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What is globalisation? A simple explanation

    What is globalisation? Well, globalisation is a hot topic and is often viewed as being somewhat controversial.

    Commonly associated predominantly with trade and finance, the concept of globalisation is actually far more than this. Globalisation is the notion that we are all becoming more alike, or more ‘global’. Globalisation is increasingly present in almost every aspect of the world that we live in. From English schools in Taiwan, to smart phones in Ethiopia to fajitas in Australia, the world is becoming more and more connected and more and more alike.

    In this article I will tell you a bit more about what is globalisation and how it impacts the world that we live in.

    What is globalisation?

    Globalisation is the way in which the world is becoming increasingly connected. We are losing our individuality and gaining a sense of ‘global being’, whereby we are more and more alike than ever before.

    Globalisation typically spans five different areas. Globalisation occurs economically, technologically, politically, culturally and environmentally.

    Definition of globalisation

    The term globalisation has been commonly used since the 1980s. The term comes from the word globalise, which refers to the growth of international networks of economic systems. 

    There are several definitions that have been given to the term, which tend to be centred around either economics or sociology.

    Sociologists have worked to conceptualise the term globalisation for years.

    According to Martin Albrow and Elizabeth King, globalisation is’

    ‘All those processes by which the people of the world are incorporated into a single world society.’

    Lechner and Boli (2012) define globalisation as;

    ‘More people across large distances becoming connected in more and different ways’.

    In his text, The Consequences of Modernity, Anthony Giddens writes that;

    ‘Globalisation can be defined as the intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa’.

    Roland Robertson, professor of sociology at the University of Aberdeen and an early writer in the field, described globalisation as

    ‘The compression of the world and the intensification of the consciousness of the world as a whole.’

    Robert Cox defines globalisation as;

    ‘The characteristics of the globalisation trend include the internationalising of production, the new international division of labour, new migratory movements from South to North, the new competitive environment that accelerates these processes, and the internationalising of the state […] making states into agencies of the globalising world.

    Most recently, theOrganisation for Economic Cooperation and Development (OECD) defines globalisation as;

    “The geographic dispersion of industrial and service activities, for example research and development, sourcing of inputs, production and distribution, and the cross-border networking of companies, for example through joint ventures and the sharing of assets.”

    Want to learn more about globalisation? Livesey’s book From Global To Local: The making of things and the end of globalisation is worth a read!

    The three types of globalisation

    If you’re asking yourself ‘what is globalisation?’, then you need to first think about the three types of globalisation.

    Globalisation occurs in almost every walk of life. However, it can largely br broken down into the three pillars of globalisation:

    1. politics
    2. economics
    3. society

    Below, I will explain what each of these pillars means, both conceptually and in real terms- to you and me.

    1- Political globalisation

    Political globalisation refers to the way that the world is becoming increasingly connected politically.

    Over the years, there have been a number of international organisations that have been formed. These are known as intergovernmental organisations (IGOs), whereby the organisation is comprised primarily of sovereign states (referred to as member states), or of other intergovernmental organisations.

    The intention of said organisations is to provide governance, leadership and regulation on particular issues or areas of concern.

    Whilst it is difficult for an international body to speculate what a nation can or cannot do, these organisations work closely with the political structures that are in place within the countries involved.

    International organisations work to govern a number of global issues such as:

    • Climate change
    • Conflict and war
    • Trade
    • Poverty reduction
    • Environmental conservation
    • Economic regulation

    IGOs operate a top-down process and range from large global organisations to organisations which operate in specific parts of the world. Examples of political organisations include:

    The relationship between globalisation and politics is covered at length in Baylis’s text The Globalization of World Politics: An Introduction to International Relations. If you’re studying the concept of globalisation for an essay or exam, I would recommend you take a look at his book!

    2- Social globalisation

    Social globalisation is the way in which societies adapt their behaviours to become more like each other.

    There are a number of things that have influenced the occurrence of social globalisation. This includes:

    • Internationally popular films, books and TV series such as Harry Potter or Frozen
    • Technological developments which have facilitated access to worldwide media, such as Netflix, Amazon and IPTV
    • Increased levels of tourism, facilitating the mixing of cultures
    • An increased desire by tourists to travel somewhere different, ‘exotic’ and unfamiliar
    • The growth of the sharing economy, slow tourism and cultural tourism
    • Internationally popular football teams, such as Manchester United

    Social globalisation is often evidenced in a number of different ways, which includes:

    • The foods we eat- think fajitas in Australia or sushi in Brazil
    • The language we speak- think English in China or Spanish in the USA
    • The clothes we wear- think Manchester United football top worn by a young boy living in a rural Gambian village
    • The music we listen to- think Jamaican reggae in France

    Globalisation is often seen as the reason for cultural change, in which ever way this might be.

    3- Economic globalisation

    Economic globalisation refers to the increased interconnectedness of global economies through trade and the exchange of resources.

    There are very few economies which are self-sufficient nowadays. The world is connected through trade and resource exchange more than ever before. The UK, for example, gets their oil from The Middle East. They get their coffee beans from South America. They get their lamb from New Zealand. Their cars are made in Germany.

