Process of Globalisation

Have you ever stopped to think about how we got to where we are, how we are interconnected with the rest of the world in real-time, or how we can, also in real-time, trade even on different continents? Well, that is the process of globalisation.

Process of Globalisation Process of Globalisation

Create learning materials about Process of Globalisation with our free learning app!

  • Instand access to millions of learning materials
  • Flashcards, notes, mock-exams and more
  • Everything you need to ace your exams
Create a free account
Table of contents

    Globalisation is a process in which we live. We can communicate so easily with people on different continents. This can happen socially, economically, culturally, technologically, and even politically.

    Explanation of the process of globalisation

    The process of globalisation is the accelerating techniques, movements, and exchanges of goods, services, technologies, cultures, and human capital worldwide.

    In other words, globalisation drives global interconnectedness through increased interaction of these processes and movements, leading to more significant progress in the regions.

    Globalisation increases relationships between regions worldwide, connecting all societies so that events in different places are no longer isolated but are recognised and shaped by what happens miles away.

    Globalisation is a process in which there is a worldwide expansion of ideas, knowledge, information, goods, and services. Globalisation is a broad term that can be applied in different areas, such as economics, technology, politics, geography, etc.

    Globalisation promotes the convergence of the world's different cultural and economic systems. That results in significant interaction and integration of the countries—the greater the interconnection between countries, the greater the level of globalisation.

    A great example to highlight the process of globalisation is the International Monetary Fund (IMF for short). In 20001, The International Monetary Fund identified four basic processes of globalisation:

    1. International trade and transactions
    2. Migration and movement of people around the world
    3. The spread of knowledge and culture
    4. Capital and investment activities

    You can learn more about types of globalisation by checking our entry about "Types of Globalisation".

    Features of the globalisation process

    Let's dive a little deeper into the features and consequences of globalisation, just mentioning the most common ones to understand the globalisation process much better.

    The features of globalisation, include:

    • Free trade

    • Global products standardisation

    • Economic reforms

    • Sharing of culture and ideas

    • Increased collaborations between people, countries, and industries

    • Freer movement of labour

    • Global production networks

    • Spread of democracy

    The following are some of the consequences of the globalisation process:

    • An increase in the global commodity market

    • Reduction of import regulations

    • Cultural homogenisation

    • The imposition of Western customs on the rest of the world

    • Its market determines economic and social needs

    • Entry and growth of the role of transnational corporations

    • Reduction of the decision-making power of governments

    • Global interconnectedness in communications and technology

    • Impact on the environment

    Transnational corporations' role in the globalisation process

    Transnational corporations play a crucial role in globalisation because they have been the drivers of interaction between regions by relocating, trading, and manufacturing in different countries.

    Transnational corporations (TNCs) are industries whose operations and business transactions operate in more than one country.

    Transnational corporations are central to the process of globalisation. These corporations play this role due to their work developing strategies that determine trade flows, foreign investment, and financial flows.

    Transnational corporations also consider external factors that can influence business, such as national procedures, how the government has conducted its internal and external trade, etc. This is very important because a country's customs and procedures can influence international and national trade.

    The current economic and trade interaction system results from the acceleration of globalisation—transnational corporations from the world economy through international business and trade.

    Due to the influence these corporations have on the economy, corporations build new commercial interactions, integrating the world economy and expanding their power, from regional interconnection to import and export transactions of goods and services and unifying markets. When a transnational corporation enters a market, it creates new opportunities to attract resources and investment in international markets.

    So, to simplify the role of transnationals in globalisation, we can conclude that transnational corporations affect our lives due to the globalisation process. They determine how to solve economic and social problems, and their influence represents a form of economic globalisation.

    According to the conditions shaped by governments, transnational organisations will adapt to different laws, markets and knowledge to function optimally in a territory and thus shape the requirements of the functioning of world trade.

    Corporations have a significant influence on the world economy, growing every day. Foreign investment is a tool to foster industrialisation and progress in developing countries, achieving savings, resources, and increased capital for those countries due to their entry into new markets.

    As a result, foreign investment as a product of globalisation has reduced poverty levels and accelerated the development of countries, generating employment. Although not all countries have benefited proportionately from international trade and transnational corporations, it has been fundamental to global growth and economic stability.

    Overall, as part of its process, globalisation has brought trade between industries in different regions, which has created opportunities and reduced the economic and accessibility gap to goods and services between other areas.

    Examples of transnational corporations and their influence on the globalisation process

    Some examples of globalisation with transnational companies are visibly known in all parts of the world. Perhaps most known is McDonalds.

