Introduction (AO1: Definitions & Context)

Globalisation refers to the increasing integration and interdependence of the world’s

economies through growth in international trade, investment, capital flows, labour
mobility, and the spread of technology and information.

It has accelerated through improvements in communication, transport, and trade

liberalisation, enabling firms and nations to operate across borders.

However, while globalisation has created immense opportunities for growth, its benefits are
not evenly distributed.

Some argue that it primarily benefits high-income countries (HICs)—those with advanced
technology, capital, and institutions—while low-income countries (LICs) face exploitation,
dependency, and inequality.

Body Paragraph 1: How Globalisation Benefits High-

Income Countries (AO2)
1. Access to Larger Markets:

HICs gain from globalisation as their multinational corporations (MNCs) expand

globally, selling to billions of new consumers.

Example: Apple, Toyota, and Nestlé earn the majority of profits from operations in
developing countries.

2. Cheaper Production and Higher Profits:

MNCs relocate labour-intensive production to LICs where wages are low and
environmental standards are weaker, reducing costs and increasing profit margins.

This allows HIC firms to enjoy higher returns on investment and consumers to benefit
from lower prices.

3. Dominance in Global Trade Rules:

Institutions like the WTO, IMF, and World Bank are often influenced by HICs,
allowing them to shape trade and investment rules in their favour—for example,
promoting free trade in goods but protecting agriculture and services where HICs
have interests.

4. Brain Drain from LICs:

Skilled workers migrate from LICs to HICs in search of better opportunities.

While this benefits HICs through an influx of talent, LICs suffer human capital loss,
weakening their domestic capacity to develop.
Link: Thus, globalisation enhances HICs’ economic strength by allowing them to capture
global profits, control global production chains, and attract top talent.

Body Paragraph 2: How Globalisation Harms Low-

Income Countries (AO2 + AO3)
1. Exploitation of Labour and Resources:

MNCs often exploit cheap labour in LICs without ensuring adequate safety, pay, or
worker rights.

Example: Sweatshops in Bangladesh or cobalt mining in Congo.

Profits are repatriated to HICs, leaving LICs with low-value-added activities.

2. Terms of Trade Problem:

Many LICs depend on primary products (coffee, cotton, copper) for export, whose
prices fluctuate and often fall relative to manufactured goods from HICs.

This worsens their terms of trade, meaning they must export more to import the
same quantity of goods.

3. Dependency and Inequality:

Globalisation can deepen the dependency of LICs on foreign capital, technology, and
markets.

Local firms find it hard to compete with large MNCs, stifling domestic
industrialisation.

Income inequality within LICs often increases as only the skilled or urban population
benefits.

4. Environmental Costs:

LICs sometimes accept polluting industries or resource extraction projects to attract

FDI, leading to deforestation, pollution, and degradation of natural capital.

Body Paragraph 3: Counterarguments – Benefits for Low-

Income Countries (AO2 + AO3)
Despite the criticisms, globalisation can significantly benefit LICs under the right
conditions:

1. FDI and Employment Creation:

Globalisation brings foreign direct investment, creating jobs, infrastructure, and

technology transfer.

Example: Vietnam and Bangladesh have reduced poverty dramatically through

integration into global manufacturing chains.

2. Access to Technology and Knowledge:

Exposure to global firms brings modern management practices, skills, and

innovation.

Over time, LICs can move up the value chain—for instance, South Korea and China
transitioned from low-cost manufacturing to advanced industries.

3. Trade-Led Growth:

Export-oriented policies (e.g., in East Asia) show that globalisation can drive
sustained GDP growth, employment, and living standards if accompanied by
education, investment in human capital, and strong institutions.

4. Consumer Gains:

Cheaper imported goods increase real incomes even for low-income consumers,
improving their standard of living.

Link:

Therefore, globalisation can be a powerful engine for development, but its success depends
on domestic policies, governance, and ability to negotiate fair terms with global actors.

Body Paragraph 4: Evaluative Discussion (AO3 – Depth of

Assessment)
 Extent of Institutional Capacity:

HICs benefit more because they have the infrastructure, innovation capacity, and
strong legal systems to attract and protect investments. LICs with corruption, weak
governance, or political instability fail to capture the same benefits.

 Nature of Integration:
 If LICs integrate through exporting low-value commodities, gains are limited. But if
they diversify into manufacturing or services, benefits expand significantly.

 Global Power Imbalance:

HICs control the intellectual property, branding, and high-value services (finance,
technology, design), while LICs handle the low-value production end.

This asymmetry means globalisation often reinforces global inequality rather than
reduces it.

 Recent Shifts:

The rise of emerging economies (China, India, Indonesia) shows that globalisation
is not inherently biased—it rewards countries that strategically use it for development
through education, industrial policy, and openness to trade.

Conclusion (AO3: Judgement)

Globalisation tends to benefit high-income countries more, given their control over
technology, capital, and institutions.

For many low-income countries, integration into global markets has come at the cost of
dependency, inequality, and vulnerability to external shocks.

However, this does not mean globalisation must harm LICs. Countries with sound
macroeconomic management, education, and industrial policy (like China or Vietnam) have
leveraged it to achieve rapid development.

Final Judgement:

→ Globalisation does not inevitably benefit HICs at the expense of LICs.

→ It amplifies existing strengths and weaknesses—rewarding nations with capable

governance and punishing those with structural inefficiencies.

Thus, the extent of benefit depends less on globalisation itself and more on how each
country engages with it.

Diagram : trade creation , diversion