drivers of globalisation
technology
shaped and set the foundation for modern globalisation
the developments in the transportation and communication technologies have accelerated the pace of globalisation over the past 40 years
internet - available readily 24/7
use of containerisation has enabled vast quantities of goods and commodities to be shipped across the world at extremely low costs
rise of social media means that national boudaries have become irrelevant as producers use new forms of communication and marketing to target international consumers
online shopping - easy access to virtual global markets
rise of new electronic payment systems including e-invoices and mobile pay apps also facilitate increase global trade
market drivers
as local markets become more and more saturated and opportunities for growth are limited —> global expansion is a way most companies choose to overcome the situation.
common customer needs are also incentives for firms to choose internationalization
germany, france, Great Britain derive more than 55% of their gross domestic product (GDP) from world trade
cost drivers
labour cost vary from country to country and are the greatest source of potential savings accounting for approximately 60 & of the total cost advantage
political drivers
economic processes are not operating in a political or institutional vaccum
at the end of the day, whether economically motivated cross border activities actually take place or not depends on the policy frameworks in place
for eg. the decision of a country to reduce import tariffs is essential for the size and structure of international trade in goods and services. —> lower barriers in trade increase the incentive to trade with other countries
the same applies to the decision to reduce capital controls which are used by national governments in order to regulate the inflow and outflow of capital