When the 1900s opened, Most people knew little about faraway places. Jet planes traveled around the globe. By the 2000s, however, revolutions in transportation and communication had put whole world within reach. Supertankers haled vast amounts of goods across the oceans. Communications satellites and the Internet open the door to new contacts. – electronic communications or “mail," sent over computer networks—made it possible to send messages almost everywhere in the world.

Such developments, Brought about globalism. People worldwide began to think of themselves as part of one big economic and political system. They believed nations could no longer stand alone. People became more connected as tens of millions of people migrated, or moved, from one nations to another in the closing decades of the twentieth century.

Tied together by Oil In the 1970s, developed nation— the world’s economic powerhouses—discovered the meaning of interdependence, or nations relying upon one another for trade and economic stability. In 1973, the oil-rich Middle Eastern nations created an embargo, or ban, on petroleum. They convinced other members of the Organization of the Petroleum Countries (OPEC) to use it against the United States during the Yom-Kippur War. The embargo was an economic protest of American support of Israel.

Tied Together by Oil 2 The price of crude oil, which fell into short supply, shot up by 70 percent. The United States suddenly felt the clout of OPEC on the world economy. Oil-producing nations formed OPEC at a 1960 meeting in Baghdad, Iraq. Today eleven nations belong to OPEC. Collectively, they greatly influence the price of crude oil in the world and have the power to affect economies of even the strongest nations, including the United States.

The New Global Economy The oil crisis of 1973 made people aware of the new global economy. A global economy is a worldwide marketplace in which nation depended upon each other for raw materials to make goods and for markets to sell them. Today few nations can fully meet all their needs without global trade.

Economic Interdependence Economic interdependence, which has increased since the collapse of the Soviet Union, has spurred the growth of large multinational corporations, or “multinationals.” These companies may have headquarters in their home countries, but they have business locations all over the world. More than 50,000 multinationals have come into existence during the past 20 years.

Multinationals Multinationals assign work to subcontractors, or small businesses that work for larger ones, and to outside workers. This is known as outsourcing. In most cases, cheap labor drives the growth of multinationals. Cheap labor helps manufacture produce goods at lower costs, which in turn means lower prices for the consumers (buyers).

High-tech High-tech companies, or businesses that work with sophisticated technology like electronics, also outsource jobs. India and China, for example, handle software development and provide technical support for the United States computer companies. As a result, the toll-free number you dial for assistance when you are having computer problems may actually be answered in India.

Regional Trading Blocs The rise of global economy has made trade relations more important than ever. To achieve a favorable balance of trade, or trade in which exports equal or outnumber imports, often means working closely with trading systems. However, in the 1970s, the U.S. lapsed into trade deficits. Americans purchased more from foreign countries than what the U.S. sold abroad. The U.S. found it difficult to compete.

Trading Blocs One way to increase international trade is to create large regional economic markets. Member nations share similar goals; to increase trade and coordinate economic growth among member states. The European Union, or EU has a common bank and a common currency called euro.

In 1994: In 1994, the United States, Canada, and Mexico created a regional market by signing the North American Free Trade Agreement, or NAFTA. Under NAFTA, the three nations agreed to remove all trade restrictions for 15 years. From 1993 to 2000, United States exports to Canada and Mexico rose from $142 to $290 billion, and increase of 104 percent.

Association of Southeast Asian Nations The creation of the EU and NAFTA helped Europe and North America compete with Asian nations along the Pacific Rim, a region linked by the by the Pacific. In recent decades, Japan, South Korea, Taiwan, Malaysia, Singapore, and Hong Kong have become trading giants. In the future, China, which now includes Hong Kong and the Association of Southeast Asian Nations (ASEAN), will have a powerful impact of global economy.

The World Trade Organization (WTO) Efforts to make international trade-free and uncomplicated has led nations to sign the GATT treaties (GATT stands for “General Agreement on Tariffs and Trade). The first treaty was signed in1947. In 1995, nations that had signed the GATT treaties over the years to create the World Trade Organization (WTO). Made up of 140 nations, WTO negotiates trade agreements and settles trade disputes.

WTO Not everyone supports the WTO. Some people and groups criticize the WTO for putting commercial interests above environmental and health concerns. They also criticize the WTO for neglecting small and developing countries. Even so, the WTO remains the only global organization that deals with the rules of international trade.

Streamlining Industry To compete in the global marketplace, the United States and other developed nations have found it necessary to rethink industry. They have downside heavy industries in favor of high-tech industry. In many cases, companies have shifted industrial jobs, such as manufacturing, to other nations. During the 1990s, for example private companies spent more than #1 trillion to build factories in developing countries.

Streamlining Industry There is a wide gap, however, between developed and developing countries. A major challenge of the 21 st century is to figure out how trade can bring enough wealth into all countries to close the gap between rich and poor nations. Experts hope other nations will follow Chain’s the footstep; the ability of people in China to earn and spend money doubles ever ten year.