10.1: Globalisation

Question 1

Definition of Globalization

Answer 1

The process of growing economic integration of the world’s economies

Question 2

The causes of globalisation.

Answer 2

• Technological advancements
• Economic Factors
• Political Factors
• Social and Cultural Factors
• Financial Factors
• Environmental Factors

Question 3

The causes of globalisation: Technological advancements: Communication Technology

Answer 3

Communication Technology
Internet: The widespread availability of the internet has revolutionized communication, making it faster and cheaper for people, businesses, and governments to interact across borders.
Mobile Technology: Smartphones and mobile networks enable constant communication, allowing people to stay connected from virtually anywhere in the world.
Social Media Platforms: Platforms like Facebook, Instagram, and Twitter facilitate the exchange of ideas, news, and cultural trends globally, contributing to the spread of information and culture.

Question 4

The causes of globalisation: Technological advancements: Transportation Technology

Answer 4

Transportation Technology
Containerization: The use of standardized containers has made shipping goods across long distances more efficient and cost-effective, reducing transport costs and enabling more goods to be traded internationally.
Air Travel: Advances in aviation technology have made international travel faster and more affordable, promoting tourism, business travel, and migration.
Logistics Networks: Global companies like DHL, FedEx, and UPS have created advanced logistics networks that facilitate the efficient movement of goods across borders.

Question 5

Technological Advancements (Transportation and Communication Technology) Diagram

Answer 5

Diagram: Production Possibility Frontier (PPF) with Trade and Technology*

Explanation: A diagram of a production possibility frontier (PPF) that expands outward due to technological advancements like containerisation, digitalisation, or logistics networks, demonstrating increased efficiency and higher output. This reflects how transportation and communication technologies have driven globalisation by enabling easier international trade.

Question 6

The causes of globalisation: Technological advancements: Information Technology (IT)

Answer 6

Information Technology (IT)
Digitization: The digitization of information has made it easier to store, share, and process data globally. This facilitates international business transactions and financial flows.
Automation: Automated systems have allowed companies to manage global supply chains more efficiently, connecting production processes in different countries.

Question 7

Causes of Globalisation: Technological Advancements; empirical numerical data points

Answer 7

Internet Usage: As of 2021, over 4.9 billion people worldwide (about 62% of the global population) use the internet. This has dramatically increased the speed of communication and the sharing of information across borders.
Mobile Technology: According to the GSMA, there were 5.3 billion unique mobile subscribers globally in 2022, representing about 67% of the world’s population, which facilitates instant communication and access to services.
Containerisation: The International Maritime Organization reports that container shipping accounts for about 60% of the world’s trade by volume. The average cost of shipping a standard container has decreased by 85% since the introduction of containerisation in the 1960s.

Question 8

The causes of globalisation: Economic Factors: Trade Liberalisation

Answer 8

Trade Liberalisation
Reduction of Tariffs and Trade Barriers: Over recent decades, countries have reduced tariffs, quotas, and other trade barriers, making it easier to trade goods and services across borders. Trade agreements such as the North American Free Trade Agreement (NAFTA) and the European Union’s Single Market have accelerated globalisation.
World Trade Organization (WTO): The WTO has played a major role in promoting free trade by setting global rules for trade and resolving disputes between member countries.

Question 9

Reduction of Tariffs and Trade Barriers (Trade Liberalisation) Diagram

Answer 9

Diagram: Supply and Demand Diagram with Tariffs
Explanation: Show a basic diagram of supply and demand where the price rises due to tariffs, and how removing tariffs shifts the supply curve downward, lowering prices and increasing the quantity traded internationally. This can demonstrate how trade liberalisation promotes globalisation by encouraging more trade between countries.

Question 10

The causes of globalisation: Economic Factors: Growth of Multinational Corporations (MNCs)

Answer 10

Growth of Multinational Corporations (MNCs)
Foreign Direct Investment (FDI): MNCs invest in multiple countries, spreading production, jobs, and technology globally. This contributes to the integration of economies by connecting local markets to global supply chains.
Global Supply Chains: Companies outsource production to different countries to reduce costs. This has created highly integrated global supply chains, making it common for products to be designed in one country, manufactured in another, and assembled in yet another.

