What are the driving forces behind globalisation?
The production of goods and services has increased around the world due to a number of factors, particularly globalisation. Many companies have gone beyond their national borders to have operations, even in remote corners of the world. McDonald’s, Subway, Kellogg’s, Walmart, Tesco, Coca Cola, and Pepsi are some of the best examples in this regard.
No doubt that globalisation has increased the production of goods and services throughout the world. So, what is driving globalisation? There are a number of factors which requires attention. Improved transportation, cultural exchange, low barriers to trade, and technological change to name but a few. So, let us now look at some of the driving forces behind globalisation.
The driving forces behind globalisation
Cultural exchange has been one of the biggest drivers of globalisation. People travel to different countries and share their cultural beliefs and practices with each other. Through this process, a cultural understanding takes place which drives globalisation. Today, people around the world like and use the same smart phones whether they are iPhone, Samsung, HTC, or Sonny Xperia. No wonder why Indian/Bengali curries, and Chinese takeaways are so popular in the UK! Likewise, now wonder why people around the globe are crazy for American burgers, softwares, movies, and many more!
We live in a ‘global village’. People can move around the world fairly quickly due to improved transportation systems. Airlines, ships, large vehicles, and others have improved the delivery time of products to and from abroad. A business man from London can go to Paris to do his ‘business’ and come back to London on the same day. Likewise, goods can be transported beyond the national border on the same day. This happens in many parts of the world on a daily basis.
Low barriers to trade and investment
This also drives globalisation significantly. Many of the world trades are currently done through free trade, bilateral, and multilateral agreements. Interestingly, countries which were very hostile or unfriendly to foreign investment few years ago, are inviting other countries for inward foreign direct investment (FDI). China is a very good example in this regard.
Technology is also an important driver of globalisation. Advanced E-commerce system has made the emergence of companies such as Amazon.com, Alibaba.com, ebay.com, and many others possible and successful. Many US and UK companies have outsourced many of their business activities to countries such as China, India, Mexico, Turkey, Bangladesh, and many others. This technological revolution enables traders from remote parts of the world to sell their products/services to customers around the world on virtual platforms.
In a nutshell, there are a number of driving forces behind globalisation. Many companies are now multinational corporations with subsidiaries around the world. This gives managers more opportunities for growth and development. However, globalisation is not without challenges. In fact, it has its own pitfalls.nFor instance, according to some analysists as cited in Saval (2017), local workers in some countries had endured a major fall in the real value of their wages, which dropped by more than 20% because of globalisation. For more information on the pros and cons of globalisation, please read our article: Advantages and disadvantages of globalisation.
We hope the article has helped you explore some of the driving forces behind globalisation. You may also like reading PESTEL analysis of the USA. Other relevant articles for you are:
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Last update: 02 September 2020
Hill, C. (2012) International Business: Competing in the Global Marketplace, New York: Mc Graw-Hill.
Saval, N. (2017) Globalisation: the rise and fall of an idea that swept the world, available at: https://www.theguardian.com/world/2017/jul/14/globalisation-the-rise-and-fall-of-an-idea-that-swept-the-world (accessed 06 September 2019)
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Author: M Rahman
M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He is a graduate of Leeds Metropolitan University and London South Bank University.