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What is Globalisation?

Level:
AS, A Level, IB
Board:
AQA, Edexcel, OCR, IB, Eduqas, WJEC

Last updated 30 Jan 2019

This year video considers the nature of globalisation as a process of deeper integration and interdependence between countries.

Globalisation is a process by which economies and cultures have been drawn deeper together and have become more inter-connected through global networks of trade, capital flows, and spread of technology and global media.

What is the key benefit of globalisation?
Globalisation allows businesses and countries to specialise in producing goods and services where they have a comparative advantage. Specialisation and trade enables a gain in economic welfare, for example through lower prices for consumers which then increases their real incomes.

Globalisation - some key terms

Foreign direct investment (FDI): An investment made by a firm or individual in one country into business interests located in another country

Globalisation: Globalisation is a process of deeper economic integration between countries and regions of the world.

Transnational company: Transnational businesses (TNCs) base their manufacturing, assembly, research and retail operations in a number of countries.

Open economy: An economy with low tariff and non-tariff barriers which is deeply integrated into the regional and global economy and where the value of trade measured as a share of GDP is rising

Closed economy: An economy operating without imports and exports – i.e. closed to global trade and also with barriers to inflows and outflows of foreign investment

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