Globalisation
"The way in which people's lives are becoming increasingly intertwined with those of distant people and places around the world, in economic, cultural and political terms" - Phillippe Legrain
Globalisation has been described as the world getting smaller as markets and people become more accessible to one another. As communication technologies advance, cultures can overlap and have influences on each other. An increase in international trade, allowed by better transportation has opened up economic interdependence between many states.
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Forms of Globalisation
Economic - World trade has expanded rapidly under the regulation of the World Trade Organization (WTO) and previously the General Agreement on Tariffs and Trade (GATT) 1948-1994. WTO promote free trade, therefore, removing barriers between countries. A rapid growth of Transnational Corporations (TNCs) since the 1970s has been a major factor (go to the TNC section for more details). The increased international trades and the TNCs have allowed the speed up of economic globalisation in the later 50-60 years.
Cultural - Western culture has spread to all parts of the world through cinema, television, internet, newspapers and magazines. Western media, food, sports, arts and leisure can be seen all over the world. People around the world have access to different cultures due to improved communication and technologies.
Political - The influence of nation states has diminished in many areas as more and more countries organise themselves into trade blocs. The influence of Western democracies on developing countries has also been strong (many of them ex-colonies).
Production, Distribution and Consumption
Globalisation has resulted in dividing international labour into two main groups:
- The highly skilled, highly paid decision-making, research and managerial occupations. These positions tend to be located at headquarters of large companies (TNCs) and are concentrated in developed countries on a global scale.
- The unskilled, poorly paid assembly occupations. These positions are located in developing countries, NICs and RICs that have low labour costs.
Manufacturing - was concentrated in the industrialised economies before the 1960s. However, due to decentralisation as a result of TNC influences, developing countries were able to take on manufacturing tasks at a competitive price. This is known as the global shift.
This is also as a result of the transfer of technology thus increasing the productivity in developing countries without raising their wages. Over 50% of all manufacturing jobs were located in the developing world by the beginning of the twenty-first century. |
Services - Services have increasingly become detached from the production of goods. High-level services have increasingly concentrated in cities such as London, New York and Tokyo which are major centres of global industrial and financial control. Low-level services have been moved from developed countries to the developing countries as a result of globalisation. Many call-centre operations have been moved from the UK to India where employment costs are 10-20% less. The global shift has resulted in deindustrialisation in many developed countries.
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Click next to find out more about Transnational Corporations and how they are the major player in the global economy.