    Process of Globalisation Mcdonalds example of the process of globalisation StudySmarterFig. 1 McDonald's, a transnational example of the process of globalisation

    McDonald's perfectly reflects how foreign investment, as a result of globalisation and international trade, has opened doors and opportunities to people worldwide. It is also an example of the influence of globalisation on technologies and communications. Since the McDonald's brand, even if you do not like it, there is no one in your city, or you do not eat there, you are almost guaranteed to know it, due to the expansion of its brand from all communications.

    McDonald's has 39,198 restaurants and has employed 2.2 million people worldwide.2

    Importance of political globalisation

    There are several consequences of political globalisation which show why it has such great importance. Firstly, political globalisation means that politics has begun to take a higher place than just “the Nation State”. They were no longer seen as an organised nation but as part of political integration schemes and international organisations.

    Process of globalisation The European Union as an example of political globalisation StudySmarterFig. 2 The European Union as an example of political globalisation

    There are lots of well-known international organisations which act as agents of political globalisation, such as the European Union, the World Bank, the International Monetary Fund, and the World Trade Organization.

    Now, political activities and issues are concerned within and beyond national borders through global movements and non-governmental organisations.

    International organisations are entities resulting from international treaties and political agreements between different actors and members. They are not "institutions," so they cannot make decisions about a country. They cannot legislate or create policies. However, international organisations can recommend or urge a particular plan of action to be taken at specific times.

    Civil society has also organised itself into international movements with global alliances with different organisations, whereby activists have formed among citizens with particular purposes and an organised way to achieve goals.

    They use an extensive global communication system and exert pressure on different political actors to achieve what they want and be heard by national governments and the integration of countries.

    Non-governmental organisations (NGOs) are organisations that are independent from governments or politics and are often non-profits. They are organised on a community basis and often have a social or humanitarian goal.

    As for the importance of political globalisation, the development and influence of international organisations reflect political and governmental action at the international level.

    Thanks to globalisation, governments' efforts are not isolated or known only to their nationals. The whole world has access to data on the political management of each country, and the political situation of the territory, whether good or bad, is also recognised worldwide.

    That is important because it allows for international monitoring of good political and governmental practices and allows organisations or other countries to take action concerning a nation and its political context.

    Political globalisation began its rise after the Cold War when the leaders of nations began to create systems that extend national functions to the level of international debate.

    A major impact of political globalisation is that world leaders are interconnected and can easily communicate in times of crisis or tension. It is also possible to solve problems and promote democracy through globalisation. The process of globalisation has contributed to the spread and promotion of democracy.

    It has reduced boundaries and borders due to wars, making it much easier to avoid or resolve national and international conflicts because the whole of society will be aware that such conflict exists. Governments and organisations will make decisions to solve it.

    Before globalisation, governments and politics were dealt with at the national level, so each country had complete jurisdiction over its policies and had full control over its regulations. But now, not only can each government's information be easily accessed, but it can internationally interfere or issue warnings when a government is violating the rights of its citizens.

    Globalisation brought a significant differentiation for politics and the integration of nation-states after the Second World War. However, in general terms, political globalisation also has a particular concept. To define it, we use R. Thompson's idea:

    "The expansion of a global political system and its institutions, in which interregional transactions (including but not limited to trade) are managed"3

    Merits and demerits of the globalisation process

    The process of globalisation has brought about different changes in the history of the world as we know it. It has influenced technology, economics, politics, and communications.

    It is also essential to know that globalisation is a process that cannot be "labelled" as good or bad. However, it is a fundamental part of the development of humanity, and it is well worth studying it objectively for what it is to make the most of the concept.

    Merits

    Demerits

    Technological distribution: Communication and technologies are now accessible globally with minimal time, cost, and effort.

    Increased inequality: Increasing the specialisation of trade can increase inequality.

    Better services: Services such as water supply, electricity, internet, and different energies are now accessible to all as they are commercialised.

    Increased unemployment: With technology, the need for physical jobs is reduced, and there are more skilled but lower-paying jobs.

    Increased GDP: With globalisation, all countries participate in global GDP growth.

    Trade imbalance: An imbalance in export-import trade relations occurs, leading to a "trade deficit."

    Improved infrastructure: As a result of globalisation, governments can provide services to enhance domestic or foreign infrastructure through investment.

    Environmental damage: The accelerated economic growth and technology also affect the environment, as industries tend to take harmful actions against nature.

    Market enlargement: Globalisation achieved the growth of markets and the capacity to satisfy needs, internationalising the exchange of goods and services.

