A-Level Economics Revision — Globalisation

Revise Globalisation for A-Level Economics with a topic explanation, worked example and common mistakes. Check the board notes for specification differences.

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This topic: Globalisation in A-Level Economics: explanation, examples, and practice links on this page.
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Topic explanation

What is Globalisation?

Globalisation is the process of growing economic integration and interdependence of countries worldwide. It is characterised by the free flow of goods, services, capital, and labour across international borders, as well as the rapid diffusion of technology and ideas. This process has been driven by technological advancements, trade liberalisation, and the growth of multinational corporations (MNCs).

Board notes: A significant topic for all A-Level boards (AQA, Edexcel, OCR). All boards expect an understanding of the causes and consequences of globalisation for developed and developing countries. AQA and Edexcel often focus on the role of MNCs and the impact on inequality and the environment. OCR places emphasis on the role of international institutions and the debate over the future of globalisation.

Step-by-step explanation

Worked examples

Worked example

The production of an iPhone is a prime example of a global supply chain. The design and software development are done in the USA, high-tech components are sourced from countries like Japan and South Korea, and the final assembly takes place in China. The finished product is then marketed and sold worldwide, illustrating the globalised nature of modern production and consumption.

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Common mistakes

1Assuming globalisation is a new phenomenon. While the pace has accelerated recently, historical periods like the late 19th century also saw high levels of global trade and migration. The current wave is characterised by the speed of communication and capital flows.
2Thinking that globalisation benefits all countries equally. While it has lifted millions out of poverty, the benefits have not been evenly distributed. Some developing countries, particularly in sub-Saharan Africa, have been marginalised, and it can increase income inequality within countries.
3Confusing globalisation with free trade. While trade liberalisation is a key driver of globalisation, the process is much broader, encompassing the movement of capital, people, and ideas, and the dominant role of multinational corporations.

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Globalisation exam questions

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Frequently asked questions

What are the main drivers of globalisation?
The main drivers include technological changes (e.g., the internet, containerisation), the reduction of trade barriers through organisations like the WTO, the growth of multinational corporations seeking new markets and lower costs, and the opening up of former communist countries to the global market.
Is globalisation a threat to national sovereignty?
This is a major debate. Some argue that the power of multinational corporations and the influence of international financial institutions (like the IMF and World Bank) can undermine the ability of national governments to make independent economic policy decisions.

What is Globalisation?

Step-by-step explanation

Worked examples

Worked example

Common mistakes

1Assuming globalisation is a new phenomenon. While the pace has accelerated recently, historical periods like the late 19th century also saw high levels of global trade and migration. The current wave is characterised by the speed of communication and capital flows.

2Thinking that globalisation benefits all countries equally. While it has lifted millions out of poverty, the benefits have not been evenly distributed. Some developing countries, particularly in sub-Saharan Africa, have been marginalised, and it can increase income inequality within countries.

3Confusing globalisation with free trade. While trade liberalisation is a key driver of globalisation, the process is much broader, encompassing the movement of capital, people, and ideas, and the dominant role of multinational corporations.

Frequently asked questions

What are the main drivers of globalisation?

The main drivers include technological changes (e.g., the internet, containerisation), the reduction of trade barriers through organisations like the WTO, the growth of multinational corporations seeking new markets and lower costs, and the opening up of former communist countries to the global market.

Is globalisation a threat to national sovereignty?

This is a major debate. Some argue that the power of multinational corporations and the influence of international financial institutions (like the IMF and World Bank) can undermine the ability of national governments to make independent economic policy decisions.