Globalisation is the growing connection of the world's economies, driven by fewer trade barriers, cheaper transport and communication, and MNCs.
Globalisation is the way the world's economies are becoming more closely linked. Goods, money, people and ideas move more and more between countries.
There are four main causes. Countries have cut tariffs and signed trade deals. Transport is cheaper, for example by container ship. Talking across borders is cheaper, thanks to the internet and video calls. And multinational companies (MNCs) spread their work across many countries.
Trade and competition: trade grows, and firms compete with rivals from across the world. Prices fall, but weaker firms may close. Environment: more production and shipping can add pollution, though cleaner technology also spreads faster.
People: more workers move abroad for jobs. Skilled workers may gain more than unskilled workers, so the income gap can widen. Development: many poorer countries have grown by making parts for global firms, but some have been left behind.
- Globalisation
- Growing connection of the world's economies.
- Causes
- Fewer trade restrictions, lower transport and communication costs, MNCs.
- Effects
- Trade, competition, environment, migration, income distribution, development.
Worked example: Why a phone is made in many countries
A smartphone may be designed in one country, use chips from another, and be assembled in a third.
- Causes at work: cheap container shipping, the internet for coordinating work, low tariffs on parts.
- MNCs: the phone company places each stage where it is cheapest or most skilled.
- Consequences: cheaper phones for consumers and jobs in assembly countries.
- But: a problem in one country, such as a factory shutdown, can disrupt supply everywhere.
Watch out for this
Globalisation only means more trade in goods.
Globalisation also includes the movement of investment, people, ideas and technology between countries.
Check your understanding
Which change has encouraged globalisation?
- A fall in the cost of international communication
- Higher tariffs on imports
- Higher shipping costs