Challenges of Globalization – Term Paper

Economic Challenges

India has been a key global player over the years; however, the onset of the globalization posed a critical challenge to the local economy development. The adverse implications on the economy do not reflect in GDP growth rate based on the nature of market development. The country is currently facing some skewed performance in the agricultural sector. The industry is employing over 40% of the working population in the country, yet the changing performance indicates a downward trend from 44% of total value to the recent rate of 14% (Trading Economics n.p). Such cases cannot be accounted for in the increasing rate of development, which contributes to the difficulties associated with poverty management processes. Most of the labor force is skewed and does not include a significant percentage of women (Shelly n.p). Most of the jobs are casual, which pays less with few technical and manufacturing jobs as compared with most emerging markets with similar structure and resources as India. Similar effects have also been depicted in fiscal transfers, financial intermediations, and asset ownership and development.

Moreover, most of the foreign investment in other countries does not match the level of international business in Indian market. Most of the organizations in the country are controlled, and their ownership is by major economies in the world. Eventually, the level of production has depicted the trend towards exportation without local consideration. Therefore, the degree of import in the country has been increasing, which results in a high balance of payment deficit. Globalization has created inequality in the country where two major economic zones have been generated. The urban divide is associated with higher income levels, security, and infrastructural development rates. On the other hand, the rural section is underdeveloped with high poverty rates that neutralize the national income advancements. The onset of globalization opened new markets and diverse investment opportunities. Nevertheless, the country still records a large number of citizens affected by the increasing poverty over decades of GDP increase, which is estimated to be over 300 million people (Trading Economics n.p).            

Long-term Implication of Stiff Competition

The level of competition in emerging markets has a two-way influence on the local firms and economy of the country. The impact depends on the level of innovation and capital of investment. The capacity of the organizations to improve their competitive advantage and control the international influence is also a determining factor. In most cases, the firms are affected based on the U-shaped Theoretical Framework of competition based on innovation as baseline factor. The same scenario has been depicted in India and other emerging markets across the world. In India, the firms have benefited according to their level of technology application and capital of innovation, which is a phenomenon emanating from globalization effect on transitional markets. However, the firms that have been unable to enhance their innovation capacity have lost control of the competitive market, which leads to the poor performance of the local enterprises in the country. Most firms operating in the manufacturing and service sectors with the same capacity as the most efficient companies have accrued the same advantages regarding revenue and cost management. On the other hand, other firms with little operating capital have experienced slow growth and low income. 

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Moreover, those organizations seeking to enter the industry have faced stiff market resistance, which affects the process of industrialization and corporate wealth dissemination. The rate of development of new firms operating on small initial capital is slower as compared to rates in other emerging markets. On the other hand, Multinational Corporations have increased dominating the manufacturing and infrastructural sector. The technical nature of the labor force required to sustain the organizations creates a crisis since the greater percentage of the working group in India are semi-skilled (Shelly n.p). Such a scenario affects the process of poverty management in the country. Furthermore, the firms located in urban centers have accrued higher profits if specializing in local production. Most global businesses have been associated with high profits, which make most companies target international market while neglecting the local demands. The location frontier is the primary defining factor for the effect of competition and innovation in India. The persistent of such a corporate culture and inclination could affect the capacity of the government to manage poverty through business effectiveness. However, the adoption of the vertical as well as horizontal relationships for local and international firms has enabled local and developing companies in the country to strengthen their competitive abilities. Nevertheless, the lack of unifying policies affects the ability of the state to ensure uniformity across all sectors of the economy.                   

Other Negative Effects of Globalization

The onset of globalization also encouraged the existence of auxiliary challenges that is affecting the rate of economic growth. The process of setting a business in the country is complicated because of the cumbersome bureaucracy and corruption rate in the country. Most businesses are facing difficulties while trying to sustain their level of generated revenue because of the numerous and non-transparent tariff regimes. The state does not have a clear and predictable regulatory strategy to manage business operations. Most firms find it difficult to operate in India based on the increasing taxes. Most wealthy individuals prefer setting their firms in other Asian economies. 

