Definition

We now communicate and share each other's cultures through travel and trade,
transporting products around the world in hours or days. We are in a huge global
economy where something that happens in one area can have knock on effects
worldwide. This process is called globalisation.
Globalisation is the process by which the world is
becoming increasingly interconnected as a result
of massively increased trade and cultural
exchange.
Globalisation has increased the production of
goods and services. The biggest companies are
no longer national firms but multinational
corporations.
Globalisation has been taking place for hundreds
of years but has speeded up enormously over the last half-century because of
numerous reasons such as the advancement of technology, the internet and all
means of transport.

Globalisation has resulted in;

o increased international trade (the selling and buying between different
countries)
o companies operating in more than one country (Multinational
Corporations/Transnational Companies)
o greater dependence on the global economy
o freer movement of capital (cash or anything that has monetary value), goods,
and services
o recognition of companies such as McDonalds and Starbucks in LEDCs (Least
Economically Developed Countries)

Although globalisation is probably helping to create more wealth in developing

countries, it is not helping to close the gap between the world's poorest countries
and the world's richest.

Ms. D. Cuschieri 1
Reasons for globalisation
There are several key factors, which have influenced the process of globalisation:
o Improvements in transportation - larger cargo ships mean that the cost of
transporting goods between countries has decreased. Transport improvements
also mean that goods and people can travel more quickly.
o Freedom of trade - organisations like the World Trade Organisation (WTO)
promote free trade between countries, which help to remove barriers between
countries.
o Improvements in communications - the internet and mobile technology has
allowed greater communication between
people in different countries.
o Labour (work) availability and skills -
countries such as India have lower labour
costs (about a third of that of the UK) and
high skill levels. Labour intensive industries
such as clothing can take advantage of
cheaper labour costs and reduced legal
restrictions in LEDCs.

Independence and interdependence

Globalisation is undistinguishably linked with interdependence since the available
resources are unequally distributed across the world and for that matter, no country
can claim to be fully self-sufficient. The need for countries to rely on each other for
these resources creates a global interdependence.

The first point to be discussed relates to ‘economic interdependence’. Free market

economy is a common feature in the world today. Hence in most developing
countries where technology is low, they tend to rely on developed countries for
durable and sophisticated goods such as cars, cell phones, refrigerators, computers
and other important gadgets.

Ms. D. Cuschieri 2
Secondly, environmental concerns in the current international system have led to
an increase in world interdependence to address such problems. Environmental
problems such as climate change, global warming, and the spread communicable
disease brings the world together to address such concerns irrespective of the origin
of the disease or problem.

Thirdly, ‘political interdependence’ in the international community is created

through political change and the growth of global civil society. In fact, the coming
together of countries under the umbrella of intergovernmental organizations makes
it possible for countries to seek help from others. For instance, the World Bank, the
United Nations, the African Union and the European Union, plays critical role in
assisting member countries in profound ways, being it domestic or international
issues.

Aspects of globalisation

 Economic
o Increase in international trade at a faster rate.
o Increase in international flow of capital.
o Creation of international agreements leading to organizations like the WTO.
o Development of global financial systems.
o Increase of economic practices like outsourcing, by multinational
corporations.
o An increase in different products that can
be bought from anywhere in the world.
o An increase in systems such as internet
banking that make transactions between
people and countries easy ex. Revolut.
o Fair trade that ensures that trade is done
fairly and that benefits anyone who is
involved in it.

 Social
o Greater international travel and tourism.
o Greater immigration, including illegal immigration.
o Increase in the number of standards applied globally; e.g. copyright laws.
o Formation or development of a set of universal values.
o Increased awareness on a lot of subject such as diversity, poverty, peace etc.
o An increased use of social media that connected people from all around the
world.

Ms. D. Cuschieri 3
 o Various opportunities such as Erasmus+ in education.
o International deals between countries to improve situations such as the
environment, peace and human rights.

 Cultural
o Greater international cultural exchange.
o Spreading of multiculturalism, and better individual access to cultural diversity.
o Spread of local foods such as pizza and Indian food to other countries.
o Change in norms for a society (can be a positive thing or a negative thing;
change is regarded as good most of the time).

 Technological
o Technology changed the economic relationship between countries because
it made knowledge an increasingly important component in the production
of goods and services.
o Technology has also enabled the world to become more interconnected,
beyond the economic sphere, with greater access to information and
communication which is having a profound impact on societies.
o An increase in innovations such as different apps that make life interesting
and easier.
o Beneficial systems such as the GPS that made people’s life, travelling and
delivering easier.

Ms. D. Cuschieri 4
Transnational corporations
Globalisation has resulted in many businesses setting up or buying operations in
other countries. When a foreign company invests in a country, perhaps by building
a factory or a shop, this is called inward investment. Companies that operate in
several countries are called multinational corporations (MNCs) or transnational
corporations (TNCs). The US fast-food chain McDonald's is a large MNC - it has
nearly 30,000 restaurants in 119 countries.

The majority of TNCs come from MEDCs (More Economically Developed Countries)
such as the US and UK. Many multinational corporations invest in other MEDCs. The
US car company Ford, for example, makes large numbers of cars in the UK.
However, TNCs also invest in LEDCs - for example, the British DIY store B&Q now has
stores in China.

