Factors Driving Globalisation

Pearson's spec lists nine separate items under 'factors contributing to increased globalisation' (4.3.1 item 3, parts a-i): trade liberalisation and the role of the WTO, political change, reduced cost of transport and communication, the increased significance of global (multinational) corporations, increased FDI, migration within and between economies, growth of the global labour force, structural change, and — last, and deliberately last — the impact of all of this on businesses. Nine items written out as a flat list is exactly the shape of answer this paper's own recurring examiner advice (repeated close to verbatim across the June 2022, October 2023 and January 2024 reports sampled for this paper) warns against: full marks for recall, next to nothing for the 'coherent, well-contextualised chain of reasoning' a 12-mark Assess actually pays for.

Ask what each factor actually changes for a business deciding whether to trade, invest, or operate across a border, and the nine collapse into four groups. Two of them (a, b) change what's legally and politically PERMITTED. One (c) changes what it COSTS to move goods, money and information once permission exists. Three (e, f, g) change who and what CAN physically move — capital, labour, people. And two (d, h) aren't inputs into any single business's decision at all — they're what happens in the wider economy once enough individual businesses have already answered 'yes' to the first three groups. Naming which of these four questions a given exam prompt is actually asking is the single biggest lever on this content, and it's why every example below is built around one real, named business rather than a general claim about 'the world economy.'

Institutional factors — trade liberalisation, the WTO, and political change (4.3.1.3a-b). Trade liberalisation is the deliberate removal of a barrier a government itself put up: a tariff cut, a quota lifted, a licensing rule relaxed. A confirmed real example, cited directly in Pearson's own Section A source material (Oct 2021 Q1e): the EU-Vietnam trade agreement. The WTO does the same thing at a multilateral scale rather than one bilateral deal at a time — running liberalisation rounds (the Doha round is Pearson's own confirmed example, Jan 2023 Q1e) and resolving disputes between members (a 2022 agreement curbing harmful fishing subsidies is the confirmed real case cited). But the WTO's tool for doing either of those things is agreement, not command — member governments choose to join, and choose whether to comply, which is exactly why the institution's own record is genuinely two-sided rather than a one-way liberalisation success story. Confirmed directly as its OWN standalone 12-mark Assess (Jan 2026 Q1d, 'Assess the role of the WTO in trade liberalisation' — unlike the Jan 2023 citation above, not embedded inside a broader transport/communication question): the same Doha round credited as a real liberalisation round is also the clearest evidence of the limit — it collapsed after 14 years without reaching an agreement, because no member could be compelled to converge. The mark scheme states the general version of that limit directly: the WTO cannot force a country to reduce its trade barriers. The same voluntary-compliance limit runs through dispute resolution too — the mark scheme's own real example of the WTO resolving a dispute between members is Australia's dispute with Canada over wine restrictions, but it also credits that reaching a resolution can take a long time even once the WTO agrees to hear a case. And because a trading bloc's own members agree in advance to remove barriers with each other, a bloc can liberalise trade without needing the WTO's involvement at all — the mark scheme credits trading-bloc expansion as having 'done much to liberalise trade' on exactly that basis. None of this makes the WTO irrelevant: 164 countries currently choose to join it specifically for the extra liberalisation membership brings — but an Assess answer on 'the role of the WTO' that only lists what it does, without this voluntary-compliance limit, is an unbalanced half of an assessment, not the whole of one. Political change is the precondition underneath both, and — corrected by this lesson's own 2026-09-13 bullet-coverage audit — it is directly confirmed as its own bullet in the SAME Jan 2023 Q1(e) indicative content already credited above for the WTO and for transport/communication: political change 'such as the opening up of previously closed economies has increased integration.' China's shift after 1978 and the collapse of the Soviet Union's centrally-planned trade system are commonly-used illustrative examples of exactly that mechanism — a previously closed economy opening up — though the mark scheme itself doesn't name either country, so treat China/the USSR as real, general-knowledge illustrations of a confirmed mechanism rather than mark-scheme-named case studies; Vietnam's own 1986 Đổi Mới reforms opening its economy to foreign trade and investment are the specific, real political change behind every other Vietnam example in this lesson. Scope note: this lesson treats trade liberalisation as a CAUSE of globalisation; the separate reasons a government might instead raise a barrier, and what that costs the businesses on both sides, is protectionism — its own spec item (4.3.1.4), covered in its own lesson.

