4.4 Globalization

CGMA BA1

4. Macroeconomics – The international economy

Our CGMA course is currently in development and is a work-in-progress.

Globalization

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Some economists describe globalization as “the increasing interconnectedness and interdependence of the many peoples of the world who all live and work on one large planet”.

So what’s driving globalization forward?

Drivers of globalization

The rise of social media: Social media platforms like Instagram and TikTok help consumers discover products and services from other countries. You can also use social media to learn skills across borders - for example, by following a step-by-step video to cook a meal from another culture.
Improved network and communication: In the early 2000s, many people relied mainly on phone calls and email. Now there are more options, including interactive tools that support real-time collaboration, such as Google Meet, Teams, Zoom, Telegram, and WhatsApp.
Growth of global industries: Large corporations push globalization forward through their international reach and influence. Many people recognize brands like Coca-Cola. Companies such as Samsung and Apple aim for similar global presence in the technology industry.
Trade liberalization: Organizations like the World Trade Organization support trade liberalization by encouraging the removal or reduction of trade barriers. When barriers are lower, goods can move more easily from one part of the world to another.
Cheaper production costs overseas: Many Western companies outsource production overseas because it can be cheaper to produce abroad than in their home countries.

Is globalization always a positive impact, though?

The following are impacts:

Reopening and growth of new markets: companies that are struggling domestically can make more sales overseas.
Opening of international markets/stock exchanges: shareholders can buy and sell shares on foreign markets easily using the same platforms. The United States holds the largest stock market, and the UK holds the largest money market in the world to this day.
Industry relocation: more industries are now being offshored to other countries in search of quality or cheaper manufacturing costs.
Easy market access: small businesses are now able to trade internationally more than ever due to increased internet connectivity.

Some economists still argue that this only makes the rich people richer and the poor, poorer because income made through globalization will still be transferred to the richer countries.

The group of 7 countries

According to Investopedia, the group is made up of “France, Germany, Italy, Japan, the United States, the United Kingdom, and Canada. Government leaders of these countries meet periodically to address international economic and monetary issues, with each member taking over the presidency on a rotating basis”.

PESTEL analysis

When an organization is planning to expand internationally, it conducts what’s called PESTEL analysis to examine whether the expansion or investment is worthwhile.

It’s common to see exam questions on PESTEL, so it helps to know what each part means.

Political influences and events: legislation and political issues.
Economic influences: economic factors in an economy, including GDP, minimum incomes, consumption rates, etc.
Social influences: demographic factors, social tastes, lifestyle, education, etc.
Technological influences: how advanced the country is in technology used in production, supply, delivery, or products, and more.
Environmental influences: the extent to which the organization impacts the environment.
Legal influences: changes in legislation and how they affect the business in areas like pollution, consumer rights, working conditions, minimum salaries, the competition authority, and more.

The Group of Seven (G-7) is an intergovernmental organization that meets periodically to address international economic and monetary issues.

G-7 countries consist of the U.S., U.K., France, Germany, Italy, Canada, and Japan.
The G-7 was formerly referred to as the G-8 until Russia was suspended from the group in 2014 after illegally annexing Crimea.
The G-7 is not an official, formal entity and, therefore, has no legislative or authoritative power to enforce the recommended policies and plans it compiles.

The following are the matters that they deal with more frequently:

Macroeconomic management
International trade
Development issues and relationships with developing countries
Trending international issues
Energy and climate change

Next | 5.1 Introduction

Globalization

Some economists describe globalization as “the increasing interconnectedness and interdependence of the many peoples of the world who all live and work on one large planet”.

So what’s driving globalization forward?

Drivers of globalization

The rise of social media: Social media platforms like Instagram and TikTok help consumers discover products and services from other countries. You can also use social media to learn skills across borders - for example, by following a step-by-step video to cook a meal from another culture.
Improved network and communication: In the early 2000s, many people relied mainly on phone calls and email. Now there are more options, including interactive tools that support real-time collaboration, such as Google Meet, Teams, Zoom, Telegram, and WhatsApp.
Growth of global industries: Large corporations push globalization forward through their international reach and influence. Many people recognize brands like Coca-Cola. Companies such as Samsung and Apple aim for similar global presence in the technology industry.
Trade liberalization: Organizations like the World Trade Organization support trade liberalization by encouraging the removal or reduction of trade barriers. When barriers are lower, goods can move more easily from one part of the world to another.
Cheaper production costs overseas: Many Western companies outsource production overseas because it can be cheaper to produce abroad than in their home countries.

Is globalization always a positive impact, though?

The following are impacts:

Reopening and growth of new markets: companies that are struggling domestically can make more sales overseas.
Opening of international markets/stock exchanges: shareholders can buy and sell shares on foreign markets easily using the same platforms. The United States holds the largest stock market, and the UK holds the largest money market in the world to this day.
Industry relocation: more industries are now being offshored to other countries in search of quality or cheaper manufacturing costs.
Easy market access: small businesses are now able to trade internationally more than ever due to increased internet connectivity.

Some economists still argue that this only makes the rich people richer and the poor, poorer because income made through globalization will still be transferred to the richer countries.

The group of 7 countries

PESTEL analysis

When an organization is planning to expand internationally, it conducts what’s called PESTEL analysis to examine whether the expansion or investment is worthwhile.

It’s common to see exam questions on PESTEL, so it helps to know what each part means.

Political influences and events: legislation and political issues.
Economic influences: economic factors in an economy, including GDP, minimum incomes, consumption rates, etc.
Social influences: demographic factors, social tastes, lifestyle, education, etc.
Technological influences: how advanced the country is in technology used in production, supply, delivery, or products, and more.
Environmental influences: the extent to which the organization impacts the environment.
Legal influences: changes in legislation and how they affect the business in areas like pollution, consumer rights, working conditions, minimum salaries, the competition authority, and more.