    The world is becoming more and more connected

    The world has become one large global economy, demonstrated through a complex system of interconnected trade networks.

    This was clearly evidenced during the global recession in 2007, when the collapse of the banks in the USA resulted in hardships being created throughout the world.

    In some parts of the world, people are rejected this ‘connectedness’, arguing that policies, processes and practices do not reflect their individual needs and requirements. This is evidenced, for example through BREXIT, in the United Kingdom.

    When did globalisation begin?

    If you truly want to understand what is globalisation, you need to look at its roots. Where did it begin? How has it evolved?

    The concept of globalisation has been around since people began to travel, although it hasn’t always been referred to using this term.

    The development of globalisation throughout the years has been characterised as having four distinct phases. These phases are:

    • The early voyages of exploration and colonisation
    • The age of transnational integration
    • Political and economic land scale
    • The modern age of globalisation

    Read more: Everything you need to know about the sharing economy

    What is globalisation? Phase 1

    The first phase of globalisation was seen to have started in the late 1400s, lasting until about 1800. During this time, explorers, the most notable being Christopher Colombus, began to travel the world, visiting unchartered territories and mixing with unknown peoples and cultures.

    During this era there were many fights for land and colonisations began to occur. The English and Spanish were particularly successful in colonising many parts of the world.

    This mixing of peoples and cultures saw the beginning of globalisation, whereby international trade began to become commonplace, economies began to work together and societies began too adapt and change in response to this new world.

    Top tip: You can learn more about the phases of globalisation in this text! The New Silk Roads: The Present and Future of the World

    What is globalisation? Phase 2

    Between the years of 1800 and 1940 we saw the age of transnational integration.

    During this time, many parts of the Western world were experiencing an industrial revolution. Advances in technology, transport and an increasingly liberalised environment saw rise to increased integration across boarders.

    Many economies were linked through trade and many businesses were expanded to an international level.

    This did not last, however. World War One and World War Two saw a decline in the growth of globalisation, with much trade and international travel being frozen.

    There was also the catastrophic event of the Great Depression, which also had a considerable influence on the slow growth of globalisation.

    What is globalisation? A summary of the phases of globalisation

    What is globalisation? Phase 3

    Between the years of 1950-1980 there was a steep incline in globalisation due to new freedoms surrounding the ability to trade internationally.

    The General Agreement on Tariffs and Trade (GATT) saw rise to many newfound businesses or business expansions, given that it eliminated many trade barriers such as tariffs or quotas.

    What is globalisation? Phase 4

    The forth phase of globalisation is the modern age.

    The modern age of globalisation spans 1980-present and represents significant growth and development in terms of globalisation throughout the world.

    Telecommunications have had remarkable impact. From the first mobile phones to blackberries, smart phones and laptops. We can now easily chat with our counterparts on the other side of the world.

    Transport developments has also had significant impact on the growth of globalisation. Air travel is now faster and more efficient. Many places around the world have developed airports, ports and roads, meaning that they are now more accessible than they once were. Travel costs are lower and making travel arrangements has never been easier.

    World trade was further promoted through the formation of the World Trade Organisation (WTO), who established a number of legal bases in the trades between countries.

    Known as globalisation 4.0, the world that we live in today is quite different from the world that our great grandparents occupied.

    The digital economy, in its infancy during the third wave of globalisation, is now becoming a force to reckon with through e-commerce and digital services. Advances in technology are only making it easier for us to work together in a global scale and for the world to become ever more globalised.

    There are some great texts out there that explore what the future holds in terms of globalisation. I can recommend Michael O’Sullivan’s book The Levelling: What’s Next After Globalization.

    Importance of globalisation

    When asking the question ‘what is globalisation?’, it is important to also understand why globalisation is important.

    Globalisation is effectively the result of freedom to move goods, services and people across the world. Some refer to it as ‘opening up the economy on a global scale’. Globalisation is the result of an increasing interconnectedness and integration of the policies, economies and societies of the world.

    The presence of globalisation can enable countries to liberalise their import protocols and welcome foreign investment into sectors that are the mainstays of their economy. In simple terms, this means that countries are able to do what they are good at or offer what they do best on a multinational level.

    In addition to this, globalisation means that countries often liberalise their visa rules and procedures so as to permit the free flow of people from country to country. This is represented no better than in the European Union, whereby freedom of movement is a core product of the EU.

    At the heart of it, globalisation is grounded in the theory of comparative advantage, meaning that countries that are good at producing a particular good are better off exporting it to countries that are less efficient at producing that good. Likewise, the latter country can then export the goods that it produces in an efficient manner to the former country which might be deficient in the same. The underlying principle here is that not all countries are good at everything and can operate more effectively if they cooperate and conjoin forces with other countries in ways that matter to them.

    Lastly, the notion of globalisation means that countries of the world subscribe to the rules and procedures of the WTO and other relevant IGOs, resulting in a more consistent global operation.

