Globalisation

Exam code: 2281

Written by: Ashika|Reviewed by: Caroline Carroll|Updated 2 July 2026

Globalisation is the economic integration of different countries through increasing freedoms in the cross-border movement of people, goods and services, technology and finance
- Globalisation has been increasing for thousands of years – it is not a new phenomenon
- This integration of global economies has impacted national cultures, spread ideas, speeded up industrialisation in developing nations and led to de-industrialisation in developed nations
Improvements in technology and the speed of global connections have exponentially increased the level of interdependence between nations in the past 50 years
- Consumers now source products globally recognising global brands wherever they travel

Cause	Explanation	Effect on globalisation
Changes in trade restrictions	When governments reduce tariffs, quotas, or trade bans, international trade becomes easier	Encourages more trade and global connections
Changes in transport costs	Improvements in shipping, air travel and logistics lower the cost of moving goods between countries	Makes global trade faster and more affordable
Changes in communication costs	The internet, mobile phones and digital platforms make it easier to manage and expand international trade	Speeds up decision-making and supports global trade
Movement of MNCs	Multinational companies expand to new countries, setting up production and creating global supply chains	Spreads economic activity across the world

Trade increases as countries buy and sell more with each other
Greater specialisation and exchange of goods and services
Some domestic industries may struggle with foreign competition and domestic unemployment may actually increase

Firms compete not just locally, but globally
- This can lead to lower prices and improved quality
However, domestic small or new firms may be pushed out of the market leading to reduced competition within the country
- This may actually lead to an increase in domestic prices

Positive effects	Negative effects
Sharing of green technologies between countries MNCs under pressure to meet global environmental standards	Increased production and transport raise carbon emissions Deforestation, pollution and overuse of natural resources

Workers move to countries with better job opportunities
Can help reduce unemployment in sending countries
- But may increase unemployment in the receiving country
May create pressure on services (e.g. housing, healthcare) in receiving countries

Advantage	Disadvantage
Jobs created in developing countries due to MNC investment Higher wages are often paid to workers in export industries	The income gap between skilled and unskilled workers may widen Wealth may concentrate in cities or with foreign-owned companies

What is globalisation?