18. The causes of Globalisation

Question 1

What are the 12 causes of Globalisation?

Answer 1

1. Improved transport, making global travel easier.
2. Containerisation. From 1970, there was a rapid adoption of the steel transport container. This reduced the costs of inter-modal transport making trade cheaper and more efficient.
3. Improved technology which makes it easier to communicate and share information around the world.
4. Growth of multinational companies with a global presence in many different economies.
5. Growth of global trading blocks which have reduced national barriers. (e.g. European Union, NAFTA, ASEAN).
6. Reduced tariff barriers encouraging global trade. Often this has occurred through the support of the WTO.
7. Firms exploiting gains from economies of scale to gain increased specialisation and increased dominance of their market.
8. Growth of Global Media e.g. BBC, Google
9. Global trade cycle. Economic growth is global in nature. This means countries are increasingly interconnected.
10. Financial system increasingly global in nature.
11. Improved mobility of capital. In past few decades there has been a general reduction in capital barriers, making it easier for capital to flow between different economies.
12. Increased mobility of labour.

Question 2

What are the benefits to Globalisation?

Answer 2

• Increased world output
• Increased consumer welfare
• The role/responsibility of the government is reduced.
• Peace
• Long run benefits for everyone

Question 3

What are the costs of Globalisation?

Answer 3

• Inequalities
• Spread of economic shock
• Externalities
• Exploitation
• Poverty
• Job losses