Introduction
The international economy has greatly changed over the last decades owing to the forces of globalization, liberalization of markets, and technology. The economy and operations of each nation have been integrated with those of other nations across the globe. Through globalization, it has been inevitable for countries to work without cooperation with others.
The international economy is characterized by increased trade activities in the global platform. New markets and opportunities have been opened up, thus boosting trade and expansion of GDP for the countries. There has however been heated debate on the value of the international economy in serving the interests of developing nations.
Research and analysis by leading economists has shown that the international economy is both advantageous and disastrous. Despite the numerous opportunities presented by the international economy, barriers in realizing national interests of developing countries have been reported. Based on research, the international economy is a force of capitalism and is only beneficial to the developed countries.
This gives a clear opinion that the international economy is to a bigger extent limiting the interests of developing countries. This essay will discuss and analyze the ways in which the international economy limits developing countries’ interests.
At present, few or no country has remained unaffected by the international economy. Some countries have greatly benefited from globalization, while others have fallen victims.
The international economy offers great opportunities for growth and trade with countries, thus boosting national economic growth and development. This has however not been the case for many developing countries, which have grown poorer due to the international economy.
The international economy has created an unstable and polarized world in the long run. This has caused protests of developing countries regarding the international economy. These protests have however been given a deaf hear by developed countries who are practically controlling the international economy.
The current form of the international economy has done more harm than good in the sense that it only enhances inequality between developed and developing nations (Chua 102).
A huge gap between developed and developing countries has resulted in the 21st century due to the international economy. Through globalization of the economy, the world has been polarized between the rich and poor countries. The developing countries have been put in a compromised situation, thus crippling them to severe poverty. A point of concern is that the international economy is nothing but a tool of capitalism.
This only benefits the developed countries since they have the power to control the market forces by formulating policies which favor their economy. Alongside the creation of the huge gulf between developed and developing nations, the international economy seeks to limit the dominance of individual nations.
The reasons for exploitation of the poor countries should not be seen to originate from the rich countries but rather outside the control of rich countries. This gives an insight on the nature and environment of trade offered by international economy, which only favors the developed countries.
The issues of technology, capital, human power, and political stability favor the rich countries. These are issues are beyond the control of the rich countries, but work in their favor, thus compromising the performance of developing countries in international markets (Held and McGrew 35).
International economy as the herald of inequality
Opponents of international economy disagree with the knowledge that it creates fairness in distribution of wealth and provision of trade opportunities. The bottom-line concerning the nature of the international economy is that it is a tool of capitalism and only cultivates inequality between nations.
The developing countries are hereby put in a compromised environment offered by international economy that favors the developed countries. It is true that the international economy has opened up trade, media, better technologies, and steered economic growth. However, this assumption does not outweigh the knowledge that the international market has created an unfavorable environment for inequality and unfair competition.
The reasons why so many people around the globe have a negative perception towards the country, which is seen as the new global marketplace is due to the limitations offered by globalization to the developing nations. The United States of America is at the center of debate due to its role in enhancing the global economy.
Being a capitalist nation, the US only looks forward to enhancing its economic prospects at the expense of poor countries. This is a clear justification that the international economy only creates a favorable ground for capitalism and the rich countries (Stiglitz 57).
The international economy is guided by capitalistic structures which have ended up exploiting the developing nations. This market structure has only heightened unfair competition and increased inequality between poor and rich countries. The developed countries led by the US have dominated the global free market. This is only a tip of the iceberg which signifies that the global economy is a platform for the rich but not the poor countries.
Through the rapidly increasing global economic integration, some of the poorest countries have even reported a declining per capita income. This is in spite that the US and other developed countries have enjoyed per capita increase.
For instance, the sub-Saharan Africa countries have been noted to experience a 1.2% decline in per capita while that of the US increased by 1.9% from 1980 to 1998. These statistics give a clear picture of the inequality created by the global economy (David 72).
Integration and expansion of the international economy have heightened poverty levels in developing countries. The number of people living in subject poverty has widened rather than declined over the last three decades. The declining living standards and economic position of the developing countries should not be viewed as a result of poor governance but as a result of inequality created by the global economy.
The US ideology has dominated the international economy in exploitative poor countries. The US-conceived globalization is exploitative to the developing nations and has led to inequalities in wealth distribution and trade.
The issue of multinational corporations should be viewed as a huge barrier to the realization of economic growth in developing nations. These big businesses offer undue competition to small businesses in developing countries, thus chasing them out of business (Stiglitz 57).
The market inequality and exploitation presented by the international economy is a limitation to developing countries’ interests. The mode of production and trade in the global markets is capitalist in nature. The developed countries take the opportunities presented by globalization to enrich themselves at the expense of the poor countries.
