Explaining the Growth in Globalisation
Globalisation refers to the increased integration and interdependence of the world economy’s. These are some reasons to explain the growth of globalisation
1. Increase in Free Trade.
Since the second world war, tariffs have generally been reduced. This has been encouraged through organisations such as the WTO. This has increased trade between different countries; this is an important factor in the process of globalisation.
Technology has improved communication between different countries. Therefore, it has become easier to split up production on a global level. It is also easier to discover what is happening in other countries. For example, through the internet you can find the cheapest raw materials.
3. Improved Transport and Infrastructure.
Global airline travel has increased exponentially. It is now easier and cheaper to transport goods by air and water.
4. Economies of Scale.
In many industries we experience significant economies of scale. This has encouraged firms and countries to specialise in the production of certain goods. Specialisation means firms are more reliant on splitting up the production process into different countries
5. Trading blocks
Trading Blocks such as the EU and NAFTA. There are more agreements amongst countries to increase trade and cooperation
6. Increased capital mobility
It is now easier to raise finance from other countries. There are fewer restrictions on the flows of capital. For example, China transfers a lot of its trade surplus to countries like US.
7. International media companies and Multinationals.
This has helped create a standardisation of ideas and products.