Globalisation involves linking all over the world via expanded trade and cultural shuffling. The domestic companies do not dominate the market, but the multinational corporations do. This leads to growth in the movement of labour and capital. A rapidly developing world alliance has expanded.
The reason behind the expansion is the increase of:
- Overseas commerce.
- Multinational firms.
- The reliance of countries on the amalgamated economy.
- Ease of transfer of assets, amenities and resources.
- Spread of enterprises, such as Subway and Pizza Hut, with global appeal and branding.
Although globalisation might help to create more wealth in developing countries, it does not contribute towards bridging the gap between the world’s poorest and richest countries. The formation of the United Nations after the Second World War and the consolidation of various agreements encouraged trade, growing from $95 billion to $12 trillion in the 50 years since 1955.
A culture of mutual assistance and networking has grown, especially in the twentieth century, getting the world highly connected. Communication is readily available and the high supply and demand have reduced costs drastically. This further allowed the companies to hire employees across the world to divide labour and cut costs based on differences in the cost of work.
Apart from the above factors, improved travel access and immigration policies also facilitate the globalisation of the world. With citizens from undeveloped/developing countries immigrating to developed countries, the latter has become much more multicultural, with lesser of a national identity, and more of a focus on global citizenship. As a result of this, cultural awareness is much more widespread than it was fifty years ago.
Advantages of Globalisation in the UK:
- Comparative Advantages: UK firms can benefit from specialising in goods where they have a comparative advantage due to a much stronger connection and sharing of data. It will also lead to lower prices for consumers.
- Shifting Sectors: Globalisation has led to a change in the segments of the economy. Developing and Underdeveloped countries have more focus on manufacturing due to cheap labour. Developed countries such as the UK outsource work. Although this can cause a loss of jobs, it also results in job creation due to new demand and needs. The UK has much more specialised and technical labour in IT, Finance and Health.
- Increased Competition: Globalisation means that national monopolies will now face more international competition, it reduces costs for international firms.
- Migration: It is easier to shift to a developing country and work. On the other hand, this could cause a loss of jobs, residential areas and amenities for UK citizens.
- Global Financial Cycle: The UK is more affected by the world economic cycle as it is deeply interwoven into the international economy and is a large provider. Brexit affects the UK because it changes the EU relations. The EU is a source of income to the UK due to trade. This might cause a domino effect in the surrounding areas.
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