The modern world is consistently affected by globalization. The process of globalization has defined the development of the world in the second half of the 20th century and plays the determinant role in the contemporary world. On the one hand, globalization has accelerated the economic cooperation and integration, stimulating economic progress worldwide, while, on the other hand, it has widen the gap between rich and poor and contributed to the emergence of civil wars and disparity of wealth, especially after the end of the Cold War. Today, the process of globalization contributes to the growing inequality in the world dividing the global landscape into two distinct parts: rich North and poor South, rich developed countries and poor developing and underdeveloped countries.
Basically, the process of globalization produces a dubious effect on the world. At first glance, globalization has a positive impact on the well-being of people worldwide since the progress of economic cooperation leads to the growing investments into the developing economies and free movement of capital from developed countries to developing countries, where new jobs are created and, therefore, the local population should prosper (Merchant, 138). In this respect, it should be said that the development of globalization contributed to the elimination of fiscal barriers and stimulated the rapid development of free trade and economic cooperation between countries. In such a situation, many developing countries could really benefit from the growing foreign direct investments which accelerated the economic development of poor, developing countries. At the same time, foreign direct investments did not really change the balance of economic powers in the world since eventually it was developed countries that benefited the most because major investors were located in developed countries and they could redirect their investments in any part of the world. In addition, developing countries are financially and technologically dependent on the developed countries, which are major suppliers of financial resources and new technologies (Klein, 124).
Nevertheless, it is obvious that globalization allowed developing countries to take their own niche in the world market and enter new international markets.
However, in actuality, the process of globalization is the process of the economic expansion of developed countries into developing countries. To put it more precisely, developing countries are just new markets for companies based in developed countries (Cliff, 311). The elimination of fiscal barriers and progress of free trade made markets of developing countries practically defenseless in face of companies from developed countries. Moreover, foreign investments in economies of developing countries are consistently lower compared to mutual investments of developed countries. At the same time, developing countries have only one dominating industry, while developed countries generate new technologies, introduce innovations and use cheap labor force and material resources of developing countries and supply markets of developing countries with their expensive, technologically sophisticated products and services.
As a result, globalization contributes to the growing disparity since rich get richer while poor get poorer that provokes social instability, civil wars, and terrorism. Thus, the wealth and power are concentrated in hands of developed countries. In this respect, it should be said that the elimination of fiscal barriers, development of free trade had a number of negative side-effects for developing countries, because their products proved to be unable to compete in international markets. Hence, their national economies started to degrade because of the inability of local companies to compete with multinational corporations and companies from developed countries. As a result, many developing countries heavily rely on one industry only which makes them vulnerable to economic crisis because of negative changes in international markets.