Globalisation is the process by which the world is becoming increasingly interconnected as a result of massively increased trade and cultural exchange.
Globalisation has beentaking place for hundreds of years, but has speeded up enormously over the last half-century.
Factors influencing globalisation include:
Communications. TV, telephony and the internet have allowedinformation and ideas to travel quickly. UK businesses can have a call centre in India answering calls from UK customers.
Transport has become cheap and quick. UK people now holiday all over theworld. People from other countries can travel to the UK to seek better-paid jobs. Businesses can ship products and raw materials all over the world more easily - making products and services from all overthe globe available to UK customers.
Trade liberalisation. Laws restricting trade and foreign investment have been relaxed. Some governments even offer grants and tax incentives to persuade foreigncompanies to invest in their country. The idea that there should be no restrictions on trade between countries is known as free trade.
Although globalisation is probably helping to create more wealthin developing countries - it is not helping to close the gap between the world's poorest countries and the world's richest.
The animation shows how wealth is distributed. Click on the incomebrackets to see where the richest and poorest countries are located.
Transnational corporations (TNCs)
Globalisation has resulted in many businesses setting up or buying operations in other countries. Whena foreign company invests in a country, perhaps by building a factory or a shop, this is called inward investment. Companies that operate in several countries are called multinational corporations(MNCs) or transnational corporations (TNCs). The US fast food chain McDonald's is a large MNC. It has nearly 30,000 restaurants in 119 countries.
The majority of TNCs come from MEDCs such as the US...