GLOBALISATION
1. Meaning of Globalisation
Definition:
Globalisation is the process by which the world becomes increasingly interconnected through
the exchange of goods, services, information, ideas, and people across international borders.
It means that businesses, cultures, and economies are becoming more integrated and
interdependent.
In simple terms:
It’s the growing link between countries — for example, when a Kenyan student wears a T-shirt
made in Bangladesh, drinks a soft drink from the USA, and uses a phone designed in South
Korea but made in China.
2. Causes of Globalisation
Several key factors have driven the rapid pace of globalisation in recent decades:
a) Improvements in Transport
● Faster and cheaper methods of transport (like airplanes, container ships, and efficient
road systems) make it easier to move goods and people.
● Example: Containerisation allows products to be shipped worldwide at low cost.
b) Advances in Technology and Communication
● The internet, smartphones, and social media enable global communication and business
transactions in real time.
● Businesses can advertise, sell, and manage operations internationally from one location.
c) Growth of Multinational Corporations (MNCs)
● MNCs are large companies that operate in more than one country, e.g., Coca-Cola,
Apple, Toyota.
● These firms spread products, investment, and business practices across borders,
encouraging global integration.
d) Trade Liberalisation
● Many governments have reduced barriers like tariffs and import quotas.
● Membership in trade organisations (e.g., World Trade Organization (WTO)) promotes
free trade and reduces restrictions.
e) Outsourcing and Offshoring
● Companies move parts of their operations to countries where labour or production costs
are cheaper.
● Example: A UK company may manufacture clothes in Bangladesh to reduce costs.
3. Characteristics of Globalisation
Globalisation is recognised by certain features:
● Increased international trade in goods and services.
● Movement of labour — workers migrate for better opportunities.
● Flow of capital — investments made across borders.
● Transfer of technology and ideas.
● Cultural exchange — global trends, food, fashion, and media spread rapidly.
4. The Role of Multinational Corporations (MNCs)
MNCs are the driving force behind globalisation. They:
● Establish factories, offices, or subsidiaries in other countries.
● Bring new technology and management skills.
● Employ local people in host countries.
● Create global supply chains — production and distribution happen across multiple
countries.
Example:
Apple designs its products in California, sources parts from Japan, South Korea, and Germany,
and assembles in China.
5. Advantages of Globalisation
a) For Businesses
● Larger markets: Firms can sell to more customers globally.
● Lower costs: Access to cheaper resources and labour.
● Economies of scale: Producing on a larger scale reduces average costs.
● Access to new technology and ideas.
b) For Consumers
● Greater variety of goods and services.
● Lower prices due to international competition.
● Improved quality as firms compete globally.
c) For Economies
● Increased investment: Foreign companies invest in local industries.
● Job creation: MNCs create employment opportunities.
● Economic growth: More trade and production raise GDP.
● Skill development: Workers gain training and experience in global business operations.
6. Disadvantages of Globalisation
a) For Businesses
● Increased competition: Local firms may struggle to survive against large MNCs.
● Dependence on global supply chains: Disruptions (like wars or pandemics) can affect
production.
b) For Workers
● Job insecurity: Companies may relocate to cheaper countries.
● Exploitation: Workers in developing nations may face low wages and poor conditions.
● Loss of traditional industries: Local businesses may close due to cheap imports.
c) For Economies
● Uneven benefits: Richer countries often gain more than poorer ones.
● Economic vulnerability: Countries become dependent on global trade.
● Environmental damage: Increased production and transport harm the environment.
7. Advantages of Globalisation for Host Countries
A host country is a nation where a foreign (multinational) company operates.
a) Employment Opportunities
MNCs create jobs for local people in manufacturing, services, and management.
b) Infrastructure Development
Foreign investment often leads to improved roads, communication, and utilities.
c) Transfer of Technology and Skills
Local workers learn new production methods, management techniques, and technologies.
d) Increased Tax Revenue
MNCs pay taxes to the host government, funding public services like education and health.
e) Boost to Exports and Economic Growth
Foreign firms help increase exports, boosting the balance of trade and national income.
8. Disadvantages of Globalisation for Host Countries
a) Exploitation of Labour
MNCs may pay low wages or provide poor working conditions to cut costs.
b) Profit Repatriation
Profits often flow back to the company’s home country rather than benefiting the local economy.
c) Environmental Damage
Industrial activities can cause pollution, deforestation, and waste issues.
d) Cultural Erosion
Local traditions and culture may be replaced by global (often Western) culture.
e) Dependence on Foreign Companies
If MNCs close or relocate, host countries lose jobs and investment suddenly.
9. Impact of Globalisation on Kenya (Case Study
Example)
● Positive impacts:
○ Growth of foreign investment, e.g., Unilever, Toyota, and Safaricom partnerships.
○ Job creation in manufacturing and ICT sectors.
○ Better access to global markets for Kenyan products like tea, coffee, and flowers.
● Negative impacts:
○ Local farmers face tough competition from imports.
○ Cultural changes due to Western media influence.
○ Pressure on the environment from industrialisation.
10. Summary / Key Takeaways
● Globalisation = worldwide connection and integration.
● It is driven by technology, trade, MNCs, and transport improvements.
● It offers many benefits — especially economic growth, jobs, and access to goods — but
also challenges, like inequality, exploitation, and environmental harm.
● Balanced policies are needed so that globalisation benefits both developed and
developing nations.