Trade and globalisation
Introduction - what is trade?
tradeThe exchange of goods for money between producers and consumers. is the buying and selling of goods and services between different countries around the world. Goods that are brought into a country are called importGoods or services which enter a country. and those that are sold to another country are called exports.
Trade occurs because no country has enough raw materialBasic material that goods are made from such as crops, metals, wood and animal products such as wool and leather. or manufactured goodsProducts that have been made from raw materials, either by hand or by machines. to be self-sufficient. global tradeThe worldwide buying and selling of goods and services between different countries. has been made possible through the process of globalisationThe way in which the world has become more interconnected. It refers to how people communicate as well as world trade, international investment and the sharing of ideas. .
What is globalisation?
Countries throughout the world now communicate and share their cultureDescribes the way of life, behaviours and beliefs of a particular group of people. and goods through travel and trade. Improved communicationsRoad, rail and air travel. enables products to be transported around the world rapidly.
A huge global economyThe inter-connected economic activity of all the countries around the world. means that if something happens in one area it can have a knock-on effect worldwide. This process is called globalisation.
Globalisation is the process by which the world is becoming increasingly interconnected as a result of a huge growth in trade and cultural exchange. Globalisation has increased the production of goods and services.
The largest companies are no longer national firms, located in one single country; they are Multi-National CorporationsA company that operates in more than one country. with businesses in many countries.
Globalisation has been taking place for hundreds of years but has rapidly increased over the last 30 years or so.
Globalisation has resulted in:
- increased international tradeThe buying and selling of goods and services between different countries.
- the same company operating in more than one country
- a greater dependence on the global economy
- easier movement of capitalThe money and equipment invested into a business., goods and services
- recognition of companies such as McDonalds and Starbucks in developing countryA country that has little industry and lacks access to healthcare or education.
Although globalisation is most likely helping to create more wealthWhen a person or country has a certain amount of money and material possessions. in developing countries, it is not helping to close the gap between the world's poorest countries and the richest.