causes of globalisation
Answers
Answer:
Globalisation is not a new phenomenon. The world economy has become increasingly interdependent for a long time. However, in recent decades the process of globalisation has accelerated; this is due to a variety of factors, but important ones include improved trade, increased labour and capital mobility and improved technology.
Improved transport, making global travel easier. For example, there has been a rapid growth in air travel, enabling greater movement of people and goods across the globe.
Containerisation. From 1970, there was a rapid adoption of the steel transport container. This reduced the costs of inter-modal transport, making trade cheaper and more efficient.
Improved technology which makes it easier to communicate and share information around the world. E.g. internet. For example, to work on improvements on this website, I will go to a global online community, like elance.com. There, people from any country can bid for the right to provide a service. It means that I can often find people to do a job relatively cheaply because labour costs are relatively lower in the Indian sub-continent.
Growth of multinational companies with a global presence in many different economies.
Growth of global trading blocks which have reduced national barriers. (e.g. European Union, NAFTA, ASEAN)
Reduced tariff barriers which encourage global trade. Often this has occurred through the support of the WTO.
Firms exploiting gains from economies of scale to gain increased specialisation. This is an essential feature of new trade theory.
Growth of global media.
Global trade cycle. Economic growth is global in nature. This means countries are increasingly interconnected. (e.g. recession in one country affects global trade and invariably causes an economic downturn in major trading partners.)
Financial system increasingly global in nature. When US banks suffered losses due to the sub-prime mortgage crisis, it affected all major banks in other countries who had bought financial derivatives from US banks and mortgage companies.
Improved mobility of capital. In the past few decades, there has been a general reduction in capital barriers, making it easier for capital to flow between different economies. This has increased the ability for firms to receive finance. It has also increased the global interconnectedness of global financial markets.
Increased mobility of labour. People are more willing to move between different countries in search for work. Global trade remittances now play a large role in transfers from developed countries to developing countries.
Internet. This enables firms to communicate on a global level, this may overcome managerial diseconomies of scale. The firm may be able to get cheaper supplies by dealing with a wider choice of firms. Consumers are also able to order more goods online E.G. Dell Computers takes orders online and can meet customer specification.
India is one of the countries that succeeded significantly after the initiation and implementation of Globalisation. The growth of foreign investment in the field of corporate, retail, and the scientific sector is enormous in the country. It also had a tremendous impact on the social, monetary, cultural, and political area. In recent year, Globalisation has increased due to improvements in transportation and information technology. With the improved global synergies comes the growth of global trade, doctrines and culture.
I hope you u understand