4-3-2 Approach to Globalisation

Since globalisation is a wide topic, students can adopt a 4-3-2 approach to understanding its application more succinctly. 4 goals – Students are often asked to assess the impact of globalisation on the 4 macro goals in this guide to macroeconomics (jointly or separately). 3 channels – The impact of globalisation is felt through 3 channels – greater flow of  (i) goods and services (aka trade);  (ii) capital (including both hot money and longer-term FDI); and  (iii) labour. 2 themes – In considering the challenges posed by globalisation, there are two themes to observe: (1) Greater reliance on global trade, capital and labour results in greater vulnerability to external conditions. (2) Globalisation is a two-way traffic. While a country can benefit by tapping on global trade, capital and labour, it also faces competition for consumer markets (from imports), capital, and talented workers.