Globalisation, or increased connections between countries, has had a huge impact on the UK since the 1980s. As technology has improved, manufacturing, tertiary, and quaternary industries have become more affected by decisions and events around the world. Information and money can be transferred, for instance, and the sharing of new ideas and working collaboratively across continents have never been easier and faster.
Three elements vital to the global economy are networks, flows and global players.
Globalisation within the UK has led to the decline of key industries such as manufacturing, as it has become cheaper to make some products in countries like China and India. As these jobs move overseas, people in the UK have had to retrain in new skills to remain employed. Improvements in technology have also reduced the number of jobs in agriculture, so the workforce has had to become more flexible. There has been an increase in people working part-time, setting up their businesses and working in technology-based services.
Privatisation
As TNCs invest more heavily in the UK, privatisation of UK industries is more common. Industries such as steel production, postal services, energy production and rail services, many of which were once run by the British government, are now owned and run by British and foreign companies. Privatisation can bring benefits to the UK, such as increased foreign direct investment (FDI) from businesses wanting to invest in the UK, as well as a wider awareness of global markets and an increase in competition. However, this can also lead to profits from UK-based businesses going abroad, and jobs could be lost when businesses try to be more efficient.
Free trade
International trade is essential for companies to increase profits and for countries to boost their Gross Domestic Product (GDP). However, not all trade is free. Some countries will impose tariffs or import duties on some products or services to help protect their industries. For example, the UK may impose high import duties on cheap Chinese steel to help promote and protect its own steel industry.
When part of the EU, the UK pursued a policy of free trade within the EU, which allowed the free movement of goods and services. This helped reduce the overall cost, making goods cheaper for the consumer. However, since the UK left the EU in 2020, importing and exporting goods to and from the UK has become more expensive.
*Insert graph showing trade flows on a global scale or other suitable graphic?
Foreign Direct Investment (FDI)
FDI is the capital (money) investment from businesses in one country to businesses in another—for example, the USA and the UK. By investing in another country’s business, these companies can become involved in the day-to-day life and markets of the receiving country. Most of the investment into the UK came from the USA in 2014, around £260 billion, and combined, European countries invested over £500 billion into the UK, mainly in energy projects (such as wind farms and nuclear power stations), and infrastructure projects such as airports and hotels.
TNCs (Transnational Corporations)
TNCs are large companies that are key players in the global economy. These companies operate in other countries and are essential in linking national economies between countries. Some of the largest TNCs are involved in the three main industries: motor vehicles, oil and electronics. Some TNCs focus on one type of industry, such as food and drinks, whereas some TNCs are interested in a range of products like manufacturing, raw materials, and food processing. Some popular TNCs that you may know are NIKE, TATA, and Nestle.
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