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Drivers of Globalisation

In the 1990s, various countries around the world opened their markets to the world. After that, the process of globalization accelerated all over the world. Many internal and external factors and forces play a major role in this. The main drivers of Globalisation are the establishment of WTO, increase in FDI, regional integration, reduction of trade barriers, reduction of investment barriers, technological change and growth of multinational companies.

Following are the key Driving forces & factors of Globalisation.

Regional Integration

Regional integration is a process in which neighboring countries agree to improve cooperation through shared institutions and rules.

Examples: European Union (EU), SAARC, NAFTA, ASEAN, EFTA, etc.

Regional integration helps to –

  • Increase the size of market
  • Increases demand
  • Generates employment
  • Increases production quantity
  • Cost affordability

Declining Trade Barriers

This is an another important driver of globalisation. Advanced countries after world war II reduced tariffs to encourage free flow of goods & services.

Example: General Agreement on Tariffs and Trade (GATT)

These reduced trade barriers & tariffs contributed a lot in Globalisation.

Declining Investment Barriers

After 1990s various countries started removing foreign investment barriers in order to encourage the growth of international business.

Technological Changes

The dramatic and unprecedented change in technology after the 1980s played a major role in this transformation of globalization.

  • Fast spread of latest technology globally
  • Development in Information Technology
  • Spread of internet worldwide
  • Transportation & logistics technologies

Growth of Multinational Companies (MNCs)

MNC is a company or organization doing business in more than one country. Growth of MNCs contributed to internationalization of businesses.

This is all about various important Drivers of Globalisation or internationalisation.

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