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Research Project on Globalisation & Development

Briefly explain: what is meant by globalisation; how it is bringing about


fundamental changes in the world economy; and is contributing to rapidly
rising income per capita in some developing countries, but that others are left
behind. Include graphs and data.
Globalisation

Globalisation is the integration of national economies which is driven by international trade,


investment, technology and innovation. It affects the world in different ways through the
environment, culture, political systems, prosperity and economic development. Furthermore it is
symbolised by firms that sell good around the world for example, Nike, Coco-cola.
Globalisation is caused by a variety of factors:
1) Improvement in communications
The use of computers, the internet, email and mobile phone technology have altered the
production, sales and distribution of goods over the last decade. This has created a gateway for
faster communications to take place and has encourages trade between different countries.
2) Free market ideology & Trade liberalisation
The collapse of the communism in Eastern Europe and the Soviet Union is often seen as a triumph
for free market economics over state-managed economoics. Furthermore communist economies like
China have now opened up to world trade allowing them to become much more intergrated into the
worlds trading system.
3) Reduction in trade barriers
The WTO (world trade organisation) has reduced the amount of barriers to trade over the last 50
years, in order to encourage trade.
4) International financial markets and the free flow of the capital
It is possible to shift funds from one country to another by the switch of a button on a computer, this
leads to the increase of 'Hot money' flowing into a country.
5) Cheaper transport costs
Air frienght and ocrean transport have become cheaper sinces 1980s, due to the economic
efficiences gained through containerisation. Containerisation leads to economies of scale within a
shipping industry.
6) Transnational (multinational) companies
Large companies have been growing in size and influence over the last two decades.

Globalisation can also have negative impacts on the countrys as it causes the enviroment and people
to suffer, for example when a large firm decides to move production to a less economically
developed country, people in industiralised countries lose thier jobs whereas people gain jobs in less
economically develop countries increasing the income per capita. However, many people in less
ecnomoically developed countries work for very little pay compared to those that work in
industrialised countries therefore they often remain poor. According to Mckinsey Global Institure
(MGI) the network of global glow is expanding rapidly as emerging ecnomies join in. This causes
rising incomes in developing countries which are causing new centres of consumer demand, global
production and commodity trade. Developing countries are make up tp 38% of global flows which
has trippled since 1990.

Furthermore this graph confirms the fact that globalisation is making it easier for developing
countries to catch up those that are advanced as the share of the worlds GDP has increased
significantly in developing countreids from 37.2% in 2000 to 51% in 2013, whereas the share of the
worlds GDP for advanced economies has decreased from 62.8% to 49%. Therefore suggesting that
developing countries are getting wealthier.
An increase in globalisation leads to an increase in growth, resulting in an increase in productivity
due to specialisation. However certain parts of sub-saharan africa, the middle east and parts of
former soviet union appear to be left behind. This is because they are affected by barriers to trades
such as tariffs, so thier ratio to trade of GDP has not risen over the past few yeas. Multinational
corportations such as coco cola have caused a rise in income per capita in some deloping countries
(by building factories and proving jobs). Income inequality can occur between the country.

The maps ephasises areas of income inequality in china. It shows us that there is a large divide
between the rich and the poor. This can cause a problems as not everyone is benefiting from
globalisation, some regions of china are being left behind.

It highlights areas of income inequality within a country that took off due to globalisation. image
image is concentrated on certain areas and nationally is not beneficial for everyone causing large
dividers between rich and poor. Furthermore due to the advenaces in techonolgy the demand for
unskilled jobs is low. So in order to compete in the worlds market these countries need to invest in
education so they a left behind in the long run.

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