The process by which businesses, economies, and cultures become increasingly interconnected and interdependent across the world. Trade, investment, and communication flow freely across borders.
195
Countries now connected by global trade
$32T
Global goods trade value annually
80%
iPhone components sourced from outside the US
🔧 Why businesses go global
Access to cheaper materials, lower-cost labour, new markets with more customers, and economies of scale from larger production volumes.
🌐 What drives globalisation
The internet, cheaper shipping, falling trade barriers, growth of trading blocs like the EU, and the rise of MNCs that operate everywhere.
✅ Benefits
Lower prices for consumers, greater product variety, economic growth in developing countries, more efficient global production.
⚠️ Drawbacks
Job losses in developed countries, over-reliance on foreign suppliers, cultural erosion, exploitation of lower-wage workers.
Real example from today: Apple makes the iPhone in China because China has the materials, the labour (at ~£2/hour vs £12/hour in the UK), and the factory infrastructure. Making it in the UK would increase costs from ~£40 to ~£200 in labour alone — and that's before rebuilding the infrastructure.
Emerging Market
A country that is developing rapidly and growing a middle class, but hasn't yet reached the full economic development of countries like the UK or USA. Examples: India, Brazil, Vietnam, Indonesia.
BRICS is a group of large, fast-growing economies that are becoming increasingly important in global trade. The name is an acronym.
🇧🇷
B
Brazil
Massive agricultural producer, oil, mining
🇷🇺
R
Russia
Energy superpower — oil, gas, metals
🇮🇳
I
India
Tech, services, 1.4bn population
🇨🇳
C
China
World's factory, 2nd largest economy
What makes BRICS significant?
These countries have large populations, are growing fast, and are developing a middle class — meaning more consumers. They represent the future of global demand, not just production.
Worth knowing: BRICS is a bit of an older, Western-centric concept. China in particular is no longer simply "emerging" — it has the world's second-largest economy and some of the most advanced manufacturing on earth. Context matters when you're asked about emerging vs developed economies.
Emerging vs Developed
A developed economy has high income per person, strong infrastructure, and stable institutions (UK, USA, Germany). An emerging economy is growing rapidly toward that but isn't there yet — think India or Brazil, not yet China.
Trading Bloc
A group of countries that have agreed to reduce or remove trade barriers between them, making it easier and cheaper to trade with each other than with the rest of the world.
🇪🇺 European Union (EU)
27 member countries. No tariffs between members, free movement of people and goods. The UK was in this until Brexit in 2020.
🧱 BRICS
A bloc of fast-growing economies that cooperate on trade, investment, and development. Less formal than the EU but increasingly influential.
🌏 ASEAN
10 Southeast Asian nations including Indonesia, Thailand, and Vietnam. Reducing tariffs and building a single market.
🌎 USMCA (formerly NAFTA)
USA, Canada, and Mexico trading freely together. Makes cross-border manufacturing chains like car production cheaper.
Before Brexit: You could put a stamp on a parcel in Nottingham and send it anywhere in Europe with no customs forms, no extra taxes. Now there are import declarations, customs delays, and extra costs. That's the practical impact of leaving a trading bloc.
Benefits of trading blocs
Lower costs for businesses exporting within the bloc, wider market for consumers, more foreign direct investment, and greater political cooperation between member states.
Drawbacks of trading blocs
Countries outside the bloc face higher tariffs (a disadvantage). Members lose some control over their own trade policy. Businesses may relocate within the bloc to cheaper countries.
Protectionism
Government policies that restrict imports to protect domestic industries from foreign competition. The opposite of free trade and globalisation.
Tariff
A tax charged on imported goods. It makes foreign products more expensive, encouraging consumers to buy domestically-made goods instead. A key tool of protectionism.
How a Tariff Works: The iPhone Example
Trump wants iPhones made in America. The tariff is designed to make importing cheaper than manufacturing domestically. Here's the logic:
1
Currently: Import from China
iPhone assembled in China. 20 hours of labour at ~£2/hr = £40 in labour costs. Cheap to import.
2
Problem: Same 20 hours in the USA
US/UK minimum wage ~£12/hr. 20 hours = £240. iPhone goes from £1,000 to potentially £15,000+. Not viable.
3
Tariff solution: Make importing expensive
Add a tariff large enough that the cost difference between making it abroad vs domestically disappears. Forces businesses to invest in domestic production instead.
🇨🇳
Made in China
Hourly wage~£2/hr
20hrs labour£40
Factory infrastructure✓ Exists
Raw materials✓ Accessible
Skilled workers100,000s
🇬🇧
Made in UK
Hourly wage~£12/hr
20hrs labour£240
Factory infrastructure✗ Doesn't exist
Raw materials✗ Not in our soil
Skilled workersNot yet trained
Other protectionist tools
Quotas — limits on the quantity of goods that can be imported.
Subsidies — government money given to domestic firms to make them cheaper to compete.
Embargoes — complete bans on trade with certain countries.
Arguments for protectionism
Protects domestic jobs. Develops strategic industries. Reduces reliance on foreign supply chains (useful in crises). Can be used as political leverage.
Multinational Company (MNC)
A business that operates in more than one country — usually with its headquarters in one country and production, sales, or offices in many others. Apple, McDonald's, Shell, and Samsung are all MNCs.
✅ Why become an MNC?
Access larger markets (more customers). Exploit cheaper labour costs abroad. Avoid trade barriers by producing inside the target market. Spread risk across different economies.
💰 Advantages for host country
Jobs created for local workers. Tax revenue for the government. Technology and skills transfer. Better infrastructure investment.
⚠️ Criticisms of MNCs
Profits leave the country (repatriation). May use tax avoidance. Local competitors can't match their scale. Could exploit workers in lower-wage countries.
🎧 Music production connection
Spotify, Apple Music, YouTube Music — all MNCs. They affect how music producers get paid globally. Streaming royalties vary massively by country because of this.
Foreign Direct Investment (FDI)
When a business invests money into physical assets — factories, offices, equipment — in another country. Different from simply buying shares. It's a commitment to operating there long-term.
Real example: When Nissan built a car plant in Sunderland, that was FDI into the UK. It created thousands of jobs, trained workers, and built supply chains. When Brexit uncertainty hit, Nissan considered moving production — showing how FDI decisions depend heavily on trade policy.
Five questions covering Theme 4 content from today and this tool.
1. What is globalisation?
2. What does the "I" in BRICS stand for?
3. Why does Apple manufacture the iPhone in China rather than the UK?
4. What is a tariff?
5. Give one benefit and one drawback of being part of a trading bloc like the EU.