4.1.3 factors contributing to increased globalisation Flashcards Preview

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Globalisation is the process of ....

greater integration and inter-connectedness between countries


Globalisation usually includes the following features and characteristics:

Free movement of goods and services
Free movement of labour
Free movement of capital
Increased cultural exchange


factors contributing to increased globalisation

Reduction of international trade barriers/trade liberalisation
Political change
Reduced cost of transport and communication
Increased significance of global (transnational) companies
Increased investment flows (FDI)
Migration (within and between economies)
Growth of the global labour force
Structural change


Reduction of international trade barriers/trade liberalisation

The World Trade Organisation (WTO) has assisted in the reduction or removal of trade barriers and there has been a greater proliferation of trade agreements across the world. This has led to reduced tariffs and protectionism. Whilst some protectionist measures remain in place, a large number of countries with significant global economic influence have lowered protectionist measures

The increased freedom of movement of goods and services increases export opportunities and therefore has a significant effect on economic welfare. This has led to a greater dependency on trade as a proportion of GDP


political change

Large and rapidly developing countries such as Russia and China, which were previously largely closed to trade have become increasingly integrated into the global economy

These play a vital role in the creation of new markets and the provision of low cost labour

As they have developed economically they have contributed to global economic growth by demanding imports from other countries and selling exports to these countries

The BRICS countries have substantial natural and human resources that contribute to globalisation


Reduced cost of transportation and communication

This has made the movement of goods and services across the globe faster and cheaper

Improved transportation services such as shipping and airlines have made this possible

Improved infrastructure e.g. roads and internet has also made globalisation easier

Use of the internet, e-commerce and mobile technology has made it quicker and easier to communicate

Advances in technology have revolutionised communications, making it easier to communicate globally and lowering the cost of communication e.g. teleconference and Skype v face to face meetings


Increased significance of global (transnational) companies

Many large organisations have taken advantage of lower trade barriers, labour mobility and cheaper transportation to grow rapidly and enter previously untapped markets


Increased investment flows (FDI

There has been a significant relaxation on the rules and regulations surrounding the movement of capital, which can move either freely or at very low cost quickly across the globe. This has led to an increase in foreign direct investment. The greater freedom of movement of capital enables businesses to invest outside their country of origin. This may lower their own costs of production and improve economic prospects and job opportunities in the invested country



Workers are more willing to move across national borders in search of employment. Free movement of labour has made this much easier. At the same time workforces show greater flexibility within economies e.g. movement between regions in the UK

Globalisation allows the best talent to move quickly and easily across borders, creating a ‘brain drain’

Less skilled workers can undercut wages in developed economies as the workforce of poorer countries seek to better their standard of living

Although not always visible, increased globalisation has arguably damaged traditional cultures. The proliferation of multinational companies creates a uniformity of many economies and arguably less cultural diversity. At the same time, traditional cultures have struggled to accommodate new ones, leading to social tension


Growth of the global labour force

Growth, in terms of both quantity and quality has led to a diverse international workforce. With increasingly freer movement of labour this has transformed workforces globally

In many economies, such as the UK, we are seeing low skilled foreign workers employed in industries that do not require high rates of human capital

At the same time we are seeing highly skilled workers from the same countries, but employed in industries where there is a high human capital requirement


structural change

National economies have been transformed with countries moving away from the primary sector to manufacturing, whilst other economies have moved from the secondary sector to services