Factors Contributing to Globalisation

Factors Contributing to Globalisation

1. DEFINITION: refers to economies coming together in order to form one world economy.

2. MIGRATION

   • Usually people import their culture over to their new environment.
   • Provides cheap labour.
   • Some people send their money back to their home country.
   • Some migrants are highly skilled and so can make contributions to firms and the national income.

3. TRADE LIBERALISATION

   • This should generate more trade between economies as there would be less restrictions, freeing trade up.
   • As economies are slowing coming together, we should start to see less and less trade barriers.
     • This should make it easier for firms to access foreign markets e.g. for outsourcing or selling direct, etc.

4. DECREASED COSTS OF TRANSPORTATION

   • This has made it cheaper for firms to transport their goods.
   • This has made it easier for firms to operate worldwide.
   • Through the internet firms have been allowed to be present in a global market.

5. STRUCTURAL CHANGE

   • Western economies are moving away from primary and secondary sectors to focus on tertiary sectors.
     • Services are more likely to be sold abroad.
   • China's structural market changes to move towards manufacturing.

6. POLITICAL CHANGES

   • Radical changes in political regimes have helped to increase globalisation.
     • E.G. in China the strong communist grip on nation was loosened, trade gradually opened up and China became a member of the WTO.

7. GROWTH OF THE LABOUR FORCE

   • Drives global demand, as people in employment earn money which can be spent on goods and services.
   • Rises in the supply of labour forces the wage rates down.

8. INCREASED COMMUNICATION

   • Through using tech like Skype, people are able to communicate globally a lot easier.

9. FOREIGN DIRECT INVESTMENT

   • Through setting up operations in other countries or investing in foreign firms, they are essentially developing a link between two different economies making transportation easier, etc.