International trade and poverty-fighting organizations

What is Globalization? The increased flow of trade, people, investment, technology, culture and ideas among countries.

“The relevant market today is planet earth” --Thomas Friedman Hans Rosling shows 200 years of growth

Causes of economic growth? EOC study guide Globalization #10 Increase in productivity through investment in land, labor or capital—including human and physical Low tariffs that encourage international trade Countries by highest percentage GDP growth

Obstacles to Economic Development? Rapid population growth A declining population Political instability and government seizure of private property High tax rates Low savings rate

Low Savings Rate Banks get the money they loan from people who have savings accounts at the bank Less-developed countries have low savings rates because the people are too poor to save They can only afford the necessities of life Thus, banks can not make loans for capital investments Farmers can’t buy tractors Businesses can’t improve their technology

Vicious Cycle of Poverty Less-developed countries are poor because they cannot save Without savings they cannot buy capital goods But they cannot save and buy capital goods because they are poor

International organizations designed to promote economic growth

Promote economic growth via trade NAFTA EU WTO

NAFTA Basics Established 1994 3 member countries EOC study guide Globalization #5

north American free trade agreement, NAFTA Eliminated trade barriers between US, Canada, and Mexico Signed by President Bill Clinton in 1994 Overall value of intra-North American trade has more than tripled since the agreement's inception EOC study guide Globalization #5

European Union Basics Began in 1945 Today 28 member countries EOC study guide Globalization #6

European Union, EU Creates free-trade zones that reduce or eliminate trade barriers Created a single currency, Euro, introduced 1 January 1999 Great Britain is currently attempting to exit the EU Brexit EOC study guide Globalization #6

World Trade Organization Basics EOC study guide Globalization #8 World Trade Organization Basics Replaced GATT 162 member countries Geneva, Switzerland

World trade organization, wto Negotiates new trade agreements Resolves trade disputes From 1930-1995 the average tariff in the US dropped from 59% to 5% EOC study guide Globalization #8

ARGUMENTS AGAINST WTO Prioritizes trade and commercial considerations over all other values Refuses to ban imports of goods made with child labor Hurts developing countries The WTO hurts the Third World. WTO rules force Third World countries to open their markets to rich country multinationals, and abandon efforts to protect infant domestic industries. In agriculture, the opening to foreign imports, soon to be imposed on developing countries, will catalyze a massive social dislocation of many millions of rural people.

World Trade Organization Criticism: It opens products to the world market and goods go to those who are willing to pay the most for them.

Another criticism of free trade: Smaller, poorer countries become dependent upon trade with richer, larger nations in trade agreements and working class jobs are displaced

organizations working to raise the standard of living in majority countries World Bank International Monetary Fund (IMF)

World Bank Basics Part of the United Nations Created 1944 EOC study guide Globalization #9 Part of the United Nations Created 1944 188 member countries Headquarters in Washington, DC

World Bank Provide low-interest loans and grants for EOC study guide Globalization #9 Set two goals for the world to achieve by 2030: End extreme poverty by decreasing the percentage of people living on less than $1.90 a day to no more than 3% Promote shared prosperity by fostering the income growth of the bottom 40% for every country Provide low-interest loans and grants for Education Health Infrastructure Agriculture

IMF basics: Part of the United Nations Created 1944 EOC study guide Globalization #7 Part of the United Nations Created 1944 188 member countries

International Monetary Fund (IMF) Primary purpose is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other How? Maintain an orderly system of payments and receipts between nations Ensure the stability of exchange rates Facilitate international trade EOC study guide Globalization #7 cont

Biggest IMF borrowers (3/13/15): Portugal, Greece, Ireland, Ukraine