Explain the trend towards globalisation in recent years.
a. Explain the trend towards globalisation in recent years. [10]
Introduction
Globalisation refers to the increasing interconnectedness and interdependence among countries, characterised by the freer flow of goods, services, capital, labour, and ideas across borders. It encompasses not just the movement of physical goods, but also the institutional and policy changes that have made such flows easier and more efficient. Over the last few decades, the world has witnessed an acceleration of globalisation, driven by a combination of technological advancements, liberalised trade policies, and the expansion of global markets. These changes have transformed the way economies interact, giving rise to global supply chains, cross-border investment, and international labour migration.
Technology
One of the key drivers of globalisation has been the significant reduction in transport costs due to advancements in both air and sea travel. Containerisation, for example, revolutionised shipping in the late 20th century by standardising cargo handling, which dramatically reduced the cost and time involved in transporting goods across the globe. The rise of low-cost carriers and improvements in air freight have also made it more feasible to move not just high-value goods, but also people—whether tourists, workers, or business travellers—across countries with increasing ease. As a result, production processes have become more fragmented across borders, with components being manufactured in different countries before being assembled and sold elsewhere. This has enabled firms to take advantage of comparative advantages in different regions, thereby improving efficiency and reducing costs.
The digital revolution has been central to the globalisation trend, especially through developments in information and communications technology. The widespread use of the internet, mobile connectivity, and cloud computing has drastically lowered the costs of coordinating production and trade across distances. A multinational corporation can now manage production plants across continents in real time, share information instantly between offices, and use data analytics to make supply chains more responsive. For labour, ICT has reduced the psychological and monetary cost of relocation, while also giving rise to new forms of global employment—such as remote working, freelance contracting, and digital nomadism.
Furthermore, the rise of e-commerce platforms has allowed small businesses in developing economies to access global markets, sell their goods internationally, and receive payments with minimal infrastructure. Digital platforms like Amazon, Alibaba, and Shopify have lowered entry barriers to international trade, fostering a more inclusive form of globalisation. Even services, which were traditionally seen as non-tradable, are now increasingly delivered across borders—ranging from customer service to medical consultations—through digital means.
Trade Liberalisation and Free Trade Agreements
Alongside technological advancements, policy decisions at the national and international levels have also fuelled globalisation. Many countries have adopted more outward-looking economic policies since the 1980s, reducing tariffs, abolishing quotas, and dismantling capital controls. These measures have allowed for the freer movement of goods and capital, making it easier for firms to invest abroad and participate in global supply chains.
The proliferation of Free Trade Agreements (FTAs) has also contributed significantly to the globalisation trend. These agreements reduce or eliminate trade barriers between signatory countries, facilitating smoother and more predictable trade flows. Agreements such as the North American Free Trade Agreement (NAFTA), the European Union’s single market, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) have integrated regional economies, making trade not only freer but also more regulated and secure. As firms gain access to larger markets under preferential terms, the incentive to internationalise operations and source inputs globally becomes even stronger.
Conclusion
The globalisation trend in recent years has been largely driven by technological advancements and policy reforms. Improvements in transportation and digital connectivity have reduced the cost and increased the speed of cross-border exchanges. Simultaneously, trade liberalisation and the signing of FTAs have created a more favourable institutional environment for international economic activity.
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