Factors attracting TNCs to a country may include:

o cheap raw materials

o cheap labour supply
o good transport
o access to markets where the goods are sold
o friendly government policies

Ms. D. Cuschieri 5
Positive effects of globalisation
Globalisation is having a dramatic effect on world economies and on people's lives.

Some of the positive impacts include;

o The flexibility of TNCs; inward investment by TNCs helps countries by providing

new jobs and skills for local people.
o The flexibility of TNCs; TNCs bring wealth to local economies when they buy
local resources, products and services. The extra money created by this
investment can be spent on education, health and infrastructure.
o Cultural enrichment; the sharing of ideas, experiences and lifestyles of people
and cultures. People can experience foods and other products not previously
available in their countries.
o International solidarity; globalisation increases awareness of events in far-away
parts of the world. For example, countries around the world were quickly made
aware of the 2004 tsunami tidal wave and sent help rapidly in response.
o International solidarity; globalisation may help to make people more aware of
global issues such as deforestation and global warming - and alert them to the
need for sustainable development.
o Free trade; free trade increases prosperity for all participating nations, by
allowing consumers to buy more, better-quality products at lower costs. It
drives economic growth, enhanced efficiency and increased innovation.
o Fair trading; Fair Trade is a trading partnership, based on dialogue,
transparency and respect, that seeks greater equity in international trade. It
contributes to sustainable development by offering better trading conditions to
and securing the rights of producers and workers.
o Global mass media; mass media is seen today as playing a key role in
enhancing globalisation, facilitating culture exchange and multiple flows of
information and images between countries through international news
broadcasts, television programming, new technologies, film and music.

Negative effects of globalisation

Critics of globalisation include groups such as
environmentalists, anti-poverty campaigners
and trade unionists.

Some of the negative impacts include:

Ms. D. Cuschieri 6
 o Cheap labour and sweatshops; globalisation operates mostly in the interests of
the richest countries, which continue to dominate world trade at the expense
of developing countries. The role of LEDCs in the world market is mostly to
provide the North and West with cheap labour and raw materials.
o Cheap labour and sweatshops; absence of international laws mean that TNCs
may operate in LEDCs in a way that would not be allowed in an MEDC. They
may pollute the environment, run risks with safety or impose poor working
conditions and low wages on local workers.
o Child labour; refers to the exploitation of children through any form of work that
deprives children of their childhood, interferes with their ability to attend regular
school, and is mentally, physically, socially and morally harmful. Some argue
that increased trade can lead to an increased child labour as it reduces a lot
of costs.
o Monopolies of TNCs; there are no guarantees that the wealth from inward
investment will benefit the local community. Often, profits are sent back to the
MEDC where the TNC is based. Transnational companies, with their massive
economies of scale, may drive local companies out of business. In addition, if it
becomes cheaper to operate in another country, TNCs might decide to close
down the factory to move to another country and make local people
unemployed.
o Threats to national identity and sovereignty; globalisation is viewed by many as
a threat to the world's cultural diversity. Some fear it might drown out local
economies, traditions and languages.
o Uneven distribution of wealth; globalisation can increase wage inequality in a
rich country by increasing the imports of manufactured goods using low-skilled
labour from developing countries. On the other hand, it opens more
opportunities for exports in high-tech firms that use more high-skilled labor.
These two forces can widen the wage gap between high-skilled workers found
in the MEDCs and low-skilled workers found in LEDCs.
o International debts; excessive levels of foreign debt can restrain countries'
ability to invest in their economic future; whether it be via infrastructure,
education, or health care, as their limited profits go to servicing their loans. The
most crucial disadvantage of external debt is that it often leads to a vicious
cycle of debt for countries. The debt cycle refers to the cycle of continuous
borrowing and accumulating payment burden.
o Brain drain; this is a problem described as the process in which a country loses
its most educated and talented workers to other countries through migration.
Negative effects include loss of tax revenues by the home country, and a loss
of key health and education service professionals.

Ms. D. Cuschieri 7
 o Environmental degradation; activists have pointed out that globalisation has
led to an increase in the consumption of products, which has impacted the
ecological cycle. Increased consumption leads to an increase in the
production of goods, which in turn puts stress on the environment. Also, the
increased economic activity leads to greater emissions of industrial pollutants
and more environmental degradation. The pressure on international firms to
remain competitive forces them to adopt cost-saving production techniques
that can be environmentally harmful.
o Unfair trading; Developing countries are sometimes locked into unfair trading
agreements with larger companies or large multinationals. They can't afford to
withdraw as multinationals can easily take their business elsewhere.

World organisations that promote peace

 United Nations
The United Nations is
an intergovernmental
organization aiming to
maintain international
peace and security,
develop friendly
relations among
nations, achieve international cooperation, and be a centre for harmonizing the
actions of nations. It is the world's largest and most familiar international
organization.

 Commonwealth
The Commonwealth is an association of countries across the world. Although
historically connected to the British Empire, any country can apply to be a
member of the Commonwealth, regardless of its intersection with Britain's
colonial past. The Commonwealth consists of 54
countries, including the United Kingdom. The
Commonwealth supports member countries to
achieve development, democracy and peace. It
is a voice for small and vulnerable states and a
champion for young people.

Ms. D. Cuschieri 8