When a country starts developing due to globalization, there are some risks that need to be taken into consideration. From the loss of local culture and tradition, to resources termination on a short term, the country needs to know any possible situations that may occur and lead to problems. Enterprises see globalization as a potential method of expanding their business on emerging markets, since they can receive support from outsourcing specialists, but at a lower cost. Risks can occur in any sector: companies, states, population, international trades, global economy and many others. Therefore, before reaching a critical point it is recommended for a risk plan to be elaborated, covering all possible and impossible risks that may appear throughout the process. In 2000, the United Nations have elaborated a report regarding economical globalization, providing information regarding the risks that may occur and methods they can be avoided, information that will be related further.
Developing countries can introduce new technology and foreign capital, as well as a better management strategy for local and international trades and exchanges. Monopolistic behaviors are also removed and the market competition is stronngly improved. The first risk to be taken into consideration is the fact that globalization increases the difference between North and South in a country, since it focuses on major economic centers. The number of developing countries around the globe that have received benefits out of globalization was in 1999 less than twenty, while the income per capita was very different in the richest country compared to the poorest; this increased from 30 times to 70 times between 1960 and 2000. Foreign trade in the poorest countries was of 1.4% of the total but reduced to 0.4% in 1995, while the trade deficit increased by 3% in developing countries. More than 80% of the capital moves between the United States, West Europe and East Asia, where developed countries already maintain a good economical course. In the United Arab Emirates, due to the fact that economy is more developed at sea, in the north of the emirates, the gap between the economy in capital cities and in southern communities is high, caused at the same time by the local climate and environment (most of the United Arab Emirates is desert).
Another risk that occurs is of being concussed by unfavorable external factors. Here, the the balance between internal and external economy is constrained by policies from developed countries that weaken the capacity of control and regulation (UN, 2000). Financial assets are fast expanded, while a large volume of international capital brings impacts on the financial safety and economic stability. The information that was given by the International Money Fund shows that the value on short term loans for international markets was around a quarter of the total outpot for the entire planet in 1997. This capital flow can lead to disorder in economy and foreign exchange, while it may also lead to a weaker national monetary sovereignty.
The largest risk that the United Arab Emirates are dealing with is losing their national identity. A study done by Gulf News in 2008 shows that Emirati are open to other cultures and have always been, since this is part of their tradition. Even before their formation as a federal state, Emirati received traders from distant parts who were looking for better options, from India, Iran, and other countries from Asia and Africa. Upon their arrival, there have been cultural elements that were adopted by Emirati, now considered to be part of their tradition. However, based on the study done, Emirati are now concerned about their national identity. This is caused by the fact that there are many immigrants moving in their state and nationals have become a minority. A cultural adviser stated that Emiratis are not afraid of other foreigners, but of losing their heritage and language, feeling that they no longer have their home (Gulf News, 2008). New generations may feel that they do not belong to the United Arab Emirates; they already start feeling isolated, since they represent around 15% of the total population. Expatriates that come to United Arab Emirates in order to make a living in a short term do not show loyalty to the country, while Arabs who lived there many years share a similar culture with the Emirati, therefore showing more respect towards the tradition. We can easily compare this situation with the current events in Europe, where immigrants need to adapt to local culture and identity, instead of changing it. This is also what Emiratis desire from immigrants when establishing.
Property investments are another risk that nationals are dealing with, since city properties are mostly targeted by foreigners (nationals receive houses from the government if they move to the desert), which is why there are not many Emiratis present in cities. One other issue that locals deal with is the language, since foreign languages are more spread than the national language, since a country can develop and keep its language strong as well (Germany, France, China and others). A consultant from Abu Dhabi considers that the number of Arabic speakers is decreasing and it will decrease close to extinction due to the fact that the number of expatriates grows (Gulf News, 2008). In order to strengthen the position of the national language, employers need to ensure that Arabic is a spoken language among their employees, setting strict rules regarding the immigration policy, while the foreigners numbers should decrease so that Arabs can represent a majority.
When a country or a state is going through the process of globalization, it forgets to take security and control measures for any obstacle on its path. The world economic regulations are not present or are lagging due to a poor established system of control, while the world economy is drifting without a controlled path. Domestic situations in western countries have almost one hundred years of regulations implemented in developed countries to fight against any financial crisis that may affect them, while the financial crisis in East Asia and Mexic in 1990 have shown the lack of a long-term management of capital. The international economic organizations in 2000 have limited the management of global economy, which needed to be undertaken through a strong coordination of the IMF and World Bank, suggesting that a cross-border supervision should be implemented. The raise of capital rate had an increased transparency done by the Basle Committee and the Basle Credit Facility Agreement that focused on financial institutions when it was needed. However, it is not recommended for a country to count on international support and aid in case of financial crisis, since states need to impose their own regulations and control systems that will keep all numbers in order and in normal limits. It is indicated that a neutral supervisor to be provided from the exterior so that he can control the flow of international capital on short terms, especially when there are signs of negative aspects.
When developing an international economic system, the countries that are affected by globalization and are developing need to be taken into consideration since older fundaments did not change in international economy. This phenomenon can bring both benefits and disadvantages for all participants in the process, but developing countries are not able to enjoy these benefits if they are treated as outsiders and foreigners to the international economy strategies. However, there are two situations that may occur: if the developing country chooses not to join the process, they will remain far beyond the modern processes and development, while if they participate it is possible that they will be considered as annexes of already developed countries. Therefore, the interest given to developing countries must be high, even though the process of increasing international capital will take longer. One condition that is required for developing economy is to have an established force that will guarantee growth sharing. Globalization not only brings benefits but also needs to ensure that they are offered to the countries participating in the process on all economy sectors. However, if low level countries will not receive benefits on a long term, the developed countries may decrease their interest in the international economy. Also, developed countries must consider the reality of the new participants in the process before sending their requirements.
One other step that must be done for providing globalization benefits is to make the process as fast as possible for the economy reform and adjustments. Nowadays, international competition is increasing and getting stronger between developed organizations and enterprises, while the difference between developed and developing countries is still big. When the government is not directly interested in the matter, any vacancy must be solved, while the government should improve their skills in protecting human rights, especially intellectual property rights, making sure that contracts and legal settlements are clear for the entire economic infrastructure. Quick methods of improving local technology, science and education, as well as human capital investment need to be clear purposes and targets for the government, in order to help industrial structures to be developed and raised.