Globalisation is the growing connection between the economies of the world, as trade, investment, technology and people move more freely across borders.
Why this matters Globalisation shapes the products you can buy, the jobs available near you, and how quickly ideas and problems spread from one country to another.
What drives globalisation?
- Cheaper transport, such as container ships and air freight;
- faster communication through the internet and phones;
- fewer trade barriers between many countries;
- the growth of large firms operating worldwide.
Multinational companies
A multinational company (MNC) is a firm that owns or controls production in more than one country. For example, a company might design a product in one country, make parts in a second, assemble it in a third and sell it everywhere.
Benefits and drawbacks
MNCs and globalisation bring gains and losses that fall differently on different groups.
Common exam mistake: treating "globalisation" and "multinational company" as the same thing. Globalisation is the wider process of the world's economies becoming more connected; an MNC is just one type of firm that operates within, and helps drive, that process. Explain the relationship between them rather than using the terms interchangeably.
| Possible benefits | Possible drawbacks |
|---|---|
| Jobs and training for host-country workers | Jobs may pay little or have poor conditions |
| Investment and new technology | Profits may flow back abroad, not stay local |
| Cheaper, wider choice of goods for consumers | Local firms may be pushed out of business |
| Faster growth and export earnings | Large MNCs may have too much power over governments |
A balanced view
Supporters argue globalisation has lifted many people out of poverty and spread useful ideas. Critics argue it can widen inequality, harm the environment through extra transport and production, and leave some workers or regions behind.
Exam technique: when evaluating globalisation or MNCs, separate the effect on DIFFERENT groups - consumers, workers in the host country, workers in the home country, and the environment - a single overall verdict without this breakdown rarely reaches the top mark band.
Whether globalisation is "good" or "bad" depends on the country, the industry and how the gains are shared. Economists genuinely disagree, and both benefits and costs are real.