Globalisation

Globalisation is the process by which the world becomes more interconnected, through increased trade and the sharing of culture and ideas. Trade in goods and services has grown and far more businesses now operate across national borders, so you can buy from, sell to and compete with firms almost anywhere in the world.

Why globalisation has grown

Globalisation has been driven by five linked changes:

• Seeking new markets — selling abroad opens up far more potential customers than a home market alone can offer.
• Better transport — container ships, lorries and air freight make it quick and cheap to move stock between continents.
• Better communication — the internet lets a small firm take an order from a customer on the other side of the world and answer questions instantly.
• Lower production costs overseas — wages, land and raw materials can be cheaper in other countries, so unit costs fall.
• Greater freedom of trade — governments have removed many restrictions on goods crossing borders, so trade involves less tax and paperwork.

For example, a two-person pottery that sells mugs through its own website and posts them to cafés in Iceland and New Zealand reaches customers it could never have reached before.

Benefits and drawbacks

Globalisation brings clear gains, but they are not shared evenly.

Standardisation of products and markets means customers in many countries buy identical versions of the same item, so a firm can sell one design everywhere, but local varieties struggle to survive.