4.1.1 Globalisation

• Globalisation is the economic integration of different countries through increasing freedoms in the cross-border movement of people, goods/services, technology & finance
• This integration of global economies has impacted national cultures, spread ideas, speeded up industrialisation in developing nations & led to de-industrialisation in developed nations
• Globalisation has been increasing for thousands of years - it is not a new phenomenon
• Improvements in technology & the speed of global connections have exponentially increased the level of interdependence between nations in the past 50 years
• Consumers now source products globally recognising global brands wherever they travel  
  
  

The Four Main Characteristics of Globalisation

Increasing foreign ownership of companies	Increasing movement of labour & technology across borders
Free trade in goods/services	Easy flows of capital (finance) across borders

• In 2000 the value of global trade was approximately $6.45 trillion. By 2020 this figure was at $19 trillion
• Numerous factors have contributed to the rapid increase in the pace of globalisation but perhaps two of the most significant are the improvements in containerised shipping & the innovation in communication technology

 

Factors Contributing to Globalisation in the Last 50 Years

Economies of scale generated by containerisation in the shipping industry	The improved ability for firms to easily connect and to promote themselves internationally as a result of the internet & improvements to communications technology e.g Skype, WhatsApp, WeChat etc	The Increased effectiveness of the World Trade Organisation (WTO) in negotiating new trade agreements & in helping countries to open up to free trade (trade liberalisation), thus increasing international specialisation & the volume of trade
A rapid growth in the number & influence of transnational corporations	The end of the cold war between Russia & the West in 1990 opened up former communist countries around the world enlarging the global supply of labour e.g. more than 800,000 people migrated from East Germany to West Germany between 1990 and 1991	In the 1990's there was deregulation of many financial markets which resulted in the expansion of global financial services & provided more access to capital

• Many of the impacts of globalisation have been positive, however there have been some very negative ones too
• When considering the impacts, it is useful to acknowledge all of the stakeholders including individual countries, governments, firms, consumers, workers & the environment

The impacts of Globalisation on Stakeholders

• Two of the more recent criticisms of globalisation include
  • The lack of action by some governments to help workers unable to find new jobs as a result of structural unemployment
  • The use of legal mechanisms (e.g. transfer pricing) & corruption by transnational corporations is stripping developing countries of their assets & has been called 'new colonialism'