What is Globalisation? Revision Notes | GCSE OCR Economics

1. Why This Matters

The phone in your pocket was probably designed in California, assembled in China, using minerals mined in the Democratic Republic of Congo, and shipped to the UK on a container vessel. The clothes you are wearing may have been sewn in Bangladesh from cotton grown in India. This is globalisation in action — and it affects almost every product you buy, every job in the economy, and the prices you pay on the high street.

Understanding globalisation is essential for your GCSE Economics exam. You need to be able to explain what globalisation means, identify its key features, and evaluate the factors driving it forward. This lesson builds the foundation you will need before tackling the benefits and drawbacks in the next lesson.

2. The Meaning of Globalisation

Think of globalisation as a web connecting countries together. Fifty years ago, most people bought products made in their own country, worked for local businesses, and had limited awareness of events abroad. Today, supply chains stretch across continents, workers migrate between countries, and a financial crisis in the United States can cause job losses in the UK within weeks. The world's economies have become deeply interdependent.

3. The Main Features of Globalisation

Globalisation is not a single thing — it has several distinct features that you need to know. Each feature represents a different way in which countries have become more connected.

4. Factors Driving Globalisation: New Technology

Technology has been the single biggest driver of globalisation. Several key innovations have made it faster, cheaper and easier to move goods, information and money around the world.

The internet and digital communication allow businesses to coordinate operations across time zones instantly. A designer in London can send specifications to a factory in Shenzhen, receive a prototype image within hours, and arrange payment electronically — all without leaving their desk. Email, video conferencing and cloud storage have made distance almost irrelevant for many business activities.

Cheaper air travel has enabled the rapid movement of people and high-value goods. Budget airlines have made international travel affordable for millions, while air freight services allow fresh flowers from Kenya to reach UK supermarkets overnight. The cost of a transatlantic flight has fallen by over 60% in real terms since the 1970s.

5. Factors Driving Globalisation: Multinational Companies

MNCs are both a feature and a driver of globalisation. They spread globalisation by locating different parts of their supply chain in different countries — sourcing raw materials where they are cheapest, manufacturing where labour costs are low, and selling where consumers have the most spending power. When Apple sources components from suppliers in 43 countries, assembles iPhones in China, and sells them in stores from London to Lagos, it is actively connecting those economies together.

MNCs also spread globalisation through Foreign Direct Investment (FDI). When a company like Amazon builds a new distribution centre in the UK, or when Tata Steel from India acquires a British steel plant, money flows across borders, jobs are created, and the two economies become more intertwined. The sheer scale of modern MNCs — the largest have revenues exceeding the GDP of some countries — gives them enormous influence over global economic patterns.

6. Factors Driving Globalisation: Reduced Trade Barriers

Since the end of World War II, governments around the world have gradually reduced trade barriers. Organisations like the World Trade Organisation (WTO) have encouraged countries to lower tariffs and open their markets. Free trade agreements — such as the EU single market that the UK was part of until Brexit — allow goods and services to flow between member countries with few or no restrictions.

The average global tariff rate has fallen from around 40% in 1947 to below 5% today. This means a British consumer can buy a television made in South Korea without paying a large import tax, keeping the price low. Reduced barriers have been essential in enabling the massive growth in world trade that characterises globalisation.

7. Real-World Examples of Globalisation

Apple's global supply chain is one of the best examples of globalisation. Apple is headquartered in California, USA, but its iPhone contains components from over 200 suppliers across 43 countries. The A-series chip is designed in the USA, manufactured in Taiwan by TSMC, the screen glass comes from Japan, rare earth minerals are mined in Africa, and final assembly takes place in Foxconn factories in China. Apple then sells the finished product in retail stores and online across 175 countries. This single product demonstrates every feature of globalisation: international trade, MNC operations, capital flows, technology transfer and the movement of skilled workers between countries.

Amazon's worldwide operations show how technology drives globalisation. Starting as an online bookshop in Seattle in 1994, Amazon now operates in over 20 countries, employs more than 1.5 million people worldwide, and its Amazon Web Services (AWS) cloud computing division hosts websites and data for businesses across the globe. Amazon's UK operation alone has over 75,000 employees across more than 30 fulfilment centres.

Fast fashion — companies like Primark, H&M and Shein — demonstrates both the speed and the scale of globalisation. Designs are created in Europe, fabric is sourced from countries like India and Turkey, garments are manufactured in Bangladesh, Vietnam or China where labour is cheap, and the finished products are shipped to shops worldwide within weeks. This rapid, global supply chain keeps prices extremely low for UK consumers but raises questions about working conditions and environmental impact that we will explore in the next lesson.

8. Exam Success: Worked Example

Worked example: Explaining Factors Contributing to Globalisation

Explain two factors that have contributed to the growth of globalisation. [4 marks]

Method: Use a Point-Explain-Example (PEE) structure for each factor

1. One factor is the development of new technology, particularly containerisation and the internet. — Start with a clear, specific identification — do not just say 'technology' alone.
2. Containerisation reduced the cost of shipping goods internationally by standardising how they are loaded and transported. The internet allows businesses to communicate instantly across time zones and coordinate global supply chains. These technologies have made it cheaper and faster to trade between countries, increasing the interconnection of economies. — The explanation must link the factor to the definition of globalisation — show how it makes economies more interconnected.
3. A second factor is the reduction of trade barriers through organisations like the WTO and free trade agreements. — Choose a distinctly different factor for your second point.
4. Lower tariffs mean imported goods face smaller taxes, making them cheaper for consumers and more profitable for exporters. Free trade agreements between countries remove restrictions on the movement of goods and services. As a result, international trade has grown significantly, connecting economies more closely. — Again, link clearly back to the concept of interconnection. Each explained factor earns up to 2 marks.

Answer: New technology (containerisation, internet) has made international trade cheaper and faster, increasing economic interconnection. Reduced trade barriers (lower tariffs, WTO, free trade agreements) have removed restrictions on trade, allowing goods and services to flow more freely between countries.

9. Key Takeaways

Globalisation is the increasing interconnection of the world's economies. Its main features are the growth of international trade, the rise of MNCs, the movement of people, the flow of capital and the spread of technology. Three key factors have driven globalisation: new technology (internet, containerisation, air travel), the operations of MNCs (global supply chains, FDI), and the reduction of trade barriers (WTO, free trade agreements). In your exam, always link your points back to the idea of economies becoming more interconnected and interdependent.