Warm Up

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Globalization

Objective

• Explain the basic concepts of trade

• Summarize how nations specialize and become interdependent through trade

• Explain the impact of government policies on international trade.

Vocabulary• Migration-big groups of people moving

from one place to another.

• Comparative Advantage – the ability of a country to produce a good at a lower opportunity cost than another country can.

• Globalization- people and countries working together despite barriers.

• Unfavorable balance of trade- When a nation imports more than it exports.

Vocabulary

• Favorable Balance of Trade - When a country exports (sells goods) more than it imports (buys goods)

Vocabulary

• Tariff- A tax on an imported good

• Quota- A limit on the amount of imported goods

**These protect domestic businesses!**

• Embargo- when a group of nations refuse to trade with a selected country

Vocabulary

• Out-sourcing- when companies move jobs from one place to another to cut costs.

Vocabulary

• Dividends- money stockholders periodically get from improving stocks.

• Capital gains/loss- the money stockholder make or lose when they sell their stocks.

• Deregulation- when the government lifts restrictions on businesses

Protectionism

• A policy of trade restrictions to help domestic businesses

• Examples– Tariff– Quota– Immigration restrictions

Impact protectionist policies

• Embargos, tariffs & quotas create barriers to international trade and globalization.

Global Organizations

NAFTA• Ended trade restrictions between

Mexico, U.S. & Canada

WTO• Oversees international trade and

trade rules

Global Organizations

EU• Ended trade barriers between most

European nations

IMF• Helps build the economy of poor/

developing nations

Global Organizations

World Bank• Provides financial assistance to

developing nations

United Nations• Maintain international peace and

cooperation

Impact of NAFTA

• Created an unfavorable balance of trade in the U.S.

Closure• What effect do the limited labor and

environmental regulations of foreign countries have on the economy of the United States?

• How are the interests of free trade and protectionism resolved in the global economy?

Economic Indicators

GDP- All that is produced within a country in one year.

Per Capita GDP- how much every person on average produced

GDP/population=per capita GDP

Economic Indicators

CPI- measures inflation/deflation rates.

Unemployment rate- percentage of people without a job

Stock Market: Overall value of company stocks.

Rust/Frost Belt- people are leaving this area

Sun Belt- people moving to this area for jobs

Silicon Valley- center of technology research

Research Triangle- research center with many colleges

Declining textile and furniture• Companies have out-sourced jobs to

China and Mexico and downsized (shrunk).

Some “stuff” we wanted to mention• Monopolies in the US are illegal

– UNLESS the gov’t allows & regulates them

• GDP & per capita GDP– Undeveloped countries have low per captia

GDP – Developed countries have high per capita GDP

• Tax breaks– Use by federal and state gov’ts to lure new

business in an area

Some “stuff” we wanted to mention• Income-money people make

– Disposable: extra income used for wants (vacation, movie tickets, eating out)

– Discretionary: income used to pay necessities (i.e. food, electric bills, mortgage)

• Exchange Rate: the price of one nation’s currency compare to another's– 1USD = .75 EURO– Allows tourists to change forms of money when traveling

around the world

World Trade Organization

• Do World Trade Organizations harm the enviornment?

World Trade Organization Background Information• What is globalization?

• The term globalization refers to the integration of economies, cultures, and government policies around the world. This integration is nothing new. From the earliest small tribal groups to large modern nation-states, trade and investment between peoples has characterized the world's economy for centuries.

How is pop culture an example of globalization?• Popular culture is a good example of

globalization. The Internet, along with international media outlets such as MTV and CNN, have sped the globalization of popular culture. Teenagers around the world can watch the same videos, listen to the same music, and wear the same clothing styles. Television audiences around the world can experience the same major news and sporting events. These shared experiences can help foster a sense of global community.

How does globalization affect the world's economy?• Large companies can organize

production on a worldwide scale. Each step in the manufacturing process is carried out in the most advantageous geographic location.

For Example…

So what's the problem?• As globalization proceeds, forces beyond the

control of national governments can affect the economic welfare of individual people. For example, an economic crisis in Asia could cause job layoffs in Eastern Europe. Or, workers in one country might lose their jobs when a multinational corporation moves its operations to a country where workers are paid less. Some critics of globalization worry that individual nations have lost control of their own economies. Institutions designed to foster global economic growth and trade, such as the World Trade Organization and the World Bank, have become targets of criticism and protest. Some people believe that these organizations are too powerful and make decisions that have harmful effects on individuals and the environment. To some, global free trade is just an excuse to increase the wealth and power of multinational corporations.

Political Cartoons• Imagine you are a political cartoonist

working for a newspaper. You are assigned to create a political cartoon that reflects your own view of the WTO's environmental policy. Your cartoon should have a clearly defined message or theme based on your research and expressing your evaluation. Be sure that the cartoon addresses your response to the Focus Question: Is the World Trade Organization misunderstood?

Closure• Why do population shifts have a

significant impact on the economy both in terms of resources and labor?

• How has the United States been affected by the shift from a focus on manufacturing to service?

• How do advances in technology influence the choices made by consumers and producers?