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WARM UP: 3/19/2018

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