Globalisation (Cambridge (CIE) IGCSE Economics): Revision Note

What is globalisation?

• Globalisation is the economic integration of different countries through increasing freedoms in the cross-border movement of people, goods and services, technology and finance

  • Globalisation has been increasing for thousands of years – it is not a new phenomenon

  • This integration of global economies has impacted national cultures, spread ideas, speeded up industrialisation in developing nations and led to de-industrialisation in developed nations

• Improvements in technology and the speed of global connections have exponentially increased the level of interdependence between nations in the past 50 years

  • Consumers now source products globally recognising global brands wherever they travel 

Causes of changes in globalisation

The effects of changes in globalisation

1. International trade

• Trade increases as countries buy and sell more with each other

• Greater specialisation and exchange of goods and services

• Some domestic industries may struggle with foreign competition and domestic unemployment may actually increase

2. Competition

• Firms compete not just locally, but globally

  • This can lead to lower prices and improved quality

• However, domestic small or new firms may be pushed out of the market leading to reduced competition within the country

  • This may actually lead to an increase in domestic prices

3. The environment

4. Migration

• Workers move to countries with better job opportunities

• Can help reduce unemployment in sending countries

  • But may increase unemployment in the receiving country

• May create pressure on services (e.g. housing, healthcare) in receiving countries

5. Income distribution

6. Economic development

• Countries benefit from investment, job creation and new technology

• Export-led growth helps raise GDP and living standards

• Can create long-term dependence on MNCs or vulnerable sectors