Question 11

Foreign Direct Investment (FDI) & Global Supply Chains Diagram

Answer 11

Diagram: Circular Flow of Income Model (Open Economy)
Explanation: Illustrate the flow of goods, services, and financial resources between households, firms, and the global market. Highlight foreign direct investment and how money flows across borders, integrating economies and encouraging the spread of multinational corporations (MNCs).

Question 12

The causes of globalisation: Economic Factors: Deregulation and Privatisation

Answer 12

Deregulation and Privatisation
Economic Deregulation: Many countries have opened their markets by removing restrictions on businesses, allowing for greater foreign investment, capital flows, and trade.
Privatisation: Governments in both developed and developing countries have privatised state-owned industries, encouraging private investment from abroad.

Question 13

Economic Deregulation and Privatisation
Diagram

Answer 13

Diagram: Cost and Revenue Curves in a Monopoly (with and without Regulation)

Explanation: Use the monopoly diagram to show the difference in prices and output before and after deregulation or privatisation. With deregulation, lower costs and more competition lead to lower prices and higher output, thus contributing to globalisation by attracting foreign firms.

Question 14

Causes of Globalisation: Economic Factors; empirical numerical data points

Answer 14

Trade Liberalisation: According to the World Bank, global trade as a percentage of GDP increased from about 39% in 1980 to 60% in 2020.

Growth of Multinational Corporations (MNCs): As of 2020, there were over 82,000 MNCs worldwide, and they accounted for approximately 80% of global trade (UNCTAD).

Foreign Direct Investment (FDI): The OECD reported that global FDI flows reached about $1.54 trillion in 2020.

Question 15

The causes of globalisation: Political Factors: Global Governance and Institutions

Answer 15

Global Governance and Institutions
International Organisations: Institutions such as the International Monetary Fund (IMF), the World Bank, and the WTO promote global cooperation, economic stability, and trade liberalisation, facilitating globalisation.
Regional Trade Blocs: Agreements like the European Union (EU), ASEAN, and MERCOSUR encourage economic integration by promoting trade and cooperation among member countries.

Question 16

The causes of globalisation: Political Factors: End of the Cold War

Answer 16

End of the Cold War
Opening of Eastern Europe: The collapse of the Soviet Union and the end of the Cold War in the late 20th century opened Eastern European and former Soviet countries to global trade, investment, and interaction with Western markets.
Spread of Capitalism: Many formerly socialist or centrally planned economies, such as China, India, and Russia, have embraced market-based reforms, integrating more deeply into the global economy.

Question 17

Causes of Globalisation: Political Factors; empirical numerical data points

Answer 17

Membership in International Organisations: There are 164 member countries in the World Trade Organization (WTO), representing over 98% of world trade, highlighting the role of global governance in facilitating trade.
Regional Trade Blocs: The EU, as one of the largest regional trading blocs, has a GDP of approximately €15 trillion, which represents around 15% of the global economy.

Question 18

The causes of globalisation: Social and Cultural Factors: Migration

Answer 18

Migration
Labour Migration: People move across borders for better employment opportunities, contributing to the flow of skills and knowledge between countries. This movement of people creates multicultural societies and global labour markets.
Diasporas: Migrant communities maintain cultural and economic ties with their countries of origin, fostering transnational connections and cross-border economic activity.

Question 19

Labour Migration and Global Labour Markets Diagram

Answer 19

Diagram: Labour Market Diagram with Increased Labour Supply
Explanation: A simple supply and demand diagram for labour showing an increase in labour supply (shift in supply curve to the right) due to migration. This lowers wage rates and increases employment in the host country, while fostering global interconnectedness as migrants move across borders.

Question 20

The causes of globalisation: Social and Cultural Factors: Cultural Exchange

Answer 20

Cultural Exchange
Global Media: The rise of global media companies like Disney, CNN, and BBC has spread cultural products (movies, TV shows, music) across borders, contributing to a shared global culture.
Cultural Diffusion: As people travel more and access international media, they adopt ideas, foods, and lifestyles from other cultures, leading to greater cultural interconnectedness.

Question 21

Causes of Globalisation: Social and Cultural Factors; empirical numerical data points

Answer 21

Migration: The UN estimated that there were about 281 million international migrants worldwide in 2020.

