Impact of Globalization on Sri Lankan Economy

Keywords: globalization sri lanka, sri lanka current economic climate globalization

Globalization is a multifaceted, multidisciplinary subject matter in its broadest reach. It is an integration of countries and folks which is manufactured possible by the reduced amount of transport and communication cost. It includes economic, political, communal and cultural aspects.

For the globalization to work countries should start their market, lower their obstacles to trade for the administrative centre, goods and services to stream. Without this policy transfer globalization would be less effective.

The ramifications of Globalization are manifold, affecting various areas of the world current economic climate to bring about overall betterment. The IT revolution in conjunction with the growing embrace of free market insurance policies in the wake of communism, have resulted in the incomparable amalgamation of economies and mixing up of cultures throughout the world.

Globalization and International Trade

International trade is the primary element of globalization. For countries this has increased access with their products to bigger, international marketplaces. This access has generated new opportunities to reap the benefits of international labour and to compete in world market.

An actively trading country benefits from new technology that are available to it from its international trading associates. This helps the expanding countries to be competitive with the developed country.

International trade and globalization has created risks for the newborn industries and the ones that are less competitive. To protect these industries protectionist guidelines are applied which restricts the international trade and globalization.

To get the maximum usage from international trade countries should consider the comparative edge and focus on the areas which they have less opportunity cost.

Globalization and International Trade in Sri Lanka

Historical evidence implies that Sri Lanka was a hub in the silk route in the first times which allowed it to benefit from international trade. The united states was wealthy with spices, gems, and elephant which drawn the investors from Far East countries to obtain trade relations with the country this made Sri Lanka a center in international trade hundreds of years ago.

To help international trade Sri Lanka became a member of the globe Trade Organization (WTO) in 1995. Increased integration into global market has generated both positive and negative influences in Sri Lankan market sectors.

Impact of Globalization in Plantation Industry

Globalization has created both prospects and obstacles for the plantation industry. It has presented new harvesting technologies which includes helped to create good quality products. These new technology have also aided in increasing production. Introduction of partial mechanization has facilitated to save labour. Globalization has generated new market segments and has increased creation by using technology.

Skilled staff member out-migration has generated a real concern for the plantation industry.

3. 2 Impact of Globalization in Rubber Industry

Globalization has made significant changes in the silicone industry. Plastic industry takes on a vital role in wheel and medical insulation products processing. The fast evolving auto-mobile industry has created demand in the wheels which has increased the demand for natural rubber. Rubber industry is governed by the International Natural Plastic Contract (INRA) which really helps to stabilize the price tag on plastic in world market.

3. 4 Impact of Globalization in Mining Industry

This mainly includes the jewel mining industry. Together with the open economic policy in the 1977 this industry flourished. Globalization created a location for Sri Lankan gems on earth market. Diamonds and gems became a significant export to the united states. Globalization has introduced new technology associated with jewel mining in reducing, polishing and id of gem stones.

3. 5 Impact of globalization operating industry

Globalization, privatization and more demand for intermediate and final consumer services have lead the service sector to be the supporting palm for the interpersonal and economic expansion of a nation. Service sector is the largest and most effective growing sector, employing more folks and adding more to the global and national output.

Sri Lanka's service sector has observed a major boom and is the major contributor to occupation and countrywide income. Service industry includes Health care and Education, Foreign Work, Communication, IT industry, BPO sector, Bank and Tourism.

3. 5. 1 Healthcare and Education

Key service industry is healthcare and education. A strong professional medical and education system helps to create a solid and diligent individual capital, who will contribute productively to the country's expansion.

Education sector once a completely open public sector in Sri Lanka is currently opened to numerous private universities and institutions. This has allowed many to continue their supplementary and tertiary education in numerous areas. These well informed youths are participating in a vital role in the development of the country.

Health good care is another sector that was fully under the control of the federal government. Today, globalization has helped many patients to reap the benefits of foreign medicines also to get appointment from international experts which includes saved an incredible number of lives.

3. 5. 2 Foreign Employment

Globalization and integration of local economies have added impetus to the growing mobility of personnel across borders. Labor migration helps development of the country through remittances. Most the labour migrant personnel are unskilled or semi skilled. More than half of the migrant employees working in Middle East are women, and many are in home work or unusual works.

High skilled employees walking out of our own shores have lead to brain drain in the country.

3. 5. 3 Communication

The deregulation of the telecom industry in Sri Lanka in the early 1990s helped bring multiple players and providers to the united states. The amount of telecom providers stands at 70, as of Dec 2009.

