Globaisation

Seite 1

Globalisation- an expansion of world trade in goods and services leading to greater international interdependence.

Countries are becoming less independent and more interdependent.

Interdependence- when countries depend on each other for goods and services.

Factors that contribute to globalisation

Improvements in transport:

- Cost of transport is reduced (increase imports and exports)

- Containerisation has made it easier to transport goods- don't need to be taken out of container- cheaper and quicker

- Lower transportation costs -> importing and exporting is more competitive (goods can be traded competitively around the world)

Evaluation: important factor but can cause pollution and a unbalance of payments

Improvements in Information and Communication Technology:

- Send and communicate information quickly and easily

- Makes goods/ services cheaper by reducing the firm's average costs

- Advertising can reach a wider audience over the internet

Rise in living standards:

- Countries are becoming richer due to increase in trade -> more money available

- People demand more from government and a wider choice -> increases trade

- Stimulates growth

Decline in protection:

- Fewer barriers in trade -> The World Trade Organisation wants to promote this free trade (eg. reduce tariffs on trade)

However barriers on trade can be useful -> eg. to stop disease

Economies of scale:

- Firms can mass produce and sell to international markets

- Firms can set up factories over seas-> benefit from lower transport costs and cheap labour

MUST BE ABLE TO EVALUATE

(SAY HOW IMPORTANT EACH FACTOR IS)