History of Global Market Integration CONWORLD Lecture 8 PDF

# History of Global Market Integration ## Before the Rise of Today's Modern Economy - People only produced for their family. - Economy demands different sectors to work together in order to produce, distribute, and exchange products and services. ## The Agricultural Revolution and the Industrial...

# History of Global Market Integration ## Before the Rise of Today's Modern Economy - People only produced for their family. - Economy demands different sectors to work together in order to produce, distribute, and exchange products and services. ## The Agricultural Revolution and the Industrial Revolution ### Agricultural Revolution (Pomeranz, 2000) - People learned how to domesticate plants and animals. - More productive than hunter-gatherer societies. - Farming helped societies build surpluses. - This lead to major developments like permanent settlements, trade networks, and population growth. ### Industrial Revolution (1800s) - Rise of industry came new economic tools, like steam engines, manufacturing, and mass production. - Factories popped up and changed how work functioned. - People worked as wage laborers and became more specialized in their skills. - Overall, productivity went up, standards of living rose, and people had access to a wider variety of goods due to mass production. ## Capitalism and Socialism ### Capitalism - All-natural resources and means of production are privately owned. - Emphasizes profit maximization and competition. - Businesses need to outperform competitors. - They are incentivized to be more efficient by improving the quality of one's product and reducing its prices. - Adam Smith called this the "invisible hand" of the market. - Consumers will regulate things themselves by selecting goods and services that provide the best value. ### Socialism - Means of production are under collective ownership. - Rejects capitalism's private property and hands-off approaches. - Property is owned by the government. - Emphasizes collective goals, expecting everyone to work for the common good. - Places a higher value on meeting everyone's basic needs than on individual profit. ## The Information Revolution - Technology has reduced the role of human labor. - Shifted from a manufacturing-based economy to one that is based on service work and the production of ideas. - Computers and other technologies are beginning to replace many jobs. - We see the decline in union membership. ## The Information Revolution pt. 2 - Agricultural jobs have fallen drastically over the last century. - Manufacturing jobs have declined in the last 30 years. - U.S. economy began with many workers serving in either the primary or secondary economic sectors. - Today, much of their economy is centered on the tertiary sector or the service industry. ## The Service Industry - Includes every job such as administrative assistants, nurses, teachers, and lawyers. - Defined mainly by what it produces rather than what kinds of jobs it includes. - Sociologists distinguish between types of jobs, which is based more on the social status and compensation that come with them. ### Primary Labor Market - Includes jobs that provide many benefits to workers, like high incomes, job security, health insurance, and retirement packages. - Includes white-collar professions, like doctors, accountants, and engineers. ### Secondary Labor Market - Jobs provide fewer benefits and include lower-skilled jobs and lower-level service sector jobs. - They tend to pay less, have more unpredictable schedules, and typically do not offer benefits like health insurance. - They also tend to have less job security. ## Global Corporations - International regulatory groups, like WTO, and transnational trade agreements, like NAFTA. - There is not a single country that is completely independent. - All are dependent to some degree on international trade for their own prosperity. - Without international trade, there would be no need for international regulatory groups. - Without these groups, international trade at the current massive scale would be impractical. - Trade regulatory groups and agreements regulate the flow of goods and services between countries. - They reduce tariffs, which are taxes on imports, and make customs procedures easier. - These international trade agreements often benefit private industries the most. - Companies produce their goods and services across many different countries. ### Global Corporations - Companies that extend beyond the borders of one country. - They are called multinational or transnational corporations (MNCs or TNCs). - Also referred to as global corporations. ## The Effects of Global Corporations - Intentionally surpass national borders and take advantage of opportunities in different countries to manufacture, distribute, market, and sell their products. - Some global corporations are ubiquitous, like McDonald's or Coca-Cola, and yet, they still market themselves as American companies. - Others can be surprising like General Electric, which is based in the United States but has more than half of its business and employees working in other countries. - Another example is Ford Motor Company, the classic American car company, headquartered in Michigan that manufactures cars worldwide. - Transnational corporations have a significant role in the global economy. - Some have greater production advantages than an entire nation. - They influence the economy and politics by donating money to specific political campaigns or lobbyists. - They can even influence the global trade laws of the international regulatory groups. - Global corporations often locate their factories in countries which can provide the cheapest labor in order to save up for expenses in the making of a product. - Developing nations provide incentives, like tax-free trade zones or cheap labor. - Companies will set up shop in their country in hopes of bringing jobs and industry to beleaguered agricultural areas. - This promotes more rapid advances in the developing nation because of the ideas and innovations brought over from the industrialized nations. - It also makes nations around the world more interdependent, which minimizes the potential for conflict. - These incentives often hurt the working population of the developing nation. - The upper classes may benefit from the business of these corporations but the people working in the factories are exploited as their wages are cut. - They are often prohibited from unionizing. - It can even result in sweatshop conditions with long working hours, substandard wages, and poor working conditions. - If the labor laws in one country become too restrictive to the TNCs, they can just move their factory to a new country, leaving widespread unemployment in their wake. - Setting up factories in developing nations may also hurt the core country where the TNC is based because many potential jobs are being sent abroad. - The same thing happens when companies outsource their labor to other countries. - Outsourcing has been enabled by technological advances, allowing immediate communication across the world and the ease of transporting people, goods, and information. - When companies find people in other countries willing to work for a lower wage, they will often employ them. - This is good for the company because they save money, and it is good for the people in other countries because they now have a job. - It also means that the people in the core country are losing jobs and having difficulty finding new ones. - There seems to be a lot of negative effects of globalization from transnational corporations. - Trade does promote the self-interested agendas of corporations and give them autonomy. - Global corporations also influence politics and allow workers to be exploited. - There are, however, positive effects. - These include better allocation of resources, lower prices for products, more employment worldwide, and higher product output. ## Cultural Diffusion - As international trade becomes easier and more widespread, more than just goods and services are exchanged. - Cultural practices and expressions are also passed between nations, spreading from group to group. - This is called diffusion. - Ideas and practices spread from where they are well known and frequently apparent to places where they are new and not often observed. - In the past, exploration, military conquests, missionary work, and tourism provided the means for the trading of ideas. - But technology has exponentially increased the speed of diffusion. - Mass media and the Internet allow the transfer of ideas almost instantaneously. - This is most commonly seen in the transmission of scientific knowledge and the spreading of the North American culture, which dominates the Internet. ## Globalization - International trade and global corporations, along with the Internet and more global processes, contribute to globalization because people and corporations bring their own beliefs, their traditions, and their money with them when they interact with other countries. - These ideas and capital can then be incorporated in other countries, and thus, change the cultures and economies of these foreign nations.