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Foundations of Economic Globalization

Chapter Issue: To what extent did the world events shape contemporary
economic globalization?

What does Economic Globalization Mean?

p. 216-218

 Some people believe that globalization is all about _________.

 Those who hold this view believe that global trade, the global
transportation system and global communication systems that increase
prosperity for some people, the unequal distribution of wealth, and
the conflicts between peoples and countries over natural resources
are all rooted in economics.
 Economic globalization includes, for example, the oil and gas pipelines
and large tankers that carry oil products; brought employment and
prosperity, but also affected climate change

Aspects of Economic Globalization

 Some see it as a force that creates healthy interdependence that will
lead to prosperity for everyone.
 Others say it could be healthy, but doesn’t yet benefit all (William
Tabb)
 Two views: Joseph Stiglitz, Nobel Prize winner for Economics in
2001- interdependence has happened because communication and
transportation costs have been reduced and barriers to the flow of
goods, services, capital, and knowledge have been taken down
 Naomi Klein, Canadian author and journalist- globalization shuts some
people out of schools, hospital, workplaces, and even their own farms,
homes, and communities- “fences of social exclusion”
 Relatively free movement of money, people, information, and goods
across borders has helped increase the size and economic power of
transnational corporations- some are so big that they are wealthier
than the governments of some countries
 Robert Reich-The Work of Nations- transformation will rearrange the
politics and economics of the 21st century- no national products or
technologies, no national corporations or industries, no national
economies
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 Some people argue that this interdependence creates instability

because a crisis in one country- whether it is caused by a civil strife,
an outbreak of disease, or a strike- can become a serious global
economic problem that can lead to job losses, factory closures, and
unemployment in many other countries
 Many people argue that, at the same time, stability is increased
because countries that trade with one another are unlikely to go to
war
 See Figure 9-5 Factors that Affect the Global Economy p.218:
-war, famine, economic uncertainty, government economic
policies, price changes for non-renewable energy, changes in
investor’s confidence, natural disasters

How did 20th Century World Events Shape Contemporary Economic

Globalization?
p. 219-225

 In 1914, European empires controlled great wealth, vast territories,

and the lives of millions of people around the world
 The imperial powers wanted to protect or expand their colonies and
trade; needed colonies as source of raw materials and market for
manufactured goods
 Along with other factors, __________led to WW I – Germany,
Austria-Hungary, Italy versus Britain, France and Russia’ involved the
colonies and other countries

The Costs of World War I

 15 million soldiers and civilians killed
 Soldiers spent years in France living in muddy, rat-infested trenches
under the constant threat of bombardment, machine-gun fire, and
poison gas
 Huge economic costs- cities, towns, farms, roads, factories, ports,
ships, and railways destroyed; economies devastated
 By 1919, world production of manufactured goods was more than
_______ than it had been in 1913

The Costs of Peace

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 signed after WW I- supposed to ensure

peace and prevent another global war
 Imposed harsh conditions on Germany knows as: - payments
for war damages in Britain, France, Russia and other countries
 __________________, a member of the British delegation, warned
that crippling Germany and Austria with war debts would starve the
people and guarantee another world war
 Germany also had to give up colonies which were divided among
European governments and Japan w/o consulting the Indigenous people
who lived there

The Effects of World War I on the Canadian Economy

 By 1918, cost more than a day
 ___________ introduced to help pay – supposed to be temporary
 After war, interest payments -__________ a year; soldier’s
pensions- __________ a year
 Unemployment _____

The Russian Revolution

 In 1914, Russia ruled by _____________
 Russian empire covered 1/6 of the earth’s surface- nearly 150 million
people with more than 100 different nationalities
 Food and fuel shortages; Russia torn apart by civil war until 1922;
between 1920-1922, 5 million killed by drought and famine

Communist Russia
 In 1922, the first communist state- _________________________
emerged
 _________- a new economic and political model- supposed to get rid
of class distinctions; opposed capitalism and capitalist countries such
as the U.S.
 Land and property were to belong to everyone; everyone would work
for the benefit of all and get help as needed
 U.S.S.R. became a one-party state- Communist Party controlled the
government and the economy- farming, industry, and transportation
 Dictator Joseph Stalin- made Soviet Union into an industrial and
military giant, Forced work, collective farms
The Great Depression
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 Late 1920s- ____________; low unemployment, price of shares rising

on the stock exchange, a place where people buy and sell shares in
publicly traded companies
 ___________, 1929- __________- stock market crash started chain
reaction in which entire world moved into an economic depression,-
The Great Depression

