What this lesson teaches
I can define globalisation as rising trade and flows of capital and labour, and explain what drives it.
Syllabus 9570, 3.3.1(a). Globalisation, International Trade and Economic Co-operation: Globalisation as the increased trade of goods and services, and flows of capital and labour between countries; Factors affecting globalisation
Make a guess
A Singapore firm hires a data engineer who moves from India. Which part of globalisation is this?
- A flow of labour between countries.
- Trade in services, because the engineer provides a service.
- Foreign direct investment, because the firm is investing in staff.
Show the answer
A flow of labour between countries.
Globalisation covers goods, services, capital, labour and ideas. A worker moving abroad for a job is a labour flow.
Globalisation is the growing integration of economies through trade, investment and the movement of people.
Globalisation is the increasing flow of goods, services, capital, labour and ideas between countries.
Trade: exports and imports of goods and services, including digital services sold online.
Capital: foreign direct investment (FDI), where firms build or buy businesses abroad, and financial flows into shares and bonds.
Labour: workers moving between countries. Singapore is one of the most globalised economies in the world: trade is several times its GDP, and it relies on FDI and foreign workers.
- Flows
- Goods, services, capital, labour, ideas.
- Singapore
- Trade several times GDP.
Worked example: Three links in one business
A local sensor company sells to overseas customers, builds a factory with money from a foreign investor, and hires an engineer who moves from abroad.
- Selling abroad: trade.
- The foreign investor's money: a capital flow (FDI).
- The engineer moving: a labour flow.
Watch out for this
Globalisation is only about trade in goods.
It also includes trade in services, flows of investment and the movement of workers and ideas.
Check your understanding
A foreign firm builds a new factory in Singapore. What kind of flow is this?
- Foreign direct investment.
- An export, because the factory will sell abroad.
- A labour flow, because the factory will hire workers.
Show the answer
Foreign direct investment.
Right. The firm takes a lasting stake in a productive business.