Globalisation — Edexcel A-Level Economics A
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Globalisation explained
Globalisation is the growing integration and interdependence of national economies, shown by several linked characteristics.
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Trade characteristics include a rising share of output traded internationally, more intra-regional and intra-industry trade, and growing trade in services as well as goods. Investment characteristics include higher foreign direct investment (FDI) by multinational corporations (MNCs), cross-border mergers and acquisitions, and capital flows moving quickly between financial centres. Other characteristics are greater international labour migration, faster technology and information transfer, global branding and sourcing, and the spread of shared consumption patterns. A useful method is to classify each characteristic as trade, investment, labour, technology or culture, then give a concrete example such as a car assembled from components made in several countries.
Your focus
- Identify at least four characteristics of globalisation and classify them as trade, investment, labour, technology or cultural features.
- Explain how a named indicator, such as trade as a percentage of GDP or FDI flows, can evidence a characteristic of globalisation.
- Distinguish globalisation from related but narrower ideas such as free trade or the existence of multinational corporations.
Globalisation exam tips
Marking Points
- Globalisation means growing integration and interdependence of national economies, not simply the existence of trade.
- Trade characteristics: a rising share of world output traded, growth in trade in services, and more intra-industry and intra-regional trade.
- Investment characteristics: rising foreign direct investment by multinational corporations, cross-border mergers and acquisitions, and more mobile financial capital.
- Labour and technology characteristics: increased international migration of workers and rapid cross-border transfer of technology and information.
- Cultural and commercial characteristics: global brands, global sourcing of components, and converging consumption patterns across countries.
- Characteristics can be evidenced by indicators such as trade as a percentage of GDP, FDI flows and migration statistics.
Examiner Tips
- 💡Classify each characteristic under a heading such as trade, investment, labour or technology so the answer is structured and complete.
- 💡Attach a concrete example to each characteristic, for example a multinational car producer sourcing components across several countries.
- 💡Use an indicator such as trade as a percentage of GDP to show that a characteristic is measurable rather than merely asserted.
- 💡Read the question carefully: if it asks for characteristics, describe features of the process rather than listing only its causes.
Common Mistakes
- Treating globalisation as identical to free trade: free trade is one driver and feature, but globalisation also covers investment, labour, technology and cultural integration.
- Assuming globalisation means all countries gain equally: the characteristics describe integration, not evenly distributed benefits.
- Confusing FDI with portfolio investment: FDI involves lasting control or significant influence over a foreign business, whereas portfolio flows are financial asset purchases.
- Describing globalisation as a single recent event: it is an ongoing process with characteristics that can be measured over time.