Cultural Exchange: The global film industry was valued at approximately $42.5 billion in 2020.

Question 22

The causes of globalisation: Financial Factors: Global Financial Markets

Answer 22

Global Financial Markets
Financial Integration: Globalisation has integrated financial markets, allowing capital to move freely between countries. Investors can buy stocks, bonds, and other financial instruments across borders, making global financial markets more interconnected.
Foreign Exchange Markets: The global foreign exchange market enables businesses and individuals to easily trade currencies, facilitating international transactions and investment.

Question 23

Global Financial Markets & Financial Integration Diagram

Answer 23

Diagram: Foreign Exchange Market Diagram
Explanation: Depict the demand and supply for currencies in the foreign exchange market. Show how increased financial integration due to globalisation leads to more exchange rate stability or volatility, depending on factors like investor confidence and global capital flows.

Question 24

The causes of globalisation: Financial Factors: Growth of International Banking

Answer 24

Growth of International Banking
International Banking Networks: Large banks operate in multiple countries, providing financial services to multinational corporations and facilitating global trade and investment.
Electronic Payments: Advancements in financial technology have made it easier to transfer money across borders, helping to facilitate international trade and remittances from migrants to their home countries.

Question 25

Causes of Globalisation: Financial Factors; empirical numerical data points

Answer 25

Global Financial Markets: The total value of global financial assets is estimated to be around $400 trillion.

Foreign Exchange Markets: The Bank for International Settlements (BIS) reported that the average daily turnover in the global foreign exchange market was about $7.5 trillion per day in April 2022 (14% increase from the $6.6 trillion recorded in 2019)

Question 26

The causes of globalisation: Environmental Factors: Shared Global Challenges

Answer 26

Shared Global Challenges
Climate Change: The need for international cooperation to address climate change has brought countries together through agreements like the Paris Climate Accord, promoting global collaboration and policy coordination.
Resource Interdependence: As natural resources become scarcer, countries have become more interdependent. For example, oil and gas exports from the Middle East are essential to fuel global economies, creating economic and political ties across continents.

Question 27

Environmental Factors (Shared Global Challenges) Diagram

Answer 27

Diagram: Externalities Diagram (Negative Externalities)
Explanation: Use a diagram to show the negative externalities of global activities like industrial pollution or deforestation. Demonstrate the gap between the social and private costs of production, highlighting the need for international cooperation through environmental regulations and treaties to combat global challenges.

Question 28

The causes of globalisation: Environmental Factors: Environmental Regulations

Answer 28

Environmental Regulations
International Environmental Agreements: Global challenges like climate change, deforestation, and pollution require international cooperation and have led to the creation of global regulations and treaties, further fostering global ties

Question 29

Causes of Globalisation: Environmental Factors; empirical numerical data points

Answer 29

Climate Change Agreements: In 2015, 196 countries were parties to the Paris Agreement, an international legally-binding treaty on climate change

Resource Interdependence: The International Energy Agency (IEA) stated that in 2021, nearly 60% of the world’s oil supply came from the Middle East.

Question 30

History of Globalisation: 1. Prehistoric and Ancient Globalisation (Before 1500 CE): Early Trade Routes

Answer 30

Early Trade Routes
Silk Road (c. 130 BCE – 1453 CE): The Silk Road connected China, Central Asia, the Middle East, and Europe, facilitating the exchange of goods, ideas, culture, and technology. It was one of the earliest examples of long-distance trade, with merchants trading silk, spices, and other valuable goods.
Trans-Saharan Trade: Between Africa and the Middle East, goods like gold, salt, and slaves were exchanged. This trade helped spread Islam and culture across North Africa and parts of Europe.
Indian Ocean Trade (c. 300 BCE – 1500 CE): The Indian Ocean served as a major trade route connecting East Africa, the Middle East, South Asia, and Southeast Asia.

Question 31

History of Globalisation: 1. Prehistoric and Ancient Globalisation (Before 1500 CE): Empires and Cultural Diffusion

Answer 31

Empires and Cultural Diffusion
Roman Empire (27 BCE – 476 CE): The expansion of the Roman Empire connected much of Europe, North Africa, and the Middle East. It created vast networks of roads and infrastructure, facilitating the movement of people, ideas, and goods.
Islamic Caliphates (7th – 13th Century CE): The Islamic empires of the Middle Ages connected the Middle East, North Africa, parts of Europe, and Asia, fostering trade and intellectual exchange (e.g., mathematics, astronomy).
Mongol Empire (1206 – 1368 CE): Under Genghis Khan, the Mongol Empire connected much of Eurasia, enabling the flow of goods, technologies, and cultural practices across the vast territory.

