Globalisation – The growing interconnection of the world's

economies.
Interdependence - where the actions of one country or large firm
will have a direct effect on others.

The key features of globalisation:

■ Goods and services are traded freely across international
borders. There are no government laws that prevent firms from
selling goods in overseas markets.
■ People are free to live and work in any country they choose. This
has resulted in more and increasingly multicultural societies in
which people from many different nations live and work in the same
city,
■ There is a high level of interdependence between nations. This
means that events in one economy are likely to affect other
economies.
■ Capital can flow between different countries.
■ There is a free exchange of technology and intellectual property
across borders.

The reasons for globalisation:

◼ Fewer tariffs and quotas: set up production facilities inside the
countries that use trade restrictions.
◼ Reduced cost of transport: people can travel to business
meetings more easily and goods can be transported more
cheaply.
◼ Reduced cost of communication: developments in technology
allows firms to transfer complex data instantly, allows
consumers to gather information and buy goods online from
firms located in different parts of the world.
 ◼ The increased significance of multi-national corporations:
Many firms want to sell abroad, more output, costs can be
minimised.

The impacts of globalisation:

◼ Individual countries - higher levels of GDP due to the extra
output and employment, increase economic growth, raise
living standards.
◼ Governments - increases tax revenue, improve government
services or lower taxes.
◼ Producers –
Access to huge markets: increase sales, higher sales
revenue, increased profits for businesses.
Lower costs: selling more output, exploit economies of scale.
Access to labour: free movement of labour.
Reduced taxation: locating their head office.
◼ Consumers - goods more cheaply, wider range of goods and
services.
◼ Workers - creates new jobs, greater freedom of movement.
May result in offshoring which means that some
companies shift production to other countries.
- The Environment - global economic growth, usually means
more environmental damage.