GlobalizationGlobalizationDefinitionDefinition

The process by which The process by which different parts of the world different parts of the world

interact economically, interact economically, politically, and culturally.politically, and culturally.

History of GlobalizationHistory of Globalization• Sharing between world cultures Sharing between world cultures

began 1000s of years ago.began 1000s of years ago.• In the 19In the 19thth century cultural sharing century cultural sharing

exploded. exploded.

1919thth Century Century• Europeans discover the AmericasEuropeans discover the Americas• European ImperialismEuropean Imperialism• Industrial RevolutionIndustrial Revolution• InventionsInventions

– TransportationTransportation– TelephoneTelephone– TelegraphTelegraph

2020thth Century Century• Free market capitalismFree market capitalism

– End of the Cold WarEnd of the Cold War• THE INTERNETTHE INTERNET

– Exchange ideasExchange ideas– Transfer $$Transfer $$– Share cultureShare culture– 24/724/7

Disadvantages of Disadvantages of GlobalizationGlobalization

• Exploitation of child laborExploitation of child labor• Low wagesLow wages• Few worker protectionsFew worker protections• Environmental degradationEnvironmental degradation• Destruction of indigenous culturesDestruction of indigenous cultures• Destruction of small farmersDestruction of small farmers

Disadvantages of Disadvantages of GlobalizationGlobalization• Corporate greedCorporate greed

• Job lossJob loss• Trade imbalanceTrade imbalance• Loss of small farmsLoss of small farms• Loss of small businessesLoss of small businesses

Advantages of Advantages of GlobalizationGlobalization

• Increased Increased employment in employment in developing nationsdeveloping nations

• Cultural diffusion Cultural diffusion (spread of culture)(spread of culture)

• More “Service” More “Service” JobsJobs

• Cheaper Goods Cheaper Goods (like cars, food, (like cars, food, clothes)clothes)

Free Trade AgreementsFree Trade Agreements• An effect of globalization An effect of globalization

has been the creation of has been the creation of free trade agreements.free trade agreements.

• Free trade agreements eliminates tariffs, import quotas, and preferences on most goods and services traded between countries.

NAFTANAFTA• North American Free Trade North American Free Trade

Agreement (1993)Agreement (1993)• Removed TariffsRemoved Tariffs• motor vehicles and automotive parts, motor vehicles and automotive parts,

computers, textiles, and agriculture. computers, textiles, and agriculture. • US President George H. W. Bush. US President George H. W. Bush. • US President Bill ClintonUS President Bill Clinton

CAFTACAFTA• August, 2004- U.S. signs free trade August, 2004- U.S. signs free trade

agreement with the five Central agreement with the five Central American countries (Costa Rica, El American countries (Costa Rica, El Salvador, Guatemala, Honduras, Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Nicaragua, and the Dominican Republic)Republic)

• Agreement – eliminates tariffs Agreement – eliminates tariffs (taxes), opens markets, reducing (taxes), opens markets, reducing barriers to servicesbarriers to services

European Union (EU)European Union (EU)• Economic and political

partnership between 27 European countries.

• Helped raise living standards• Created a single European

currency (Euro)• Built a single Europe-wide

market in which people, goods, services, and capital move among member states freely

GATTGATT• General Agreement on Tariffs and General Agreement on Tariffs and

TradeTrade• an international agreement an international agreement • Reduced tariffs Reduced tariffs • Favored Nation StatusFavored Nation Status• Updated 1947 to 1990sUpdated 1947 to 1990s

Who benefits from free trade, and who does not?

• CorporationsCorporations• Real smart people Real smart people

who invent thingswho invent things• Real aggressive Real aggressive

people who start people who start large companieslarge companies

• Developing Developing countriescountries

• Poor People in Poor Poor People in Poor CountriesCountries

• Poor People in the USPoor People in the US• Non-technical people Non-technical people

in the USin the US• Manual Labor in the Manual Labor in the

USUS• The EnvironmentThe Environment• Small Farms and Small Farms and

BusinessesBusinesses

OutsourcingOutsourcing• Having certain job

functions done outside a company instead of having an in-house department or employee handle them

• Creation of new jobs - Creation of new jobs - in the third/developing in the third/developing world is just one world is just one controversial element controversial element of globalization.of globalization.

INDIA & CHINAINDIA & CHINA• Benefits of fast-

growing economy.• The economic

fundamentals of both nations, with their enormous populations of young workers and consumers, point to strong growth for decades under almost every forecast.

• Problems of fast-growing economy.

• Coups, political strife, and bad management.

• Both China and India Both China and India need annual growth need annual growth of at least 8% just to of at least 8% just to provide jobs for the provide jobs for the tens of millions tens of millions joining the joining the workforce each year. workforce each year.

Use your notes to answer Use your notes to answer the following questions.the following questions.

• What is globalization?What is globalization?• What historical events led to culture What historical events led to culture

sharing and globalization?sharing and globalization?• What are the advantages and What are the advantages and

disadvantages of globalization?disadvantages of globalization?• Are free trade agreements a good Are free trade agreements a good

idea? Explain your answer.idea? Explain your answer.• What are the benefits and problems What are the benefits and problems

of outsourcing?of outsourcing?