MEDC: More Economically Developed Country
LEDC: Less Economically Developed Country
TNC: Transnational Corporation
Globalisation is the process by which the world is becoming increasingly interconnected as a result of massively increased trade and cultural exchage. Globalisation has increased production of goods and services. The biggest companies are no longer national firms but multinational corporations wit subsidiaries in many countries.
Globalisation has resorted in:
- Increased international trade
- A company operating in more than one country
- Greater depedence on the global economy
- Freer movement of capital, goods and services
- Recognition of companies such as McDonalds and Starbucks in LEDCs.
- It also has helped create more wealth in developing countries.
Reasons for Globalisation:
- Improvements in transportation: Larger cargo ships and more types of transport.
- Freedom of trade: World Trade Organisation (WTO) removes barriers between countries.
- Improvements in communications: Technology such as the internet and mobile phones.
- Labour Availability and skills: e.g- India have lower labour costs and high skill levels.
Transnational Corporations:
Globalisation has resulted in many businesses setting up or buying operations in other countries. When a foreign company invests in a country, perhaps by building a factory or a shop, this is called inward investment. Companies that operate in several countries are called multinational corporations (MNCs) or transnational corporations (TNCs). The US fast-food chain McDonald's is a large MNC- it has nearly 30,000 restaurants in 119 countries.
