GenEd 3: Globalization of World Economics

Study Notes

Economic Globalization

Economic globalization is a historical process driven by human innovation and technological advancement.
Trade (goods and services) as a percentage of world GDP rose from 42.1% in 1980 to 62.1% in 2007.
Increased trade facilitates rapid international investments through mechanisms like high-frequency trading, which executes millions of transactions in seconds using supercomputers.

International Trading Systems

The Silk Road was the earliest known international trade route, connecting China to the Middle East and Europe, operational from 130 BCE to 1453 CE.
Silk was the most profitable product traded via the Silk Road opened by the Chinese Han Dynasty and closed by the Ottoman Empire.
Despite its scope, the Silk Road was not truly global due to the absence of sea routes to the Americas.

The Age of Globalization

The Age of Globalization began with continuous product exchanges among populated continents.
Flynn and Giraldez trace this back to 1571 with the establishment of the galleon trade linking Manila and Acapulco, marking the first direct trade connection between America and Asia.
The galleon trade was part of mercantilism, an 18th-century system aiming to increase national wealth through stringent government regulations and trade surplus.

Gold Standard

A shift to a more open trade system occurred in 1867 with the adoption of the gold standard by the U.S. and other European nations.
The gold standard established fixed exchange rates based on gold value but imposed restrictions by requiring currency backing with gold reserves.
World War I led many countries to abandon the gold standard due to depleted reserves, transitioning to floating currencies.
The Great Depression of the 1920s to 1930s was exacerbated by the gold standard, which limited money circulation and decreased demand.
The U.S. economic recovery began after abandoning the gold standard, allowing for increased government spending.
Fiat currencies later emerged, not backed by precious metals, allowing governments to more flexibly manage their economies.

Bretton Woods System

Post-World War II efforts to establish a stable global system culminated in the Bretton Woods Conference in 1944.
Influenced by economist John Maynard Keynes, the system underscored the importance of active government intervention in economies to promote spending and prevent economic stagnation.
Keynes's idea emphasized that economic crises stem from insufficient spending rather than a lack of currency availability.

Description

This quiz covers Module 3 of the Contemporary World course, focusing on the globalization of world economics. You will explore key concepts such as international trading systems, the Bretton Woods Agreement, and the roles of various actors in facilitating economic globalization. Additionally, the quiz will challenge you to articulate your perspective on global economic integration.