Economic Globalization Review PDF

Economic Globalization KEY CONCEPTS AND REVIEW Economic Globalization  The spread of trade, transportation, and communication systems  Promotes worldwide commerce  Contributors:  Transnationals (businesses that operate in multiple countries…outsourcing)  C...

Economic Globalization KEY CONCEPTS AND REVIEW Economic Globalization  The spread of trade, transportation, and communication systems  Promotes worldwide commerce  Contributors:  Transnationals (businesses that operate in multiple countries…outsourcing)  Containerization (Shipping containers revolutionized transportation of goods)  Internet (Global shift in communication) Sustainable Prosperity  A big question of our unit  How can we work towards prosperity for everyone at a rate that doesn’t destroy the planet?  Sustainable Development:  Development that occurs at a rate that does not deplete the earth’s resources for future generations Economic History – Post WWI  War had disrupted the normal flow of global trade and domestic economies  Infrastructure had been destroyed  Some countries were well off (US, Canada)  Others were desperately poor and facing high inflation (Germany, Austria) Economic History – Economic Systems  Poor conditions in Russia led to call for change and rise of communism  Joseph Stalin implements a centrally planned economy  Government controls all aspects of production and distribution  Equal distribution of wealth  Soviet Union became an economic and industrial powerhouse Economic History - The Roaring 20’s  Period of rebuilding following WWI characterized by:  Optimism  Economic Prosperity  High Investment  USA and Canada were market economies  Based on supply and demand rather than central planning Economic History – Stock Market Crash and Great Depression  Stock Market Crash  Stocks that had been rising steadily suddenly dropped  Large numbers of frightened investors sold shares, which lowered values  Many investors lost huge sums of money  Great Depression  Economic downturn saw people pull savings out of banks  Private banks didn’t have enough on hand, closed, banking collapsed  International trade declined  Rampant unemployment and poverty Economic History – Keynes VS Hayek and Friedman  Keynes  Supported government intervention  Government should borrow money and spend it on public works  Creates jobs, people make money, people spend money, problem solved  Hayek and Friedman  Government intervention = bad  Economy too complex for government to fine tune  Letting bad conditions go in the short term means better long term health Economic History – Cold War  At the end of WWII the USA instituted the Marshall Plan to rebuild Europe  Plan provided massive financial aid to rebuild Europe into a trading partner  Powerful USSR began trying to expand influence  Led to ideological and economic conflict between market and communist ideology  The Cold War Bretton Woods: World Bank and IMF  International conference near the end of WWII  Created the World Bank and the IMF  Policy was to create international monetary stability (after the depression) World Bank  The World Bank  Was designed to provide long term loans to developing countries  Countries had to follow certain rules  Reduced government spending on social programs (education, health care, subsidies)  Reduced corruption in government  Allow competition in the marketplace (let Transnationals in) International Monetary Fund  International Monetary Fund  Funded by member countries  Goal was to increase world trade and free markets  Promotes trade by increasing the stability and exchange of major currencies  Short term loans to countries with balance of payment problems Criticisms  World Bank IMF  Sometimes viewed as an extension of the White House (headquarters in the Larger member countries have more US) control  Conditions imposed with loans often Free trade can sometimes come under fire (too harsh, support disproportionately benefit the larger non green industries, cause social nation problems)  Seen as a tool for corporate IMF focuses too heavily on economic advancement (forcing international issues and not others (including trade) labor) Sustainable Development  Sustainable Development  Economic development that consumes resources at a sustainable rate  Up to us to take on stewardship of our planet  Doesn’t always happen  Rapid economic growth sometimes leads to unsustainable development  Acid rain, water scarcity, air pollution Ecological Footprints  Your ecological footprint represents the area of the earth’s surface necessary to:  Sustain the resources you consume  Sustain the waste you create  Measured by biologically productive land and water resources divided by total population  About 1.89 hectares of productive area available for each person – about four football fields Climate Change – Causes  Human Impact  Human activities change the natural greenhouse  Over the last century, burning of fossil fuels (coal, oil, etc) has increased concentration of atmospheric CO2  The fuel burning process combines carbon with airborne oxygen to form CO2  CO2 emissions SPEED UP the natural warming process Climate Change – Evidence  Sea Level Rise  Global Temperature Rise  Shrinking Ice Sheets and Sea Ice  Extreme Weather Events Case Studies – Life and Debt  Jamaica takes a loan from the IMF in the 1970s  Social programs are cut as part of the conditions of the loan (education, healthcare)  Free trade imposed by IMF loan sabotaged Jamaican industry (farming, dairy) as they couldn’t compete on world markets  Free Zones (designed to provide jobs) imported Asian workers (lower $$) Case Study - WTO  What does it do?  The World Trade Organization  Intergovernmental organization  Regulates international trade  Provides a forum for negotiations and settling disputes between member nations  Criticisms  Power bias to wealthy member nations  Ignores issues of labor and environment Case Study - NAFTA  What does it do?  North American Free Trade Agreement  Promote free trade among Canada, the US, and Mexico  Increased trade between all three nations  Criticisms  Has led to the shift of labor jobs from Canada and US to Mexico (maquiladors)  Has damaged the agriculture industry in Mexico  Too much legal power to corporations Case Study – Transnational Corporations  What do they do?  Companies that operate across many countries  Access foreign markets  Obtain cheap labor and goods  Criticisms  Too powerful; 51/100 of the world’s largest economies are transnational corporations  Control most of the world’s energy  Exploitative of vulnerable populations  Environmental damage Case Study – Free Trade  What is it?  Removal of trade barriers (IE tariffs) between partners  Opens both markets to unrestricted access  Trade liberalization  Criticisms  Often still full of regulations and rules  Unfair advantage to larger nations Case Study – Fair Trade  What is it?  Strategy to alleviate poverty and promote sustainable development  Send less money to middlemen and more to the producers  Also invest in producers’ homes  Criticisms  More expensive and difficult to find than regular products  If handled poorly may only aid individual producers