what is globalisation? why is it so important in trade?
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In terms of trade, globalisation is the system we have built where supply chains are not confined to a single country or region, but stretch all around the world. So shipping timber from Canada to China, turning it into paper, then shipping that to Belgium to make into books which are sold throughout Europe is globalisation.
Or shipping iron ore from Australia and coal from Brazil to Mexico to product steel and cars for sale in the USA.
Or most of all, manufacturing goods in South East Asia for sale in Europe and North America.
It is important because it is surprisingly recent, and took considerable effort to bring about, mostly through multilateral free trade deals. It massively improved quality of life in many places through more efficient use of labour and resources. It also resulted in many people losing out, especially manufacturing workers in the west. It also exposed the world to lots of risk: the pandemic showed how fragile the supply chains are, and war in Europe showed that producing countries can hold consuming countries to ransom to some extent. This is true of Russian gas going to Europe, but also blockades of Ukrainian grain which is needed to feed much of Africa.
So now there is a big political question on whether to reduce global trade and pursue more protectionist policies (keeping trade within a country), or to make global supply chains more robust.
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