What is globalisation?
Globalisation is the process of integrating the world's economies so that goods, services, capital, technology and labour can move across national borders more freely. The world becomes a kind of "global village" where an event in one country can quickly affect others.
Causes of globalisation
- Advances in technology — the Internet, smartphones and cheaper transport make communication and the shipment of goods easy.
- Trade liberalisation — lower tariffs and fewer restrictions, through bodies such as the WTO and ASEAN, encourage international trade.
- Multinational corporations (MNCs) — large firms open factories and offices in many countries, bringing capital and jobs.
Example
A smartphone may be designed in the United States, its chip made in Taiwan, assembled in China and sold in a shop in Kuala Lumpur. This is a global production chain.
Benefits and challenges
Among the benefits of globalisation: wider markets for Malaysian exports, inflows of foreign direct investment (FDI), transfer of technology and skills, and a greater choice of cheaper goods for consumers.
But there are challenges: fierce competition from imported goods can hurt small local firms, the economy becomes more dependent on outside conditions, and a financial crisis in one country can spread quickly to others. Globalisation can also widen income gaps, because not every group shares in the gains equally.
Malaysia in the global economy
Malaysia is a very trade-open country, so its economy is strongly shaped by globalisation. It belongs to ASEAN, has signed several free-trade agreements, and attracts FDI into industrial areas such as Penang and Selangor. Factories run by multinational corporations here create jobs, transfer technology, and raise exports of electronics. In return, Malaysian consumers enjoy a wide range of goods and services from around the world. To keep gaining, Malaysia must raise the skills of its workforce and encourage innovation so that it stays competitive.
Remember
Globalisation brings opportunity and risk at the same time. Malaysia takes part through ASEAN, free-trade agreements and by attracting FDI to areas such as Penang and Selangor.