Podcast
Questions and Answers
What percentage of the U.S. population was immigrants in 1890?
What percentage of the U.S. population was immigrants in 1890?
Which of the following is NOT a feature of contemporary international economic relations?
Which of the following is NOT a feature of contemporary international economic relations?
What is the concept of deep integration primarily concerned with?
What is the concept of deep integration primarily concerned with?
What has been the trend in the percentage of immigrants in the U.S. population from 1900 to 2010?
What has been the trend in the percentage of immigrants in the U.S. population from 1900 to 2010?
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What is one effect of integrated economies on price differences in different markets?
What is one effect of integrated economies on price differences in different markets?
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What term is used to describe the economic aspect of globalization?
What term is used to describe the economic aspect of globalization?
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When did the significant rapid increase in international economic integration occur?
When did the significant rapid increase in international economic integration occur?
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What major event disrupted the globalization wave between 1870 and 1913?
What major event disrupted the globalization wave between 1870 and 1913?
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Which of the following technologies contributed to the earlier globalization wave?
Which of the following technologies contributed to the earlier globalization wave?
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What is one of the three types of evidence that trade supports economic growth?
What is one of the three types of evidence that trade supports economic growth?
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What factor distinguishes the current wave of globalization from the one at the end of the first wave?
What factor distinguishes the current wave of globalization from the one at the end of the first wave?
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Which measure is NOT used to assess the degree of international economic integration?
Which measure is NOT used to assess the degree of international economic integration?
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What was a significant outcome of the early 20th century disruptions to globalization?
What was a significant outcome of the early 20th century disruptions to globalization?
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What does FPI stand for in the context of capital flows?
What does FPI stand for in the context of capital flows?
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Which of the following types of capital flows involves investments owned and operated by a foreign entity?
Which of the following types of capital flows involves investments owned and operated by a foreign entity?
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What is a key advantage of capital flows today compared to earlier periods?
What is a key advantage of capital flows today compared to earlier periods?
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Which factor contributes to the larger capital flows seen in the current globalization era?
Which factor contributes to the larger capital flows seen in the current globalization era?
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How have transaction costs related to capital flows changed over time?
How have transaction costs related to capital flows changed over time?
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Before World War I, how were international labor movements characterized?
Before World War I, how were international labor movements characterized?
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What was a notable difference in international migration practices before World War I?
What was a notable difference in international migration practices before World War I?
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Which of the following is NOT a type of capital flow mentioned?
Which of the following is NOT a type of capital flow mentioned?
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What is one primary reason economists support more open trade?
What is one primary reason economists support more open trade?
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Which of the following is a form of evidence supporting the benefits of trade?
Which of the following is a form of evidence supporting the benefits of trade?
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What is a potential downside of increased competition resulting from trade?
What is a potential downside of increased competition resulting from trade?
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How does increased trade influence economic growth?
How does increased trade influence economic growth?
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What is a characteristic of trade's impact on nations?
What is a characteristic of trade's impact on nations?
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What is a potential consequence of deep integration mentioned in the content?
What is a potential consequence of deep integration mentioned in the content?
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Which organization is NOT considered a prominent multilateral organization following World War II?
Which organization is NOT considered a prominent multilateral organization following World War II?
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What are Regional Trade Agreements (RTAs) primarily aimed at providing?
What are Regional Trade Agreements (RTAs) primarily aimed at providing?
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What has been a trend regarding the number of Regional Trade Agreements since the 1980s?
What has been a trend regarding the number of Regional Trade Agreements since the 1980s?
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Which economist is associated with the view that RTAs may harm world trade?
Which economist is associated with the view that RTAs may harm world trade?
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What is the primary focus of multilateral organizations?
What is the primary focus of multilateral organizations?
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What term describes products that are increasingly 'Made in the World'?
What term describes products that are increasingly 'Made in the World'?
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What is the major argument made by economists who support RTAs?
What is the major argument made by economists who support RTAs?
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Study Notes
International Economic Integration
- Globalization includes many aspects, including culture, language, economics, politics, and more.
- In the economic context, globalization is referred to as international economic integration.
- International economic integration has been occurring rapidly since approximately 1950.
- Reduction of trade barriers and an increase in financial integration, and information & communication technologies (ICT) have contributed to this economic integration.
- This current wave of international economic integration is not the first.
- A major wave of globalization took place between approximately 1870 and 1913.
- New technologies like transatlantic cables, steam-powered ships, and railroads contributed to this earlier wave.
- This wave was destroyed by World War I and II and the worldwide Great Depression of the 1930s.
Measures of International Economic Integration
- World Trade: trade flows
- International Capital Flows: capital movements
- International Migration of Labor: labor movements
International Capital Flows
- Capital flows include financial and physical assets.
- Financial capital represents paper assets like stocks, bonds, currencies, and bank accounts.
- Physical assets include real estate, factories, and businesses.
- Foreign Direct Investment (FDI): Capital investment owned and operated by a foreign entity.
- Foreign Portfolio Investment (FPI): Investment financed with foreign money but operated by domestic residents.
International Migration of Labor
- Labor movements across international boundaries are part of international economic integration.
- International migration was larger relative to the population before World War I than it is today.
- Before World War I, passports and visas were not required in most countries, and there were few border controls.
Three Features of Contemporary International Economic Relations
- Deeper integration, moving beyond shallow integration.
- The presence of multilateral organizations like the World Trade Organization (WTO).
- The growth of regional trade agreements such as the European Union or the North American Free Trade Agreement (NAFTA, renamed USMCA in Dec. 2018).
Deeper Economic Integration
- Shallow integration involves the removal of tariffs and quotas.
- Deep integration involves reforming domestic policies that limit trade, including labor, environmental and consumer safety standards, investment restrictions, industry policies favoring local firms, buy national programs, etc.
Multilateral Organizations
- Multilateral organizations are open to all countries to maintain international economic and political stability.
- Prominent examples include the United Nations (UN), World Bank (WB), International Monetary Fund (IMF), GATT, and World Trade Organization (WTO).
Regional Trade Agreements (RTAs)
- RTAs are made up of countries that give special market access to each other.
- Examples include the North American Free Trade Agreement (NAFTA → USMCA) and the European Union (EU) among many others.
- There has been a significant increase in the number of RTAs since the 1980s.
- The role of regionalism versus multilateralism is a point of debate among economists.
Trade and Economic Growth
- Economists favor greater openness to trade because it allows countries to grow faster and their people live better, as the benefits of trade outweigh the costs.
- Greater variety of goods with lower prices, benefits of increased innovation, access to new technologies and ideas, and competitive pressure to raise productivity are some advantages of trade.
- Evidence of these benefits comes in three forms:
- Historical examples of countries.
- Statistical comparisons of countries.
- Economic models and deductive reasoning (Liberalization-Trade-Productivity-Economic growth).
- Trade benefits a nation but not necessarily every individual in the nation.
- There are winners and losers (Consumers vs. Producers).
- Firms experience a greater degree of competition.
- Labor markets face more competition, potentially leading to social tensions and conflicts.
- There is a risk of spreading financial crises internationally.
Commodity Classification: SITC and HS code
- The text does not provide detailed information on this topic.
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Description
Test your knowledge on the concepts of international economic integration and globalization. This quiz covers the historical progression, major technological influences, and the changes in trade and capital flows associated with economic integration. Challenge yourself on what you know about this important economic phenomenon!
