Trade and Globalization Preview Starting Points Map: World Per Capita GDP Main Idea / Reading Focus Economic Interdependence Global Trade Quick Facts: Major Trade Organizations and Agreements Cultural Exchange

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Trade and Globalization Main Idea Trade and culture link economies and lives around the world. Reading Focus How does economic interdependence affect countries around the world? What are some patterns and effects of global trade? How does globalization lead to cultural exchange?

Economic Interdependence At the beginning of the twenty-first century, the world was divided over a number of political, cultural, and economic issues. Despite divisions, countries tied together like never before Globalization is force behind closer relationships Process in which trade, culture link countries Improvements in transportation, communication make global trade easier Globalization Major effect of global trade, increased economic interdependence Relationship among countries in which they depend on each other for resources, goods, services Occurs because countries vary in goods, services they provide, need Interdependence

Developed and Developing Countries Economy Goods, services nation provides and needs depend on level of economic development in that country Countries grouped in two categories: developed, developing Developed Industrialized nations have strong economies, high standards of living 20 percent of world’s nations wealthy, powerful like Japan, United States Have access to good health care, education, technology Developing Less productive economies, lower standard of living; Guatemala, Philippines People in these countries lack adequate education, health care Poorest, least-developed countries located mostly in Africa, southern Asia

Growth and Outsourcing Multinational Corporations Increasing interdependence and dramatic growth of multinational corporations—large companies operating in multiple countries Benefits to companies Outsourcing—having work done elsewhere to cut costs, increase production Manufacturing facilities in developing countries, where materials, labor relatively inexpensive Outsourcing Advocates say: creates jobs and wealth in developing countries Critics say: fails to improve standard of living, outsourcing causes job loss in company’s home country

Global Economic Ties Oil Prices Certain events, actions can affect economies of many nations Global interdependence particularly evident in times of uncertainty Early 2000s, price of crude oil rose dramatically Factors: rising world demand, concern over available supply Oil Prices All countries depend on oil for energy; rise in prices felt around world Developed countries like United States faced with higher costs Poor nations in Africa could not afford to import, faced shortages Rise in oil prices led to increased demand for alternative energy sources, attempts to reduce consumption

How does economic interdependence affect the world? Summarize How does economic interdependence affect the world? Answer(s): helps to provide jobs in developing countries, increases production and decreases cost for multinational companies

International Trade Organizations Global Trade Globalization often leads to or promotes free trade, the exchange of goods among nations without trade barriers such as tariffs. This can lead to consumers purchasing higher-quality goods at lower prices. Many of these groups work to promote, regulate free trade 1948, General Agreement on Tariffs and Trade (GATT) Worked to limit trade barriers, settle disputes International Trade Organizations 1995, GATT replaced by World Trade Organization (WTO) Monitors national trade policies Organization of Petroleum Exporting Countries (OPEC) works to control oil production, price GATT, WTO, OPEC Regional trade blocs promote free trade, deal with economic issues of neighboring nations European Union (EU), North American Free Trade Agreement (NAFTA), others Regional Trade

Effects of Global Trade Global trade has clear benefits Developing countries can provide new, valuable markets for goods, services produced by developed countries Technology, services, money from developed nations can improve public services, raise standard of living of developing countries Benefits Opponents argue process benefits wealthy developed nations at expense of developing nations Free trade encourages practices that exploit workers, destroy environment Some promote fair trade, like fair trade coffee movement guaranteeing fair prices to coffee bean farmers Anti-Globalization

How does global trade affect the world? Find the Main Idea How does global trade affect the world? Answer(s): can provide opportunities for developing countries; opponents believe global trade exploits developing nations, supporters believe it provides for the production and sale of high-quality, low cost goods

Cultural Exchange Culture Popular Culture Spread of Traits Mass Media Globalization; countries linked through trade and culture Modern transportation, communication allow faster exchanges of ideas, customs Popular Culture Globalization leads to changes in popular culture Culture traits: food, sports, music common within group of people Spread of Traits Globalization leads to cultural diffusion, spread of culture traits from one region to another Work, travel, permanent moves all play part Mass Media Television, movies, music most powerful methods of cultural diffusion Satellite news and Internet also ways of exchanging images, ideas

Effects of Cultural Changes Negative Effects Some believe changes largely negative Mass media, advertising encourage growth of consumerism, preoccupation with buying consumer goods Media Opponents say market shaped by media and advertising, not actual needs Worry that globalization creating common world culture, allowing traditional cultures to lose uniqueness World Community Globalization linking people together through economics, culture Challenge to preserve valuable traditional cultures while providing enrichment from other places in world

How is cultural exchange a part of globalization? Summarize How is cultural exchange a part of globalization? Answer(s): leads to cultural diffusion, more travel to other countries for work or vacation, exotic goods from other countries available