Globalisation makes separate economies act together

1. Over the past twenty years or so goods have moved far more freely across borders and countries have come to rely on one another far more, and that pairing is what the word describes.
2. The connection runs through several channels at once: trade in goods and services, money moving between countries, technology spreading from one economy to another, and people moving for work.
3. Because the channels work together, a decision taken by a firm or a government in one country now reaches households and firms in many others.

Globalisation is more than international trade

1. Plain international trade means one country selling finished goods and services to another, and on its own that is not globalisation.
2. Under globalisation production itself is split up, so a single product can be designed in one country, use materials bought in a second and be put together in a third before it is sold in a fourth.
3. The result is interdependence, because countries now depend on one another for parts, finance and jobs, so a shock in one economy spreads quickly to the rest.

Cheaper transport made distance matter less

1. Moving goods around the world once cost so much that producing a long way from the customer made no sense.
2. A single ship now carries thousands of those containers at once, so the transport cost carried by any one item inside them is a tiny share of its price.
3. Once transport is cheap, a firm can put each stage of production wherever that stage is done best or most cheaply, and that is what builds a supply chain spanning several countries.

Technology lets firms run production anywhere

1. Production can only be spread across countries if it can be controlled from a distance, and communication technology is what made that possible.
2. Orders, designs and instructions now travel between countries in seconds rather than weeks, so a drawing changed in an office one morning reaches a factory abroad the same day.
3. Digital technology also created trade that did not exist before, because software, streaming, advertising, design and customer service can all be delivered from anywhere with a connection.

Restrictions on trade and money were removed

1. Governments have removed many of the charges and restrictions that once made selling into another country slow and expensive.
2. Controls on moving money between countries were relaxed as well, so savings and investment can flow to wherever they earn most instead of staying at home.

The driving factors work together, not alone

1. No single factor produced globalisation, because each one is worth far less without the others.
2. Cheap shipping would not build a supply chain spanning several countries without the technology to manage a factory abroad, and neither would matter if the money could not cross the border.
3. The drivers also feed one another, since more goods shipped pays for bigger ships and better ports, which lowers the cost of shipping again.

Whether all this leaves a developed country better off is weighed in 4.4.3.