Can Small Economies Survive Globalization

CAN SMALL ECONOMIES SURVIVE GLOBALIZATION?

Globalization can be defined as a process by which states become interdependent on each other on all spheres of life. It is therefore a process of uniting people of the world into one unit such as systems of education, politics, democracy, economy and many more that can be included. Globalization allows civilizations no matter where they are physically in the world to reach out and touch each other. Globalization can be separated into four phases starting in 1830-11880 with the introduction of railroads and ocean transport, second stage from 1900 to 1930 the rise of electricity and steel production, third stage from 1948 to 1970 with the formation of agreements on tariff for trade, end of world war II and the plan to reconstruct Europe; and the fourth phase from 1980’s to present day : privatisation of state enterprises in transition economies, revolution of information, communication and transportation. As could be noted from the different phases of globalization the world currently stands at the fourth stage of rapid growth, cross border trade of products, and emerging markets. This process of globalization promises a level playing field for both developing and developed countries alike with a borderless world.

As we look at what is globalization we must also look at what is the definition of a small economy in order that the analysis of whether survival of globalization can be considered. Currently the World Trade Organization has no definition for “small economy” , however according to Wikipedia a definition can be “A small open economy, is an economy that participates in international trade, but is small enough compared to its trading partners that its policies do not alter world prices, interest rates, or incomes. Thus, the countries with small open economies are price takers”. According to the World Bank using the standard of a population below 1.5 million people, 45 developing countries are small,...