Globalization

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Globalization
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Objectives

• Describe the ways in which countries around the
  world are interdependent and how economic crises
  can have a global impact.
• Understand how international treaties and
  organizations make global trade possible.
• Analyze the costs and benefits of global trade.

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Terms and People

• globalization the process by which national
  economies, politics, cultures, and societies
  become integrated with those of other nations
  around the world
• interdependence the dependence of countries on
  each other for goods, resources, knowledge, and
  labor from other parts of the world
• outsourcing the practice of sending work to the
  developing world to save money or increase
  efficiency

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Terms and People (continued)

• multinational corporation a corporation with
  branches and assets in many countries that sells
  its goods and services throughout the world
• World Trade Organization (WTO) international
  organization set up to facilitate global trade
• protectionism the use of tariffs and other
  restrictions that protect a countrys home
  industries against competition

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Terms and People (continued)

• bloc a group, such as a trade group, that works
  for the common needs of its members
• sustainability the ability to meet present
  needs for food, resources, and shelter without
  harming future generations

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How is globalization affecting economies and
societies around the world?
Globalization began 500 years ago, at the time of
the Columbian Exchange. By 2000, globalization
was taking place at a rapid rate. The rise of
free trade, improvements in transportation and
communication, and the spread of democratic
systems has increased economic interdependence in
todays world.
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• Nations depend on each other for goods,
  resources, knowledge, and labor.
• Financial markets are interconnected.
• These connections create opportunities and
  challenges.

Interdependence is a major effect of
globalization.
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Rich and poor nations of the world are linked.
Wealthy countries depend on developing nations
for low-paid labor through outsourcing.
Developing nations depend on wealthier countries
for capital, trade, and technology.
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Globalization led to the growth of multinational
corporations.

• Huge companies have assets in many countries and
  sell goods or services worldwide.
• Defenders of these corporations argue they invest
  in the developing world, provide jobs, and
  improve infrastructure and technology.
• Critics say they take profits out of developing
  countries and pay workers wages that are too low.

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Natural resourcesespecially oilplay a huge role
in the global economy.

• When OPEC limited oil exports in 1973, economies
  suffered around the world.
• People have began to invest in alternative fuels,
  but the world is still dependent on oil.

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Interdependence contributed to a debt crisis in
developing nations in the 1980s.
Bank interest rates rose in the 1980s. Developing
nations could not repay loans they had taken out
to modernize.
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Because the world is connected financially, a
crisis in one nation or region can have a global
impact.
In 2008, a banking crisis in the United States
rippled through the world as global stock markets
plunged.
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• The United Nations was created to keep the peace,
  but it also deals with political and social
  issues.
• The World Bank offers loans and technical advice
  to developing nations.
• The International Monetary Fund (IMF) promotes
  global economic growth and monetary cooperation.

International organizations and treaties have
greatly expanded since 1945.
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International treaties promote and set guidelines
for global trade.

• The World Trade Organization was organized in
  1995. It opposes protectionism and seeks to keep
  the flow of world trade smooth and free.
• The Group of Eight (G-8) is an organization of
  industrialized nations that meets annually to
  discuss economic issues. Its members are Canada,
  Britain, France, Germany, Italy, Japan, Russia,
  and the United States.

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• The North American Free Trade Agreement (NAFTA)
  links Canada, the United States, and Mexico.
• Asia-Pacific Economic Cooperation (APEC) eases
  trade among Pacific Rim nations.
• The African Union deals with both economic and
  political issues.

Nations have formed regional blocs, such as the
European Union, to promote trade.
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Global trade has costs and benefits.
Benefits Brings consumers variety and low prices Exposes people to new ideas Generates money that can be used to provide services such as education Promotes democracy
Costs Can cause poor countries to go into debt and lower their standard of living Disrupts indigenous peoples land and culture Encourages too-rapid development, which compromises sustainability
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The anti-globalization movement targets
organizations such as the World Bank, the World
Trade Organization, and the International
Monetary Fund.
They oppose the tough changes that such
organizations require developing nations to make
and accuse developed nations of exploiting poorer
countries.