Revision summary
Globalisation opens markets and tightens external rules. Wallerstein’s hierarchy and Prebisch’s trade concern still describe many late developers. Capital flight, TRIPS, and farm subsidies in the North cut policy space. Inequality, informality, and climate costs are domestic faces of the same pressure. Regional and South–South bargains are the usual reply, not autarky.
Model answer
Copper italics in this answer — like this — are the key facts. Each one is unpacked in the Facts & figures rail.
Introduction
Globalisation thickens trade, capital, data, and rules across borders. For developing countries it is opportunity and pressure at once. The challenges are economic, political, and social.
Body
Economic challenges
- Terms of trade and commodity dependence still fit parts of Raul Prebisch’s older UNCTAD warning, even after export growth in East Asia.
- Immanuel Wallerstein’s core–periphery map still describes technology and finance concentrated in a few States.
- Sudden capital flight, as in the 1997 Asian crisis, shows how open accounts can punish late developers.
- WTO rules, TRIPS, and agricultural subsidies in rich States constrain policy space that earlier industrialisers used.
- Joseph Stiglitz stressed that IMF-style conditionality can deepen recessions before growth returns.
Political and social challenges
- Sovereignty is shared with rating agencies, investors, and treaty dispute panels.
- Tax competition, illicit flows, and a digital divide widen inequality inside States.
- Labour informality and weak social security meet import shocks and automation.
- Climate rules and carbon borders add costs that developing States did not create in the same historical share.
Agency that remains
- South–South clubs, BRICS finance, and regional trade pacts are attempts to rewrite, not exit, globalisation.
Flow diagram
flowchart TD G[Globalisation] --> T[Trade and TRIPS] G --> K[Capital volatility] G --> R[Rules of WTO IMF] T --> C[Challenges for South] K[K] --> C[C] R[R] --> C[C]
Conclusion
Developing countries face volatile capital, unequal rules, squeezed policy space, and social inequality under globalisation. The era is not a level market. It is a hierarchy that they must bargain inside.
Quick related
Students also ask
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Identify and evaluate the reasons for deadlock in the WTO negotiations on fisheries between the developing and developed countries
Next question on this syllabus topic (2022 · Q4(a)). View answer →
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Is globalisation only a loss for the South?
No. East Asian export growth and Indian services show gains. The challenge is unequal rules and vulnerability, not autarky as destiny.
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Does the WTO treat all members equally?
One-member-one-vote sits beside bargaining power, special and differential treatment disputes, and Northern subsidy capacity.
Same topic · past papers
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2024 · Q4(c) · PSIR GS 2 · 15 marks
Do you agree with the view that the EU has thus far proved to be the most successful experiment in the regional integration processes? Account for its successes and also some of the recent challenges that it is faced with. -
2023 · Q1(b) · PSIR GS 2 · 10 marks
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More from this topic
Q4(a) · UPSC Mains 2023 · PSIR GS 2 · 20 marks · Solution
Critically examine the impact of Globalisation on the developing countries of the world
Globalisation
Globalisation is deeper cross-border economic and legal integration, marked by the WTO era. Some developing countries gained manufacturing and services growth. Others faced financial crises, TRIPS costs, and commodity dependence. Wallerstein and Cox stress hierarchy; Keohane stresses what regimes can still do for weaker States. India’s post-1991 path is partial opening plus defence of policy space, not a single verdict for all of the South.
Q4(a) · UPSC Mains 2022 · PSIR GS 2 · 20 marks · Solution
Identify and evaluate the reasons for deadlock in the WTO negotiations on fisheries between the developing and developed countries
Globalisation
Doha mandated cuts in harmful fisheries subsidies. IUU and overfished-stock bans are the easier slice; overcapacity is the deadlock. Developing Members want S&DT for small-scale and food-security fleets. Developed Members fear loopholes for large emerging distant-water fleets. MC12’s partial treaty parked the hardest pillar rather than ending the conflict.