What is meant by the term globalisation?

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Globalisation exam questions unit 6

a) What is meant by the term globalisation? (20 marks)

The Organisation for Economic Cooperation and Development (OECD) defined globalisation as,

'The geographical dispersion of industrial and service activities (for example, research and development, sourcing of inputs, production and distribution and the cross border networking of companies (for example through joint ventures and the sharing of assets)

Economic activity is becoming organised on a global scale giving a new international division of labour, with production, investment patterns and movements and technology transfers all becoming global. In this strategy, activities are established in many sites spread over the world, based on a country's comparative advantage. A manufacturer striving for the benefits of globalisation aims to secure the supply of inputs by locating production of the resulting outputs in the most favourable locations. Thus, labour-intensive production of components will be situated in low wage areas, while the production of high technology and high value added parts will require a skilled or well educated workforce, and are therefore likely to be concentrated in more capital-intensive locations.

Globalisation could be seen to significantly affect developing economies, such as Ghana and Egypt. For example,