11.6 Globalisation

Main Content

Objective 1: The Meaning of Globalisation, Its Causes and Consequences

What Is Globalisation?

Globalisation is the process by which the economies of countries around the world become more and more connected and interdependent (meaning they rely on each other more). It involves the increasing flow of goods, services, money, people, and ideas across national borders.

Think of it this way: when you buy a phone made in South Korea, wear clothes stitched in Bangladesh, and stream a show produced in the USA — all from your home — you are experiencing globalisation first-hand.

Causes of Globalisation

Several factors have driven the growth of globalisation:

• Reduction in trade barriers — Countries have gradually removed or reduced tariffs (taxes on imports), quotas (limits on the amount of imports), and other restrictions on trade. This has been encouraged by international organisations like the World Trade Organization (WTO), which works to make trade between countries freer and fairer.

• Advances in transport technology — Shipping goods across the world has become much faster and cheaper. Container ships can carry enormous amounts of goods across oceans efficiently. Air freight allows perishable (goods that spoil quickly) and high-value goods to be transported rapidly.

• Advances in communication technology — The internet, mobile phones, and digital platforms allow businesses, consumers, and governments to communicate instantly across the globe. A business in Germany can manage a factory in Vietnam in real time. This has dramatically reduced the cost of doing business internationally.

• Growth of multinational corporations (MNCs) — These are large companies that operate in many countries at once (for example, Apple, Toyota, or Coca-Cola). MNCs set up factories, offices, and supply chains around the world, spreading economic activity globally.

• Financial liberalisation — Many countries have opened up their financial markets, allowing money (capital) to move more freely across borders. Investors can now put their money into businesses and assets in other countries with fewer restrictions.

• International institutions and agreements — Bodies like the International Monetary Fund (IMF), the World Bank, and the WTO have encouraged open markets and provided financial support to developing countries to integrate into the global economy.