Economics

Impact of Globalization on Developing Economies;

A Vietnamese Case Study

CASE STUDY
Submitted by:

Aiza Binte Asad | 01-154192-002

Binufsheen Khalid | 01-154192-018
Tasmiya Fatima | 01-154192-069
Syed Ahsan Zahid | 01-154192-064
Amna Masood | 01-154192-007
Program/Semester: BS Media Studies 7A

Submitted to Miss Aliza Abid Bhutta

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Table of Contents
1. INTRODUCTION ................................................................................................................. 3
1.1. Definition ......................................................................................................................... 3
1.2. Background ..................................................................................................................... 3
1.3. Study Objectives ............................................................................................................. 5
2. Impact of Globalization on Vietnam .................................................................................... 6
2.1. History ............................................................................................................................. 6
2.2. Vietnam’s integration in the world economy ............................................................... 7
2.3. Impact of globalization on Vietnam ............................................................................. 7
3. Role of social media in Globalization ................................................................................. 10
4. Conclusions........................................................................................................................... 13
5. Recommendations................................................................................................................ 14
6. References............................................................................................................................. 15
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1. INTRODUCTION

1.1. Definition

The term "globalization" refers to the increasing interdependence of the economies, cultures,

and populations throughout the world as a result of technology, cross-border trade in goods and

services, and flows of capital, labor, and information. Ever since the early 1990s there has indeed

developed a policy, promoted particularly by the more affluent nations, in favor of the

desirability of open markets, free trade, deregulation and privatization. (Robertson & White,

2007)

1.2. Background

Over many years, countries have developed economic alliances to support these movements.

However, the phrase became more common after the Cold War in the early 1990s because of

how these cooperative arrangements influenced contemporary daily life. That first "wave" of

globalization, which came after centuries of European colonization and trade, was fueled by

technological advances like the steamship, railroad, telegraph, and others as well as an increase

in economic cooperation between nations. After the devastation of World War I, postwar

protectionism, the Great Depression, and World War II, the trend of globalization gradually

weakened and crumbled. The gold standard and protectionist measures are adopted by the United

States and other nations in 1920. Mass production and a stock market bubble fuel the US

economy's expansion. Germany struggles to pay war debts while also struggling to pay

reparations, causing hyperinflation. Germany's manufacturing suffers as a result of late

reparations payments. In an effort to obtain a trading advantage, many nations abandon the gold

standard and devalue their currencies. In 1930, the United States enacts the Smoot-Hawley Tariff
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Act; in response, other nations impose their own levies on US goods, escalating the worldwide

economic crisis. The emergence of the Nazi party is fueled by the failing German economy.

Forming regional trade blocs without Germany, Italy, or Japan. Austria, Czechoslovakia,

Ethiopia, Manchuria, and other countries are conquered by the Axis powers. Germany is at war

with Britain and France. A second wave of globalization began in the middle of the 1940s after

World War II, with the United States taking the lead in efforts to revive international trade and

investment under negotiated ground rules. This second wave of globalization is still going strong

today despite periodic downturns and increasing political scrutiny. (Kolb, 2022)

Globalization provides businesses with a competitive advantage by allowing them to

source raw materials where they are inexpensive, making them achieve lower labor costs with

the leverages and expertise of developed world. Hence with lower labor costs, we see the

decrease manufacturing costs switching benefits the consumers since companies offer them

goods at lower prices. This just doesn't apply with tangible goods but with services as well such

as with the USA, there business structure revolves around outsourcers service providers from

different countries such as China, India, Vietnam, Bangladesh etc. (Goldberg & Pavcnik, 2007)

It provides income for developing countries and aids in addressing their employment

issues. a situation where both the rich countries and the developing countries benefit. Although

globalization is not a recent phenomenon, commerce has always been conducted in a fairly

similar way. However, as time has gone on, the market has grown significantly as people

compete for a piece of the profits in this interconnected world. (Goldberg & Pavcnik, 2007)

There are several negative aspects to globalization. This activity has winners and losers,

and typically the people who live in towns that were dependent on jobs that were outsourced to

other countries suffer the most. This effectively means that workers in developed nations must
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compete with lower-cost markets for jobs; unions and workers may not be able to defend against

the threat of corporations that offer employees the choice between receiving lower pay or losing

their jobs to a supplier in a labor market with lower wages. In the developing world, where

economies are changing quickly, the situation is more complicated. It is true that some parts of

the supply chain's working conditions are appalling. According to studies, it is also challenging

to raise and function as a society when there is income inequality and gap between the most and

least educated members of society. All because the effects of declining wages, which are under

constant pressure from globalization, may be particularly severe for unskilled workers. For

example, Vietnam has been able to take advantage of globalization to fuel its economic growth,

but it also faces challenges such as income inequality and environmental degradation.

