Globalisation & Trade Restrictions
International Trade & Globalisation
Globalisation increases when it becomes cheaper and easier to trade, communicate and move money across borders, and it can slow when those things become harder. The main drivers are:
- Changes in . When countries lower tariffs, quotas and other barriers, often through trade agreements, trade between them grows and globalisation deepens. Raising barriers does the reverse.
- Changes in transport costs. Container shipping, larger vessels and cheaper air freight have cut the cost of moving goods around the world, making it economic to produce in one country and sell in another. A rise in transport or fuel costs slows this down.
- Changes in communication costs. The internet, mobile phones and video conferencing let firms coordinate suppliers, factories and customers across continents almost instantly and very cheaply.
- Movement of multinational companies (MNCs). As firms set up operations in more countries, they build global supply chains that tie economies together through trade, investment and the transfer of technology.
Exam tip
Features and causes of globalisation
When you are asked to identify features of globalisation (2 marks), name the ways the world is becoming more connected: people migrating between countries, trade in goods and services, the sharing of ideas and technological development. The scheme gives a mark for each feature named.
For a cause, ask what makes trading across borders cheaper or easier. One multiple-choice item wanted the only option in which both changes raise trade, more specialisation with falling transport costs; each of the others included tariffs, quotas or unstable exchange rates.