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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