1.3. Study Objectives

The shadow economy, also known as the underground economy, has long been

acknowledged and now has a significant impact on economies all over the world, particularly in

emerging nations like Vietnam. The Vietnamese economy has had considerable expansion in

recent years, which has recognized the emergence and important contribution of informal

economic activity. This research seeks to understand how globalization has affected Vietnam's

economic and industrial growth.

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2. Impact of Globalization on Vietnam

Vietnam, a developing nation in Southeast Asia, has seen recent decades of tremendous

economic expansion, mostly as a result of globalization. Vietnam has benefited from

globalization by boosting its exports and accelerating capital flows. It significantly increased

economic growth and industrial development, prompting a sharp shift in the country's production

activity.

Globalization has helped Vietnam. From about $1,500 in 1990 to about $6,500 in the

present, its GDP per capita has expanded. In contrast to some economies that are growing

quickly, its new affluence has been shared. From over 70% in the early 1990s to roughly 10% in

2016, the population's proportion of those living in extreme poverty has dropped. The World

Bank ascribed this notable decline in poverty to the jobs in a recent report.

2.1. History

In the middle of the 1980s, Vietnam was a developing agricultural nation with a socialist

economic system centered on the centrally planned distribution of resources through

administrative means. At the time, agriculture employed the majority of employees, but due to a

scarcity of food, the country had to import rice. Low productivity was a problem for the

economy. The majority of individuals were firmly entrenched in abject poverty.

Two distinctive features of Vietnam's economic restructuring strategy stand out. It started

out by employing a top-down, systematic strategy. Pilot projects on a trial basis were carried out

in particular locations before they were implemented across the nation. Second, the Vietnamese

leadership came to the consensus that political and market-oriented changes should not be

combined.
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Between 1991 and 2009, the real GDP of Vietnam grew at an average annual growth rate of

7.4%. Vietnam had one of the lowest GDP per capita values in the world in 1990, at US$98.

With a GDP per capita of $1,099, Vietnam achieved lower middle-income status in 2009,

according to the World Bank's classification methodology. In 2014, there were 2052 dollars in

the GDP per person. Vietnam has furthered its economic integration as a result of its reforms.

This integration process is still proceeding thanks to trade agreements under ASEAN,

membership in the WTO in 2007, and the signing of the Trans-Pacific Partnership Agreement

(TPP) in 2015. (Philip Abbott, 2011)

2.2. Vietnam’s integration in the world economy

Vietnam quickly becomes a part of the world economy. Due to the fact that imports and exports

as a percentage of GDP were at extremely low levels, trade increased quickly. In 2015, the sum

of exports and imports as a proportion of GDP reached over 200%. This is far higher than, for

example, the values for Germany, the USA, or China, which were each 42% for the same year.

2016a, World Bank. Due to this ratio, which is especially significant when compared to other

nations with a population of over 90 million, Vietnam is more dependent on trends in the global

market than other countries. (Hansjörg Herr, 2016)

2.3. Impact of globalization on Vietnam

Here are 10 bullet points summarizing the impact of globalization on Vietnam:

• Globalization has increased trade and investment in Vietnam, leading to economic

growth and the creation of new job opportunities.

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• Vietnam has benefited from globalization through its participation in international

trade agreements, such as the World Trade Organization and the Trans-Pacific

Partnership.

• The manufacturing sector has been a major beneficiary of globalization in Vietnam,

as foreign companies have set up factories in the country to take advantage of its low

labor costs.

• Globalization has brought cultural changes to Vietnam, as foreign companies and

ideas have entered the country.

