1. Introduction: The Global Economy
Objectives: by the end of this globalization unit you should be able to: articulate your own ideas about trade, and have an educated discussion on why trade issues are important to American society.

2. The positive and negative affects of globalization in America
Positive: 1. new markets have opened up for American exports 2. American consumers have been able to choose from a wide variety of imports 3. millions of investors have reaped the rewards of placing their savings in foreign & domestic stock markets 4. trade allows nations to specialize in some products & then trade them for goods & services that are more expensive to produce 5. When countries specialize, they produce the things they do best & exchange those products for the things other nations do best

3. Negative effects:
American businesses & workers have been forced to compete in a global marketplace
2. Our countries “flagship” corporations have
struggled to hold down costs and boost
efficiency (General Motors & Ford)
3. Many jobs have moved overseas
4. the pressures of the international labor market
have been holding down wages for millions of
American workers

4. Changes in U.S. trade occurring today
developing countries are likely to account for
a large portion of the worlds imports
B. American exports to developing countries
represent 40% of the total U.S. exports & is
expected to increase sharply in the future
C. The WTO (World Trade Organization) NAFTA
(North American Free Trade Agreement)-both
organizations are designed to reduce trade
barriers to international trade

5. Why Nations Trade Lack of goods at home Need for raw materials
Specialization (do what you do best, trade for the rest)
Exotic Products
$$$$$ Profit

6. Problems the U.S. faces in international trade
A. Subsidies- many countries subsidize various industries in order to
help make those industries compete in world markets
1. in the U.S. we subsidize farmers even though it goes against the basic ideas of capitalism
B. Dumping- companies flood markets with goods priced far below what they would cost in the country they are produced
1. the company can operate at a loss of profit for a time period to “drive out” their competitors
2. dumping disadvantages producers who are not subsidized
C. The U.S. share of global manufacturing has fallen from half of the world output to about 1/5th
1. automobile, steel, & consumer electronics industries have lost ground to foreign competition
2. the U.S. now faces chronic trade deficits
instead of trade surpluses