1.0 Introduction

There has been increased removal of barriers to trade across national borders. This is to enable increased integration of production processes and capital markets, and flow of financial resources, knowledge, etc. This has been made possible by regional and trade blocs such as EU, ECOWAS, NAFTA, etc. Such regionalisation seems to be the precursor for globalisation.

This article discusses the factors that drive globalisation. This is done in section 2.0. Section 3.0 draws conclusion from the discussion. References are provided at the end of the article for further reading on the concepts used in this article.

2.0 Factors Driving Globalisation

Globalisation can be described as the removal of barriers to trade across national borders to enable increased integration, interdependence and interconnectivity of production processes and capital markets, and flow of financial resources, goods and services among different nations thus expanding international trade and economic growth in complex ways.

Globalisation is driven by the following factors:

The digital revolution. The internet has made it easy to access goods and services produced from anywhere in the world. It is now easy to purchase goods such as mobile phones and books online. A good example is Amazon which has an online store for books and other products. Potential customers can search for titles, check for prices, make orders and pay online. The purchased books (and other products) are then shipped to the customers worldwide. This implies that customers are able to compare prices online and determine which transactions will make them incur the lowest costs. Therefore, technology has made it easy to carry out borderless transactions due to e-commerce and electronic banking: the digital revolution enables initiation and completion of transactions globally.

With social media, every seller can ‘advertise’ his/her goods and services, for example, showing photos and videos on Facebook at negligible cost. This implies that social media has compressed the world into a global village since within seconds, people can initiate and complete transactions online. When the potential buyer seeks the product on social media, he/she can place an order for the product immediately. Certain payments can be made through the sellers’ website or direct to his/her phone using mobile money. Such global and online funds transfers have seen growth of intermediaries such as Western Union and WorldRemit.

International economic integration. Several trade blocs have made national borders porous as barriers to trade are reduced/removed among member countries. Examples of such trade blocs include: NAFTA for the US, Mexico and Canada; and EAC for East African countries. Such trade blocs increase competition among firms in member countries as flow of goods and services is facilitated across national borders. Whereas there is no complete deregulation of markets among member states, there is a move towards that direction even if protectionism tendencies are still experienced in some blocs such as that of East Africa. For example, some countries still encourage the population to buy homemade products instead of encouraging them to buy regional products from members of the trade bloc. Such protectionism still works counter to the aims of economic integration.

Socio-cultural convergence. Due to access to information through online newspapers and social media, people are losing ‘cultural identity’. For example, what used to look ‘unAfrican’ is now looking normal such as wearing mini-skirts. This is due to exposure to cultures in which wearing mini-skirts is not seen as a taboo. As a result, producers of mini-skirts have a global clientele due to convergence of cultural values, traditions and beliefs. What used to be a national/regional product is now a global product. Firms can now sell their products worldwide without customising them to meet the tastes of particular countries.

Global education providers. With the popularity of online learning increasing, there are institutions which offer education courses to a global audience. We have seen universities and colleges offering a blend of on-campus, distance, and purely online programmes. The global education providers enable students to access globally accepted academic qualifications while residing in their home countries. As a result, the students enter the job market with diverse skills and exposure to diverse cultures. This enables them to work for companies dispersed globally especially using online platforms to write articles and tutor learners. Therefore, there is increasing number of people who can offer services across borders using online platforms after attaining ‘global education’ thus constituting ‘global human capital’.

Cross-border political influence. Governments have formulated polices that facilitate cross-border trade and influence. For example, there is growing influence of China especially in Africa where China is offering long-term loans to countries. Zambia is a key example where China virtually took over operations at the international airport. This shows that developed countries are positioning themselves to influence political and economic developments in developing countries. This was also clear when supporters of Brexit were popularising it that a ‘global Britain’ is far much better than remaining an EU member. This shows that there is competition among developed countries to influence what takes place in developing countries. This makes countries bundled up by developed countries, for example, some countries are seen as allies of China and Russia while others are seen as allies of the US/Israel and Britain. Such bundling makes national borders porous as the countries trade as members of the loose grouping.

Financial liberalisation. There is increasing interconnection of countries due to deregulation of financial markets.  It is now easy to exchange money to ‘global currencies’ such as the US dollar and British Pound. This has made it easy to purchase goods and services globally. For example, it is easy to pay tuition fees while in Africa for an online academic course in UK through online payments. This is possible because of the ease of exchanging money from one’s currency to US dollars or British pounds. This has led to financial globalisation which is facilitated by companies like PayPal which operate innovative online payments system thus transferring money globally.

Intense competition. With intense competition among firms, firms are looking for new markets across borders. In some sectors such as news media, there is competition from any corner of the world. Information is readily accessible from both local and foreign news firms thus forcing firms to keep innovating in order to remain competitive and/or survive. Due to intense competition, firms are now searching for foreign markets. The search for foreign markets has been facilitated by increase in foreign direct investment (FDI). FDI involves transactions in which a foreign investor avails capital to a firm for use in its operations. Such transactions have increased capital mobility and facilitated global economic integration as firms enter international strategic alliances.

Increased international business and trade. Some firms are involved in importing and exporting goods and services across national borders. Other firms are using joint ventures, licensing and franchising as alternatives to importing and exporting while making their products reach a global clientele. This has enabled firms to meet customer needs across borders without necessarily customising products as products now have a global appeal due to convergence of cultures (already discussed) leading to uniform markets. For example, Coca-Cola products have become global brands sold in every country. Such cross-border trade has been facilitated by reduction in transaction costs as more efficient and effective means of payments and communication are enabled by technology.

Need for economies of scale. As competition intensifies, firms are looking for ways of obtaining and enjoying cost savings. This can be achieved through economies of scales when firms produce the same product for a huge market. This necessitates firms to have huge investments in promoting products globally. A key example is PepsiCo which sells its drinks globally.

3.0 Conclusion

Globalisation has been driven by various factors which are interconnected and interrelated in complex ways. These factors include: the digital revolution; international economic integration; socio-cultural convergence; global education providers; cross-border political influence; financial liberalisation; intense competition; increased international business and trade; and the need for economies of scale.

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