ESSAY:

Examine the significance of the factors which have

contributed to increased globalisation in recent years.

Globalisation is one of the fastest process in the world and is the ever increasing
integration of the world’s local, regional, and national economies into a single
international merger. For today, the global economy is becoming more
interdependent. In recent years the process of globalisation has accelerated and
there are several factors that are responsible for this, they are containerisation,
changes in technologies and growth of trading blocks. Despite the fact that they
are beneficial to globalisation, it is important to bear in mind that some of the
factors may have their downsides and limitations.
Firstly, the containerisation helped to significantly reduce the cost of trade.
Before the use of containers, goods were transported in various bags and boxes.
Therefore, in order to unload and sort the goods, a large amount of workforce
was required. However, when the bigger containers appeared the transport
charges were drastically lowered. As a result, the demand has risen due to
several facts: it became cheaper to export; the containers enabled an
exploitation of more goods because they were quite increased in volume; since
goods were transported in small bags and boxes they could easily go missing, so
the containerisation became more secure way of exporting goods. An example
of firm, which is enjoying the economies of scale is Walmart. Walmart (WMT)
is the largest US supplier of groceries, and the largest US general retailer. They
can buy in such enormous bulk, and force suppliers to accept such low prices,
so they can sell at low prices to customers. So, in this case, economies of scale
arise when the unit costs fall (low prices)as output increases(bulk). In other
words, WMT can benefit from economies of scale because they can buy food in
bulk and get lower average costs.

However, an increase in sea transport has also led negative externalities to

appear. Over the past 20 years the estimates for CO2 emissions has risen,
meaning that there is a environmental damage caused by sea transports. So,

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there may be an appearance of green taxes on shipping transport, leading to a
repeat increase in transport costs and hence the process of globalisation will be
stopped at some point.
Secondly, sustainable technological changes have reduced the cost of
transmitting and communicating information. For example, the invention of the
internet enables firms to compete more easily in global markets. One of the
most significant functions of the internet for firms is to act as a 24-hour online
platform allowing consumers all over the world to buy products online from
whoever happens to be offering the best deal. For the firm, it therefore provides
cheap marketing and advertising with global reach.
However, there is a very uneven spread of internet around the world. For
instance, this new platform for buying things works very good in developed
countries but doesn’t not help to developing ones so they are still left behind. It
can be explained by the costly infrastructure of the internet. Not every
country(residents)can afford themselves to use such invention. Poor countries
such as those in Africa will clearly have little incentive to take part in the
internet revolution. Therefore these regions would continue focusing on basic
survival needs rather than investing in IT equipment, because again they are
very poor. Therefore the growth of internet usage have made an unequal
contribution towards the process of globalisation.
Finally, the growth of global trading blocks, for example, European Union,
NAFTA or ASEAN have reduced national barriers. Trading blocks themselves
are groups of countries who form trade agreements between themselves. They
have advantages in enabling free trade between countries. This means no tariffs
between members and negotiation of own trade deals. As a result, there will be
lower prices, increased export and higher growth, boosting the process of
globalisation.
However, trading blocks still have certain restrictions and are able to increase
trade only among members but may decrease trade with non-member countries.
For example, before 1973, British consumers could import agricultural products
from New Zealand, especially lamb and apples. However, after joining the EU
all agricultural products from outside the block, including New Zealand,
became subject to very high tariffs. Many UK consumers have therefore
switched to British or other EU produce, with the consequence that our reliance

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on countries outside the EU has fallen greatly. As a result, it may not always
lead to globalisation.(info from internet)
In conclusion, globalisation is the fastest-growing process. Several factors may
have an influence on it’s further development. However, when evaluating the
importance of each factor, it is important to bear in mind that every factor has
its own limitations and drawbacks. So, it will be better to always examine them
before giving complete conclusions. However, I believe that in the next decades
the process of globalisation will keep increasing because it opens a lot of new
opportunities for countries and obviously advantages outweigh the
disadvantages.