Question 32

History of Globalisation: 2. Age of Exploration and Early Modern Globalisation (1500 – 1800 CE): European Exploration and Colonisation

Answer 32

European Exploration and Colonisation
Discovery of the New World (1492 CE): Christopher Columbus’ voyage to the Americas marked the beginning of European exploration and colonisation. Spain, Portugal, and later other European powers established colonies in the Americas, Africa, and Asia.
The Columbian Exchange: This period saw the exchange of crops, livestock, diseases, and people between the Old World (Europe, Africa, Asia) and the New World (the Americas). Key crops like potatoes, maize, and tobacco were introduced to Europe, while European diseases decimated Indigenous populations in the Americas.

Question 33

History of Globalisation: 2. Age of Exploration and Early Modern Globalisation (1500 – 1800 CE): The Rise of the Atlantic Slave Trade

Answer 33

The Rise of the Atlantic Slave Trade
Transatlantic Slave Trade (16th – 19th Century): One of the darkest aspects of early globalisation was the Atlantic Slave Trade, which forcibly transported millions of Africans to the Americas. This formed part of the “triangular trade,” where European goods were exchanged for slaves in Africa, slaves were sent to the Americas, and raw materials were sent back to Europe.

Question 34

History of Globalisation: 2. Age of Exploration and Early Modern Globalisation (1500 – 1800 CE): The Globalisation of Economies

Answer 34

The Globalisation of Economies
Mercantilism: European powers pursued mercantilist policies, using colonies for the extraction of resources and wealth. Trade monopolies and protectionist practices characterised this period.
Establishment of Trading Companies: The Dutch East India Company (VOC) and the British East India Company established global trading networks, importing goods like spices, tea, and textiles from Asia to Europe.

Question 35

History of Globalisation: 3. Industrial Revolution and Modern Globalisation (1800 – 1945): Industrial Revolution

Answer 35

Industrial Revolution
Technological Advancements (18th – 19th Century): The Industrial Revolution, beginning in Britain in the late 18th century, transformed economies and societies. Innovations such as the steam engine, textile machinery, and the railway facilitated the mass production of goods and faster transportation. This led to greater international trade as countries sought to export industrial products and import raw materials.
Urbanisation: The movement of people from rural areas to cities in search of jobs contributed to the growth of urban centers and a global market for labour.

Question 36

History of Globalisation: 3. Industrial Revolution and Modern Globalisation (1800 – 1945): Imperialism and Colonialism

Answer 36

Imperialism and Colonialism
Scramble for Africa (Late 19th Century): European powers colonised much of Africa, exploiting resources and integrating African economies into global markets.
Expansion in Asia: Britain, France, and other powers extended control over India, Southeast Asia, and China, creating global trade networks based on resources like tea, rubber, and cotton.
Global Migration: Millions of people migrated across continents, including Europeans to the Americas and Australia, and indentured labourers from India and China to colonies in Africa, the Caribbean, and Southeast Asia.

Question 37

History of Globalisation: 3. Industrial Revolution and Modern Globalisation (1800 – 1945): Global Capital Flows

Answer 37

Global Capital Flows
Financial Integration: By the late 19th century, global financial markets had developed. Banks and investors in Europe financed infrastructure projects like railways in North America, Latin America, and Asia.
Gold Standard: The use of the gold standard in the 19th and early 20th centuries created a system of fixed exchange rates, further facilitating international trade and investment.

Question 38

History of Globalisation: 3. Industrial Revolution and Modern Globalisation (1800 – 1945): World Wars and Economic Shifts

Answer 38

World Wars and Economic Shifts
World War I (1914-1918): The war disrupted global trade and led to protectionism and economic decline in many parts of the world.
Great Depression (1929): The economic collapse of the 1930s led to a retreat from globalisation, with countries erecting trade barriers and focusing on domestic economies.
World War II (1939-1945): The global conflict further disrupted international trade and investment, although post-war rebuilding would set the stage for a new era of globalisation.

