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