Introduction
Globalization is used to measure the performance of many economies. It is greatly determined by the strength of economies in the world. At the same time, globalization helps these economies grow by ensuring that they are sustainable with time (Welfens 168). Weak economies are witnessed in less developed countries as well as the developing ones due to the various economic cycles which include recessions and booms among others. These weak economies are characterized by an elevated rate of unemployment, poverty, and inflation among other macroeconomic issues (Patman 119). These economies are also affected by vices such as corruption which greatly affect them. These issues restrict countries to make investments internationally because they have a limitation of financial resources.
Politics plays a very big role as far as the economy is concerned. Weak economies have poor governance or leadership which translates to poor allocation of the few available resources. The politicians in these economies tend to accumulate wealth for themselves and hence formulate policies that are in their favor. Such economies continue to stagnate and sometimes deteriorate.
Whether governed by the use of capitalism or socialism people need to be to work hard to make an impact in the economy. The majority of countries experiencing weak economies are governed through the use of capitalism. Capitalism leads to social stratification which makes the poor poorer and the rich richer. There is a lot of exploitation in this economy because unemployment is high. The employers exploit the employees because they are unskilled and because they know so many other people are desperate for the same job.
Weak economies have shown that there is a very wide gap between the people who own the means of production and the laborers. This has greatly led to weak labor unions. The implication of the weak labor unions is that the human capital is underpaid and hence the workforce migrates to other countries in search of better pay. Weak economies import labor because they lack expertise in major professions (Leung 115).
Main body
When an economy is weak, people are afraid to invest because they can easily lose their money. They, therefore, decide to hold liquid cash to take care of their consumption needs. This does not lead to any developments in the economy because the rate of inflation rises. Consequently trading declines internationally due to a decline in the value of the currency (O’Rourke 304). Weak economies have little economic growth and thus slowing the pace of globalization. Weak economies are not able to negotiate their way into trade organizations, which can help them overcome the barriers of trade in the international arena, such as tariffs. Weak economies let globalization down because they do not contribute to matters arising in the globe as they ought to, because they do not have the powers to do so.
Weak economies survive on loans from International Monetary Fund and donations from developed countries (Leng 203). Thus, these economies work towards repaying these debts instead of investing in technologies that could enhance growth in their economies. This makes weak economies become very dependent on donor funds and makes the countries lose their sovereignty. Once a country loses its sovereignty it is easy to be manipulated as they operate in the better interest of its donor.
Most of all globalization helps to open up international investment, which weak economies cannot do on their own. Involvement in international activities such as trade ensures exposure to economic opportunities internationally (Hook 182). Weak economies keep countries off from competition because they lack exposure to variations of goods and services. Competition is good for every economy because it ensures that countries produce the best goods and services. Most weak economies rely heavily on the agricultural sector which is greatly affected by climatic conditions and also faces the challenges of obsolete technologies and last but not least diseases that attack crops and livestock.
Majority of weak economies have poor banking policies or facilities and this greatly affects foreign investment because investors need assurance, that their finances are being handled with professionalism (Das 192). Also the few banking sectors that are available put very high charges for locals to bank with them. The locals therefore have no option but to keep the money in the house. Even though it is not a safe method of storing money they view it as cheap. Also the banks have very high borrowing rates which discourage borrowers from taking loans. Banks needs to make themselves accessible to people so that they can have enough money to create credit for investment and lending out too.
Saving is very important for every economy; however in weak economies only a very small portion of the population saves. This is because majority of them earn just enough money for consumption. Savings are for investments, is what is left after deducting the money for consumption. Savings also increase the capital availability for investment by the banks locally and internationally (Macleod 157).Investing in infrastructure is very important for globalization because weak economies are characterized by poor infrastructure especially the transport sector.
Perishable agricultural produce gets bad on the way to the market due to delays in the bad roads and leads to great losses in the economy (Bennett 103).This greatly frustrates the farmers and in the process they give up with farming and seek other methods of acquiring an income. This leads to food insecurity which drains a lot of resources from the economy once drought or famine occurs.
Conclusion
Besides financial effects on globalization a weak economy is said to have a big impact on the environment. This is because policies formulated on environmental issues are weak and as resources are utilized to make the economy better; the degradation of the environment takes place.
There are a lot of externalities that are witnessed such as; pollution which takes place and is associated with industrialization. The policies set are not strict about the levels of pollution that a company is entitled to. The companies should be made to pay for the levels of pollution that they emit so that they can embrace recycling of waste materials. This affects globalization negatively because these resources help countries to earn revenue through exports and through the tourism industry by providing raw materials for the industrial sector (Baker 256).
The growth of the stock markets is a strong indication that the countries facing weak economies have increased investments. Foreign investors realize the potential that weak economies have in order to grow because the rates of investment when the economy is weak are not high, however the risks involved are high. Globalization leads to improved standards of living and the general welfare of economies. Countries need to have the right policies in place to support globalization.
Works cited
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Leung, Suiwah. Globalization and Development in the Mekong Economies. Cheltenham: Edward Elgar Publishing, 2010. Pg 106- 224
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