Chapter 68 Factors Contributing To Increased Globalisation

Question 1

What are the 8 factors contributing to increased globalisation?

Answer 1

1) Reduction of international trade barriers/trade liberalisation.
2) Political change.
3) Reduced cost of transport and communication.
4) Increased significance of global (transnational) companies.
5) Increased investment flows.
6) Migration.
7) Growth of the global labour force.
8) Structural changes.

Question 2

1) Reduction of trade barriers/trade liberalisation: (2)

Answer 2

• More countries around the world have opened up their economies, allowing trade to flow without any barriers.
• FTAs help to encourage trade between nations, increasing the volume of international trade, maintaining globalisation.

Question 3

2) Political Change. (2)

Answer 3

• Radical changes in the political regimes of certain nations have helped to increase globalisation.
• E.g. countries like China are now less concerned with protectionism/preventing trade than they once were.

Question 4

3) Reduced cost of transport and communication. (3)

Answer 4

• International transport networks have improved considerably- cost of flying has fallen and the number of flights and destinations has increased. So, goods can be transported more cheaply.
• Modern technology allows more people to work at home.
• Containerisation has made a considerable contribution to globalisation because containers provide a flexible and much cheaper means of transporting goods.

Question 5

4) Increased significance of global (transnational) companies (3)

Answer 5

• A growing number of MNCs have developed significant business interests overseas.
• They sell goods/services into global markets and manufacture all around the world.
• They make huge global investments in research and development.

Question 6

5) Increased Investment flows (2)

Answer 6

• FDI occurs when a company makes an investment in a foreign country. E.g. the construction of a factory.
• FDI spreads business activity, job creation and wealth all over the globe, increasing globalisation.

Question 7

6) Migration (4)

Answer 7

• The movement of people who aim to set up temporary or permanent residence in a new location).
• Migrants often import their cultures into their new environment, bringing goods with them.
• Migrants often provide a supply of low-cost labour to a nation.
• Some migrants are highly skilled, filling ‘skillgaps’, such as Premier League football players.

Question 8

7) Growth of the global labour force (2)

Answer 8

• A bigger global labour market helps to drive global demand —> more disposable income.
• Some people move from the global labour market to setting up their own businesses after gaining work experience. This adds to number of businesses globally, some of which might grow and develop their activities around the world.

Question 9

8) Structural changes

Answer 9

Structural change such as the huge growth of the tertiary sector (services), contribute to globalisation as these services are sold abroad, and operations are likely to be set up in a range of countries.