What is Globalization?????

Globalization is………. Goods and services exchanged through trade across national boundaries, creating a global market.

Mercantilism ‘Closed Door’ policy where countries used colonies as sources for natural resources Only the ‘mother country’ could trade with the colonies Strict governmental regulation aimed at creating foreign trading monopolies The opposite of globalization Ended following WWII

COLONIES 1920 Great Britain France Spain Portugal Germany Japan Denmark Norway USA Italy

Historical Global Trade Patterns Silk Road Trade Route -Ancient trade route connecting China to the Mediterranean World. This sparked European interests in finding sea routes to China Columbian Exchange – trade of plants, animals, and people between the old world and the new

The Silk Road

Negatively, they introduced diseases and pandemics that killed most of the native population

Let’s Trade Countries have typically wanted to trade with China because of its abundance of natural resources and its enormous labor force (population). Labor is very cheap in China Singapore and Panama are geographically situated in perfect areas for trade

Panama Connects Pacific and Atlantic Oceans Singapore connects Pacific and Indian Oceans So it’s easier to get to China!

Panama Singapore

Uneven Distribution of Natural Resources in the World

Uneven Distribution of Money in the World

Uneven Distribution of Workers in the World

Regional Specialization in Trade Country A makes cell phones better –Because they have more capital ($$$) Country B makes jeans better –Because they have more labor (workers) Specialize –and trade

FREE TRADE An ‘open door’ to trade—all nations are free to trade with each other A policy that allows businesses to trade across national boundaries without interference from the respective governments “Free” trade because the governments do not levy tariffs (taxes) or subsidies (to bring in) on imported goods

Commercial Expansion The expansion of commercial industry looking for new markets Example-there is no room for any more starbucks in America so in order for the company to grow they must open stores in Europe a major driving force for globalization

Integration of Economies The increasing reliance of economies on each other The opportunities to be able to buy and sell in any country in the world The opportunities for labor and capital to locate anywhere in the world The growth of global markets in finance

FREE TRADE AGREEMENTS NAFTA- North American Free Trade Agreement ASEAN- Association of South East Asian Nations EU-European Union

Free Trade Organizations

NAFTA On January 1, 1994, the North American Free Trade Agreement between the United States, Canada, and Mexico (NAFTA) entered into force. Created the world’s largest free trade area Mexico and Canada are now the top buyers of American products Canada and Mexico are the 2 nd and 3 rd largest suppliers to the United States

ASEAN Formed on 8 August 1967 Includes Indonesia, Malaysia, the Philippines, Singapore and Thailand Brunei, Burma (Myanmar), Cambodia, Laos, and Vietnam The motivations for the birth of ASEAN were so that its members’ governing elite could concentrate on nation building formed to prevent Indonesia from becoming a hegemony

EUROPEAN UNION The EU was created in the aftermath of the second world war. The first steps were to foster economic cooperation countries that trade with one another are economically interdependent and will thus avoid conflict

the union has developed into a huge single market with the euro as its common currency. The E.U. has delivered over 50 years of peace, stability, and prosperity, helped raise living standards, and is building a single Europe-wide market in which people, goods, services, and capital move among Member States as freely as within one country.

The European Union

World Trade Flows NAFTA EU ASEAN

Cause and Effect Uneven distribution of resources –Natural resources, capital and labor Leads to regional specialization –Increased regional trade Increased regional trade causes more world trade –Globalization

Once trade is free we have… Contracting jobs abroad to save money Using foreign labor for jobs that were once done domestically (AT HOME) Example- call centers in India, Adidas made in China not Germany

Globalization in World Trade

Cause and Effect Better transportation technology causes –Faster cheaper ways to ship goods around the world –Therefore more trade And therefore more $$$$, or more £ £ £, or more € € €, or more ¥ ¥ ¥

Is Globalization a good thing… Benefits of Trade: –Increased choice –Greater potential for growth –Increase international economies of scale –Greater employment opportunities –More $$$ in economy

…or a bad thing Disadvantages of trade: –Increase in gap between the rich and the poor –Dominance of global trade by the rich, northern hemisphere countries –Lack of opportunities for the poor to be able to have access to markets –Exploitation of workers and growers

Cultural Problems with Globalization Stronger cultures sometimes overwhelm weaker local cultures –Cultural Imperialism

How other cultures see American culture

What is Globalization?????