Question 39

History of Globalisation: 4. Post-World War II Globalisation (1945 – 1980s): Bretton Woods System

Answer 39

Bretton Woods System
Creation of Global Institutions: After WWII, international institutions like the World Bank, International Monetary Fund (IMF), and General Agreement on Tariffs and Trade (GATT) were established to promote economic stability, rebuild war-torn economies, and foster international trade. The Bretton Woods system of fixed exchange rates was implemented to stabilise currencies.
Marshall Plan (1948-1952): The United States provided economic aid to Western Europe for reconstruction, which helped integrate European economies into the global economy.

Question 40

History of Globalisation: 4. Post-World War II Globalisation (1945 – 1980s): Cold War and Economic Blocs

Answer 40

Cold War and Economic Blocs
Division of the World: The Cold War (1947-1991) created two economic blocs—capitalist Western nations led by the U.S., and socialist nations led by the Soviet Union. While trade was limited between the blocs, globalisation still advanced within each sphere.
Rise of Multinational Corporations (MNCs): Large corporations began to establish production facilities in multiple countries, facilitating the spread of technology, capital, and goods across borders.

Question 41

History of Globalisation: 4. Post-World War II Globalisation (1945 – 1980s): Decolonisation

Answer 41

Decolonisation
End of Colonial Empires (1940s-1970s): Many African, Asian, and Caribbean countries gained independence. These newly independent nations sought to integrate into the global economy, often focusing on export-led growth or industrialisation strategies.
Emergence of the Third World: Newly independent nations played a key role in global forums like the United Nations and attempted to form their own alliances, such as the Non-Aligned Movement.

Question 42

History of Globalisation: 5. Contemporary Globalisation (1980s – Present): Neoliberal Economic Policies

Answer 42

Neoliberal Economic Policies
Liberalisation of Trade and Investment: The 1980s and 1990s saw a wave of economic liberalisation, with many countries reducing trade barriers, deregulating industries, and encouraging foreign direct investment (FDI). This led to the rise of free-market globalisation.
World Trade Organization (1995): The WTO was established to promote global trade liberalisation, succeeding GATT and further reducing barriers to international trade.

Question 43

History of Globalisation: 5. Contemporary Globalisation (1980s – Present): Technological Revolution

Answer 43

Technological Revolution
Information and Communication Technology (ICT): The rapid development of the internet and mobile technologies in the 1990s and 2000s revolutionised how people communicate, work, and trade globally. Companies became more interconnected through global supply chains, and the digital economy emerged.
Global Financial Markets: The deregulation of financial markets and advancements in technology allowed capital to move rapidly around the globe. The 2008 financial crisis highlighted the risks of this interconnectedness.

Question 44

History of Globalisation: 5. Contemporary Globalisation (1980s – Present): Emergence of China and India

Answer 44

Emergence of China and India
China’s Economic Rise: After economic reforms in 1978, China opened up to global trade and investment, becoming the “world’s factory” for manufactured goods. Its rapid industrialisation and export-led growth have made it a central player in globalisation.
India’s IT Revolution: India’s economic liberalisation in the 1990s and its emergence as a global hub for information technology and business process outsourcing (BPO) have integrated it into the global economy.

Question 45

History of Globalisation: 5. Contemporary Globalisation (1980s – Present): Globalisation in the 21st Century

Answer 45

Globalisation in the 21st Century
Global Supply Chains: Companies like Apple and Amazon have established complex global supply chains, where products are designed, manufactured, and assembled in multiple countries.
Backlash to Globalisation: In recent years, there has been a backlash against globalisation, with rising nationalism, trade tensions (e.g., U.S.-China trade war), and calls for protectionist policies in many countries.

Question 46

History of Globalisation: 5. Contemporary Globalisation (1980s – Present): Cultural Globalisation

Answer 46

Cultural Globalisation
Spread of Culture: Globalisation has led to the exchange and diffusion of cultural practices, languages, and ideas. However, it has also raised concerns about cultural homogenisation and the erosion of local traditions.
Global Governance: Issues like climate change, migration, and pandemics have highlighted the need for international cooperation and governance in an increasingly interconnected world.