4.3.1.3 FACTORS CONTRIBUTING TO INCREASED GLOBALISATION

What is Globalisation?

Process of greater integration and inter-connectedness between countries

What is implied w globalisation?

• Free movement of goods and services

• Free movement of labour

• Free movement of capital

• Inc cultural exchange

What factors contribute to increased globalisation?

• Trade liberalisation (reduction of int. trade barriers)

• Political change

• Reduced cost of transportation & communication

• Increased significance of global MNCs

• Increased FDI

• Migration

• Growth of the global labour force

• Structural changes

How does trade liberalisation contribute to globalisation?

Trade liberalisation reduces barriers to trade, enhancing the flow of goods and services across borders and fostering economic interdependence among countries.

How does Political Change contribute to globalisation?

Political change can lead to the adoption of policies that encourage open markets, reduce trade barriers, and promote international cooperation, thus facilitating global integration.

How does reduced cost of Transport & Comm. contribute to globalisation?

• Movement of goods cheaper, standard shipping sizes, stacked up shipping containers

• Shipping & airlines improved in quality.

• Improved road, internet

• Can communicate globally e.g. skype

How have MNCs contributed to globalisation?

• rapid growth has led them to enter untapped markets due to labour mobility, cheaper transport, lower bureaucracy and cheap labour

How has increased FDI contributed to globalisation?

• relaxation of rules & regulation around movement of capital

• increased of FDI

• greater freedom means business can lower costs and improve economic prospects in invested countries

How has migration contributed to globalisation?

• Workers more likely to move in search of employment. Greater flexibility.

• Best talent can move across borders, creating ‘brain drain’s in the economies they leave

How has growth of the global labour force contributed to globalisation?

The growth of the global labour force allows for a larger pool of workers, enhancing competition and attracting businesses to seek talent, which fosters economic integration across borders.

How has structural change contributed to globalisation?

Structural change, such as shifts in market dynamics, economic policies, and technological advancements, facilitates globalisation by enabling more efficient production processes, reducing costs, and improving access to global markets.

Ansoff’s Matrix quadrants

Existing Market Existing Product: Market penetration

Existing Market New Product: Product development

New Market Existing Product: Market development

New Market New Product: Diversification