Developed countries exploit the poor countries through the sell of cheap, capital intensive products at very high prices. This is in relation to the developing nations who sell tools of production, raw materials, and labor at throw away price. International markets assure rich countries of ready market for their high priced products and steady supply of cheap raw materials and labor from poor countries.
In regards to this scenario, precedence for long lasting inequality and exploitation is set which inhibits poor countries from actualizing their economic objectives. Alongside the price disparities of commodities traded in international markets, poor countries have been deprived of money circulation and left with unbalanced foreign trade accounts due to the importation of highly priced finished goods (Chua 102).
Globalised economies have created inequality and dominance of the rich countries. The rich countries have dominated key sectors of the global economy like information technology. This dominance of sensitive sectors of the economy has limited the potentials of poor countries in realizing their goals.
The developed countries use this economic and political dominance to exploit the poorer nations through weaker environmental laws, low wages, and other factors which enable them to dominate global markets.
Poor countries are no longer used as potential markets for high priced finished goods, but also as sources of cheap labor. This is a capitalist approach which has dominated the global economy by exploiting the developing countries (Stiglitz 57).
The continued dominance of developed countries as well as the relationship with poor countries is only sustained through manipulation. The benefits of international economy do not guarantee their persistent participation but rather the manipulation and dependence on developed countries. The developed western nations like the UK and US use their economic and political power to manipulate the poor countries.
The institutions of globalization like the International Monetary Fund (IMF) and the World Bank are used by rich countries to press and manipulate the developing countries. In this perspective, the structure of global economy inhibits fair trade and thus limits the interests of developing countries.
Developing countries have continued to protest against the double standards adopted in global trade with little or no success. The policies, trade agreements, and economic institutions are aligned to the interests of developed countries. The loan policies of the IMF and World Bank are tools of neo-liberal capitalist policies (Chua 102).
Developing countries have been forced or manipulated to liberalize their markets prematurely. Without the strong economic potential like their developed nations counterparts, poor nations have only been put in a compromised state for exploitation. The neo-liberal policies set by the World Bank and the IMF are doctored by the developed nations to exploit poor nations.
These global economic policies require developing nations to do away with trade regulations so as to attract foreign investors. In spite of the fact international economy is an opportunity for economic growth; it ends up damaging the economic prospects of the poor countries. By liberalizing the domestic markets of poor countries, unfair competition is created by the multinational corporations.
It is sad to note that most of the developed nations even exempt themselves from harmful policies advocated by the World Bank and IMF. Based on this analysis, the international economy only deprives poor countries what they deserve and give room for rich countries to capitalize on the weaknesses and opportunities of the poor nations (Held and McGrew 35).
International Economy as tool of absolute dominance
The huge economic disparity between the rich and poor countries is a recipe for dominance. The platform offered by international economy favors the rich countries at the expense of poor nations. The global economy is very competitive and only favors the economically and politically empowered. In regards to production and trade, the rich countries are better placed.
This is in regard to their technological know-how as well as capital empowerment. The developing countries are technologically backward and lack the high capital requirements to sustain market competition with developed countries. As a result of this scenario, the developing countries’ interests are compromised (Chua 102).
The developed nations, mostly the US, have dominated the global economy through manipulation and coercion. By adopting the capitalist ideology, the developed nations have been able to replace their selfish and greedy image with a compassionate one. The global economy is governed by capitalistic structures that are used by developed nations to bring about economic and political dominance.
A good example of tools of manipulation and dominance is the foreign aid. This is a deception used by developed countries to advance their interests in the global economy. The percentage of GNP of developed nations used as foreign aid is wanting. This is despite the ignorance of developing countries, mostly in sub-Saharan Africa which have fallen prey to the trickery of rich countries.
Foreign trade is adequately used in the international economy to seek economic favors and fair trade agreements. This capitalist approach has led to more harm than good to the developing countries (Held and McGrew 35).
The forces of capitalism have encroached into the global market in an uncontrolled way. With liberalized markets, developed nations use their power to exploit the potentials of poor countries. Capitalism in international has led the poor countries to grow in extreme poverty rather than help them to overcome their problems.
Opponents of international economy offer insightful ideas on the manner in which poor nations have been held hostage by the rich nations. The use of medical aid, dollars, food aid, and military aid to poor nations is aimed at dominating them and making them live at the mercies of western nations. Foreign aid is exploitatively used to give favors to rich nations on exploitative economic deals.
For instance, developing nations are manipulated to keep importing expensive products from developed countries, while being coerced to export cheap raw materials to the same countries. This scenario explains why the poor nations will continue to grow in poverty due to their exploitation in international trade (Stiglitz 57).
Lack of fair and transparent market structures in the global economy leaves loopholes for exploitation and dominance of the developing nations. The current structure of the international marketplace favors developed countries like UK and US. The developed countries are conscious of their economic strengths and weaknesses and create regulations favoring all aspects of their economy at the expense of poor countries.
