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Process of increased integration and interdependence of world economies
Features of Globalisation
- National Economies are becoming more closely integrated with each other. For example the Common Market in the EU, harmonization of Monetary Policy. But also closer integration in America and Africa.
- Greater movement of labour between countries. Also, easier for consumers to buy goods from other countries.
- Increase in World Trade. Tariffs and other impediments to world trade have gradually been reduced leading to an increase in world trade. The WTO has played a role in reducing tariffs.
- Economies tend to move in trade cycles together. A slow down in US growth has an impact on the whole world economy, because of the importance of trade. Monetary Policy is linked between the economies, if US cuts its interest rate, this is likely to lead other countries to cut theirs
- The growth of international multinational companies
Causes of globalisation
- Improved technology making it easier to travel and communicate.
- Growth of multinationals who have operations in several countries
- Growth of global media which helps to share global idea
- Growth of trading blocks, such as EU
- Benefits of free trade mean that countries become aware of their interdependence.
Benefits of Globalisation
- More flexible labour markets and more opportunities. People can work in different parts of the world
- Free trade has helped increase living standards and give consumers a wider choice of goods.
- Workers in developing economies send home substantial sums to help close gap between rich and poor countries. Remittances and globalisation
- Global competition reduces power of domestic monopolies
- Faster sharing of ideas and technology
Costs of Globalisation
- Some developing economies have been left behind and not benefitted from growth in trade
- Hastened environmental problems because of rapid exploitation of scarce resources
- Global inequality remains substantial problem