Globalisation: Trade in Goods &

Services
Tim Alim » Winston Phan » Henry Saunders » Viet-Tu Vu
• Globalisation, through the reduction of trade
barriers and advancements in technology has
lead to increased trade of goods and services
• Floating exchange rates leads to a truer value of
exchange rates and increases trade - foreign
imports and exports
• ETM goods have increased in demand, increase
the trade of goods and services from country to
country
• TNCs who, trade and invest worldwide, have
grown and had a larger influence on world trade
• World Trade, in particular, exports, grew by
5.2% in advanced countries while in
developing and emerging countries, it grew
by 9.8%
• World trade has grown faster than world
output
• Over the past 10 years, excluding the 08-09
period of the Global Financial Crisis, Real
GDP growth grew.
• Trade of goods and services has increased,
over the past 20 years up until the GFC, from
US$8.7 trillion, which is 38% of global
output (1990) to US$31.2 trillion, 63% of
global output (2007)
• GWP is 9 times the level in 1950
• Volume of World Trade has grown to 33
times the 1950 level
• Countries are now more dependent on
trade with other countries
How Globalisation has impacted on
International Investment
 Growth of International Investment
One way in which globalisation has impacted upon international investment is through
encouraging the expansion of Foreign Direct Investment (FDI), which involves the
movements of funds that are directly invested in economic activity or in the purchase of
companies. This means that globalisation has increased the number of transnational
and multinational corporations. FDI flows are strongly influenced by the level of
economic activity. This has enhanced the effects of globalisation. Since 1950, for
example, the volume of world trade has increased by 20 times, and from just 1997 to
1999 flows of foreign investment nearly doubled, from $468 billion to $827 billion.

Another way in which globalisation has impacted upon international investment is that it
has increased the level of international mergers and takeovers. In recent years, there
has been a spate of mergers between some of the world’s largest corporations – most
recently between automotive companies Volkswagen and Porsche, between
telecommunications companies Vodafone and Hutchison and between major companies
in the mining, pharmaceuticals and financial services industries.

Globalisation has increased competition for international investment. This has been a
result of increased integration through trade and investment.
 Statistics
•The world has seen a significant increase in FDI flows from US$201 billion in 1990 to a peak of US$1.8
trillion in 2007.
•Between 1993 and 2000, the total value of world FDI flows rose exponentially, from US$250 billion to
almost US$1500 billion. At this point however, the level of FDI flows considerably declined, to
approximately US$600 billion, in three years. This decline is a result of the downturn in the US and
European economies, demonstrating the strong influence economic activity has on the level of FDI flows.
•After 2003, the economy darned itself, and FDI flows continued to rise significantly, in line with the
booming economy, until the global economic crisis in the late 2000’s, when FDI levels were moderated
again.
•Countries in the OECD received 68% of the world’s net FDI inflows in 2007, when the level of FDI
flows (and the economy) peaked. High income economies dominate FDI inflows in 2007, with 85%.