single year. For instance, India produces thousands of software engineers, hardware engineers, code developers, and other modern branches of industrial technology, and with such a large pool to select from, the Countries that produce these tech gurus would only select the crème de la crème and then let the other thousands into the world labor.

With the world becoming increasingly globalized by the internet, it has become increasingly common for a company in Lagos, Nigeria, to hire through social media, online job markets, and other platforms, foreign service providers, and since they are mostly objectively better than what is to be found here, can you blame them. So a firm in Lagos has a web designer from Indonesia, a copywriter from the USA, and an app developer from China, all while ignoring the teeming labor market in their location.

This is not just a technological phenomenon, today how many of our top music artists are actually home-based with Nigerian record labels or producers, big companies hire foreign poll readers and market observers to implement better sales, politicians hire foreign campaign managers to provide expert insight on campaigns, most of our sports teams are managed or have been managed exclusively by foreigners, the list goes on and on.

The term “economic dependence” has been thrown around a lot, and because of the constant need for financial aid required by most of the third-world Countries, they’ve had to follow the “expert” economics policies prescribed by the international monetary fund (IMF) and the World Bank which of course would require the free market policies. So the next time you hear about the dictatorial, undemocratic leadership of countries like China, Korea, and Rwanda, think about the economic-dependent democracy of other third-world countries.

Work Cited

The Wealth of Nations Adam Smith.

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