It is notable that the developed countries ensure protection of their weaker segments of the economy while encourage poor countries to liberalize all segments of their economy. This opens pure competition in developing countries, thus catalyzing unfair competition. The overall economic policies and regulations are not fair to developing countries.
This scenario creates a barrier in the fulfillment of the interests of the poor countries. The use of political manipulations in the international economy is rampant and unacceptable.
Most of the developing nations are governed by rogue regimes which coalesce with rich countries to serve their interests with this in mind, the poor countries will continue to suffer from exploitation by the rich countries if fairness in the international economy is not restored (Dunklin 1).
Weakening the position of poor countries in global economy
Poor nations have been made vulnerable to catastrophic competition, which has weakened their position in the international economy. The perception that globalization has made poor countries vulnerable to unfair competition cannot be assumed. This is attributed to the huge gap between the rich and poor which has continued to widen instead of narrowing.
Multinational corporations are the main force behind the weakening of the developing countries’ economies. Multinational corporations not only create employment and revenues for the government but also enhance capitalist exploitation. Developing nations are deprived of their potential labor and natural resources by foreign companies.
This is a great catastrophe in the endeavors of realizing sustainable development. Most of the prime natural resources are exhausted by multinationals hence leaving the developing nations with no reserves. This phenomenon is more of harm to poor countries than benefit. This is because the natural resources are exploited and exhausted at a very minimal price or benefit to the nations (Chase-Dunn 62).
Alongside the depletion of national resources and labor, multinational companies kill domestic companies. The competitive environment offered by the global economy is not favorable for developing countries. The young industries of developing countries are not in a position to compete with foreign companies. This is attributed to the technological and capital disparities which give the foreign companies a competitive advantage.
Due to economies of scale, multinational companies are able to produce goods and services at minimal prices and maintain high quality. This is the main reason why multinational companies enjoy monopoly power since they have left no room for domestic companies to grow (Held and McGrew 35).
Import trade is also a disaster for developing countries’ interests and economic growth. The liberalized market structures created by the global economy have encouraged unfair trade. Poor countries are forced to import cheap and better quality products from developing nations. This is simply because the domestic companies can not compete with foreign companies in terms of quality and price.
The high capital endowment and technological knowhow facilitate economies of scale and standardization, thus ensuring high quality and relatively low prices for commodities. In such a scenario, the domestic market in developing nations is made captive of imported products. The import trade and policies are biased in the sense that they favor import and discourage export in developing nations.
Poor countries are manipulated with foreign aid to waive or reduce import duties so as to boost imports and restrain exports. This is a malicious initiative by developed nations whose main goal is to capitalize on the prime opportunities offered by poor countries (Chase-Dunn 62).
Ecological damages are also severely suffered by developing nations due to the global economy. There is a strong link between economic operations and ecological management. The developed nations have engaged in unfair relationships with poor nations aimed at exploiting their natural resources. The developed countries pose a severe problem to developing countries since they try to manage their environment.
This is mainly because natural resources have remained a key element in developing countries’ exports. The global economy has created instability in developing nations, thus limiting them from managing their natural resources. The low priced tagged on natural resources has led to exploitation in order to balance foreign trade payments. This leads to unsustainable production.
Poor nations are facing unbearable foreign debt. In relation with this scenario, the developing nations are put pressure to exploit their natural resources in the endeavors of servicing debt.
Environmental deterioration as well as natural resource depletion is inevitable in developing nations due to the vulnerability they have been subjected to by rich countries. Long-term development in poor countries is hereby compromised due to environmental deterioration (Chase-Dunn 62).
The encroachment and operations of multinational corporations in developed countries are intertwined with political and economic relations. These are relationships, made for convenience and only benefit the multinationals but not the developing countries. Multinational corporations have sought to deal with developing countries in consumer goods industries that are labor intensive.
This is a strategy aimed at exploiting the cheap labor offered by the developing countries. As a result of this relationship, the developing nations have been left to suffer from the violation of labor standards.
Through the immense economic and political powers of the multinational corporations, the citizens of poorer countries continue to suffer. This is due to the massive violation of labor laws regarding working environment and remunerations (Wallerstein 42).
Developing countries have remained attractive to multinational corporations due to their relative abundance of unskilled and low-skilled labor. This is a competitive advantage to the foreign companies which are enabled to produce export goods at cheaper costs. The net benefit goes to the foreign companies rather than the developing countries.
Alongside the exploitation of labor, the operations of foreign companies lead to massive destruction of the environment. Developing nations offer raw materials to multinational corporations at very low cost. This has led to exploitation and exhaustion of the resources, thus heightening poverty levels in developing countries (Chase-Dunn 62).
