Globalisation refers to the
integration of markets in the global economy. Markets where globalisation is
particularly common include
financial
markets, such as capital markets,
money and
credit markets, and insurance markets,
commodity
markets, such as markets for oil, coffee, tin, and gold, and product
markets, such as markets for motor vehicles and consumer electronics
Why has globalisation increased?
The pace of globalisation has increased for a number
of reasons:
-
Developments in ICT, transport and
communications have accelerated the pace of globalisation over the
past 30 years. The internet has enabled fast and 24/7 global
communication, and the use of containerisation has enabled vast
quantities of goods and commodities to be shipped across the world
at extremely low cost.
-
Increasing capital mobility has also
acted as a stimulus to globalisation. When capital can move freely
from country to country, it is relatively straightforward for firms to locate and invest
abroad, and repatriate profits.
-
The development of complex financial products,
such as derivatives,
has enabled global credit markets to grow
rapidly.
-
Trade has become increasingly free,
following the collapse of communism, which has opened up many former
communist countries to inward investment and global trade. Over the last 30 years,
trade
openness, which is defined as the ratio of exports and imports to
national income, has risen from 25% to around 40% for industrialised
economies, and from 15% to 60% for emerging economies.[1].
-
The growth of multinational companies
(MNCs) and the rise in the significance of global brands like
Microsoft, Sony, and McDonalds, has been central to the emergence of
globalisation.
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