Characteristics

1. Trade in goods and services has grown faster than world output, so national economies are far more open than 50 years ago.
2. Capital moves freely across borders as foreign direct investment and portfolio flows, e.g. Gulf sovereign wealth funds investing worldwide.
3. Labour migrates more between countries, e.g. South Asian workers in the Gulf states and intra-EU migration.
4. Production is transnational: global supply chains split a single product across many countries, e.g. Apple's iPhone is designed in the USA, uses components from South Korea, Japan and Taiwan, and is assembled in China.
5. Technology, ideas and consumer tastes spread quickly, so tastes converge across markets.

What has driven globalisation?

1. Trade liberalisation through successive GATT and WTO rounds has cut tariffs and quotas, opening economies to each other.
2. Containerisation and falling transport costs have made shipping goods across the world cheap.
3. Cheaper communication and the internet link distant markets in real time and allow services to be offshored, e.g. India's IT and business-process offshoring hubs such as Bangalore.
4. The opening of China, whose WTO entry in 2001 drew it deeply into world trade, and of the former Soviet bloc added huge new labour supplies and markets.
5. The growth of transnational corporations has spread production worldwide in search of lower costs.
6. Deregulation of financial markets has increased the mobility of global capital.

Impacts on countries, firms and workers

1. Countries can grow faster through trade, inward investment and technology transfer, as China and much of South-East Asia have done.
2. Consumers gain lower prices and wider choice from cheaper imports.
3. Producers reach larger markets and exploit economies of scale, lowering average costs.
4. Workers gain jobs in exporting sectors, but others face structural unemployment as production shifts to lower-cost economies.
5. Governments can lose tax revenue where TNCs use transfer pricing to book profits in low-tax countries.
6. Inequality can widen within a country because owners of capital and skilled workers capture most of the gains, while low-skilled workers in import-competing sectors face wage pressure and job losses.
7. The environment can suffer from higher output, transport emissions and resource depletion, although technology transfer can also raise environmental standards.

Does globalisation benefit everyone?

1. It brings clear gains because trade, investment and technology transfer have lifted hundreds of millions out of poverty in China and South-East Asia, and give consumers cheaper goods and more choice.
2. But the gains are uneven: low-skilled workers in high-cost economies can face structural unemployment, many sub-Saharan African commodity exporters stay dependent on volatile primary prices, and the environment bears external costs.
3. On balance the net effect depends on whether governments redistribute the gains through retraining and welfare, and on how a country is integrated, since diversified manufacturing exporters gain more reliably than single-commodity economies.