The extent of the global economy into developing countries only gives power to the holders of capital, who are in this case are the rich nations. Global financial institutions are used wealthy nations to manipulate and exploit developing nations. The immense power of global financial institutions and multinational firms manipulate economic policies in their favor.
The labor markets in developing nations have been most affected by the global economy, whereby it has been weakened. Workers in developing nations have been denied the freedom of unions and movement from country to another thus impairing their bargaining power.
This is an exploitative approach which is dominating the global economy. In reference to the growth of the international economy, membership in unions has been shown to decline significantly, where unions are facing more challenges than before.
All these problems facing the labor market in poor countries as a result of the global economy. Multinationals, foreign investors and global economic institutions impose labor constraints which restrain wage increase and participation in unions (Wallerstein 42).
Poverty and increased dependence of developing countries
Despite that it is a complex task to prove the direct link between global economy and poverty in developing countries; studies of different scholars have ascertained that international economy trends have heightened dependency and poverty in developing countries. The effects of international economy on poverty and dependence are due to increased competition.
Foreign trade, investment and government borrowing are key issues of concern which has enhanced poverty in developing countries. The position of poor countries in the global economy has been compromised by western powers.
This has led to increased dependence and poverty rather than benefits. Since the 1980s, the global economy has grown tremendously and has brought more suffering to poor nations than good. The depletion of natural resources and killing of domestic industries are the main causes of poverty and dependency in poor countries (Chase-Dunn 62).
The robust growth of the international economy is disastrous to developing nations. Through globalised economy, growth of developing nations has been made uneven. The total share of developing nations in the international economy has also declined over the years. In this case, the interests of these poor countries to actualize economic growth are limited.
Many developing countries have only found them in a compromised state in reference to the liberalized markets. The deficiencies of developing countries in economic structures and stability have led to exploitation.
The poor infrastructure and societal institutions of developing nations are outweighed by the sophisticated technologies, capital stability and socioeconomic and political powers of the developed nations. The nature of products and services offered by developing countries in international markets are not competitive. This is because most of these developing countries are dependent on agriculture and natural resources.
The developing nations only produce raw materials which are low priced in the global scale. The gap and difference in products dealt by developed and developing nations has led to interdependence in trade.
This is however not a mutual or sustainable relationship since it has led to unbalanced foreign trade. This is attributed to the excessive and high priced imports of developing nations compared to low export to developed nations (Singh 31).
Support for international economy and its benefits to developing countries’ interests
The international economy has faced a lot of criticism due to its limitation to developing countries’ interests. However, these criticisms have not taken into account the benefits the international economy may have on the interests of poor countries. Despite that the global market favors developed countries of the West; it has been supported for its ability to inhibit absolute dominance by any single country.
Political and economic interdependence has been cultivated by the globalised economy. For instance, multinational corporations are bound to obey laws in countries where they operate. This is an indication of the nature of the international economy, where it leads to interdependence between countries.
The establishment of global financial institutions like IMF, WTO, and UN regulates the operations trade in the global economy. This is good for developing countries in the sense that their interests are protected (Dunklin 1).
The international economy has also opened economic growth in developing countries. The global economy has come as a relief to developing countries in the sense that it has opened up development. Many poor nations have been opened up for trade and made new centers of growth. This is because the global economy has come with diverse opportunities for countries.
The provision of a ready market for goods and services in developing countries has economic benefits. Foreign investment and multinational corporations have helped developing nations to utilize natural resources. This is in relation to the limited capital and technological know-how of many developing nations. Job creation and improvement of living standards are also scenarios worth praising.
In this case, multinational corporations and foreign investment steers economic growth by creating employment and provision of revenues for the government. This has in turn helped in reducing poverty and improving living standards (David 72).
Conclusion
The international economy has profoundly affected all countries over the last couple of decades. While the global economy has benefited some nations, some are in constant protests due to the limitations they have experienced in the globalised economy. In regards to the developing countries, the international economy has been of harm than benefit. The interests of poor countries have been compromised by developed countries.
The international economy is capitalistic in nature and is a tool for exploiting poor nations. The international economy has limited attainment of developing countries’ interests through exploitative economic policies, multinational corporations, manipulative foreign aid, and biases in global financial institutions. Wealthier nations have dominated the developed countries inhibited their economic growth.
On the contrary, poor countries have benefited from increased employment, expansion of trade, and improvement of living standards. The disadvantages of international economy on poor countries outweigh the benefits, thus calling for caution while operating in the global markets.
There is no doubt that poor countries will remain victims of the capitalistic global economy, hence inhibiting the realization of their visions. A thorough review of the structures and mechanism of the global economy is paramount so as to ensure fairness and realization of developing countries’ interests.
Works Cited
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