What Impact Has Globalisation Had on the Potential for Development and Change?

What impact has globalisation had on the potential for development and change?

Globalisation is the process through which economies; societies and cultures are becoming more integrated in the global network of communication, transportatio Page 1 15/05/11n and trade. The impacts of globalisation can both benefit and hinder the future development of a country, each country reacts differently to the process of globalisation. Globalisation has contributed to economic development in China and Greece through increased foreign direct investment, trade, capital flows and spread of technology and ideas. In Both Greece and China economic development has occurred at such a fast rate that the benefits have been disproportionately felt by those in urban centres, creating greater inequality and hindering development. Since the global financial crisis, Greece has experienced negative economic repercussions, which are dramatically hindering the potential for future development.

This essay focuses on the potential economic development of a country, influencing growth and restructuring of an economy to enhance the economic well-being of a community, region, state, or nation and its citizens.

Globalisation and the impacts on development in China

Globalisation has ensured significant development in China, progressing from a developing country run under strict communist rule and severely affected by one of the world's famines to prosper into the world second largest economy in 2007. ( CIA , 2010)

The Chinese economy has been transformed ,by globalisation since the 1980's China has changed from a centrally planned economy with large government control to a market orientated economy, where prices are reflective of supply and demand in the market. This structural change has created a competitive market for Chinese goods and services. Competition ensures efficient allocation of resources, as only the most efficiently produced products will be able to survive . Thus globalization has developed the Chinese economy into a highly efficient and productive market.

The public sector has grown significantly with globalisation, and a large number of businesses have floated on the global market. The Chinese government has been able to generate revenue from its own prospering economy through the public sector. Giving the country more economic stability. The flow on affect of these structural reforms is evident in China's GDP 10 fold increase since the 1980's , to US$4.9 trillion in 2009 (CIA, 2010).

Due to globalisation China is more integrated in the global economy, sparking a huge increase in foreign Direct Investment (FDI) flows. An increase in GDP ensures china is appealing to foreign investors, with new foreign investment further boosting economic growth and development. The central intelligence agency highlights that annual FDI rose to $108 billion in 2008. The huge inflow of funds sparked economic growth, which saw the development of new business, job creation and increase in GDP. China's average growth rate of GDP per capita was 8.1% , with industrial growth reaching a high of 11.5%.

The Increase in FDI flows and structural reforms can be linked to the increase in foreign trade. Foreign trade as a fraction of GDP grew from barely 10% in the 1980''s to over 40% peaking in 1993-4. Although the ratio has declined somewhat after the peak, it still exceeds 35% ( Wei, S J 2009). This indicates that china's has a high dependency on trade, and is significantly integrated in the global economy.

However while the economy has been prospering at a fast rate, the economic gains have been disproportionately felt, rising the rate of inequality in china.

People located in the urban centres and the coastal areas of China have experienced increases to incomes, development of infrastructure and a greater choice on goods and services between 1980's and 2008. Business boomed with rapid industrialisation in urban centres while Western China experienced a decline in economic activity. The main factor contributing to this decline was the huge rural to urban migration, over 200 Million rural labourers moved to urban centres to seek work. In the past China's most predominate sector, agriculture, today only represents 39.5% of the work force ( CIA, 2010). This saw the closure of many businesses as demand reduced.

One study estimates that China's Gini Inequality index moved steadily from 0.310 in 1985 to 0.417 in 2007( Roberts, 2009 p7) with the highest levels of inequality experienced in the regional centres. While urban centre and the coastline of China experienced economy gains from increased export of industrialised products, Western China was affected by increased competition due to the freeing up of the market. The agriculture sector