Globalization Definition The process by which different parts of the world interact economically, politically, and culturally.

History of Globalization Sharing between world cultures began 1000s of years ago. In the 19th century cultural sharing exploded.

19th Century Europeans discover the Americas European Imperialism Industrial Revolution Inventions Transportation Telephone Telegraph

20th Century Free market capitalism THE INTERNET End of the Cold War Exchange ideas Transfer $$ Share culture 24/7

Disadvantages of Globalization Exploitation of child labor Low wages Few worker protections Environmental degradation Destruction of indigenous cultures Destruction of small farmers

Disadvantages of Globalization Corporate greed Job loss Trade imbalance Loss of small farms Loss of small businesses

Advantages of Globalization Increased employment in developing nations Cultural diffusion (spread of culture) More “Service” Jobs Cheaper Goods (like cars, food, clothes)

Free Trade Agreements An effect of globalization has been the creation of free trade agreements. Free trade agreements eliminates tariffs, import quotas, and preferences on most goods and services traded between countries.

NAFTA North American Free Trade Agreement (1993) Removed Tariffs motor vehicles and automotive parts, computers, textiles, and agriculture. US President George H. W. Bush. US President Bill Clinton

CAFTA August, 2004- U.S. signs free trade agreement with the five Central American countries (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic) Agreement – eliminates tariffs (taxes), opens markets, reducing barriers to services

European Union (EU) Economic and political partnership between 27 European countries. Helped raise living standards Created a single European currency (Euro) Built a single Europe-wide market in which people, goods, services, and capital move among member states freely

GATT General Agreement on Tariffs and Trade an international agreement Reduced tariffs Favored Nation Status Updated 1947 to 1990s

Who benefits from free trade, and who does not? Corporations Real smart people who invent things Real aggressive people who start large companies Developing countries Poor People in Poor Countries Poor People in the US Non-technical people in the US Manual Labor in the US The Environment Small Farms and Businesses

Outsourcing Having certain job functions done outside a company instead of having an in-house department or employee handle them Creation of new jobs - in the third/developing world is just one controversial element of globalization.

INDIA & CHINA Benefits of fast-growing economy. The economic fundamentals of both nations, with their enormous populations of young workers and consumers, point to strong growth for decades under almost every forecast. Problems of fast-growing economy. Coups, political strife, and bad management. Both China and India need annual growth of at least 8% just to provide jobs for the tens of millions joining the workforce each year.

Use your notes to answer the following questions. What is globalization? What historical events led to culture sharing and globalization? What are the advantages and disadvantages of globalization? Are free trade agreements a good idea? Explain your answer. What are the benefits and problems of outsourcing?