Trade and globalisation

Introduction - what is trade?

The global chain of trade

Trade is the buying and selling of goods and services between different countries around the world. Goods that are brought into a country are called imports and those that are sold to another country are called exports.

Trade occurs because no country has enough raw materials or manufactured goods to be self-sufficient. Global trade has been made possible through the process of globalisation.

What is globalisation?

Make-up and China's global economic position

Countries throughout the world now communicate and share their cultures and goods through travel and trade. Improved communications enable products to be transported around the world rapidly. We are in a huge global economy where something that happens in one area can have knock-on effects worldwide. This 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 but are multinational corporations 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 led to a number of developments:

  • increased international trade
  • the same company operating in more than one country
  • a greater dependence on the global economy
  • easier movement of capital, goods and services
  • recognition of companies such as McDonald's and Starbucks in developing countries

Although globalisation is most likely helping to create more wealth in developing countries, it is not helping to close the gap between the world's poorest countries and the richest.