What factors have contributed globalization

What factors have contributed globalization

1. Trading blocs

   • Trading blocs like the EU do speed up this process. The EU has expanded to over 26 countries and has a combined population of 356 million. Within the EU, there has been a marked integration of the national economies. Trade amongst members has increased. There has also been greater movement of capital and labour. (e.g. the immigration from Poland of many workers to UK and Ireland). Within the EU, there has also been a single currency and single monetary policy adopted by 11 members. As well as increased integration amongst members of a trading bloc. It is argued trading blocks help globalisation through making global negotiations easier. For example, in the case of trade negotiations.  The EU will negotiate as a single trading block making it easier to push through practises which increase free trade.
   • Evaluation
     • However, trading blocks often don’t help the process of globalisation. For example, the EU’s CAP involved high tariffs on food imports and the dumping of surplus food items onto world markets. Rather than lead to greater globalisation, it is argued trading blocks create conflicting parties fighting for regional interests.

2. Improved technology

   • Developments in ICT, transport and communications have accelerated the pace of globalisation over the past 30 years. The internet has enabled fast and 24/7 global communication, and the use of containerisation has enabled vast quantities of goods and commodities to be shipped across the world at extremely low cost. More recently, the rise of social media means that national boundaries have, in many ways become irrelevant as producers use new forms of communication and marketing, including micro-marketing, to target international consumers. The widespread use of smartphones has also enabled global shoppers to have easy access to 'virtual' global markets.

3. Development of MNCS

   • The emergence of footloose multinational and transnational companies (MNCs and TNCs) and the rise in the significance of global brands such as Microsoft, Apple, Google, Sony, and McDonalds, has been central to the emergence of globalisation. The drive to reduce tax burdens and avoid regulation has also meant the establishment of complex international business structures.

4. Collapse of communism

   • Trade  has become increasingly free, following the collapse of communism, which has opened up many former communist countries to inward investment and global trade.  Over the last 30 years, trade openness, which is defined as the ratio of exports and imports to national income, has risen from 25% to around 40% for industrialised economies, and from 15% to 60% for emerging economies.

5. Capital mobility

   • The rise of new electronic payments systems,, including e-Wallets, pre-pay and mobile pay, e-Invoices and mobile pay apps, also facilitate increased global trade.  

6. WTO & low trade barriers

   • The WTO (World Trade Organisation ) has helped to reduce trade barriers This has opened up markets in Asia, Africa and Latin America