AQA Specification focus:
‘The causes of globalisation. The main characteristics of globalisation.’
Globalisation has transformed the modern economy, driven by multiple interconnected causes. Understanding these factors helps explain how economic, political, and cultural integration has expanded across the globe.
Key Characteristics of Globalisation
Globalisation is defined by the increasing interdependence and integration of economies, societies, and cultures across international borders. Key characteristics include:
Growth in international trade: Higher volumes of imports and exports between nations.
Movement of capital: Large-scale flows of financial investment and loans.
Increased foreign direct investment (FDI): Multinational corporations investing in operations abroad.
Labour migration: Movement of workers between countries in search of employment.
Technological interconnection: The spread of communication technologies and the internet.
Global supply chains: Production processes that cross national boundaries.
These features illustrate how nations have become increasingly linked, both economically and socially.
Technological Causes
Technological progress has been one of the most powerful drivers of globalisation.
Transport improvements: The reduction in costs and time associated with air, sea, and land transport has facilitated faster and cheaper movement of goods and people.
Communications revolution: Innovations such as the internet, fibre optics, and smartphones allow instant communication and remote collaboration.
Digital platforms: E-commerce and online services expand access to global markets.
This infographic categorises the human and non-human causes of global change, highlighting factors such as technological advancements, government policies, and economic activities that contribute to globalisation. Source
Foreign Direct Investment (FDI): Investment made by a firm or individual in one country into business interests located in another country.
Advancements in technology have enabled multinational corporations to coordinate global operations efficiently and expand into new markets with reduced barriers.
Trade Liberalisation
Governments and international organisations have worked to reduce barriers to trade.
Lower tariffs and quotas: Many countries have reduced or removed taxes and restrictions on imports.
World Trade Organisation (WTO): Promotes free trade agreements and ensures rules are followed.
Regional agreements: Such as the European Union or NAFTA, which simplify trade between member nations.
These policies encourage specialisation and comparative advantage, where nations trade based on their most efficient production capabilities.
Growth of Multinational Corporations (MNCs)
MNCs play a central role in globalisation, operating across multiple countries to maximise efficiency and profitability.
They establish production facilities in nations with lower labour costs.
They expand into emerging markets to access new consumers.
They integrate global supply chains, often controlling raw material sourcing, manufacturing, and distribution.
Multinational Corporation (MNC): A company that operates in multiple countries, managing production or delivering services in more than one nation.
The growing influence of MNCs accelerates global interconnectedness, particularly through foreign investment and employment creation.
Political and Institutional Drivers
Political decisions and international cooperation are crucial causes of globalisation.
Economic liberalisation: Governments adopting pro-market reforms, privatisation, and deregulation.
Membership of trade blocs: Encourages economic integration and harmonisation of rules.
Political stability: Stable governments create confidence for international trade and investment.
Global institutions: Organisations like the IMF and World Bank provide financial support and promote economic development.
Such frameworks have provided the environment for businesses and individuals to operate beyond national boundaries.
Cultural and Social Influences
Cultural exchange has both shaped and been shaped by globalisation.
Media and entertainment: Global spread of films, music, and fashion.
Tourism: Rising international travel broadens cultural connections.
Migration: Diasporas encourage cultural diffusion and cross-border networks.
Social changes, such as increasing education and awareness of global issues, have also fostered greater international collaboration.
Financial and Economic Factors
The internationalisation of finance has been a major cause of globalisation.
Global capital markets: Investors can easily shift funds across borders.
Currency markets: Trillions of dollars traded daily, integrating economies.
Financial deregulation: Removal of restrictions on banks and investment has facilitated cross-border activity.
Rising incomes: As economies grow, demand for foreign goods and services increases.
Interactive maps from the NYU Stern Globalization Explorer visualise the global flows of trade, capital, information, and people, demonstrating the interconnectedness of modern economies. Source
Balance of Payments (BoP) = Current Account + Capital Account + Financial Account
Current Account = Trade in goods/services + Primary income + Secondary income
Capital Account = Transfers of capital assets
Financial Account = Investment flows, including FDI and portfolio investment
While the full structure belongs to balance of payments analysis, the openness of these flows demonstrates how finance drives international economic integration.
Environmental and Resource Considerations
Natural resource distribution has encouraged cross-border trade.
Nations lacking vital resources (oil, minerals, agricultural products) rely on imports.
Countries with resource surpluses benefit from exports, reinforcing global supply networks.
Environmental awareness has also fostered international agreements on sustainability and energy use, further linking economies.
Summary of Causes
The causes of globalisation are multiple and interconnected:
Technology reduces costs and speeds up communication.
Trade liberalisation lowers barriers to exchange.
MNCs drive investment and create global production chains.
Political cooperation facilitates integration.
Cultural exchange spreads ideas and lifestyles.
Financial globalisation links economies through capital flows.
Resource distribution encourages international trade.
These overlapping causes explain the rapid growth and enduring characteristics of globalisation as outlined in the AQA specification.
FAQ
Technological advances reduce barriers mainly by cutting transaction and transport costs. Faster shipping and cheaper air freight make goods more accessible worldwide.
The internet and digital platforms allow firms to reach consumers globally without physical presence. Communication tools also help firms coordinate operations across multiple countries instantly, enhancing efficiency.
MNCs expand operations abroad to take advantage of lower costs and new markets, actively driving globalisation.
At the same time, globalisation creates the conditions—such as liberalised trade rules and better infrastructure—that make it easier for MNCs to grow internationally. Thus, MNCs both shape and benefit from globalisation.
Governments promote globalisation by:
Signing free trade agreements.
Reducing tariffs, quotas, and subsidies.
Liberalising financial markets to attract investment.
Stable institutions and transparent legal systems also attract multinational investment and strengthen international economic ties.
Globalisation increases opportunities for workers to move across borders in search of better wages and job prospects.
Skilled workers often migrate to developed economies with higher demand, while remittances sent home boost developing economies. However, this can create challenges such as brain drain in poorer countries.
Economic causes focus on material drivers such as trade liberalisation, technological improvements, and financial integration.
Cultural causes include the spread of global media, tourism, and migration patterns. These shape consumer tastes and promote shared cultural experiences that reinforce global interconnectedness.
Practice Questions
Define globalisation and identify one main characteristic of it. (2 marks)
Definition of globalisation: the process by which economies, societies, and cultures become more integrated and interdependent across national borders. (1 mark)
One correct characteristic identified, e.g. growth in international trade, increased FDI, labour migration, or global supply chains. (1 mark)
Explain two causes of globalisation. (6 marks)
Identification of first valid cause (e.g. technological progress, trade liberalisation, growth of MNCs, political cooperation). (1 mark)
Development/explanation of first cause, e.g. how technology lowers transport costs or how MNCs expand into new markets. (Up to 2 marks)
Identification of second valid cause. (1 mark)
Development/explanation of second cause, e.g. how trade agreements reduce tariffs or how political stability encourages investment. (Up to 2 marks)
Maximum 6 marks.
Award up to 3 marks per cause, with clear explanation required for full marks.
