What is globalization and its importance

Updated: Jul 18, 2021



Globalization involves activities that collaborate in trade or business related activities between individuals, firms and governments worldwide.


Global population growth have made globalization increasingly important to meet the needs and wants of consumers. With globalization, countries can trade products and services, and share information and technology with each other, to enable specialization to produce more efficiently. This increases output and creates more competition.


As output increases, the economy grows, as more employment are created, increasing incomes, encouraging consumer spending that increases more demand for output. This is especially important to developing economies, as their living standards rises from economic growth.


Global trade has grown due to improved international communication and transportation from technology advances and internet access. This resulted to cheaper and faster global communication, enabling collaboration and easier decision-making. As more national economies open to trade with each other, exchange in trade, capital and labour increases.


PAST YEAR QUESTIONS

  1. What is meant by ‘exchange rate’? (2 marks) Oct/Nov 2019/12

  2. Identify and explain two benefits to a firm selling in other countries. (6 marks) Feb/Mar 2018/12

  3. Identify and explain one advantage and one disadvantage to a firm in importing its products. (4 marks) Oct/Nov 2018/11

  4. Identify and explain two possible problems for BVC when exporting its products. (6 marks) May/June 2019/11

  5. Do you think a firm should start buying its products from country C? Justify your answer. (6 marks) May/June 2019/13