Disadvantages of Globalisation
Globalisation involves certain risks, threats and costs which are given below :
- Interdependence : Globalisation increases interdependence between nations of the world. As a result economic sovereignty and control over the domestic economy are reduced. There is a danger of foreign economic dominance over the developing economies. In globally integrated countries international economic problems and crises like inflation, unemployment, recession and currency depreciation lend to spread fast.
- Threat to Domestic Industry : Globalisation leads to establishment of manufacturing and marketing facilities by multinationals in developing countries. The domestic firms in these countries fail to face the onslaught of multinationals. As a result they sell out to foreign firms. Cheap imports from China and other countries also kill domestic business particularly in the small sector. Availability of high quality foreign products reduces the demand for domestic products and domestic production base is eroded.
- Unemployment : Globalisation leads to restructuring of industry. Technology up gradation and focus on areas of comparative advantage create unemployment and under employment among low skilled workers. As a result income inequality, Poverty and social unrest may increase.
- Drain of Basic Resources : Globalisation results in exploitation of natural resources and basic raw materials in developing countries. These countries are often the sellers of agricultural and other inputs and buyers of finished products. Talented human resources are also transferred to developed nations which offer better remuneration and carrier prospects. Economic underdevelopment of poor countries is the result of exploitative character of international trade.
- Technological Dependence : Globalisation offers readymade foreign technology which scuttles domestic research and development. Foreign technologies are available at a high cost and are often not adaptable to local conditions. Developing countries become technologically dependent on developed countries.
- Alien Culture : Globalisation promotes consumption patterns and life styles which are inconsistent with the local culture and values. It may lead to shift in the industrialisation pattern contrary to the national priorities.
