Globalization

Globalization Defined as: a process by which individuals and businesses in any part of the world are much more affected by events elsewhere in the world than they used to be. Growing integration of the national economies of the world.

Smaller World Example of China – 2009 used trade money and bought US bonds thus lowering interest rates. How does this affect our economy overall? How does this affect the consumer?

Free Enterprise World Freer markets, more freedom of movement for people and goods. Moving from hundreds of national economies to one large world economy.

Early History of Globalization Mid 1800s to 1920s referred to as the First Era of globalization. Ended after G.D. and WWII. Cold War divided nations and economies.

Recent Causes End of the Cold War – thawing of political and economic relations between former enemies. Willing to trade with past enemies.

Advancing Technology – Advances in transportation and communication lower cost of trade and increased flow of information.

Policy changes – allow investments in other countries, easing of trade restrictions. NAFTA

Costs & Benefits of Globalization Trade Standard of Living – increase in income and increase in life expectancy

Costs Increased Income Inequality between rich and poor countries Losing American Jobs More power to big corporations

Globalization and the Financial Crisis How does a financial crisis in one country affect others?