6.2 Globalisation, Free Trade & Protection

What is Globalisation?

Think of it like this: 50 years ago, a British teenager could only buy British products made by British companies. Today, they can buy Korean phones, Mexican avocados, and Japanese clothing—all from their local shop. That's globalisation.

Key point: This isn't new. Countries have traded for centuries. What's changed is the speed and scale. Improved technology, faster transport, and lower communication costs have made it exponentially easier to do business globally.

The Four Main Characteristics of Globalisation

1. Increasing foreign ownership of companies — A UK company might be owned by American investors, with factories in Vietnam and offices in Singapore.
2. Greater movement of labour and technology across borders — Workers migrate for jobs; tech firms share innovations globally.
3. Free trade in goods and services — Countries remove import taxes and quotas.
4. Easy flows of capital across countries — Money moves freely to where returns are highest.

Multinational Corporations (MNCs)

MNCs are the engines of globalisation. They take advantage of lower costs in some countries (cheaper labour, less regulation) while selling to wealthy markets elsewhere.

Advantages of MNCs