Cost-reduction factors — transport and communication (4.3.1.3c). Pearson's own confirmed mark-scheme content for this exact sub-point (a 12-mark Assess, January 2023) names THREE separate channels, not one and not two: containerisation cutting the cost of moving goods by sea to roughly a fifth of its former cost by the end of the 20th century; cheaper air travel enabling more face-to-face business negotiation; and — a third, genuinely separate channel a 2026-09-13 bullet-coverage audit found this lesson had silently dropped — a direct fall in the cost of communicating itself, which the same mark scheme credits to satellites and other technological advances cutting communication cost 'to a fraction' of what it previously was (independently confirmed a second time in a real January 2026 mark scheme, which separately credits 'better communications and infrastructure' with having 'encouraged trade without the help of the WTO'). The first moves goods; the second moves the people a deal sometimes still needs face-to-face; the third replaces the need for either — a licence agreed, a shipment tracked, a supplier audited, with nobody and nothing physically crossing the border at all. A full answer names all three channels, not just shipping, and not just shipping-plus-travel. The mechanism block below derives exactly why a falling COST, not a shrinking price gap, is what decides whether a specific good crosses from non-tradable to tradable.

Factor-movement factors — FDI, migration, and the global labour force (4.3.1.3e-g). These three are grouped together because each is a different factor of production crossing a border: FDI is capital (a business building or buying productive capacity abroad); migration is labour moving between — and, spec-explicitly, WITHIN — economies; and growth of the global labour force is the same story from the supply side, Asia's, Africa's and other developing regions' expanding working-age populations meaning there are, in absolute terms, far more workers available to a globalising business than a generation ago. Pearson's own confirmed FDI content (an 8-mark Discuss, October 2021) uses Vietnam as the case: South Korea's multi-billion-dollar investment and Apple's own decision to move AirPods production there are credited as raising Vietnam's productive capacity, lowering unemployment, and — via the exports that capacity then generates — improving its balance of payments. The same mark scheme credits the honest counter-risk too: FDI growing faster than an economy can absorb can itself trigger inflation — exactly the kind of stated boundary condition a top-band conditional judgement needs. Migration runs alongside this rather than separately from it: the same electronics-manufacturing boom that drew Apple's and South Korea's FDI has also drawn workers from Vietnam's rural provinces toward its new industrial zones — migration WITHIN the economy, precisely as spec 4.3.1.3f names it, not only the between-economies kind most answers default to. Migration's own mark-scheme credit runs on a second, quite different channel too — confirmed, like political change above, in the SAME Jan 2023 Q1(e) indicative content a 2026-09-13 audit re-extracted directly from the primary PDF: 'labour has become more mobile, migration of people spread ideas and culture leading to further globalisation.' That is not a labour-supply argument at all, but a cultural-diffusion one — migrants themselves carrying tastes, expectations and know-how across a border and making the economies on both sides more alike in the process. An answer that credits migration only for supplying workers has covered half of what this exact mark scheme rewards for migration; the ideas-and-culture half is a distinct mechanism, not a restatement of the labour-supply one.

Structural-consequence factors — MNC growth and structural change (4.3.1.3d, h). These two are different in KIND from the six factors above them, and the difference is worth deriving rather than skating past. Trade liberalisation, political change, falling transport/communication costs, FDI, migration and labour-force growth are all things a business or government does or experiences BEFORE a globalisation decision gets made — they're inputs. Increased MNC significance and structural change are what happens AFTER enough individual businesses have made that decision — the aggregate, compounding result, not a seventh and eighth independent cause sitting alongside the first six. Once Apple's Vietnam investment makes the same landed-cost case profitable for its own component suppliers, and Samsung's much larger Vietnamese footprint does the same for its own supply chain, each new MNC's presence lowers the cost of the NEXT one arriving — a skilled labour pool already exists, a supplier network already exists, customs procedures are already handling this trade — an effect economists call agglomeration economies. That compounding is what 'increased significance of MNCs' means in a specific place, and it's also the mechanism behind structural change: an economy that used to earn its export income mainly from agriculture or textiles increasingly earns it from electronics assembly instead, not because a government planned that shift centrally, but because enough individual businesses' landed-cost arithmetic pointed the same direction at once.

The payoff — impact on businesses specifically (4.3.1.3i). Spec 4.1 is explicit that everything in 4.3.1 has to be understood in relation to businesses, not economies in the abstract — and a real, confirmed examiner report (June 2022, Q1d — set under this paper's adjacent 4.3.1.1c sub-point on economic growth, not under this item's own part (i), but testing the identical spec-4.1 principle) records candidates losing marks on exactly this point: asked to assess trade opportunities for European businesses specifically, a significant number instead wrote about opportunities for developing economies generally, a genuinely different question that happens to share vocabulary. Every one of the four groups above only earns marks on this paper once it's brought back to what a NAMED business actually does differently as a result: which markets it can now profitably enter, which locations it can now profitably produce in, which competitors it now faces that it didn't a decade ago, and which workforce it can now draw on. The rest of this lesson is built around one real case — Apple's confirmed move of AirPods assembly to Vietnam — worked through as an actual landed-cost decision, not a list of nine things that happened to be true about the world at the same time.