Economic Globalisation

Global Trade Expansion

World merchandise trade: ~$25 trillion in 2022; 60% of global GDP.

- Shows globalisation is driving economic expansion worldwide.

- High trade volume means countries can sell more goods abroad, increasing national income and GDP.

China: Export-led growth post-2001 WTO accession; manufacturing became central to its economy

- Demonstrates how globalisation can transform a country's economy, creating rapid economic expansion.

Limiations of global trade expansion

South Korea imposes an average tariff of 79% on agricultural imports vs ~4% on non‑agricultural goods.

- Shows restriction - High tariffs on agriculture limit foreign competition, meaning global trade doesn't expand freely in this sector.

- Illustrates protectionism - Even in a globalised world, countries can protect key industries, which slows full global economic integration.

Transnational Corporations (TNCs) & Global Supply Chains

Google has offices in more than 60 countries

- Shows TNCs operate across borders, limiting a single state's ability to regulate them → supports argument that globalisation reduces state sovereignty.

The biggest 500 TNCs account for nearly 70% of world trade

- Shows TNCs dominate the global economy, meaning states often depend on them and may have to shape policies to suit corporate interests.

Limiations of Transnational Corporations (TNCs) & Global Supply Chains

In September 2024, the European Court of Justice ruled that Apple must pay €13 billion in back taxes to Ireland.

- Even powerful TNCs can be regulated by states or supranational bodies → shows states retain sovereignty.

Apple's supply chain in China (Foxconn) has faced reports of excessive overtime, poor working conditions, and worker suicides

- Illustrates how even powerful, well-known corporations can exploit workers to maintain global production and profits.

Foreign Direct Investment (FDI)

In 2023, Vietnam's registered FDI reached US $36.61 billion, with about US $23.18 billion disbursed to projects

- Foreign investment can help states create jobs, boost exports, and integrate into global supply chains, supporting economic development.

In 2024, ASEAN countries attracted record FDI inflows of around US $225 billion, making Southeast Asia a major destination for global investment.

- Globalisation via FDI can drive regional economic expansion, especially where governments promote open investment policies.

Limiations of Foreign Direct Investment (FDI)

In 2023, FDI to developing economies fell by about 7 % to US $867 billion, and some regions saw declining inflows, while others (like Africa) had divergent trends.

- Globalisation doesn't benefit all states equally — many poorer countries receive far less capital, limiting their economic growth and increasing inequality.

In 2024, FDI into developed economies fell by around 22 %, while flows to some developing regions remained more stable.

- States cannot rely on FDI for stable long‑term growth — global investment decisions are not controlled by governments and can shift quickly.

Global Financial Integration

Major financial hubs: London, New York, Hong Kong; $2-3 trillion traded daily; 90% of FX trading in few hubs (2023-2024)

- Suggests that centralised hubs allow fast capital flows, liquidity, and investment opportunities, which can support global economic growth and inter-state cooperation.

COVID-19 market crash (March 2020) coordinated policy response: Governments and central banks implemented stimulus and rate cuts to stabilise markets.

- Suggests that financial integration enables rapid policy coordination, potentially reducing the severity of economic crises.

Limitaions of Global Financial Integration

2008 Global Financial Crisis: US bank losses >$500 billion, European banks lost €940 billion, global stock markets fell ~40%

- Suggests that financial integration creates contagion risk, limiting states' ability to protect domestic economies from global crises.

COVID-19 market crash (March 2020): Dow fell 35%, FTSE & Nikkei fell 30-40%, major currencies volatile

- Suggests that states are exposed to rapid global volatility, constraining independent economic policy-making.