Globalisation involves the increased integration and interdependence of national economies. Globalisation reflects the increased importance of the whole international economy. Globalisation involves increased international trade, increased inward investment and an increased role for global multinational companies.
Reasons for growth of globalisation
National Economies are becoming more closely integrated with each other. For example the Common Market in the EU, harmonization of Monetary Policy. But also closer integration in America and Africa
Increase in World Trade, Tariffs and other impediments to world trade have gradually been reduced leading to an increase in world trade.
The WTO has been instrumental in bringing about a more integrated and interdependent global economy
Economies tend to move in trade cycles together. A slow down in US growth has an impact on the whole world economy, because of the importance of trade.
Monetary Policy is linked between the economies, if US cuts its interest rate, this is likely to lead other countries to cut theirs
At the level of the firm, more product markets have become open to international influences due to:
Globalisation of brands e.g. McDonalds
Growth of Multinationals through Mergers and internal expansion, this is noticeable in Pharmaceuticals, airlines, oil processing leading to the growth of global oligopolies
At a personal level people can shop on the internet buying books in the UK from the US
More detail at: Causes of globalisation
Benefits of globalisation
Increased economies of scale enabling lower prices
Increased competition pushing down prices
Increased choice of goods, services and opportunities for work
Costs of globalisation
Growth of global monopolies with opportunity to exploit consumers
Environmental costs from increased use of raw materials.