Factors Of Globalisation

Question 1

Define factors of globalisation

Answer 1

The reasons why globalisation have rapidly increased in pace in the last 20 years

Question 2

What are the factors of globalisation?

Answer 2

1. New financial systems
2. New systems of trade
3. New systems of communication and transport
4. New management and information systems
5. New security systems

Question 3

How have new financial systems increased the pace of globalisation?

Answer 3

• Financial institutions like banks now operate globally – they are TNCs. This means that they can move finance quickly and easily across the world.
• The deregulation of financial institutions like banks means that government controls and regulations have been reduced which also makes the flow of finance quicker and easier than in the past

Question 4

How have new systems of trade increased the pace of globalisation?

Answer 4

• Trade barriers - called tariffs - are now far lower than in the past which means that trade can flow more easily and quickly around the world. The WTO sets global tariffs and overseas 97% of all world trade.
• Trading Blocs are groups of countries which have agreed to eliminate all trade barriers between member states. An example is the EU. This has made trade within the bloc quicker and easier.

Question 5

How have new systems of transport and communications increased the pace of globalisation?

Answer 5

• Improvements in transport systems such as containerisation of ships and more efficient air transport have both made the flow of people and goods quicker and easier. The cost of shipping goods has fallen by 70% since 1920.
• Improvements in electronic communications made possible by satellite technology, mobile phones and the internet have all made the flow of services, information and ideas much quicker and easier than in the past.

Question 6

How have new management and information systems increased the pace of globalisation?

Answer 6

To make it possible for goods and services to flow globally more quickly and easily TNCs have had to invest in new systems of management and production. This includes:

1. Sourcing goods and services globally
2. Using new financial systems, new trading systems, new systems of transport and communications to supply a JIT system of production.
3. Having capable and highly trained managers to organise and maintain these systems.

Question 7

How have new security systems increased the pace of globalisation?

Answer 7

• Traditional border security – customs posts have become less important. For example in the EU Schengen zone goods and people move freely. This eases the flow of goods and people.
• Cyber security has become more important as TNCs seek to protect their data from individuals, organisations and countries who seek to gain an advantage. Although this could have the potential to slow the pace of globalisation