Global Systems and Global Governance 4

Globalisation affects the volume and pattern of international trade and investment:

Trade:

• International trade is the import and export of goods and services between countries.
• The volume of global trade has increased dramatically since the 1980s - its value increased by nearly eight times between 1980 and 2008.
• The pattern of global trade is also changing. Developed countries remain the biggest global traders, but some emerging economies are catching up - China is now the largest exporter of goods in the world, largely due to the rapid growth of its manufacturing sector.
• Less developed countries are also becoming bigger traders, but growth is slow - in 1995, African countries accounted for around 2% of world trade, whereas in 2010, they accounted for just over 3%. The poorest 49 countries make up 10% of the world's population, but still only account for 0.4% of world trade.
• More countries are opening themselves up to international trade by removing barriers to trade. This is partly due to the formation of trade blocs.
• There has also been a rise in fair trade - this is a way of trading that supports people in less developed countries who make products that are exported to developed countries. Since the 1970s, nealy a thousand fair trade producer groups have been set up in less developed countries. These groups trade with developed countries, who sell their products in shops and supermarkets.

Investment:

• Foreign Direct Investment (FDI) is when a person, company to other group spends money in another country in order to generate a profit.
• Foreign investors may be attracted by the size of the market, the stability of the market, the possibility of extracting resources for themselves or the ability to access financial services, as in countries like Luxembourg with large banking sectors.
• The volume of FDI has risen dramatically from about $400 billion in 1996 to nearly $1,500 billion in 2016.
• The pattern of investment has also changed. Until the 1980s, developed countries mainly invested in other developed countries. Since the 1980s, developed countries have begun investing more in emerging economies and developing countries. In the past ten years, China, India, Brazil and Mexico were some of the largest receivers of foreign investment.
• Another big change has been where the investment has come from. Emerging economies now invest heavily in less developed countries.
• Ethical investment is when a person, company or group only invests in areas that are considered socially responsible.

Some countries limit trade using tariffs and non-tariff barriers to shield their industries from foreign competition - this is called protectionism. Free trade is the policy of removing these barriers.

The World Trade Organisation (WTO) was set up to increase trade and help resolve trade disputes between member countries. It sets rules about how countries should trade with each other:

• Countries can't give another country special access to their market without doing the same for every other country in the world. However, there are some exceptions, e.g. countries can give special…