Unit 1
Unit 2
Globalisation
Given the recent protests, you would be forgiven if you thought that globalisation is a recent phenomenon. It isn’t. In fact, people have been exploring and searching for products that their own country can’t provide for them. People who lived inland travelled to the coast in search of fish, while those who lived closer to the coast needed to find fresh water and other types of meat.
As this relationship became more sophisticated, brave explorers covered the globe looking for new land and new products. Crops such as coffee, tea and cocoa are not native to Europe; they were taken there by early explorers. Marco Polo returned from China with treasures such as silk and knowledge about the way in which message services in Europe could be made more efficient. This was the beginning of globalisation.
By the nineteenth century, people were starting to look to other countries in order to increase their own standard of living. The American continent was now well established, and Australia moved from being a penal colony to becoming one of the wealthiest places on Earth. Ships travelled all over the globe trading spices, silk and other exotic products. The lure of gold and unimagined riches ensured that people living in Europe and Asia began to uproot their lives and travel to Australia and the United States. With people moving to new countries, business owners saw new opportunities to sell their products. By the mid-ninteenth century, the process of globalisation was accelerating.
New inventions helped to increase the pace of globalisation. In the 1870's Alexander Graham Bell began to refine the processes that would ultimately lead to the telephone. Later in the same decade the very first patent for an automobile was awarded to George B. Seldon (1879). By the time the internal combustion engine was perfected (1885) the path to more efficient forms of transport had been established. In fact, this was one of the key steps that helped to ensure that in 1903 two brothers on a beach in the United States were able to sustain the first flight in a machine that was heavier than the air in which it was flying. It could be argued that this invention, the aeroplane, marked the beginning of the twentieth century. It is certainly true that rapid improvements in international travel after that time helped to ensure that the pace of globalisation was set to increase.
It was also during this period that multinational firms began to establish themselves in the global economy. A multinational firm is one that operates in more than one country. This could be due to the fact that their products are sold in several different countries (such as Toshiba), because they are manufactured in more than one country (such as Nike) or a combination of the two. In fact, some firms had been using this process for centuries. For example, the Dutch East India Company had a base in Indonesia by 1602, and the British East India Company had a factory in Surat (India) as early as 1612. Most people today consider these firms to be the first true multinationals. But progress was slow until the means to travel to and communicate with distant lands was well established. It is also significant that during this period the gold standard for currency valuation became internationally accepted. As a direct result of this change, exchange rates could be established. Once that occurred, the process of international trade became possible.
There is no doubt that the impact of globalisation has increased dramatically since that time. Travel allows us to see products that we can't get in our own countries, and so we find ways to buy them when we get home. The internet, mobile phones and fax machines have all ensured that we can access things immediately. Credit cards mean that we can easily buy things in any country in the world.
Today, relative wage rates help to ensure that very large firms will choose to base expensive manufacturing programs in the country with the least expensive labour. As a result, an "American made" car will often be built from parts that were machined in Mexico, and "Italian" suits will generally be made from cloth that was made and coloured in south east Asia. There is no doubt - globalisation is here to stay.
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