The socioeconomic impact of globalization on developing countries of the world: A comparative analysis of Nepal and India

The socioeconomic impact of globalization on developing countries of the world: A comparative analysis of Nepal and India”

Introduction:

            The study behind the Globalization can be termed as the transfer of trade, technology, cultures, investment in the international scale as an open border. A person or country from East of the globe can trade with the person or country from West, this is globalization. And talking about socioeconomic, it is combination of Social, Cultural and Economic. Trade of goods and services has grown up rapidly globally acting as attribute to the development. Globalization has not only contributed to the trade but also to the technology and cultures. Globalization has not only positive impacts but there are also controversial drawbacks too.

            Undoubtedly globalization has contributed a major role in developing socioeconomic condition in developing nations. Mainly, globalization contribute toward trade openness and Foreign Direct Investment (FDI) to the countries which are rich in natural resources. The developing countries like India and Nepal are getting benefits because of access to more capital, information technology and addressing of unemployment issues. Developing nations are getting exposure to international circle which has valued in the trade increasing national income, increase in manufacturing industry and thus attracting Foreign Direct Investment. Impact of globalization can be assessed in numerous ways like impact on growth, income, Gross Domestic Product (GDP).

            Developing countries are receiving FDI at faster rate, the investment has been increased in terms of number and monetary enormously. The annual growth of FDI has been increased highly than the growth rate of trade. FDI are mostly flowing into the developed countries like USA, China. Investors are attracted towards developing countries due to inexpensive labor wages. Recently, India is being focused on not only due to its low labor cost but also bigger market and consumption the market can make. FDI has not only brought capital but also employment opportunities. Large manufacturing industries are established creating more and more employments which means improve income of the people means growth in economy.

            Migration has been one of the major factors for the developing nations like Nepal and India due to the introduction of globalization and lack of job opportunities. The major source of revenue for the country like Nepal has been remittance that are brought back to countries from skilled and unskilled employees from gulf countries and migrants to USA, Australia and European countries. This has increased the rate of employment increasing the purchasing power of people back in the home country.

            One of the major industries that had risen up in developing countries is Information Technology. The industry has boomed due to less expensive labor cost and the skilled manpower that matches the requirements. The education industries are

            Let's talk about the social changes that had made in developing countries like Nepal and India, the country where people believe their meal is rice and pulse is now being changed with the introduction of International Franchiser like Kentucky Fried Chicken (KFC), Pizza Hut and McDonald's. This has changed the eating habit of the people. Though still McDonald's cannot penetrate Nepali market due to its limitation of use of beef which is its specialty but Nepali worship cow as god so cultural aspect of the host nation should be covered.

There has been critics that the globalization does not suit developing countries due to institutional and structural problems within the country. Developing countries are not able to match the international trade demand in terms of export due to different consequences especially country like Nepal whose production is lesser who cannot produce in large number.

Literature Review

After the welcoming of Foreign Direct Investment from Prime Minister of India, Narendra Modi, India has attracted many International companies. The Indian government has been getting FDI in different sectors like defense, construction and development, real state, civil aviation. The FDI has grown up by 9% to $43.97 billion in 2016-17. As an example in aviation, 51% stake has been with Indians and remaining with foreign investors in Air India. Foreign brands in retail sectors like Monte Carlo, Apple has started its production factory.

Nepal has been getting investment in tourism, hydroelectricity and agriculture. As of Nepal Central Bank, FDI stock has reached Rs 137.7 billion that is 6.1 % of GDP in 2015/16 due to rise in FDI based industries out of which 70.2 % is covered by FDI in service sectors. The increased inflow of FDI in telecom sector like Ncell, service sectors Standard Chartered Bank and UniLever Group are one of the main factors in increasing the financial flow. China and India are investing in hydroelectricity.

Developing nations have been benefitting with the less expensive prices for quality products like Samsung electronics, Iphone, KFC. World Bank, IMF and Asian Development Bank facilitates the developing nations for the development from the foreign assistance. Globalization has opened to the international labor market to the citizens of these countries. The flow of remittance has been high. In case of Nepal, though it is facing trade deficiency Balance of Payment is in positive side due to high remittance inflow and FDI.

Globalization has helped in the development process of the developing nations but there is also negative impact in the environment. Inequality in income in comparison with the FDI invested companies and the local industries. The liberalization of trade has displaced domestic industries due to its inefficiency to compete with the less priced services from FDI industries offerings. The globalization has impacted in capital flight, the flow of students to study abroad has given away lots of foreign currency. The flow of import has gone high in comparison with the export in the consumer items causing trade deficiency since developing nation's product become incompetent with the foreign goods. These nations are going towards more dependency to the foreign aid. Trend in going for international labor market has drained the local labor market which directly hampers the local industries. Also the globalization has impacted the local cultural values and identity due to Westernization.

Abbreviation

GDP Gross Domestic Product

FDI Foregin Direct Investment

IMF International Monetary Fund