    Read more: The economic impacts of tourism

    Characteristics of globalisation

    When attempting to understand what is globalisation, it is helpful to be familiar with the characteristics. There are 10 dominant characteristics of globalisation. These are as follows:

    1. Greater trade in goods and services both between nations and within regions
    2. An increase in transfers of capital including the expansion of foreign direct investment (FDI) by trans-national companies (TNCs) and the rising influence of sovereign wealth funds
    3. The development of global brands that serve markets in higher and lower income countries
    4. Spatial division of labour– for example out-sourcing and off shoring of production and support services as production supply-chains has become more international. As an example, the iPhone is part of a complicated global supply chain. The product was conceived and designed in Silicon Valley; the software was enhanced by software engineers working in India. Most iPhones are assembled / manufactured in China and Taiwan by TNCs such as FoxConn
    5. High levels of labour migration within and between countries
    6. New nations joining the world trading system. China and India joined the WTO in 1991, Russia joined the WTO in 2012
    7. A fast changing shift in the balance of economic and financial power from developed to emerging economies and markets – i.e. a change in the centre of gravity in the world economy
    8. Increasing spending on investment, innovation and infrastructure across large parts of the world
    9. Globalisation is a process of making the world economy more inter-dependent
    10. Many of the industrializing countries are winning a rising share of world trade and their economies are growing faster than in richer developed nations especially after the global financial crisis (GFC)

    Is globalisation good or bad?

    For many people, when they hear of the term globalisation, their fist question is ‘what is globalisation?’. Their second question is ‘is globalisation good or bad?’.

    More often than not, globalisation is spoken about with negative connotations. Whilst there are indeed many negative aspects to globalisation, there are also a number of positive elements too.

    Below I have listed the major advantages of globalisation along with the negative effects of globalisation.

    Advantages of globalisation

    Many people who support the notion of globalisation will argue that is can make the world that we live in a better place.

    Here are some of the arguments made, demonstrating the advantages of globalisation:

    1. Free trade reduces restrictive barriers such as tariffs, taxes and subsidies
    2. Globalisation creates jobs and makes businesses more competitive, which subsequently drives down prices for consumers
    3. Globalisation provides opportunities for poor countries to gain foreign capital and develop their economy
    4. Globalisation encourages the spread of democracy, which enhances human rights across the world
    5. There is now a worldwide market for companies and consumers who have access to products of different countries
    6. Globalisation encourages political decisions to be made that take the whole world into consideration, as opposed to particular areas or regions
    7. Globalisation encourages information sharing across countries
    8. Globalisation encourages cultural education
    9. Socially we have become more open and tolerant towards each other and people who live in the other part of the world
    10. Many people see fast and efficient travel, mass communications and quick dissemination of information through the Internet as benefits of globalisation
    11. Labour can move between nations, encouraging people to enhance skills and filling job shortages
    12. Transnational companies that conduct operations in other countries bring enhanced employment prospects to the area
    13. Globalisation has encouraged a range of free trade agreements to be established such as the North American Free Trade Agreement (NAFTA) and Trans-Pacific Partnership (TPP).
    McDonalds are criticised for their role in globalisation BUT they do a good job differentiating their menus according to local customs…

    Negative effects of globalisation

    Many people complain about the negative effects of globalisation. Here are some of the common remarks:

    1. Globalisation makes the rich richer (manager, owners, investors) and the poor poorer (grass roots workers)
    2. Free trade is often not entirely ‘free’ and many countries have high value added taxes (VATs)
    3. Developed countries suffer when jobs are lost to lower cost countries
    4. Many experience job instability or insecurity, with threats made to relocate positions to cost saving countries
    5. Large multi-national corporations have the ability to exploit tax havens in other countries to avoid paying taxes
    6. Many multinational corporations (MNCs) are accused of social injustice, unfair working conditions (including slave labor wages, living and working conditions), as well as lack of concern for environment, mismanagement of natural resources, and ecological damage
    7. MNCs are increasingly influencing political decisions because of their increased size and subsequent power
    8. Building products overseas puts our technologies at risk of being copied or stolen by the host country
    9. It is believed by some that increased movement of people will result in the spread of diseases around the globe
    10. Many organisations are ignoring safety standards and allowing the exploitation of workers to occur
    A fascinating talk about the negative effects of globalisation

    Dani Rodrik has some fascinating and worthy arguments against the cause of globalisation in his brilliant text The Globalization Paradox: Why Global Markets, States, and Democracy Can’t Coexist.

    Globalisation: To conclude

    As you can see, globalisation is a hot subject right now. Criticised by many, the new interconnected world that we live in is shaped by the political, economic and social interactions that we have across the globe.

    But what is the future of globalisation? What are your thoughts on the subject? What is globalisation to you? Leave your comments below!

    Further reading on globalisation

    There are some fantastic texts available if you want to learn more. Some of these are formal, academic-based texts and others are more of a weekend read with a cup of coffee. Here are some of my recommendations:

    What is globalisation? Have I answered your question?