Globalisation

Economic Impact – Developed Countries

A developed country is one in which the population maintains a standard of living which would generally be considered “high” by the international community. Developed countries have a satisfactory system of infrastructure, including roads, running water and electricity. For example, Australia, most of Europe and the United States are all developed countries.

There is no doubt that developed countries have benefited from an increasingly globalised world. There are many direct changes which have resulted in an improvement in living standards for people in the developed world:

Increased availability of products: With the opportunity to import goods and services from a variety of countries, globalisation has helped to ensure that consumers in developed countries have greater choice.
Specialisation: With the opportunity to have products made overseas, developed countries have benefitted from increasing specialisation. For example, many people in Australia wear “Italian suits”, but those suits might have been made from Australian wool. That wool could have been spun in Indonesia, and then died in Thailand. After the colouring process, the fabric might have been sown together in Vietnam. The buttons, cotton and lining might all come from other countries. Only the final assembly needs to happen in Italy for the suit to be classified as Italian. The end result is a suit made by global specialists.
Lower Prices: Next time you go shopping, compare the price of imported products with the price of locally made products. You may find that the imported goods and services are actually cheaper, despite the fact that they needed to be transported from overseas. Relatively low labour costs in many countries have helped to ensure that products are made available for consumers in developed countries at lower prices.
Job Creation: Although some people argue that the global labour market has been negatively affected by globalisation, there is no doubt that some jobs have been created in developed countries as a result. With increasing imports, it is necessary to employ people in the loading and unloading of stock, delivery and even in the selling process. Goods used in the production process also create jobs; people need to be employed to finalise the assembly process.

As a direct result of these changes, we have seen improvements in many of the economic measures that we use to assess our economy. Economic growth has been strengthened by the fact that input costs are now lower. This has also helped to create jobs, and the unemployment rate has fallen significantly. The inflation rate is lower as a result of the opportunity to import from low cost countries. We could also argue that resource allocation is more efficient, as we have been able to achieve economies of large scale production. All of these things can be considered benefits for the Australian economy, and many other developed countries have come to the same conclusions.

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