• Some people in Vietnam have welcomed these cultural changes, while others have

resisted them and expressed concern about the loss of traditional industries and

practices.

• The overall impact of globalization on Vietnam has been positive, with the country

experiencing rapid economic growth and poverty reduction.

• Developing economies like Vietnam have been both helped and hindered by

globalization, depending on a variety of factors such as their level of development,

economic and political institutions, and ability to adapt to changing circumstances.

• The effects of globalization on developing economies are complex and cannot be

easily summarized.

• Vietnam has been able to take advantage of globalization to fuel its economic growth,

but it also faces challenges such as income inequality and environmental degradation.
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2.4. Indirect Impacts of globalization on Vietnam

The global economy has an impact on the Vietnamese economy, which in turn has an impact

on the nation's social structures, political views, and cultural traditions.

In contrast to Western countries, Vietnamese society did not previously have as severe class

distinctions. Since Vietnam implemented the open-door policy to promote global integration,

create a multi-sectorial economy, and attract foreign investment, there have been significant

changes in class relations in the nation. But the disparity between the wealthy and the poor, as

well as the income and living standards gap, are widening in every region, including rural and

urban areas, plains and mountains, workers and farmers, and employees at domestic and foreign-

owned businesses.
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3. Role of social media in Globalization

Globalization is a concept that covers not only the interconnection of people miles away, rather it

is a broad term that encapsulates the idea of the interconnection of economics, cultures, and

politics beyond the national boundaries. Some people tend to believe that it is not just a concept

rather a law that people should abide by yet some people argue that this is not a law rather a fact

that should shape all the laws and policies. (Yalcin, 2018)

The emergence of globalization has been attributed to the constant technological

advancements by many. These technological advancements have allowed the humans to interact

leaving the boundaries of time and space far behind and turning the world into a global village

where everything is just a click away. (Ali M. Alli, 2007)

Globalization is universally affecting five major areas that include, economics, politics,

education, technology, and business. In economics, globalization has allowed free trade between

different countries on the globe. Global sourcing of technologies has become a common practice

that has helped the products reach new markets. Political globalization is the growth of the

worldwide political system, both in size and complexity; the growing influence of international

organizations on different developing countries can be witnessed. Globalization has had a huge

impact on businesses, the shift from traditional to e-commerce can be seen. It has allowed

businesses to enhance their marketing activities beyond borders reach more audience and

generate more profit. In education, globalization has helped improve the quality of education. It

has allowed the students to explore more and get more knowledge irrespective of the culture and

classes. (Ali M. Alli, 2007)

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It might be argued that globalization is a relatively modern phenomenon, but it is not

true. You can trace back the history of globalization to the migration of Africans into other parts

of world in order to promote their culture, skills and products to new lands. Another example is

that of a silk route which rapidly spread trade between China and Europe. (Gray, 2017)

Today, media is one of the largest industries that has its versatile effects globalization.

The mass media is a key element in enhancing globalization, and facilitating cultural exchange

and multiple flows of information and images between countries through international news

broadcasts, television programming, new technologies, film, and music. The mass media has

been playing a convincing role in reaching the maximum audiences irrespective of the national

boundaries. (Matos, 2012)

There are many tools that have helped in furthering globalization, however the most

modern one is social media. Social media is a network of people sharing same interests and

connecting at a common place from all around the world via the magic of internet. Social media

is an umbrella term that encapsulates a number of social media apps that include Instagram,

Facebook, YouTube, LinkedIn, Twitter and many more. With introduction of more and new

technological devices, more users have become part of the social media due to the easy

accessibility. (IvyPanda, 2022)

Social media, if not the only, is the most powerful tool of globalization in this century.

Different social media platforms have allowed people to interact with each other without

considering the long distances and the time differences. It has allowed people to connect due to

the common interests and opinions. You can find different groups targeting different topic of

interests on a single platform. For example, on Facebook, you might be able to find different

groups related to sports, academia, politics, business, entertainment and many more, you name,
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and we have it. Social media has also allowed the people from different cultural backgrounds to

befriend each other. It has also allowed people to share their knowledge with each other hence

creating a good intellectual influence on others. From this it can be concluded that social media

is playing a pivotal role in globalization.

