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cation:
Week 2, Video 1: Truste
d
What is
Globalisation?
Globalisation refers to interdependence, interactions and integration among people, businesses,
cultures, countries, and governments worldwide.

Governments are not the only responsible actor. International governmental organisations (IGOs),
Nongovernmental organisations (NGOs), Civil society organisations (CSOs), Multinational
corporations (MNCs), multinational enterprises (MNEs) and Transactional corporations (TNCs) are all
key players in globalisations and impact on political economy of it.

The beginnings of economic globalisation dates to more than 2000 years ago. Some historians and
economists see the ‘Silk Road’ as the spike of the globalisation where people started trading luxury
products (mainly Silk) from China to the other end of Eurasia continent – Rome. Although it was
confined to few products and hence had limited economic impacts, it was the start of an era when
the production and consumption of goods were not confined to one country.

The Islamic merchants during 7th and 15th centuries were the next step in global trade, still limited to
few luxury products but widespread from Spain to Indonesia. After this era, the so-called “Age of
Discovery” started when European explorers built trading networks throughout the world.
Colonialization has been widely referred to as the major trigger in the state of globalisation we know
today. During this era, European empires started trading globally and setting up global supply chains
but mainly within their colonies. In the late 19 th s and early 20th centuries these states used a
common gold standard to allow for the simple exchange currencies, and an developed an
international system of states.

Industrial Revolutions have accelerated the globalisation and global trade. Invention of steamships
and trains made it possible to transport goods over thousands of miles in late 19 th century and the
beginning of 20th century. Industrialisation allowed countries to produce what other countries
demanded for and were unable to produce. By this time, the trade grew on average 3% per year.

A similar trend happened in investments. Some started investing in internationally active joint stock
companies. For example, the French Compagnie de Suez, constructed the Suez Canal, connecting the
Mediterranean with the Indian Ocean and opened yet another artery of world trade. Others built
railways in India, or managed mines in African colonies. Foreign direct investment was globalizing.

We should not forget that all these developments, globalisations and industrialisations have their
dark sides too. Africa was was colonised by the European nations leaving just Ethiopia and Liberia as
the only independent countries on the continent. Their resources were used, and their people have
experienced cruelties. Other countries such as India, China, Mexico or Japan were not allowed to
access and adopt globalisation and industrialisation trends since their independent developments
were restrained by Western countries and had no access to technology and capital.

The end of WWII was the beginning of a new era for global economy. The second industrial
revolution, this time driven by the invention of planes, and cars and other new technologies
deepened global trade further.
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Now, most of the world’s countries are cation: members of World Trade Organisation (WTO)
– the primary international organisation Truste dealing with the rules of trade between
nations. The WTO encourages nations to d enter into free-trade agreements (FTAs). FTAs
are contracts between countries to allow reciprocal access to their markets. They may increase the
competition on the global market since the customers have access to more imported products than
locally produced ones. So the local manufacturer must compete in the global market. It increases the
foreign direct investment and eases the technology transfer.

However, it has its disadvantages and negative impacts. Job outsourcing, poor working conditions,
closing downs of domestic industries, degradation of natural resources and destruction of native
cultures are all considered as the disadvantages of FTAs and globalisation in a broader context.