1. Globalization and the World Economy
Economics

2. What is Globalization?
Globalization is the integration of economic activities through a market and across borders
The creation of a single world market

3. What Has Caused Globalization?
Technology
Improved transportation of goods
Improved communication around the world
Government Policies
Can set policies to open up or close trade with other countries

4. How can the government affect globalization?
Barriers to free trade and globalization
Limiting imports
Embargos- refusing to trade with a particular country
Tariffs- taxes on any goods that are imported into a country
Used to make these goods equal to prices of domestic goods or higher than domestic goods prices
Quotas- limit the number of certain goods allowed into a country at a specific time
Restricting workers- limiting work permits for migrant workers

5. How can the government affect globalization?
Developing Free Trade and Globalization
Cutting Tariffs
Usually will increase exports as well as imports
Other countries become more willing to trade and will drop their own tariffs

6. How can the government affect globalization?
World Trade Organization (WTO)
The World Trade Organization (WTO) deals with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.
Protects trade on goods and services
Services include: Insurance, telecommunications, hotels etc.
Helps develop the economies of other countries
Protect intellectual property- ideas and designs (copyrights)

7. How can the government affect globalization?
WTO Controversies
Labor
Issues over poor labor conditions and child labor
Some countries have an “unfair” labor advantage
Environment
Pollution concerns (China)
Food Safety
Concerns over how safe imported food is (GMO Food)

8. How can the government affect globalization?
European Union (EU) 1993
Trade agreement between European countries
Opened trade between European countries
Created a single currency

9. How can the government affect globalization?
North American Free Trade Agreement (NAFTA)
Formed in 1993
Meant to increase trade between Mexico, US and Canada

10. How can the non-profit organizations affect globalization?
World Vision International is an Evangelical Christian relief, development and advocacy organization
dedicated to working with children, families and communities to overcome poverty and injustice. Inspired by Christian values, they are dedicated to working with the world’s most vulnerable people.
Founded in 1950, it has grown into one of the largest relief and development organizations in the world[with a total revenue including grants, product and foreign donations of $2.79 billion (2011).

11. How can international organizations affect globalization?
The United Nations (UN) is the world's largest, foremost, and most prominent International Organizations. The stated aims of the United Nations include promoting and facilitating cooperation in international law, international security, economic development, social progress, human rights, civil rights, civil liberties, political freedoms, democracy, and the achievement of lasting world peace.
The UN was founded in 1945 with the goal to stop wars between countries, and to provide a platform for dialogue
As of 2011, the UN has 193 member countries.

12. How can international organizations affect globalization?
The International Monetary Fund (IMF) is an organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

13. How can international organizations affect globalization?
Greenpeace is the leading independent campaigning organization that uses peaceful protest and creative communication to expose global environmental problems and to promote solutions that are essential to a green and peaceful future.

14. What are Multinational Corporations?
Multinational Corporation- a firm that has factories, offices or branches in two or more countries
Ex. Microsoft, Toyota, Sony, Wal-Mart, McDonalds, Sony etc.
Numerous large companies are becoming multinational due to Globalization

15. What are Multinational Corporations?
Many companies produce their products in other countries or will build a plant in in the country the export their products to
Why?
Cheaper labor
Save on shipping cost
Cut import/export tariffs

16. Exchange Rates
Foreign Exchange Market- where currency, from numerous countries, are bought and sold
Exchange Rate- The value of a country’s currency in relation to another country’s currency
Ex. 1 Euro = $1.294
Ex. 1 CAD = $0.978
Ex. 1 MX Peso = $0.080

17. Exchange Rates Fixed Rate of Exchange Flexible Exchange Rate
Currency values did not change daily and were set in regards to gold reserves (until 1971)
Governments can set the value of their currency
Flexible Exchange Rate
Currency values are set in relations to supply and demand
Traded in a manner similar to the stock market

18. Exchange Rates
What impact does the Foreign Exchange Rate have on our economy?
Can influence the cost of goods imported/exported
Can lower or increase the price of finished goods due to cost of raw materials

19. Exchange Rates Balance of trade
Currency depreciates (decreases in value)- export more goods due to other countries being more willing to buy at the “lower price”
Currency value increases- import more goods due to foreign goods “costing less”
Trade Surplus- export value is higher than import value
Trade Deficit- import value is higher than export value

20. Major US Imports and Exports
Crude Oil
Electronic equipment
Cars
Precious Metals and Gems
Food Products
Electronic Equipment
Cotton
Vehicles

21. Major US Imports and Exports

22. Potential Short-Answer Questions
What are some causes for Globalization
Why do companies produce their goods outside of their home country?
How are trade patterns established?
How can the US Dollar exchange rate affect our economy?