The Great Depression in Canada

 Between 1929-1933, Canadian exports fell by ____; by 1933, _____
of Canadian were out of work; salaries of employed cut

World War II
 Great Depression esp. hard in Germany due to reparation payments
from WWI;
 ____________ and the Nazi Party promised to fix things, elected in
1933 and dissolved the German parliament and declared himself
fuhrer, or absolute ruler
 Hitler-________; convinced many Germans that they belonged to a
master race entitled to rule others
 Took over the Rhineland, _________, _____________
 On ___________________ invaded Poland
 In response, Britain, France, Australia, New Zealand, and Canada
declared war; U.S. entered on side of Allies after Japan attacked
Pearl Harbor in 1941
 More than 50 countries and colonies were drawn into the war

World War II in Canada

 About _________ Canadians died, another ________ wounded
physically or psychologically
 Short- and long-term economic effects; government spending
_________ and manufacture of arms, airplanes, and ships rose,
Farming became more __________
 Unemployment fell; more than a _____________ joined the ‘paid’
workforce; from 1939-1941, employment in Canada’s manufacturing
sector rose by ____; less than ___ if Canadians unemployed by the
end of the war
What Factors Laid the Foundations of Contemporary Global Economics?
p. 226-233
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 Representatives of Britain, the U.S., Canada, and other countries

worked to build an organization, the _____________, that would:
~support people who wanted to choose their own gov’t.
~help countries co-operate on trade issues
~protect smaller countries against invasion by larger ones
~ensure that no single country controlled the world’s oceans
 war had cost more than __________ dollars

The United Nations Monetary and Financial Conference at Bretton

Woods
 in ___________, representatives of 44 countries met in
____________, U. S. for a conference sponsored by the U.N.

John Maynard Keynes and Government Involvement in the Economy

 Keynes led the British delegation at the conference; he believed that
__________________ had failed; gov’ts. playing a very limited role
in country’s economy was wrong

Friedrich Hayek and Government Non-Involvement in the Economy

 Mistrusted gov’t control, complete or partial; thought gov’t. should
protect the market by ensuring that its rules and laws do not
interfere with competition between businesses; believed competition
and market would keep economy healthy; ___________________

The World Bank and the International Monetary Fund

 The World Bank (also called the International Bank for
Reconstruction and Development) and the International Monetary
Fund (IMF) -mapped out at the Bretton Woods conference; were to
be supported by the UN and were to help expand international trade
 Supporters say these organizations have helped stabilize the global
economy and brought prosperity to many countries

General Agreement on Tariffs and Trade

 Signed in _____, GATT members agreed to gradually eliminate
tariffs and other trade barriers among themselves
 Tariff: ____________________________________
 ______________________ emerged from the GATT -1995
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 Set rules to protect copyright and intellectual property, which refers

to products of the mind or intellect, such as slogans, industrial
designs, communication technologies, and patents on drugs

Changing the Foundations of Economic Globalization

 After WW II the _____ and the ______ became economic and
military superpowers
 U.S.- capitalist economic system and democratic government
 Soviet Union- communist economic system and central gov’t. run by a
dictatorship
 Battled for global influence and power, but never open military
warfare- called _________
 During 1980s, people in various communist counties struggled to
overthrow Soviet control; in 1989, Soviet Union began to collapse
 Destruction of the ___________ which had separated communist
_________________ from capitalist, _______________ Berlin
became symbolic of _______________

Changing National Economies

 By 1970s, some gov’ts. had _________, inflation and unemployment
________
 Views of Hayek and Friedman began to gain support

Moving Toward a Market Economy

 Hayek and Friedman believed that _______________________ and
freer markets would generate economic health and prosperity
 Friedman’s (see profile-p.231) theories began to influence Reagan in
the U.S and Thatcher in Britain
 U.S. began to move toward a ________________in which individuals
were freer to make their own decisions with _______________ from
the government- and where resources are the private property of
individuals and companies.
 Canada- ______________ - public and private sectors play
significant role