Globalization role in the inflation of developing countries
Globalization is enhancing the connectivity of individuals, groups, institutions, and governments. Through faster and efficient methods of transportation, the movement of goods and services is enabling the transfer of other means of production from one region to another. More than ever, people are becoming global citizens. Economies are interacting with one another and breaking barriers of interaction that previously existed in the traditional models of business. Nonetheless, the classification of economies still lives with the significant difference being the distance between these two. While the developed economies are enjoying widespread growth, developing countries are fast adopting the provisions of globalization to boost their growth.
Globalization has played a role in the inflation of developing countries. Using the model of ASEAN countries, the price stability within the region has aided in the growth and development of industries. Additionally, they have embraced international trade along with its volatility, which in turn affects rates of inflation in the countries. The article has captured how global monetary policies have worked to align domestic policies to events happening around. In as much as it has come at the cost of the independence of local central banks, globalization has enhanced developing countries to develop better preparedness for global financial shocks. This works to enable them to align with global inflationary cycles.
While globalization plays a role in influencing inflation in developing countries, it does not take into consideration the differences that exist in these countries. Each country enjoys economic autonomy, where policies are formulated in line with the interests of the given country. Globalization tends to ignore the role each nation plays in controlling inflation. The generalization of terms denies developing countries the economic autonomy they so yearn. Additionally, the part of social vices in the economy of developing countries is also ignored, with the main focus being globalization.