The relationship between social media and globalization has proven to be most beneficial

for the markets. The phenomenon of global markets has enabled the companies to reach a wider

range of audience. Social media has helped the markets to identify their specific audience in

different parts of the world and hence reach them. Social media has provided the producers and

consumers with a bigger and effective marketplace than ever. It has not only made it easier for

the consumers and the buyers to connect but also yield an immediate and efficient two-way

communication that helps gauge the success of the product within no time. Quicker feedbacks

and analysis have what made this globalization era a fast-paced era. (The Role of Social Media

in Globalization., 2022)
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4. Conclusions

The findings suggest that long-term development of the Vietnamese manufacturing sector has

been significantly influenced by foreign direct investment. Developing economies like Vietnam

have been both helped and hindered by globalization, depending on a variety of factors such as

their level of development, economic and political institutions, and ability to adapt to changing

circumstances. The analysis also shows that the long-term impact of the trade balance on

industrial development has been good. Additionally, it was discovered that while the exchange

rate has a negative short-term impact on the industrial sector, it has a beneficial long-term impact

on industrial development. Additionally, while reserves had little of an effect in the short term,

they had a detrimental influence on industrial performance over the long term. Although

Vietnam has been able to take advantage of globalization to fuel its economic growth, but it also

faces challenges such as income inequality and environmental degradation.

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5. Recommendations
Vietnam should Utilize modern media tools strategically to promote their domestic markets and

expand its exports to smaller markets as well. However, the Vietnamese nation's ambition for

globalization has its limits, too. Large-scale demonstrations were provoked by the Vietnamese

government's recent decision to permit foreigners to hold 99-year leases on land in the nation's

special economic zones. Vietnamese protesters worry that Chinese corporate interests are

dominating the nation too much. Vietnam should have regulatory strategies added to their

foreign policy so that their sovereignty and economic interests are protected. Vietnam can

achieve its ambitious reform agenda if the country continues to unlock the potential of its

domestic private sector. The report’s final message relates to governance. Vietnam will have a

greater chance to achieve its goals for 2035 with comprehensive governance reform. While

we’ve seen great progress on this front, Vietnam aspires to be an even more modern and

democratic society. These steps will depend on institutions that are accountable, transparent, and

firmly rooted in the rule of law.

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6. References
Works Cited
(2022, July 22). Retrieved from IvyPanda: https://ivypanda.com/essays/impacts-of-globalization-
on-social-media-essay/
Ali M. Alli, G. S. (2007). Globalization: Its Effects. International Business & Economics
Research Journal,6(1), 89-96.
Goldberg, P. K., & Pavcnik, N. (2007). Distributional Effects of Globalization in Developing
Countries. JOURNAL OF ECONOMIC LITERATURE, 39-82.
Gray, A. (2017, January 10). Retrieved from World Economic Forum:
https://www.weforum.org/agenda/2017/01/what-is-globalization-
explainer/#:~:text=We%20might%20think%20of%20globalization,Europe%20via%20an
%20overland%20route.
Hansjörg Herr, E. S.-M. (2016). The integration of Vietnam in the global economy and its effects
for Vietnamese economic development. GLOBALLABOUR UNIVERSITY.
Kolb, M. (2022, October 06). What Is Globalization? and how has the Global Economy Shaped
the United States? Retrieved from Peterson Institute for International Economics:
https://www.piie.com/microsites/globalization/what-is-globalization
Matos, C. (2012). Mass Media. In C. Matos, The Wiley-Blackweel Encyclopedia of
Globalization.
Philip Abbott, F. T. (2011). Globalization Crises, Trade, and Development in Vietnam.
Robertson, R., & White, K. E. (2007). The Blackwell companion to globalization. Victoria:
Blackwell Publishing.
The Role of Social Media in Globalization. (2022, April 18). Retrieved from Premium Papers.:
https://premium-papers.com/the-role-of-social-media-in-
globalization/#:~:text=who%20live%20far.-
,Social%20media%20also%20provides%20a%20forum%20for%20cultural%20exchange
.,new%20approach%20to%20global%20marketing.
Yalcin, B. (2018, April 9). What is Globalization?
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