On the other hand, the import duties in the country are extremely high as compared to other emerging markets. Furthermore, the space factor because of immigration and increased population has created social challenges such as hostility among locals as well as political conflicts. The poor economic performance is also affecting the ability of the country to compete in the African market and increase the import capacity. Other factors such as an inability to control equitable wealth distribution also characterize the global integration between India and other economies in the world. A greater percentage of the development process emanating from large organizations and investments are jointly shared with other major economy players such as the European countries.        


It is clear from the above evaluations that India, as an emerging market, has achieved a lot regarding economic growth and development because of globalization. The country has collaborated with other developed as well as emerging markets to sustain the targeted performance. Nevertheless, the state has faced significant challenges regarding investment, employment, governance, and wealth distribution. However, effective planning and strategic implementation can transform the current situation for the transitional development of the local market. Some of the essential measures with global positioning potential have been outlined below.   

Pursuing Effective Corporate International Connection

The Government of India, as well as other emerging markets, should consider nature of the economic partnerships they establish with other nations. The process of selecting the associations and joint investment should evaluate the needs of the country as well as the long-term implications of such ties. Lack of proper planning and implementation could affect the local firms and thus downgrading the anticipated rate of economic development. On the other hand, the country should consider the effect is emanating from developed economies that bring about skewed competition and local dominance (Moulin et al. n.p).    

Modernization of Institutions

The exploitation of ICT potential in India has not been fully exploited, and there is a need for the state to consider upgrading institutions to modern and automated standards to guarantee equitable benefit. The access to technology services will improve the quality of production, knowledge dissemination, and information processing. The need to protect government’s revenue from embezzlement will ensure a high level of income accountability that could spread to the private sector (Moulin et al. n.p). Upgrading the public institutions to international standards will assist the country to compete in the global market with large economies. The effective business environment is a contributing factor to the success of investments both in public and in private sectors. Therefore, the government should enhance protectorate approaches for local and international investors.      

Talent and Education Management

The level of education enrollment and technical skill training is relatively low in India. The government should consider modern strategies that will assist in enhancing the level of education. The process of training should be tailored to the development agenda as well as sustainability targets. Moreover, the state should evaluate the implication associated with a small portion of high school enrollment ending up in technical training. Such a scenario has affected the development of technical skills in the country, which explains why most of the workforce from India end up as casual laborers since executive positions are limited. Proper planning in education and talent management will assist the national to control expertise and social mobility that reduce the available opportunities in the county for the residents (Moulin et al. n.p). Moreover, strategic implementation in the education sector will eliminate the skewed employment culture associated with gender disparity in the workforce.       

Access to Investment Capital and Strategic Policing

The problem of accessing finance affects most entrepreneurs seeking to invest in emerging markets. Small income individuals find it difficult to get the initial capital thus most rewarding opportunities are left in the hands of foreign entities. The government of India has strategic plans that ensure that business firms access necessary funds through public support, bank loans, and grants; however, the marginalized groups in the country are yet to access the corporate sector. Most of the people without access to banking services live in India; in fact, 400 million of the 2 billion global figures are Indians (Moulin et al. n.p). Moreover, the need for strategic policing is essential for unified growth, access to the market, and predictable economic performance. The states should establish stable tax regimes, sound business protection laws, and unbiased export-import management mechanisms.

Table 2: Summary of Bank Access Statistics in India (Source: World Bank 2015)



Those without bank accounts: Global Figure

2 Billion People

Those without bank accounts: India Only

400 million

Those without bank accounts in India: 2011


Those without bank accounts in India: 2014


Those without bank accounts in India: Women


Those without bank accounts in India: Men  



In conclusion, experiences emanating from globalization on emerging markets create diverse implications. A critical evaluation of markets such as India depicts both positive and negative outcomes associated with diverse sectors of the socioeconomic and geopolitical dimensions. Through globalization, India has advanced economically through effective sociocultural intermingling, economic growth and development, geopolitical expansion, and labor market. Moreover, the level of market competition and efficiency, as well as new markets and corporate integration, has enabled the government to stimulate innovation and technology development through global interaction. However, the country has also faced challenges such as long-term implication of stiff competition and economic stagnation. Nevertheless, the government can enhance local multidimensional performance through several mechanisms. Access to investment capital and strategic policing, talent and education management, modernization of institutions, and pursuing effective corporate international connection will improve the level of equitable growth and development. 

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