Reviewing GlobalizationReviewing Globalization

ObjectivesObjectives

• Review basic economic principles.• Review key trade agreements & agencies.• Review issues and controversies

surrounding globalization.

Warm UpWarm Up• What is economics?

– Way in which we manage limited resources to meet unlimited needs

– Market • Free choice, competition, limited govt role

– Command• Govt decides, controls• Security over risk

– Traditional• Custom dictates• Support selves

ReviewReview

• What is globalization?– Growing integration of the world’s

economies and societies.

– New communications technology

– Free trade, open currency markets, privatization

Trade Agreements and Regulating BodiesTrade Agreements and Regulating Bodies

• Regional Trade– NAFTA– EU– AU – ASEAN

• International Trade– IMF– World Bank– WTO

Trade Agreements and Regulating BodiesTrade Agreements and Regulating Bodies

• International Monetary Fund (IMF)– Short term loans to

countries in economic crisis

• World Bank– Financial aid for

long-term development

• World Trade Org.– GATT– Promote & monitor free trade among

member nations– Settle disputes

Globalization: Issues and ControversiesGlobalization: Issues and Controversies

• National Sovereignty• Loss of Cultural Identity• Free Trade or Unfair Trade • Globalization & Human Rights• Globalization & Migration• Emerging Powers• Global Economic Crisis

Global Economic CrisisGlobal Economic Crisis• Global Pool of Money

– How did world invest in US housing market?• Mortgage Backed Securities

– Problem?• Not enough mortg’s = Lowered standards (NINAs)• Default / Foreclosure = securities worth less• Stock Market “Crash” = banks / financial co’s bankrupt• Credit crunch (no loans for cars, school, house, small

business)• Unemployment

– Fix?• TARP & Govt bailouts• Overhaul / Regulate system

Global Economic CrisisGlobal Economic Crisis

• Global Impact US Crisis?– Global investors $1 trillion loss– Lower US interest rates = weaker dollar =

declining profits for trade partners = decline trade

China- US RelationsChina- US Relations

• China’s economic rise– Mao? Collective Farm

Fail– Deng? Eases controls,

opens up

• Impacts of rapid growth?

• What is China’s impact on the world stage?

• What are BRIC nations?