MAKE AS MANY CONNECTIONS AS YOU CAN BETWEEN LABOR,
CORPORATIONS AND GLOBALIZATION.
YOU MAY WORK IN GROUPS OR BY YOURSELF.
THINK ABOUT HOW OUR ECONOMY IS INTERCONNECTED. GLOBALIZATION UNIT 2 SECTION 3 WHAT IS GLOBALIZATION? Refers to the increased flow of trade, people, investment, technology, culture, ideas among countries and creates a more integrated and interdependent world Globalization has been around since the 15th century when European exploration & colonization created global empires & markets, but most historians and economists agree that today is special by the extent of interdependence and the speed by which it has occurred. DRIVERS OF GLOBALIZATION
• Two factors have expanded
globalization 1. Interdependence “Decline in barriers to the free flow of goods, services, and capital” that has occurred since the end of World War II 2. Technology DECLINING TRADE AND INVESTMENT BARRIERS • During the 1920s and ‘30s, many nations erected formidable barriers to international trade and foreign direct investment
• Advanced industrial nations of the West
committed themselves after World War II to removing barriers to the free flow of goods, services, and capital between nations. AVERAGE TARIFF RATES ON MANUFACTURED PRODUCTS 1913 1950 1990 2002 France 21 % 18 % 5.9 % 4.0 % Germany 20 % 26 % 5.9 % 4.0 % Italy 18 % 25 % 5.9 % 4.0 % Japan 30 % -- 5.3 % 3.8 % Holland 5% 1% 5.9 % 4.0 % Sweden 20 % 9% 4.4 % 4.0 % UK -- 4% 5.9 % 4.0 % US 44 % 14 % 4.8 % 4.0 % THE ROLE OF TECHNOLOGY Lowering of trade barriers made globalization possible. Technology has made it a transforming movement • “World Wide Web” has exploded in last 40 years • Computers can move money around world • Example: Online Banking, Crypto-currency • Silicon Valley is 9th largest economy in world! INTERNET USAGE GROWTH GLOBALIZATION IS ACCELERATION OF TRENDS OF THE LAST 10,000 YEARS People lived for 250,000 years in hunter-gatherer bands Rise of agriculture 10,000 years ago led to rise of empires and nation-states Science and ‘enlightenment’ after 1600 produced global trade and empires Free trade and tech after 1945 produced present-day globalization ASPECTS OF GLOBALIZATION 1. ECONOMIC 2. CULTURAL 3. POLITICAL THESE ASPECTS ARE ALL INTERCONNECTED! ********************* ECONOMIC GLOBALIZATION Economies Are Increasingly Linked Together EX: NAFTA (MX, CA, US), The EU, WTO (World Trade Organization)
Creation of Global Institutions:
World Trade Organization (WTO) Responsible for policing the world trading system and ensuring that nations adhere to the rules established in WTO treaties In 2008, 151 nations accounting for 97% of world trade were members of the WTO International Monetary Fund (IMF) maintains order in the international monetary system, provides loans. ECONOMIC GLOBALIZATION Multinational Corporation • Any business with productive activities in 2 or more countries. • NEW: Nike, Wal-Mart, Shell • Top 100 multinationals are all US-owned companies! • Royal/Dutch Shell: global group of energy and petrochemical companies, operating in more than 140 countries and territories, employing more than 112,000 people GLOBALIZATION OF PRODUCTION & SERVICES Vizio flat panel TV is designed in a small office in California assembled in Mexico From panels made in South Korea electronic components made in China microprocessors made in the U.S. Increasingly companies are using modern communications to outsource service activities to low-cost nations Example: Customer Service calls routed to India GLOBALIZATION OF MARKETS In the past, each country had its own companies in many industries and its own products Now today everyone knows… Nintendo Starbucks Coca-Cola Ikea McDonald’s Samsung GROWTH OF REGIONAL TRADING ALLIANCES (SHARED POLITICAL AND ECONOMIC INTERESTS TO PROMOTE TRADE)
ASEAN (Association of Southeast Asian Nations) 1967
EC (European Community) 1967 EU (European Union) 1993 NAFTA (North American Free Trade Agreement) 1994 AEC (African Economic Community) 1991