The Most Important 5 Causes of Globalization You Should Know

Last updated on May 6th, 2023 at 05:43 am

Looking for what globalization and its causes are? AAMcourses is here to answer your question. In this article, we will discuss the definition, meaning, and 5 causes of globalization.

We are in an era where every business can reach every person beyond national boundaries. The dream of one market has become a reality, and now we live in that in that reality. Every business is competing with other businesses in the world market.

Globalization is the factor that has created this dream into a reality. It integrated all the markets, opening countries to trade, creating more opportunities, etc. Let’s study the concept of globalization in detail.

What is Globalization?

Globalization can be defined as an integrated market where every country is open to trade with other countries. Globalization enables the trade of jobs, finance, products, services, technology, etc.

Globalization has always been responsible for development and innovations. One country’s technology being transferred and used in another gave the less developed country more advanced tools for working. This is how the concept kept growing; now, it is a concept the world revolves around.

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The 5 Causes of Globalization

To achieve Higher Profit

The 1st of the 5 causes of globalization is to achieve higher profit rate. The most basic and common reason for globalization is to earn more profits. When the domestic market does not offer a higher profit rate, businesses spread beyond the national boundaries to find and achieve higher profit rates.

Over Production

The 2nd of the 5 Causes of Globalization is overproduction. Many companies that produce more than they domestically need tend to go global to sell their excess production in the foreign developed markets.

High Competition in the Domestic Market

Businesses started to have severely high competition in the 1960s. As the companies could not survive in the high competition environment and dont want to quit, they decided to expand into the global market.

Limited Domestic Market

Next of the 5 Causes of Globalization is the limited domestic market. Due to the limited size of the domestic market due to population, competition, or lower purchasing power of the country, businesses tend to move to the global market. 

Example: Japan moved its automobile operations to the US, Europe, and African markets due to its smaller domestic market size. 

Availability of Technology and Manpower

The last of the 5 causes of globalization is the Availability of Technology and Manpower.

The availability of advanced technology and workforce can also be a factor that attracts business from various countries. When new, improved, and better tools are available, which ease operations, businesses tend to move to such places for better operations.

Availability of workforce is also a crucial pulling factor for foreign business. India is known for their workforce, which have attracted many foreign business to the nation.

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FAQs

Closing Statement 

Globalization has had a significant impact on every country’s economy and its development. In most cases, it has resulted in the growth of countries in several aspects. The transfer of technology, labor, ideas, etc., has helped in many countries’ development.

I hope this article about the 5 Causes of Globalization is helpful. If you have any doubts or suggestions, exchange your ideas in the comment box.