CGMA BA1

4. Macroeconomics – The international economy

Our CGMA course is currently in development and is a work-in-progress.

Globalization

3 min read

Font

Discuss

Feedback

Some economists describe globalization as “the increasing interconnectedness and interdependence of the many peoples of the world who all live and work on one large planet”.

So what’s driving globalization forward?

Drivers of globalization

The rise of social media: Social media platforms like Instagram and TikTok help consumers discover products and services from other countries. You can also use social media to learn skills across borders - for example, by following a step-by-step video to cook a meal from another culture.
Improved network and communication: In the early 2000s, many people relied mainly on phone calls and email. Now there are more options, including interactive tools that support real-time collaboration, such as Google Meet, Teams, Zoom, Telegram, and WhatsApp.
Growth of global industries: Large corporations push globalization forward through their international reach and influence. Many people recognize brands like Coca-Cola. Companies such as Samsung and Apple aim for similar global presence in the technology industry.
Trade liberalization: Organizations like the World Trade Organization support trade liberalization by encouraging the removal or reduction of trade barriers. When barriers are lower, goods can move more easily from one part of the world to another.
Cheaper production costs overseas: Many Western companies outsource production overseas because it can be cheaper to produce abroad than in their home countries.

Is globalization always a positive impact, though?

The following are impacts:

Reopening and growth of new markets: companies that are struggling domestically can make more sales overseas.
Opening of international markets/stock exchanges: shareholders can buy and sell shares on foreign markets easily using the same platforms. The United States holds the largest stock market, and the UK holds the largest money market in the world to this day.
Industry relocation: more industries are now being offshored to other countries in search of quality or cheaper manufacturing costs.
Easy market access: small businesses are now able to trade internationally more than ever due to increased internet connectivity.

Some economists still argue that this only makes the rich people richer and the poor, poorer because income made through globalization will still be transferred to the richer countries.

The group of 7 countries

PESTEL analysis

When an organization is planning to expand internationally, it conducts what’s called PESTEL analysis to examine whether the expansion or investment is worthwhile.

It’s common to see exam questions on PESTEL, so it helps to know what each part means.

Political influences and events: legislation and political issues.
Economic influences: economic factors in an economy, including GDP, minimum incomes, consumption rates, etc.
Social influences: demographic factors, social tastes, lifestyle, education, etc.
Technological influences: how advanced the country is in technology used in production, supply, delivery, or products, and more.
Environmental influences: the extent to which the organization impacts the environment.
Legal influences: changes in legislation and how they affect the business in areas like pollution, consumer rights, working conditions, minimum salaries, the competition authority, and more.

The Group of Seven (G-7) is an intergovernmental organization that meets periodically to address international economic and monetary issues.

G-7 countries consist of the U.S., U.K., France, Germany, Italy, Canada, and Japan.
The G-7 was formerly referred to as the G-8 until Russia was suspended from the group in 2014 after illegally annexing Crimea.
The G-7 is not an official, formal entity and, therefore, has no legislative or authoritative power to enforce the recommended policies and plans it compiles.

The following are the matters that they deal with more frequently:

Macroeconomic management
International trade
Development issues and relationships with developing countries
Trending international issues
Energy and climate change

Next | 5.1 Introduction

Globalization

Some economists describe globalization as “the increasing interconnectedness and interdependence of the many peoples of the world who all live and work on one large planet”.

So what’s driving globalization forward?

Drivers of globalization

The rise of social media: Social media platforms like Instagram and TikTok help consumers discover products and services from other countries. You can also use social media to learn skills across borders - for example, by following a step-by-step video to cook a meal from another culture.
Improved network and communication: In the early 2000s, many people relied mainly on phone calls and email. Now there are more options, including interactive tools that support real-time collaboration, such as Google Meet, Teams, Zoom, Telegram, and WhatsApp.
Growth of global industries: Large corporations push globalization forward through their international reach and influence. Many people recognize brands like Coca-Cola. Companies such as Samsung and Apple aim for similar global presence in the technology industry.
Trade liberalization: Organizations like the World Trade Organization support trade liberalization by encouraging the removal or reduction of trade barriers. When barriers are lower, goods can move more easily from one part of the world to another.
Cheaper production costs overseas: Many Western companies outsource production overseas because it can be cheaper to produce abroad than in their home countries.

Is globalization always a positive impact, though?

The following are impacts:

Reopening and growth of new markets: companies that are struggling domestically can make more sales overseas.
Opening of international markets/stock exchanges: shareholders can buy and sell shares on foreign markets easily using the same platforms. The United States holds the largest stock market, and the UK holds the largest money market in the world to this day.
Industry relocation: more industries are now being offshored to other countries in search of quality or cheaper manufacturing costs.
Easy market access: small businesses are now able to trade internationally more than ever due to increased internet connectivity.

Some economists still argue that this only makes the rich people richer and the poor, poorer because income made through globalization will still be transferred to the richer countries.

The group of 7 countries

PESTEL analysis

When an organization is planning to expand internationally, it conducts what’s called PESTEL analysis to examine whether the expansion or investment is worthwhile.

It’s common to see exam questions on PESTEL, so it helps to know what each part means.

Political influences and events: legislation and political issues.
Economic influences: economic factors in an economy, including GDP, minimum incomes, consumption rates, etc.
Social influences: demographic factors, social tastes, lifestyle, education, etc.
Technological influences: how advanced the country is in technology used in production, supply, delivery, or products, and more.
Environmental influences: the extent to which the organization impacts the environment.
Legal influences: changes in legislation and how they affect the business in areas like pollution, consumer rights, working conditions, minimum salaries, the competition authority, and more.