UK Accounting Glossary
The worldwide movement toward economic, financial, trade, and communications integration.
Globalisation implies the opening of local and nationalistic perspectives to a broader outlook of an interconnected and interdependent world with free transfer of capital, goods, and services across national frontiers. However, it does not include unhindered movement of labour and, as suggested by some economists, may hurt smaller or fragile economies if applied indiscriminately.
In business, globalisation is a term used to describe the spectrum of changes occurring in societies and economies as good and services, capital, people, technology, and ideas flow more freely across international borders. The World Bank has defined globalization in terms of economic freedom, irrespective of national borders. Globalisation is thus closely associated with laissez-faire capitalism. Sometimes globalization is used to refer more narrowly to the flow of goods and services. Another name for this aspect of globalisation is trade liberalization. Contrary to popular belief, in some respects, globalisation is not at its peak. In the decades prior to WWI, international trade’s percentage of global GDP was higher than it is today, so that period is sometimes called the first era of globalization. More idealistically, globalization is also sometimes used to describe the notion of a coming global village, with a single international culture. The term internationalisation is sometimes used interchangeably with globalisation.
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This glossary post was last updated: 9th January 2020.