Some Consequences of Globalization for Developing Countries

1996 Kiel Working Paper 756, Institut fur Weltwirtschaft

33 Pages Posted: 31 Oct 1996

Date Written: August 1996


Globalization improves the prospects for developing countries (DCs) to catch up economically with industrialized countries. Depending on economic policies with respect to openness and factor accumulation, globalization may increase capital and technology flows to DCs, thereby generating a higher rate of income growth than would be possible in a less integrated world economy. Nevertheless, many observers draw an overly pessimistic picture of the perspectives of DCs in the era of globalization, mainly for three reasons. First, DC membership in institutionalized regional integration schemes such as in Europe and North America is sometimes considered to be a necessary precondition for economic success. Second, a low level of interfirm technology cooperation between rich and poor countries is feared to delink DCs from technological progress. Third, a relatively high concentration of foreign direct investment flows on a few advanced DC hosts is said to limit the development prospects for the majority of DCs. The paper shows that such concerns are largely unfounded.

JEL Classification: F 21

Suggested Citation

Gundlach, Erich and Nunnenkamp, Peter, Some Consequences of Globalization for Developing Countries (August 1996). 1996 Kiel Working Paper 756, Institut fur Weltwirtschaft, Available at SSRN: or

Erich Gundlach (Contact Author)

University of Hamburg ( email )

Department of Economics
Von-Melle-Park 5
Hamburg, 20146
+49 40 428384589 (Phone)


Peter Nunnenkamp

University of Kiel ( email )

D-24100 Kiel

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