    Exploits poorer labour markets: Globalisation allows jobs to be developed in developing countries because of cheaper labour costs.

    Table 1 – Merits and demerits of the globalisation process.

    Process of Globalisation - Key takeaways

    • Globalisation drives global interconnectedness through increased interaction of these processes and movements, leading to more significant progress.
    • Transnational corporations are central to globalisation. The important role of these corporations is that they develop strategies that determine trade flows, foreign investment and financial flows.
    • Although globalisation seems like a time of rapid development at first glance, it is worth pausing to learn about the merits and demerits of the globalisation process to understand better the level of impact it has had and continues to have.
    • With globalisation, politics began to take a higher place than the state. They were no longer seen as an organised nation but as part of political integration schemes and international organisations, such as the European Union, the World Bank, the International Monetary Fund, or the World Trade Organization.
    • Some examples of globalisation with multinational companies are visibly known in all parts of the world.

    References

    1. The International Monetary Fund, 2000.
    2. Characteristics of the globalization process, 2022
    3. Drew, 2022.
    4. Lutkevich, N/A
    5. Table 1 – Merits and demerits of the globalisation process.
    6. Fig. 1 BH 6381 McDonalds Lienz (https://commons.wikimedia.org/wiki/File:BH_6381_McDonalds_Lienz.jpg) by Linie29 (https://commons.wikimedia.org/wiki/User:Linie29) licensed by CC-BY-SA-4.0 (https://creativecommons.org/licenses/by-sa/4.0/deed.en) on Wikimedia Commons.
    7. Fig. 2 Flag map of the European Unions (https://commons.wikimedia.org/wiki/File:Flag_map_of_the_European_Union.png) by DrRandomFactor (https://commons.wikimedia.org/wiki/User:DrRandomFactor) licensed by CC-BY-SA-3.0 (https://creativecommons.org/licenses/by-sa/3.0/deed.en) on Wikimedia Commons.
    Frequently Asked Questions about Process of Globalisation

    What is the process of globalisation?

    Globalisation is a process of accelerating global interconnectedness in trade, communications, technologies, culture, and social and political issues.

    What are the four processes of globalisation?

    The four processes of globalisation, according to The International Monetary Fund, are:

    1. International trade and transactions
    2. Migration and movement of people around the world
    3. Dissemination of knowledge and culture
    4. Capital and investment activities

    Why is globalisation important in politics?

    The importance of globalisation in politics centres on the fact that national governments worldwide now have an international projection so that their decisions are known to the rest of the international community, thus protecting democracy and reducing violations of rights by governments.

    What are examples of globalisation today?

    Some examples of globalisation are prominent and recognized multinational corporations, such as Amazon, Mcdonald's, and Ford Motor Company.

    What are the possible consequences of the globalisation process?

    The potential and actual results of the globalisation process are many, but here are the most salient:

    1. Impact on the environment
    2. Cultural homogenization
    3. Reduction of the decision-making power of governments.
    4. Entry and growth of the role of transnational corporations.
    5. Decrease in import standards.

    Test your knowledge with multiple choice flashcards

    What is an example of a TNC?

    What has helped cultural globalisation?

    What type of globalisation does NATO help?

    Next

    Discover learning materials with the free StudySmarter app

    Sign up for free
    1
    About StudySmarter

    StudySmarter is a globally recognized educational technology company, offering a holistic learning platform designed for students of all ages and educational levels. Our platform provides learning support for a wide range of subjects, including STEM, Social Sciences, and Languages and also helps students to successfully master various tests and exams worldwide, such as GCSE, A Level, SAT, ACT, Abitur, and more. We offer an extensive library of learning materials, including interactive flashcards, comprehensive textbook solutions, and detailed explanations. The cutting-edge technology and tools we provide help students create their own learning materials. StudySmarter’s content is not only expert-verified but also regularly updated to ensure accuracy and relevance.

    Learn more
    StudySmarter Editorial Team

    Team Process of Globalisation Teachers

    • 12 minutes reading time
    • Checked by StudySmarter Editorial Team
    Save Explanation

    Study anywhere. Anytime.Across all devices.

    Sign-up for free

    Sign up to highlight and take notes. It’s 100% free.

    Join over 22 million students in learning with our StudySmarter App

    The first learning app that truly has everything you need to ace your exams in one place

    • Flashcards & Quizzes
    • AI Study Assistant
    • Study Planner
    • Mock-Exams
    • Smart Note-Taking
    Join over 22 million students in learning with our StudySmarter App