Globalisation

the definition of: Globalisation

Increased integration of different economies around the world.

What is the first characteristic of globalisation?

the increased international movement of labour

What is the second characteristic of globalisation?

increased international movement of financial capital.

What is financial capital?

money

In 2008, Tata, an Indian cotton company, purchased Jaguar, a British car company. Tata’s purchase of Jaguar is an example of:

Conglomerate integration

What is Conglomerate integration?

where two firms merge, when they are in a different industry and are completely unrelated.

What is one of the main ways that financial capital moves across countries?

FDI

What is the third characteristic of globalisation?

increased specialisation

What is the fourth characteristic of international trade?

increased international trade

What is the fifth characteristic of international trade?

increase in the trade to GDP ratio.

What would cause an increase in the trade-to-GDP ratio?

A decrease in the economy’s reliance on international trade

GDP is on the bottom of the trade-to-GDP formula. If GDP decreases, you would be dividing by a smaller number, which would give a larger answer. So, a decrease in GDP will actually increase the trade-to-GDP ratio. If trade stays the same and GDP increases then trade is taking up a smaller percentage of GDP.

How do you calculate the total value of international trade?

[Total Value of Trade/GDP] x 100

What is Transnational Corporation

A transnational corporation is a company that operates in two or more countries.