Increased Globalization - Reasons PDF

Political change How political change has led to increased globalisation of markets Politics used to be only carried out by individual governments who wanted to protect the interests of their country Politics now happens on a global scale with regular meetings between heads of state, at...

Political change How political change has led to increased globalisation of markets Politics used to be only carried out by individual governments who wanted to protect the interests of their country Politics now happens on a global scale with regular meetings between heads of state, at summits (meetings), where power is devolved to governments in trading blocs such as the EU and organisations such as the World Trade Organisation (WTO) This has led to less protectionist policies and more open trade between nations. What might these protectionist policies be? Research: The WTO The World Trade Organisation (WTO) is the only global international organisation dealing with the rules of trade between nations. At its heart is the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. Find out the impact on businesses of the work of the WTO HERE Who are the G7 countries? The Group of 7 (G7) is a group consisting of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. These countries are the seven major advanced economies as reported by the International Monetary Fund: the G7 countries represent more than 64% of the net global wealth ($263 trillion). A very high net national wealth and a very high Human Development Index (HDI) are the main requirements to be a member of this group. What is a ‘summit’? Reduced cost of transport and communication Globalisation caused by – reduced cost of transport Developments in transport, for example jet aircraft and container ships, have reduced the cost of transport per unit, so products are affordable for customers in foreign nations making trade between nations more realistic The physical distance between countries is unchanged, but cheaper transport and communications increase connectivity and reduce the time taken for goods to arrive, so shrink the world in trade terms Globalisation caused by – the reduced cost of communication Communication and trade via the Internet has meant an explosion in globalisation and has been a huge catalyst for change Messages can be sent instantly and for free via telecommunications systems such as e-mail or Skype Far away countries are no longer isolated from the global How do Satellites help to reduce the marketplace cost of communication? Increased significance of global companies Globalisation caused by – increased significance of MNCs Globalisation has been caused by some large companies setting up or buying existing businesses in other countries These businesses that operate in other countries are called MNCs and are from the developed countries (G7) E.g. Starbucks, Coca-Cola Starbucks in Egypt  Revenue of the big 4* Task - match the revenue to the company Revenue $365 billion Revenue $37.4 billion Revenue $37.27 billion Revenue $21 billion GDP of poorer nations How do these GDP figures compare with the revenue figures of the MNCs? Increased investment flows Definition: FDI flows FDI stands for Foreign Direct Investment. A FDI flow is the movement of investment across borders. The FDI may be in the form of buying a foreign company, buying shares in a foreign company or investing in a foreign company. Globalisation caused by - FDI Businesses located outside of important market trading blocs will invest in a business or set up production inside the trading bloc to get around tariffs, e.g. Honda, Nissan and Toyota manufacturing in the UK This has led to globalisation, more companies in more countries FDI can give a country more consumer income, jobs, GDP growth, skills transfer, and the local businesses will also benefit from having customers with money to spend