Globalization effects developed and developing countries in different manners with obvious winners and losers in the emerging global capitalist economy. In “Welfare Spending in an Era of Globalization: the North-South” by John Glenn, readers learn about the extent to which developing countries lose. After being roped into the global market as a result of debt crises or international finance traps, developing countries are tangled in the global economy. In order to keep up with developing countries, Glenn argues that the developing countries employ one of two models: compensation or competition. They either compete by reconfiguring their structure to produce an environment conducive to FDI or compensate with more economic liberalization. In other words, developing countries make concessions like lowering corporate income tax, or employing other tactics to make themselves more attractive to foreign investment. In order to stay in the global economy, developing countries, especially in the South cut social spending and allocate their money in such a way that does not necessarily increase the welfare of the country.Watch Cyberbully (2015) Full Movie Online Streaming Online and Download
The danger of the developing country’s practices of compensating and competing is the market it reinforces of potential host countries. MNCs and international investors then have the opportunity to be footloose and “vote with their feet,” as Glenn puts it. MNCs have the economic freedom to pick up and move all capital from one developing country to another that is more competitive in the market for foreign investment or has a more suitable economic climate.
I wonder what the net change in the GDP of these developing countries is. Is the greater economic openness worth the introduction and then exit of global capital? Does the net change in GDP make up for the reduction in social spending that the developing country had to undergo? I also wonder if the spillover effects of the MNC presence is sustainable. The sustainability of the economic growth of these developing countries needs to be considered. If it is true that MNCs and foreign investors are footloose enough to negatively impact the economic growth of globalized developing countries, then there should be some sort of legislation by the IMF or World Bank to protect the vulnerability of these countries. However, these two international institutions, backed by the major winners of globalization, probably wouldn’t find that sort of policy to be in their favor.