Globalisation: Impact on Developing Countries Revision Notes | GCSE OCR Economics

1. Why This Matters

The clothes you are wearing right now were almost certainly made in a developing country. Your smartphone was assembled in China or Vietnam. The coffee in your kitchen was grown in Colombia or Ethiopia. Globalisation connects your daily life to workers and producers thousands of miles away, and understanding its impact on developing countries is a core part of your GCSE Economics course.

This lesson examines both sides of the argument. Globalisation can bring jobs, investment and new technology to poorer nations, but it can also lead to exploitation, environmental damage and growing inequality. The key skill for your exam is being able to analyse and evaluate these effects using real-world examples.

2. Benefits of Globalisation for Producers

Globalisation gives producers in less developed countries access to much larger markets. A garment factory in Bangladesh can sell to retailers across Europe and North America, rather than only to local customers. This increased demand allows producers to achieve economies of scale, lowering average costs and increasing profit margins.

FDI from multinational corporations brings capital investment that many developing countries cannot generate domestically. MNCs build factories, roads, ports and communication networks. This infrastructure investment benefits the wider economy, not just the MNC itself. Technology transfer means local firms can learn new production methods, improving productivity and competitiveness over time.

3. Benefits of Globalisation for Workers

When MNCs set up operations in developing countries, they create employment opportunities. In Bangladesh, the garment industry employs over 4 million workers, the majority of whom are women who previously had very limited economic opportunities. Factory wages, while low by UK standards, are often significantly higher than wages available in subsistence agriculture or the informal economy.

MNCs also provide skills training. Workers learn to operate machinery, follow quality control processes and work in organised teams. These transferable skills improve workers' long-term employability, even if they move to a different employer. In Vietnam, workers trained by tech assembly firms such as Samsung have gone on to start their own businesses or move into higher-skilled roles.

4. Benefits of Globalisation for Consumers

Consumers in developing countries benefit from a greater variety of goods and services. Mobile phone technology is a striking example: in sub-Saharan Africa, mobile phone ownership has risen from under 5% in 2005 to over 50% by 2023, giving millions of people access to banking, information and communication tools that were previously unavailable. Increased competition from imports can also drive down prices, raising the real purchasing power of consumers.

5. Drawbacks of Globalisation for Producers

While globalisation brings opportunities, it also creates significant risks for local producers. Large MNCs can dominate local markets, driving smaller domestic firms out of business. A local food producer in Kenya, for example, may struggle to compete with a global brand that benefits from massive economies of scale and sophisticated marketing.

Developing countries can also become dependent on foreign firms. If an MNC decides to relocate production to a cheaper country, the local economy can suffer dramatically. This happened in some Central American countries when clothing manufacturers moved production to South-East Asia in search of even lower costs. Local producers who had built their business around supplying the MNC were left without customers.

6. Drawbacks of Globalisation for Workers

The Rana Plaza disaster in Bangladesh in 2013, where over 1,100 garment workers died when a factory building collapsed, became a global symbol of the risks workers face. Many factories in developing countries have poor working conditions, long hours and wages that, while higher than local alternatives, are still not enough to live on comfortably. Child labour remains a serious concern, particularly in cobalt mining in the Democratic Republic of Congo (DRC), where children as young as six work in dangerous conditions to extract minerals used in smartphone batteries.

The 'race to the bottom' means that countries compete to offer the lowest costs to MNCs. If one country raises its minimum wage or strengthens safety regulations, MNCs may simply move production elsewhere. This gives developing countries very little bargaining power and can trap workers in poor conditions.

7. Drawbacks of Globalisation for Consumers

Globalisation can cause environmental damage that harms consumers in developing countries. Increased industrial production leads to pollution of air and water, deforestation and loss of biodiversity. In many cases, the environmental costs fall on local populations while the profits flow back to MNC headquarters in developed countries.

Cultural erosion is another concern. As global brands spread, traditional local products, customs and ways of life can be displaced. Widening inequality is also a problem: the benefits of globalisation often flow disproportionately to those who already have wealth and skills, while the poorest communities may see little improvement or even become worse off.

8. Real-World Case Studies

Bangladesh garment industry: The garment sector accounts for over 80% of Bangladesh's export earnings and employs over 4 million people. It has helped reduce poverty and given economic independence to millions of women. However, the Rana Plaza collapse and ongoing reports of low wages and unsafe conditions show the human cost of cheap production.

Cobalt mining in the DRC: The DRC produces over 70% of the world's cobalt, essential for lithium-ion batteries in phones and electric vehicles. MNC demand has created jobs, but also fuelled child labour, dangerous working conditions and environmental destruction. Much of the profit leaves the country, contributing to the 'resource curse'.

Tech assembly in Vietnam and China: Samsung's largest smartphone factory is in Vietnam, employing over 100,000 workers. China's Shenzhen region produces a significant share of the world's electronics. These countries have benefited from technology transfer, rising wages and industrial development, though concerns about working hours and conditions persist.

Worked example: Analysing the Impact of Globalisation on a Developing Country

Explain one benefit and one drawback of globalisation for workers in Bangladesh. [4 marks]

Method: Point-Explain-Example-Link structure

1. One benefit of globalisation for workers in Bangladesh is employment creation. — Start with a clear point that directly answers the question.
2. The garment industry, driven by demand from global retailers, employs over 4 million workers, many of whom are women who previously had limited access to paid work. These jobs provide wages that are higher than those available in subsistence agriculture, helping to reduce poverty. — Use a specific example (Bangladesh garment industry) and develop the point by explaining why it matters.
3. One drawback is that workers often face poor and dangerous working conditions. — Balance your answer by addressing the other side.
4. The Rana Plaza disaster in 2013, where over 1,100 workers died in a factory collapse, highlighted the lack of safety regulation in many garment factories. Workers may face long hours, low wages by international standards, and limited rights to organise or complain. — Again use a specific, named example and explain the wider significance.

Answer: Globalisation creates employment in Bangladesh's garment industry, benefiting millions of workers, particularly women. However, poor working conditions, as tragically shown by the Rana Plaza disaster, demonstrate that these benefits come at a significant human cost.

9. Exam Success Strategy

When answering exam questions on globalisation and developing countries, always present both sides of the argument. Use the structure: Point → Explain → Example → Link back to the question. Name specific countries and industries rather than writing in general terms. For evaluation marks, consider phrases like 'However, this depends on...', 'On the other hand...' and 'The extent of the benefit depends on...'.