Globalisation — meaning and causes
Globalisation is the increasing integration of national economies through cross-border flows of goods, capital and people. Causes: falling transport and communication costs; trade liberalisation cutting tariffs; the growth of MNCs (multinational companies); and financial deregulation letting FDI (foreign direct investment) flow. Distinguish cause from effect — a falling cost is not an impact until you explain why it deepens integration.
Winners and losers by stakeholder
Consumers: more choice and lower prices from competition and cheap imports. Producers: bigger markets but tougher competition. Workers in developed economies can lose jobs to lower-wage countries; those in developing ones gain low-paid jobs. Governments: more tax from FDI (foreign direct investment) and MNCs (multinational companies), but tax competition pushes rates down. Name the stakeholder and the mechanism, not just 'it helps consumers'.
FDI and MNCs — benefits and drawbacks
FDI (foreign direct investment) is investment in productive assets (a factory, offices) in another country; MNCs (multinational companies) are the main vehicle. For the host: jobs, technology transfer, tax revenue and exports — but profits are often repatriated, standards exploited, local firms crowded out. For the home country: lower costs and resource access, but lost jobs. The FDI definition is often answered poorly — learn it precisely.
Drawn from real examiner reports.
Define FDI, do not rearrange it
Asked to define FDI (foreign direct investment), 'FDI is when foreign investment is directed into a country' is a circular restatement scoring zero. Give both parts: (1) investment by a firm or individual (2) in productive assets — factories, offices, equipment — in another country. Re-ordering the three words shows no understanding.
November 2024 Paper 2, Q2(d): examiner reports that very few candidates could provide an accurate definition of FDI — most simply rearranged the words in the question.
Develop the cause, do not restate it
Asked for an impact of globalisation given cheaper communication, many wrote 'globalisation will increase because communication is cheaper' — the stem restated, worth 1 mark. The development mark needs the why: cheaper communication → firms coordinate overseas production cheaply → more FDI (foreign direct investment) → deeper integration. Chain cause to consequence.
November 2024 Paper 2, Q1(d): second mark required explaining the mechanism by which cheaper communication increases globalisation — restating the fact from the stem scored only 1 mark.
Use extract data, do not copy it
On an Assess about a trading bloc, quoting 'the bloc has 15 member countries' earns no AO2 (assessment objective 2 — application) marks unless developed: 15 members → a larger market → higher export demand → higher GDP and jobs. Add a counter-argument (import competition) and a supported judgement. Copying the extract stays at Level 1.
November 2024 Paper 2, Q4(c): evaluate the possible benefits of India joining the RCEP trading bloc — top responses used extract evidence with developed chains of reasoning and a supported conclusion; weaker responses copied the extract verbatim.
FDI is not buying shares
FDI (foreign direct investment) means investing in productive assets — building or acquiring a factory, office or equipment — in another country, usually with a lasting stake. Buying foreign shares or bonds for a return is portfolio investment, a different thing. Calling any purchase of foreign assets FDI loses the definition mark.
GDP per capita is not living standards
GDP per capita (output per person) is an average that hides inequality — a high figure can sit alongside widespread poverty. Development is broader than income, so use the HDI (human development index), which combines income, education and life expectancy, plus poverty and inequality measures. GDP per capita alone misses health, education and distribution.
MNCs do not always exploit hosts
A blanket claim that MNCs (multinational companies) always exploit host countries is one-sided. They can bring jobs, technology transfer, tax revenue and infrastructure; they can also repatriate profits, exploit weak standards and crowd out local firms. Which dominates depends on the host government's regulation. A balanced answer weighs both.
Evaluate: benefits, costs, new judgement
For a 12-mark globalisation Evaluate: define → benefits with extract data → drawbacks from a different part of the extract → supported judgement that adds a condition (gains outweigh costs if there is a comparative advantage), not a repeat of earlier points.
Chain a cause to a consequence
On Describe and Explain questions, never stop at the cause. Add the why: cheaper transport → firms source globally at lower cost → more cross-border trade. The identification earns one mark; the developed consequence earns the rest. Restating the stem develops nothing.
Name the stakeholder, then the mechanism
For 'impact of globalisation' questions, pick one stakeholder (consumers, producers, workers, government) and explain the mechanism. A named stakeholder with a developed chain scores; a vague 'globalisation is good' does not.
Pick the right development measure
Pick the development measure that fits. GDP per capita shows average income but hides inequality; the HDI (human development index) adds education and life expectancy; the Gini coefficient captures inequality. Name the measure and its limitation.
Globalisation is the process by which national economies become increasingly integrated through cross-border flows of goods, services, capital, technology, and people.
| Cause | Explanation |
|---|---|
| Falling transport costs | Container shipping and air freight make moving goods across borders cheaper |
| Falling communication costs | The internet allows firms to coordinate global production and reach customers anywhere |
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