UB NUMBER: 10006436

UB NUMBER: 10006436
MODULE: MANAGEMENT IN CONTEXT
ATTENDANCE MODE: FULL TIME
TUTORIAL GROUP: A4
MODULE LEADER: PROFESSOR NANCY HARDING
PROGRAMME: INTERNATIONAL BUSINESS
MANAGEMENT
DATE OF SUBMISSION: 18th NOV 2010

I certify that this assignment is the result of my

own work and does not exceed the word count
noted below.

983
Number of words
(excluding references)

1
UB NUMBER: 10006436

Globalisation has had adverse effects and implications and this paper
examines as it affects developing countries. It’s a comparative review of
two articles; “The evolution of development economics and globalisation”
by Piasecki and Wolnicki (2004) and “Could developing countries take the
benefit of globalisation?” by Hartungi (2006). Effort was made to also
identify points of congruence between the two articles as well as different
views on globalisation trends experienced in developing countries. The
general consensus is that globalisation theories reflecting economic
growth and development are not a true representation of economic
realities in developing countries. It is also clear that the articles do not
identify the positive effects of globalisation. A holistic unbiased approach
is thus encouraged in the understanding of globalisation as there is the
tendency to get carried away with theoretical approaches while ignoring
practical implications.

Hartungi (2006) describes the various concepts of globalisation and how it

has affected developing countries. The article is focused on the debate on
whether developing countries can benefit from globalisation and the
involvement of the domestic nation-state in maximising these benefits. It
identifies the dependency of economic development not only on domestic
policies but on market forces and global influences of international trade.
The possible positives of globalisation to developing countries are briefly
highlighted in the article but the author focused on the negative effects on
developing countries. The benefits of globalisation to developing
countries are examined under the following classification;

• Trade and industry

• Labour and employment
• Intellectual property right
• Environment

In each of the above listed instances, the author cited under-development,

brain drain, unbiased favour of industrialised countries and multi-national
corporations by international organisations such as the World Trade
Organisation (WTO) at the expense of the domestic economies of the
developing countries as further hindering the ability to gain from
globalisation. The author consistently used Indonesia as a reference point
in examining the effects of globalisation on developing countries. This
isn’t totally representative of the existing scenario of globalisation in
developing countries. Hartungi (2006) argues that globalisation should
favour both developing and developed countries but this isn’t the case.

The article goes on to identify the concept of protectionism as a panacea

for developing countries in their bid to control and manage globalisation
2
UB NUMBER: 10006436

and the influence of multinational corporations and industrialised

countries on their domestic economies. Hartungi (2006) encourages
protection of domestic economies matched with the nation’s development
level as the key to reaping the inherent benefits of globalisation. The
author concludes by accepting the inevitability of globalisation, soliciting
for developing countries to synchronize their domestic economic policies
in line with the globalisation process so as to make the best use of it.

Piasecki and Wolnicki (2004) on the other hand, focuses on the evolution
of development economics and its failures, the intervention of
globalisation as a solution and the experience of economic and social
growth for developing countries. A key point identified in the article is the
need for development economics to accommodate “socio-cultural
complexities” crucial in designing and developing models of economic
growth. Development economics failed to address the growth needs of
developing countries resulting in high poverty levels and inequality.

Piasecki and Wolnicki (2004) goes on to establish the paradigm shift to

deregulated trade and the role of global corporations and inflow of foreign
direct investment in developing countries to facilitate the development
process. Inflow of foreign capital and western consumption of domestic
resources only served to worsen the problem of poor development. The
article attributes the failure of globalisation in developing countries to
their excessive openness to the world economy and their inability to
manage this openness. In conclusion, Piasecki and Wolnicki (2004) insist
on globalisation being the solution to economic development despite its
negatives. They advocate the intervention of the state in economic
development in limited proportion and only when market imperfections
exist.

An important feature in critical literature review according to Kabilan

(2007) involves the establishment of relationships between different
studies on a particular topic. As stated earlier, both articles examine
globalisation and its role in the economic growth and development in
developing countries. The trend of globalisation favouring industrialised
countries at the expense of developing countries is highlighted in both
articles, identifying the World Trade Organisation (WTO) as formulating
and enforcing international trade policies which marginalise developing
countries in international trade activities and their efforts at economic
development. It becomes obvious that some form of protectionism is
necessary for developing countries to harness the inherent benefits of
globalisation.

3
UB NUMBER: 10006436

Both articles acknowledge the emergence of multinational companies

(MNCs) with considerable power over nation-states and their control of
their economies. An important point which Hartungi (2006) fails to
address but which is stated clearly by Piasecki and Wolnicki (2004) is that
the mismanagement of the globalisation process by politicians and
leaders could be the reason for poor economic development in developing
countries. Hartungi (2006) blames globalisation for under-development
without exploring how the process evolved in these countries and its
implementation.

Hartungi (2006) quotes Stiglitz (200) in arguing that “The impact of trade
liberalisation caused trade liberalisation caused inefficient industries,
which are mostly found in infant industry to close down as a result of
pressure from international completion. Piasecki and Wolnicki (2004) also
agrees with this by citing “excessive openness to the world economy and
the inability to manage this openness” as responsible for the ripple effects
of under-development in developing countries.

This thus informs the opinion that globalisation is necessary and

inevitable, but needs to be managed and implemented carefully to
achieve its objectives of economic development. Ability to benefit from
globalisation by developing countries is dependent on how they adjust
their policies to nurture the process domestically. The need to also view
globalisation execution as country-specific as stated by Piasecki and
Wolnicki (2004) is imperative with economic development models and
protection efforts implemented with a conscious consideration of the
maturity levels of individual economies.

4
UB NUMBER: 10006436

REFERENCES

Hartungi, R. (2006) ”Could Developing Countries Take Benefit

of Globalization?” International Journal of Economics.Vol.33, No.
11, pp.728-743

Kabilan, M. (2007) “Writing Critical Literature Review”, Scribd, 9

January, available at: www.scribd.com/doc/267683/Writing-
Critical-Literature-Review

Piasecki, R. and Wolnicki, M. (2004) “The evolution of

development economics and globalization” International
Journal of Social Economics. Vol.31, No. 3, pp. 300-314