Global Economy in Historical Context Early Patterns of Global Finance and Trade, largely supported state building, war making, and colonization. –14 th C.-Florentine Merchant Banks (Peruzzi Company) Financed Trade with Asia Super company: also produced cloth transnationally –16 th -18 th C.- Antwerp, Belgium financial center Bank of England financed Britain's war with France British and Dutch East India Companies Hudson Bay Company –18 th C.-Amsterdam and London are global cities

Global Economy in Historical Context: 1850-WWII MNCs establish colonial operations –Extractive and Primary Industries; Mining, Logging Agriculture: Plantations and Ranches; Fruit and Tea Oil companies emerge –MNCs export textiles and decimate indigenous industries Industrial Age: –Classical Gold Standard Period: Skeptics argue that this was the only truly globalized era. –Telegraph drastically improves communication

Global Economy in Historical Context: Interwar Years Interwar (WWI and WWII) years: Global Monetary Disorder –Collapse of the Gold Standard –German Hyperinflation –Domestic investments predominate Trade protectionism and cartels dominate remaining international business Soviet Union withdraws from intl market

Global Economy: Bretton Woods 1944 Meeting in Bretton Woods, New Hampshire Marshall Plan IMF: short term loans, also administered global financial order –Compromise between free trade and social democrats –Discrepancies between European and developing world World Bank: Infrastructural Development GATT: General Agreement on Tariffs and Trade

Global Economy: Development 1950s-1960s Decolonization: finished by early 1960s: however global capital is afraid of conflict and turmoil Marshall plan is completed, IMF and World Bank turn to new independent states. Development = Progress, modernization, infrastructure –embedded in Cold War conflicts; used as geopolitical strategy

Global Economy: Big Changes in the 1970s 1971: Nixon delinks dollar from gold standard floating exchange rates OPEC cartel quadruples oil prices petrodollars US/Euro Banks have $50 billion to loan Developing countries receive this boon in the forms of government and private loans

Global Economy: Neoliberal 1980s Early 1980s-Debt crisis begins: world wide interest rates soar/ global recession/fall in commodity prices IMF imposes Structural Adjustment Policies (SAPs) to justify additional loans. Green Revolution, Industrial Agriculture and commodity dumping drive small farmers out of business Rural-Urban Migration in Developing World IMF riots 1989-Fall of USSR and end of Cold War Market economy is the only game in town

Global Economy in the 1990s Structural Adjustment continues and critique intensifies GATT WTO (1995): Free Trade and Financial Flows) Global Assembly Line- –MNCs –Export Processing Zones Industrial/Export Agriculture Internal and External Migration continues Rise of the Mega city and the Informal Economy Rise of Transnational Communities

The Global Assembly Line

VWs Global Assembly Line

Country v. Corporate Economic Size: World Ranks-GDP and Sales

The Rise of Multinationals Overheads

Differences in Wage Rates Average wages of workers who make Suburbans U.S. $18.96/hr. Mexico $1.54/hr. # of Suburbans produced Mexico 80,400 U.S. 83,000 Comparative Wage Rates: US/Mexico

The Cost of a Shoe

Early 1960s - Oregon 1967 – Japan S. Korea and Taiwan 1986 – Indonesia, China and Thailand Vietnam Globe-trotting Nike

Industrial relocation: non-labor factors Government incentives and regulations –Provision of infrastructure (Export Processing Zones) –Reduced cost of land, water, electricity –Tax breaks and tariff reductions –Lower environmental pollution standards –Lower health and safety standards

Global Growth in EPZs Region (No. of EPZs) Key Countries (No. of EPZs) Latin America and the Caribbean (240) · Central America and Mexico (148) · Caribbean (51) · South America (41) Mexico (107) Honduras (15) Costa Rica (9) Dominican Republic (35) Colombia (11) Brazil (8) Europe and NIS (81)Slovenia (8) Bulgaria (8) Asia and Near East (264)Turkey (11) Philippines (35) Indonesia (26) Jordan (7) China (124) Africa (47)Kenya (14) Egypt (6) Oceania (2)Fiji (1) Total (633)

61% MFG - 77% EXPORTS

Map of world trade interconnectedness

Exports % % Imports – % % Intra-Firm Transfers - U.S. Corporations Data

Global Production: Social Issues

Health and Safety of Workers Coercive Working Conditions Anti Union Environment Government Involvement in Coercion and Lack of Participation/Democracy in Decisionmaking Child Labor decl/intro/ilo_movie/index.htm decl/intro/ilo_movie/index.htm