Globalisation

Causes of globalisation

So, globalisation is the increased interconnectivity around the world. But what exactly caused this globalisation phenomenon? What, or who has contributed to this interconnected world?

Is the world getting smaller?

Transport and trade boomed during the 19^th century. The development of railways and larger ships meant that products and people could move more quickly and more cheaply around the world. The development of aeroplanes and containerisation shipping (the transport of goods in mass in large shipping containers) in the 20^th century, progressed this further. Fast-forward to the 21^st century, a period characterised by increased technological interconnectivity; communication has become significantly easier with the increase in ICT, the internet, mobile technologies, and social media.

Increasing transport and communications have contributed to the theory of time-space compression. Coined by David Harvey, a Marxist geographer, time-space compression is the way that places are becoming theoretically closer together, and distance is getting smaller. This can be directly related to the theory of a shrinking world. Obviously, the world isn't actually getting smaller; that's impossible (unless we get hit by an asteroid!) However, the idea of the world shrinking refers to the way that globalisation makes the world feel smaller, due to increased connectivity, contacts, and flows.

Transnational Corporations (TNCs)

The growth of Transnational Corporations has contributed massively to economic globalisation. Transnational Corporations (TNCs) are large companies that can be located in more than one country. Think of McDonald's or Starbucks, for example. These companies conduct work in countries all around the world, through foreign direct investment (FDI), increasing flows and connections. TNCs operate internationally, through the processes of outsourcing and offshoring, which allows TNCs to work within a global production network.

Governments and Organisations

You can read more on this section in the explanation on the Role of Government, but let's bullet point a few reasons why governments and organisations have a role in globalisation.

• Different political ideologies are being driven around the world, such as the increased influence of capitalism and democracy, which is so dominant in the west.
• Organisations like the IMO (International Maritime Organization) help to increase free trade and FDI.
• National governments help to get rid of trade barriers (just like in the European Union), improving trade between nations.
• Governments and other organisations, like the United Nations (UN), help to provide global connections, through things like aid or other forms of international support, helping countries to work together.
• Other policies, such as free market liberalisation, help to reduce trade barriers and improve competition to increase productivity.

Impact of globalisation

The impact of globalisation differs across the world. Some countries are massively affected by globalisation, whilst others, have been entirely closed off from this process. How much a country has globalised can be measured by different indicators, such as the AT Kearney Index and the KOF Index. Let's explore these ideas.

Measuring globalisation

The AT Kearney Index and the KOF Index (Konjunkturforschungsstelle, created by the Swiss Economic Institute) have similar characteristics. They both look at specific indicators that show how well-connected a country may be. These indicators include things like FDI, how much internet is used, the amount of aid from governments or involvement in international organisations, or how much tourism occurs in the country, to highlight just a few.

Switched off?

Some countries have experienced no effects of globalisation. Countries like North Korea, or countries located in the Sahel region in Northern Africa, are examples of countries that have been somewhat shut off by globalisation. But why might this be? Some countries may be affected by certain political issues, like ideologies or conflict. North Korea is run under a communist dictatorship system, whereby things like external tourism, outward migration, and internet access, are all forbidden. The country also has a limited trading system.

Fig. 2 - North Korean propaganda

The Sahel region is the African region including countries such as Niger and Burkina Faso, for example. Issues commonly seen in these countries include corruption, war, high levels of poverty, and subsistence economies, making it unattractive for any form of FDI. Physical characteristics are also one of the main reasons for the country being cut off from global processes. Many of these regions are landlocked, far away from any coastal passages for trade, meaning transport to these areas is expensive and long.

Advantages of globalisation

With globalisation, there have been both winners and losers. Let's talk about the winners of globalisation and the advantages that globalisation has brought to the world.

Cultural and social advantages

Globalisation has allowed more people to move around the world, as well as all sorts of products and information, which can now be accessed by people everywhere. Cultural characteristics have merged as a result; for example, Western-style foods and clothes can be seen all over the world.

Social globalisation can be seen through the increasing flows of people through migration and tourism. This has created a global culture. Some great examples of the global culture include the Hollywood film industry, which promotes American/Western values and ways of life. English is the world's dominant language of business, now used across the world for global communications. Even fast food chains show this global culture; fast food chains, like McDonald's, can be found all over the world.

Economic and political advantages

Global trade and the increase of TNCs, have helped to reduce inequalities, improve development in poorer countries, and companies can gain profit hugely. The free movement of people has helped countries to fill the gaps with certain jobs that are experiencing shortages; an example of this is how the UK hired foreign nurses to work in UK hospitals. With globalisation, countries can work together to make global decisions, producing global networks. This can bring benefits to the environment, for example. The Paris Agreement is a treaty signed by 193 states and the European Union, allowing countries to work together to reduce global warming and catastrophic climate change.

Disadvantages of globalisation

Globalisation has not impacted every country in the same way. In fact, many places lose out in the process of globalisation. Globalisation has resulted in huge inequalities across the world, and some countries are even exploited in the process. With the spread of western ideals, some cultures and languages are eroding. Environmental damage is another huge disadvantage associated with the acceleration of globalisation.