1. Globalization Is it different this time?

2. Integration Services and goods Markets

3. Relocation Globalization of production process Technological innovation Out-sourcing

4. Re-emergence: India, China, former Soviet Union Lower prices for manufacturers Higher demand for energy, food

5. Causes Reduction in Technological Barriers -Communications *Since 1956, transatlantic capacity has grown by 36% per year while costs have fallen by 24% per year -Transport *Containerization *Air-freight costs drop 6% per year since 1955

6. U.S. Tariff Rate 60% in 1930 40% in 1945 15% in 1960 5.1% in 2010 EU=5.6%China=10.4% Japan=5.5%Brazil=12% India=29.9%

7. Regional Trade Agreements # of RTA’s 1957=2 2002=180 Largest: EU, Nafta, Mercosur (Brazil, Arg, Uruguay, Paraguay)

8. WTO What is the WTO? Founded 1995 Organization of member governments (more like UN than IMF) Est by international treaty Successor to GATT 150 member countries

9. WTO Rules Export subsidies illegal Antidumping Agreements on intellectual property Health and safety standards (but must be justified by science)

10. What if the rules are broken? One government asks for talks Complaining government can ask for a panel of trade officials to adjudicate If rules have been broken the offending government is supposed to amend laws

11. The 1 st Globalization Price differentials: London-Bombay=50% (1850), 15% (1913) International migration: In 1913 10% of the world’s population was composed of immigrants, 2010=3% Contracts: In 1913 a contract signed in Bombay was just as enforceable as one signed in Paris

12. Failures The first globalization failed to diffuse prosperity of the richest to the poorest 1820= Income gap between England and India is 2:1 1913= Income gap between England and India is 10:1

13. ISI By 1970 FT study find “almost without exception” all “Third World” countries pursue socialist or ISI policies Features: high tariffs/subsidies

14. Ricardo Do I pursue a career in tennis or mathematics? Should I do both? Specialization is necessary But the center is rich because it fosters specialization on the part of each of its member. Ultra-specialized are vulnerable  competition at the periphery

15. Immaterial Production Case study: Nike Air Pegasus costs = $70 in the U.S. Wage=$2.75 p/h Materials + transport+ labor= $16 port of L.A. Now Nike must transform sneaker into a social object=$35

16. Immaterial production makes you rich The challenge for poor countries is how to gain their share of immaterial production Education

17. Cultural Impact of Globalization Facebook revolutions? Demographic transitions Gary Becker: When women are offered “better things to do” they have fewer children UN: Images on T.V impact behavior in the developing world