Globalisation is the process by which the world is becoming interconnected as a result of massively increased trade and cultural exchange. Globalisation has increased the production of goods and services.
Globalisation has resulted in:
- increased international trade
- a company operating in more than one country
- greater dependence on the global economy
- freer movement of capital, goods, and services
Although globalisation is probably helping to create more wealth in developing countries – it is not helping to close the gap between the world’s poorest countries and the world’s richest.
Reasons for globalisation
There are several factors which have influenced the process of globalisation:
- Improvements in transportation – larger cargo ships mean that the cost of transporting goods between countries has decreased. Transport improvements also mean that goods and people can travel more quickly.
- Freedom of trade – organisations like the World Trade Organisation (WTO) promote free trade between countries, which help to remove barriers between countries.
- Improvements of communications – the internet and mobile technology has allowed greater communication between people in different countries.
- Labour availability and skills – countries such as India have lower labour costs and also high skill levels. Labour intensive industries such as clothing can take advantage of cheaper labour costs and move to LEDCs.
Positive impacts of globalisation
Some of the positive impacts of globalisation are:
- Investment by transnational companies help countries by providing new jobs and skills for local people.
- The sharing of ideas, experiences and lifestyles of people and cultures. People can experience foods and other products not previously available in their countries.
- Globalisation may help to make people more aware of global issues such as deforestation and global warming – and alert them to the need for sustainable development.
Negative impacts of globalisation
- Globalisation operates mostly in the interests of the richest countries, which continue to dominate world trade
- There are no guarantees that the wealth from investment will benefit the LEDCs
- An absence of strictly enforced international laws means that TNCs may operate in LEDCs in a way that would not be allowed in an MEDC.
Anti-globalisation campaigners sometimes try to draw people’s attention to these points by demonstrating against the World Trade Organisation. The World Trade Organisation is an inter-government organisation that promotes the free flow of trade around the world.