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Explain what is meant by globalisation.

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Introduction

GLOBALISATION ESSAY a) Globalisation involves the increased interdependence/reliance of countries. It is the increasing integration of the world economy into a single international market due to the dynamics of trade in goods and services and flows of capital and technology. Globalisation implies that goods are being manufactured abroad and that there is more prominent international trade. This is shown through the rise in exports and imports. For example, UK exports as a percentage of gross domestic product have more than doubled in the post-war period. Globalisation welcomes new technology and means that countries are less 'inward' looking. In general, globalisation increases as time goes on and develops along with changing objectives and advances in technology. It is not a new phenomenon. Especially during the last 25 years, more and more areas of the world economy have been brought into the competitive market. Globalisation, on the whole offers huge scope to improve the efficient allocation of resources and derive the benefits of international trade. It is fuelled by trade, movement of factors of production, the increasing number of Multi-National Corporations and the new technology. b) There are four main factors that have contributed to globalisation in recent years. Firstly, there is the freer movement of goods and services between countries. ...read more.

Middle

A Multi-national corporation is a company that has significant production operations in at least two countries, e.g. Starbucks or Sony. These large firms exist because of economies of scale, marketing, and lots of political power. MNCs help globalisation because without them there would be far less trade and innovation. MNCs have increased the amount of world output significantly and this has improved living standards throughout. MNCs create new jobs in other countries, giving rise to opportunity for the country they are operating in, and generating money for their own country. Multi-national corporations and globalisation is inevitably leading to a shifting in production from the First World to the Third World, where labour is cheaper. This is an example of globalisation as countries become more interdependent on each other. Finally, the last main factor that has contributed to globalisation is the prominence of advancing technology. This includes communication, the Internet, computers, etc. Technology is tied in with the other factors that have led to globalisation. The dramatic improvement in communications during the second half of the twentieth century has especially helped globalisation and MNCs. Falling airfares, the Internet, the fax machine, digitalisation and computers especially have meant that the movement of people and the transmission of information and ideas is easier and more cost-effective than ever before. ...read more.

Conclusion

In the long run, inflation will fall and economic growth will increase to the benefit of both parties of consumers and firms. However, a disadvantage of globalisation is that the UK is dependant on imports, especially as it is a net importer. For example, it is more than a nuisance if OPEC restricts supply or push up prices. Also, globalisation could mean the loss of domestic jobs and higher unemployment, which is why President Bush earlier this year imposed a tariff on steel. He did this to protect the interests of the US steel industry, although it was met with retaliation. Hence it can be said that globalisation is beneficial only when everyone is willing to participate in it and cope with it. Protectionism can often get in the way, but then again protectionism is to 'protect' the country. Seeing as the UK is more dependent on imports that exports, globalisation can add to its balance of payments deficit, which hit 33 billion pounds in 2001. Of course, it depends however on the elasticity of demand for both exports and imports. Finally, globalisation is generally seen as a positive thing as advantages exceed disadvantages, but it is occurring at such a rapid rate these days that it is hard to have perfect information and deal with the consequences. Along with globalisation comes responsibility. ...read more.

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