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Globalisation

Globalisation can be defined as being when human activities take place on a worldwide scale creating an interdependence between countries. When something happens in one area, it can have a knock-on effect in other places. For your GCSE in Geography, you need to be aware of the causes of globalisation plus the positive and negative effects on people and the planet.

There has always been a degree of globalisation but since the end of the Second World War, transport and communications have increased massively, making it much easier to exchange trade and cultural ideas. Companies that operated only in their own countries have been able to expand and have become what are called multinational corporations (MNCs) - companies with subsidiaries in many countries. This is helping to create increased wealth in MEDCs, however, the benefits are less for ordinary people living in LEDCs - they are often seen as a source of cheap labour.

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So what has caused this increase in globalisation? As well as improvements in transport such as larger and faster cargo ships, the development of the international telephone system, the internet and mobile technology has made it much easier to communicate with people in other countries. When importing goods from other countries, many governments imposed taxes, making items from abroad expensive. Organisations like the WTO (World Trade Organisation) have promoted the idea of free trade between countries, with the reduction of import taxes. This makes the goods cheaper to buy and so more trade is the result. Labour costs in some countries is much lower than in Britain so labour intensive industries like clothing and call centres take advantage of this by moving abroad.

Multinational corporations are also known as TNCs (trans-national corporations). These generally have their origins in MEDCs and quite often, they invest in other MEDCs as the market for their products is greater, however, some TNCs do invest in LEDCs. You need to learn the factors that attract TNCs to a particular country.

Positive impacts of globalisation are numerous and include humanitarian, environmental and economic benefits. There is an increased awareness of events in far away parts of the world such as famines, wars and natural disasters meaning that aid can be sent quickly by MEDCs. An increased awareness of issues like deforestation and global climate change effects alerts more people that a return to sustainable development is necessary to ensure the future of the planet. Economically, inward investment by TNCs brings jobs and opportunities for local people and increased wealth for local economies. Finally, it means that ordinary people can experience foods and products that were not previously available to them.

On the other hand, globalisation tends to benefit mainly MEDCs, the money invested by TNCs does not always benefit the local economy as profits are often sent back to the MEDC. Unscrupulous TNCs can operate with lower safety and environmental standards in many LEDCs, where laws to protect workers and the environment have not been made or are not enforced. In Britain, the textile industry, coal mining and steel manufacturing industry have declined severely as these products can be obtained much more cheaply from abroad thanks to globalisation.

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  1. A positive benefit of globalisation is ...
    This increases profits for the company
  2. The term economy of scale means ...
    When products are made on a large scale, the costs are less. The same applies to transporting of goods or raw materials
  3. Which of the following statements about globalisation is true?
    The other three answers are exactly the opposite of what has really happened due to globalisation
  4. When a company invests in a foreign country it is called ...
    Such investment does not necessarily fully benefit the local economy
  5. Which of the following is a negative impact of globalisation?
    Labour costs are usually cheaper in LEDCs so multinational (transnational) companies close down factories in MEDCs and set them up in LEDCs where they can pay less for labour
  6. Which of the following is not a transnational corporation?
    An Indian restaurant is an example of globalisation
  7. Which of the following is not a result of globalisation?
    LEDCs are usually exporters of the less profitable raw materials and food. Exports from MEDCs are usually the more profitable manufactured goods
  8. Which of the following is not a factor that has influenced globalisation?
    Quarrying for building materials is a local business as it is usually more expensive to import suitable building materials from abroad
  9. Which of the following factors is most likely to attract an MNC to invest in a foreign country?
    If raw materials are cheaper, this can increase profits for the MNC by reducing costs
  10. Why do some people think that globalisation is not a good thing?
    There are many positive points for globalisation, make sure you know them for your exam

Author: Kev Woodward

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