Factors contributing to globalisation:

Globalisation – The process where national economies become increasingly integrated and
interdependent.

Trade liberalisation:
Trade liberalisation – The removal or reduction of restrictions on the free exchange of
goods between nations.
Example: The EU is trading bloc where tariffs have been removed.

Investment flows:
Foreign direct investment (FDI) - When a business makes an investment in a foreign country

 Increases employment
 Spreads business activity (access to global markets and reduction of reliance on one
revenue stream)

Migration:
 Supply of low cost labour -> Cost competitiveness
 Highly skilled labour -> Improved productivity and quality of operations
 However can be overcrowding and lead to domestic unemployment

Growth of trading bloc’s emerging markets:

Trading blocs – An intergovernmental agreement where barriers to trade are reduced or
eliminated among the member states.
Example: EU, ASEAN, NAFTA

Political change:
 Changes on the movement of goods and services.
 Level of protectionist measures used.
 Tensions with other countries may also affect trade.

Emerging market’s middle class:

 Middle class will have rising disposable incomes as a result of a fast-growing
economy.
 Consumers will then have a higher demand for imports from abroad.

Technology advances:
 Improved internet connection allows greater communication at a lower cost than
before.

Containerisation:
Containerisation – A method of intemodal freight transport

 The costs of ocean shipping have come down, due to containerization, bulk shipping,
and other efficiencies.

Structural change:
 Increased contribution to national income from tertiary sector due to higher returns
 Increases employment of high skilled labour and demand for services internationally
-> Strengthen global brands
 However, may cause decline in profits of manufacturing (secondary) and extraction
(primary) industries

MNC Growth:
Multinational corporations – Businesses that are set up in multiple countries around the
world.

 Expansion into other countries by businesses to transform into global brands.

 Can invest in a country’s infrastructure to reduce costs of transportation
 However, it does reduce cultural diversity.