What is the responsibility of Western countries toward the economic development of developing countries?

 What is the responsibility of Western countries toward the economic development of developing countries? 

Most of the time, when we talk about globalization, it is all about economic growth, international trade, and information interchange. Like previously discussed, Nike benefits from globalization. However, does it really benefits those developing countries where Nike is operating? In the beginning, Nike just tried to lower the cost of production by producing its products in those low-income and low-wage countries. After some negative effects on its brand, such as child labor and poor working conditions in Nike's foreign factories, Nike changed its strategy to redeem its brand image. Nike improved the working conditions and published detailed information about its supplier policies, audits, and remediation processes. 

But, do these processes enough to help and those developing countries? I think it is more likely to unequally distribute the benefits back to where they came from. This is one of the basic business rules. If there is a profit, there is a business. A company like Nike is trying to benefit from those direct investments, not doing charity to take care of the local laborers. However, after some remediation processes, the local laborers did get jobs, get paid more, and learned some new skills. They can grow from the accumulated knowledge they learned and build their own empires. Instead of just rely on the teacher to teach you something, you can choose to learn more by yourself. If a country always imports anything they need, it is very likely to be controlled by other countries. During the pandemic of COVID-19, vaccines have become a life-saving product. However, those poor countries seem they do not have the ability to produce vaccines of their own.

One of the key factors is the crucial resources, techniques, technologies, and knowledge is controlled by these big companies and Western countries. Education is the key to better competitive advantages. If those developing countries can build their own excellent education systems, they may not be just developing countries anymore. However, most developing countries are dragging by their corrupt bureaucracy. High efficient governments can lead their residents to follow up the steps of a better future, whereas corrupt bureaucracy just makes things worse.

Do the math. Suppose that Nike invests and builds its own factory in Indonesia. Then, it produces the products at a lower cost of $5 per pair of shoes instead of $100 cost per pair in the US. If Nike sells one million shoes worldwide per year, it will gain $95 million more profit per year due to the lower cost of production. Now, compare to the wages that Nike paid to the laborers, suppose it is about $4 per day, $9,600 per year. If Nike hired 1,000 workers to produce the products, it has to pay $9.6 million per year. It is almost 10 times less than it gains $95 million more profit per year. For Indonesia, the 1,000 jobs only contribute $9.6 million per year to overall income growth. But for Nike, it is more than that. 

In conclusion, I think there are no clear responsibilities for companies or Western countries to do anything for developing countries since it is an ethical issue and making money is all business owners care about the most. However, if enterprises do their businesses more kindly, honestly, and with integrity, it is also a way to gain their profits by increasing sales and consumer loyalty. 

Reference

New Idea. (2019, December 11). Nike Sweatshops: The Truth About the Nike Factory Scandal. New Idea. https://www.newidea.com.au/nike-sweatshops-the-truth-about-the-nike-factory-scandal.