What is Globalisation?
In the past two to three decades, more MNCs have looked for cheap production locations around the world, so foreign investment has been rising. At the same time, foreign trade between countries has risen rapidly, and a large part of this trade is controlled by MNCs.
The result of greater foreign investment and greater foreign trade is greater integration of production and markets across countries. Globalisation is this process of rapid integration or interconnection between countries. MNCs play a major role in it.
Ways Countries Are Connected
Through globalisation, more and more goods and services, investments and technology move between countries, and most regions of the world are in closer contact than a few decades ago.
Besides goods, services, investment and technology, countries can also be connected through the movement of people — people usually move in search of better income, jobs or education. However, in the past few decades there has not been much increase in the movement of people between countries, because of various restrictions. By connecting countries, globalisation leads to greater competition among producers.
Questions and Answers
Q1. What is globalisation?
Answer: Globalisation is the process of rapid integration or interconnection between countries. It happens through greater foreign trade and foreign investment, so that more goods and services, investments and technology move between countries and most regions of the world come into closer contact. MNCs play a major role in driving this process.
Q2. What is the role of MNCs in the globalisation process?
Answer: MNCs play a major role in globalisation. They invest in many countries (foreign investment) and control a large part of foreign trade, moving goods, services, investment and technology across borders. By spreading and interlinking production across countries and connecting distant markets, MNCs drive the integration of production and markets that is the heart of globalisation.
Q3. In what different ways can countries be connected under globalisation?
Answer: Countries can be connected through the movement of: (i) goods (foreign trade); (ii) services (like IT and call-centre services); (iii) investment (foreign investment by MNCs); (iv) technology; and (v) the movement of people between countries in search of better income, jobs or education. Of these, the movement of people has increased the least, because of various restrictions.