Factors Driving Globalization (rate of globalisation)

Factors Driving Globalization

1. Growth of economic co-operation

2. Technological Factors

   1. Advancement in transport

   2. Advancement in ICT

3. Political & policy changes

Growth of economic partnerships/co-operation

Growing economic integration in both across & within continents.

• Eased trade & movement of resources & technology between countries

• Aided by WTO: Encourage the removal of tariffs & other trade barriers to promote an open market.

Example of economic partnership/co-operations

ASEAN — Association of Southeast Asian Nations

EU — European Union

Tech factors: Advancement in transport

Increased efficiency & flow of transporting goods, raw material & people at lower costs.

• Firms better able to reorganize their supply chains.

  • Allows the breaking up their operations via offshoring & outsourcing to various countries → optimize costs & resources.

Example of advancements in transport

Maritime & commercial air travel

Tech factors: Advancement in ICT

• Trade flows: Instant, low cost global information transmission → expansion of dd and ss chain + boost international trade flows

• Capital flows: Seamless movement of financial capital →quick transactionsacross borders + minimal cost

• Capital flows: Increased digitalization → real time operations → enabling offshoring & outsourcing → greater connectivity & operational efficiency

  • Reap EOS + reduced AC → greater profits

Policy & political changes

• Trade: Opening of economies → more opportunities to export.

• Capital: Cheaper production → inflow of capital & investment

• Labour: Relaxation of migration → greater inflow of people