Globalization allowed Foreign Direct Assets (FDIs) in telecommunications sector. This endorsed Sri Lanka to bring Technology and Management know-how at a decisive instant. Over 80% of assets in value are held by regional telecommunication giants which includes helped the industry to be aligned with global tendencies.

3. 5. 4 IT industry

The IT industry has achieved development after the liberalization. The industry is undertaking well amidst difficult competition. Despite the insufficient knowledge pool in comparison to India the IT industry innovator in Asia Sri Lanka has had the opportunity to contend in the global market. Virtusa, IFS and Millennium IT are a few of the main IT companies that contain placed their branches in Sri Lanka

3. 5. 5. BPO Sector

Globalization made Sri Lanka to emerge as a potential destination for outsourced use low labour cost, low operational costs, and taxes incentives. Liberalization and the existing peacefulness situation in the united states has fascinated many BPO companies. MphasiS a BPO giant in India is in the process of setting basics in Sri Lanka

3. 5. 6 Bank Sector

Liberalization has lead to international banks getting access to local market and private traders to enter the banking website. These lenders are governed by the same rules and regulations that govern the local finance institutions. HSBC, Standard Chartered Standard bank, Deutshe Loan provider, Citi Lender and Indian Overseas Loan company are a few of the foreign lenders that are functioning in Sri Lanka.

These foreign lenders are giving a hardcore competition for the neighborhood banks.

3. 5. 7 Tourism

Tourism is one of the most effective growing big business in the global current economic climate. Sri Lanka being truly a exotic island is among the best tourist destinations in Asia and with the finish of the ethnical warfare in the united states it has drawn more vacationers. This increase of vacationer arrival has generated new job opportunities and got brought foreign exchange and purchases to the united states.

The dark area of this industry is the fact globalization and thrives of travel and leisure industry increases exploitation of children and women into sex trade.

3. 6 Impact of globalization in Garment industry

Garment industry has an important role in Sri Lanka's market. After the open economic policy in 1977 garment industry accounts for almost 65 % of the total export cash flow. Garment industry is the most significant net forex earner since 1992. Globalization has allowed Sri Lanka to improve the garment creation to benefit from the wider market that is opened to it.

Multinational corporations released to Sri Lanka's garment industry through globalization have recognized the industry hugely. Globalization has blessed the garment industry with technical advancement which has helped to reduces the creation time and cost.

Garment industry has generated new employment opportunities for many, especially women. The industry utilizes more than 5 % of country's employment with most female workers. It has helped to improve the quality lifestyle which in turn has business lead to the monetary development of the country.

The quota free age has generated heavy competition in the attire industry. Major players could actually remain competitive in the market by preserving the reputation for high quality products and producing world class brands. MAS holdings and Brandix the leading garment exporters will be the major single provider for brands like Difference, Markings & Spencer, Victoria's Hidden knowledge, NEXT, Lands' End, Abercrombie & Fitch, Old Navy and Tommy Hilfiger.

But still this informal service sector has many unsafe working practices which can be below the standard. This consists of long working hours, below the standard salary range, poor working conditions, neglectfulness of health insurance and safety methods.

Other negative impacts of globalization in Sri Lanka

Liberalization has created more opportunities for the center class and top of the course in the world and has completely neglected the poor. Low rate of job creation and multinational organizations offering higher salary increased the distance between the rich and poor within the contemporary society.

Service sector blossomed as the primary source of occupation. Low skilled labour is neglected and many who performed in the reduced skilled labour sector lost their jobs. This increased the unemployment percentage in the united states.

Globalization has threatened the newborn and less competitive companies. These market sectors have to struggle with the international companies. Some of these have grown to be endangered industries.

Globalization encourages sociable ills. It is the cause for the upsurge in the amount of child abuse conditions. Globalization and liberalization for everything has prompted pornography and prostitution. The number of under aged in this industry is in surge in Sri Lanka.

Illicit drug trade is encouraged by globalization. Deregulated and privatized marketplaces have allowed the medication industry to disperse its wings across the world. Sri Lanka has turned into a victim of the. The amount of youths addicted to drugs is at rise.

Privatization of businesses has made ensuring compliance with environmental benchmarks a difficult activity. This has lead to quick deforestation, excessive garden soil erosion, land degradation, pollution and lack of biological diversity.

Globalization is the cause for the spread of american culture and safeguarding the home culture is a genuine challenge.

Conclusion

The allegations of globalization for Sri Lanka a wide range of. It has generated interdependence and competition between the economies of the world market. Today globalization has made local economy more dependent on both local and international policies and economic conditions.

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