Globalization can promote development by expanding trade, investment, employment and access to technology. However, it can also deepen inequality, exploitation and dependence, so its effects depend on how benefits and costs are distributed.
How Globalization Shapes Development
Globalization increases interdependence by connecting states, businesses and individuals through flows of goods, capital, information and people. Development is multidimensional: it includes economic growth, poverty reduction, health, education, equality and political participation.
| Effect of globalization | Development impact and example |
|---|---|
| Trade and foreign direct investment | Export industries can create employment and government revenue. After Vietnam joined the World Trade Organization in 2007, foreign investment and manufacturing exports expanded, contributing to rising incomes and substantial poverty reduction. |
| Technology and knowledge transfer | Global networks can spread productive and social technologies. Kenya's M-Pesa mobile payment system, launched in 2007, expanded access to financial services and helped households manage economic risks. |
| Labour exploitation | Competition for low production costs can weaken labour protections. The 2013 Rana Plaza collapse in Bangladesh killed 1,134 garment workers, exposing the human costs within global supply chains. |
| Unequal economic power | Transnational corporations may capture more value than workers or producing states. In garment supply chains, global brands often control prices and contracts while workers receive only a small share of the final product's value. |
| Exposure to global shocks | Interdependence can transmit crises. During the COVID-19 pandemic, disruptions to tourism and international trade reduced income and employment in tourism-dependent states such as Fiji. |
A liberal perspective emphasizes cooperation, trade and innovation, while a neo-Marxist perspective highlights dependency and unequal control over production. Neither perspective alone explains every outcome.
The common misconception is that globalization automatically produces development. It creates opportunities, but institutions, regulation and the distribution of power determine whether outcomes are inclusive and sustainable.
Exam Technique
For an IB Global Politics essay, treat development as contested. Present benefits and limitations, use specific contemporary cases, connect globalization to interdependence and power, and reach a qualified judgment about the conditions under which it supports development.