Globalisation- Refers to the increased economic integration between countries

Globalisation- Refers to the increased economic integration between countries

1. FDI

   • (Foreign Direct Investment) has meant that many manufacturing plants have moved from developed countries to low-wage developing countries.

2. Increased capital flows between countries capital flows

   • relates to money flowing in and out of the stock and bond markets of countries around the world, as well as factors such as real estate and cross-boarder mergers and acquisitions and mergers of companies have grown in different countries.

3. Increased movement of labour between countries

   • Free movement of labout, for example between memebers of a common market,.

4. Increased trade as a proportion of GDP

   • Since 1960, trade as a percentage of GDP has risen from less than 25% to over 57%, demonstrating clearly the increased economic integration of the world economy

5. Causes

   • Decrease the cost of transport
     • Containerisation has meant that vast quantities can be transported by sea and road at very low average cost as a result of the benefits of economies of scale.
   • Decrease in cost of communications
     • Boston Consulting Group (BCG) estimated in 2010 that the internet economy is worth £121 billion to the UK economy.
     • Predicts it will continue to expand at a rate of 11% per annum - researching £221 billion by 2016 due to broadband speed and 4G
   • Reduction in world trade barriers
     • GATT and WTO have created significant reductions in trade barriers, the most recent member to WTO being russia in 2012.
   • Growth of trading blocs
     • Trading blocs are groups of countries that agree to reduce or eliminate trade barriers between themselves.
     • Help to promote globalisation because there is free trade between member countries.
     • NAFTA, MERCOSUR, ASEAN, EY, SADC, ECOWAS
   • Increased importance of transnational companies
     • TNC's have undertaken much FDI, which frequently involves moving manufacturing to a country where production coasts are lower - offshoring