Summary
Globalisation is the growing integration of local, regional, and national economies into a unified international market. It involves economic interdependence and the intertwining of economies on a global scale.
- Globalisation — the integration of economies into a unified international market.
Example: Increased trade and financial flows between countries. - Economic Interdependence — rising economic connections between countries.
Example: Countries relying on each other for resources and markets. - Foreign Direct Investment (FDI) — investment by a company in another country to establish a presence.
Example: A U.S. company setting up a factory in China. - Transnational Companies (TNCs) — large companies operating in multiple countries.
Example: A car manufacturer with factories in several countries. - Trade Liberalization — reduction of trade barriers to encourage global trade.
Example: Lower tariffs and quotas between countries. - Migration — movement of people across borders for better opportunities.
Example: Workers moving from Eastern Europe to Western Europe for jobs.
Exam Tips
Key Definitions to Remember
- Globalisation
- Economic Interdependence
- Foreign Direct Investment (FDI)
- Transnational Companies (TNCs)
Common Confusions
- Confusing FDI with simple trade transactions
- Assuming all migration is due to economic reasons
Typical Exam Questions
- What factors have contributed to increased globalisation over the last 50 years? Trade liberalization, advancements in communication, reduced transport costs.
- What might be the negative impacts of FDI on a recipient country? Low-level jobs, competition with local firms, environmental impact.
- State three reasons for FDI by a transnational company. Profit opportunities, tax advantages, avoidance of tariff barriers.
What Examiners Usually Test
- Understanding of the causes and effects of globalisation
- Ability to explain the role of TNCs and FDI in globalisation
- Knowledge of the economic impacts of increased migration