Quick questions on Globalisation and the international economy explained: HSC Economics Topic 1

Globalisation is the process of increasing economic integration between countries through the flow of goods and services, capital (financial and physical), labour, technology and ideas across national borders.

Gross world product is the sum of all final goods and services produced by national economies. It is around USD 105 trillion in 2025 (IMF World Economic Outlook). World real GDP growth has averaged around 3.0 to 3.5 percent per year over the last decade, with major slowdowns during the 2008 GFC and the 2020 COVID-19 recession.

Merchandise and services exports together amount to roughly 28 percent of gross world product (World Bank, World Development Indicators). Trade has grown faster than output for most of the post-war period, although the trade-to-GWP ratio has been roughly flat since the GFC ("slowbalisation").

Cross-border financial flows include foreign direct investment (FDI), portfolio investment (shares, bonds) and short-term capital. Global FDI flows total around USD 1.5 trillion per year (UNCTAD), of which roughly two-thirds is intermediated by transnational corporations.

A transnational corporation (TNC) is a firm with operations in two or more countries. TNCs account for around 80 percent of world trade through global value chains (GVCs), in which intermediate goods cross borders multiple times. The 100 largest TNCs by foreign assets are mostly headquartered in advanced economies but earn an increasing share of revenue from emerging markets.

The technological dimension of globalisation has accelerated since 2010. Cloud computing, mobile broadband, AI tools and digital platforms have allowed services that were previously non-tradable (legal advice, accounting, software engineering) to be delivered remotely. Australia's IT services exports have grown 12 percent per year on average over the last decade (ABS).

The international business cycle is the synchronised pattern of economic expansions and recessions across countries. Synchronisation has tightened since the 1990s due to:

Globalisation is broader, including capital, labour, technology and ideas. Free trade is one driver of globalisation.

Markers reward balanced analysis: TNCs raise productivity and bring FDI, but can also avoid tax, weaken local competition and shift labour standards.

Update your data card each term. Use the most recent IMF World Economic Outlook and WTO data.