Globalisation

Globalisation

Overview

• Globalisation refers to the process by which the world’s economies become more interlinked and interdependent.
• It is driven primarily by advancements in technology, trade liberalisation and increased mobility of capital and labour.
• It often refers to increasing ‘openness’ of economies in terms of trade, investment and capital flows.

Drivers of Globalisation

• Technological advancements: Innovations in transport, communication and computing have greatly reduced the costs and timescales involved in trade, and have enabled instant communication globally.
• Trade liberalisation: Reduced trade barriers, such as tariffs and quotas, have facilitated freer trade between countries.
• Mobility of capital and labour: Greater freedom for capital and labour to move across borders has also promoted globalisation. Multinational corporations (MNCs) can draw on global resources and reach global markets.

Pros and Cons of Globalisation

• Potential benefits of globalisation include: access to larger markets and therefore higher potential revenues for businesses; greater choice and lower prices for consumers; opportunities for developing countries to grow and develop through increased investment.
• The downside of globalisation includes: increased risk of economic contagion (for instance, one nation’s economic crisis spreading to its trade partners); loss of national economic autonomy; potential exploitation of workers in developing nations; and environmental degradation due to increased production and transportation.

Globalisation and International Trade

• Globalisation has resulted in a significant increase in international trade. Nations are more interdependent than ever before.
• Free trade agreements, global supply chains, and global production networks are all examples of how globalisation has impacted the dynamics of international trade.
• Globalisation has also resulted in increased competition, which can drive innovation and efficiency, but might also lead to job losses in industries that aren’t competitive on a global scale.

Strategies to Manage the Impact of Globalisation

• Countries can implement various policies to take advantage of globalisation while mitigating potential negative impacts.
• These might include developing human capital through education and training to ensure workers can compete in the global market, implementing stronger regulatory oversight of multinationals to prevent exploitation and uphold domestic labour standards, and promoting environmentally friendly production and consumption.

Summary of Key Points on Globalisation

• Globalisation refers to the process of increased interconnectedness and interdependence among the world’s economies.
• It is driven by technological advancements, trade liberalisation, and mobility of capital and labour.
• Globalisation has significant economic benefits and drawbacks, impacting competition, job markets, consumer choice and pricing, and environmental quality.
• Countries can harness the potential of globalisation through strategic human capital development, regulatory oversight, and sustainable practices.