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4.1.3 Factors contributing to increased globalisation - Coggle Diagram
4.1.3 Factors contributing to increased globalisation
Key terms
Globalisation
the process in which the world is becoming more interconnected as a result of increased trade and cultural exchange
Trade Liberalisation
Includes the removal of barriers to trade
Transnational corporation
A business that is registered and operates in more than one country at a time, selling the same product
Migration
The movement of people from one place to another
Reduced costs of transport and communication
large cargo ships (containerisation) - decrease in transporting goods from one country to another
oil is cheaper = global shipping cheaper
economies of scale when operating on a larger scale
transport improvements = goods + people can travel more quickly
people can order products online/on the phone to be delivered to a different country - made globalisation easier
Increased significance of transnational corporations
taken advantage of lower trade barriers. labour mobility and transportation to grow and enter previously untapped markets
Reduction of international trade barriers/trade liberalisation
advantages
increased economies of scale and competition - can drive costs down and improve quality
disadvantages
potential loss of local business due to increased competition
infant/local industries could be lost to foreign competitors
Dumping - when a company has excess stock so they sell it below cost in global markets to break into the market - causes other producers to be unprofitable
Increased investment flows (FDI)
this is movement of money for the purposes of trade or production
globalisation has eased trading across countries - allows businesses to easily access funds to invest in new emerging markets
may lower costs of productions (especially for MNCs who increase investment flows by building factories/other facilities in countries)
may improve economic prospects and job opportunities
cross country mergers, takeovers and partnerships can increase this
when a foreign company starts operating in another country
Migration within and between economies
transport between countries has become cheaper, quicker, less regulated - globalisation has encouraged people to move around to find the best job they are suited for
relatively high level of migration into the UK became an important factor in the electorate's decision to vote for BREXIT in June 2016
Growth of the global labour force
growth in terms of quantity and quality = diverse international workforces globally
offshoring - Offshoring involves the relocation of business activities from the home country to a different international location
takes advantage of lower labour costs especially in emerging markets to lower unit costs
Structural change
an economic condition that occurs when an industry changes the way it operates
as a country developes it moves away from the primary sector to secondary manufacturing sector to become more industrialised
economy grows as there is more productivity - manufacturing increases