What Is the Relationship between Globalization and Economic Development?

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  • Written By: Esther Ejim
  • Edited By: Kaci Lane Hindman
  • Last Modified Date: 20 October 2019
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Globalization and economic development are related in several ways. Globalization may be said to be a catalyst for the growth of the economies of several nations. Increased movement of people across territorial borders means that there is a cross transfer of knowledge, expertise and labor. Cross-border trade means that there are more opportunities for the sale of various goods and services. Globalization has also led to the accessibility of various technologies from various countries of origin by other countries to their benefit.

One of the links between globalization and economic development is the fact that people from different nationalities now find it easier to go to other countries in pursuit of livelihoods, careers, trade and other purposes. These people bring with them much-needed expertise, knowledge or labor, which the host country can use to its own benefit and economic development. For example, some countries that need skilled engineers, nurses, doctors and architects may benefit from immigrants of other countries who possess these skills. There is usually a shortage of skilled health care professionals in most countries and such people are often given more consideration in terms of immigration policies. These people help develop the economies of their host countries through the use of their various gifts and expertise.


Another relationship between globalization and economic development is that it has led to the increase in trade between various countries. It has made it possible for a country to sell its goods and services to countries located in different corners of the globe and for that same country to purchase needed goods and commodities from other countries. For instance, countries in the west that do not have crude oil can purchase the commodity mainly from countries in the Middle East and Africa that have huge reservoirs of oil deposits. The countries selling the commodity can benefit in terms of increased financial resources.

The relationship between globalization and economic development can also be seen in the manner in which globalization has led to a transfer of technology between several countries. For instance, due to the effects of globalization, new technology from the United States will also soon be available in other countries, which will be able to benefit from it. An example of such a technology is the development of different brands of smart phones that soon become available to other markets as soon as they are released into the US markets.


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Post 2

@Markerrag -- good point, but you are leaving out one thing. Are companies really reducing the price of their goods because of lower labor costs or are they charging what they would have, anyway?

Also, there is no reason to think that the great disparity in wages will last forever. As economies mature, workers demand more pay for their labor. It may be that globalization will make that process quicker, just as it has made sharing technology and goods easier. The days when nations could focus on the economies within their own borders are over and we are working through what that all means.

Post 1

Globalization has also been blamed for the near death of the manufacturing industry in the United States. The theory is that a global market means that multinational corporations can go shopping for less expensive labor, utilize it until labor prices start to get too high and then move on to other markets.

Think of it this way. Let's say that a factory worker in the United States makes $20 an hour. If the average factory worker in China makes $1 an hour, then a United States-based company has a choice to make. Either stick with American labor and compete against comparable products that cost less because they are made by companies using Chinese labor or go out of business.

In that environment, it is little wonder that companies choose to look for less expensive labor.

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