Global Economy

Economy

The system where people produce, exchange, and consume goods and services.

Adam Smith's definition of economy

An inquiry into the nature and causes of the wealth of nations (1776).

Global Economy

Integration of economies worldwide, especially through movement of goods across borders (IMF, 2008).

Dicken's view on globalization

A qualitative transformation, not just quantitative change (2004).

Szentes' view on globalization

Process making the world economy an organic system (2003).

Ohmae’s perspective on global markets

States no longer exist as primary economic units (1995).

Reich's view on government

Governments act as midwives of globalization.

Role of Transnational Corporations (TNCs)

Primary drivers of globalization, accounting for two-thirds of world exports (Gereffi, 2005).

Silk Road

Example of archaic globalization, connecting Asia, Africa, and Europe.

Golden Age of Globalization

Period from 1870–1913 with relative peace, free trade, and economic stability.

Frank and Gills (1993) on globalization

World system has existed for over 5,000 years.

Bairoch (1993) on globalization

Contemporary globalization is a myth, not without precedents.

Structuralism view on inequality

Global capitalism reinforces North-South structural inequalities (Wallerstein, Brown).

International Monetary System

Institutions and rules governing international payments (Salvatore, 2007).

Cohen's view on money

Money is inherently political and tied to high politics (2000).

Gold Standard

A system where currency value was tied to gold; began in 1880 and ended during WWI.

David Hume (1752)

Early theorist on gold standard mechanisms.

Bretton Woods System

Established in 1944 to ensure global financial stability after WWII.

Gold-Exchange Standard

System where currencies were pegged to the U.S. dollar, convertible to gold.

Institutions from Bretton Woods

IMF and International Bank for Reconstruction and Development (IBRD).

Collapse of Bretton Woods

Mid-1960s due to overvalued US dollar and depleted gold reserves; ended 1971.

Post-Bretton Woods

System shifted to floating exchange rates; confirmed by Jamaica Accords (1976).

Plaza Agreement (1985)

Agreement to devalue the U.S. dollar.

Louvre Accord (1987)

Agreement to stabilize the U.S. dollar.

Washington Consensus

1990s neoliberal reforms promoted by IMF and World Bank.

Criticism of Washington Consensus

Policies failed in countries with weak institutions (Stiglitz, 2002).

European Monetary Integration

Started with the Marshall Plan and culminated in the creation of the Euro.

European Coal and Steel Community

Established in 1951 to promote European integration.

European Economic Community (EEC)

Established by the Rome Treaty in 1957.

European Monetary System (EMS)

Regional monetary regime with adjustable peg and no role for gold or USD.

European Monetary Union (EMU)

Created by the Maastricht Treaty (1992); Euro launched in 1999.

European Central Bank (ECB)

Supranational bank managing the Euro.

Eurozone Crisis (2008–2009)

Crisis revealed EU design flaws

European Stability Mechanism

Launched in 2013 as a permanent EU rescue fund.

Ricardo's Comparative Advantage

Theory that countries benefit by specializing even if one is better at all goods.

Friedrich List

Proposed “infant industry argument” for temporary protectionism.

Realist/Neomercantilist view

Protection is a natural means to secure national objectives (Gilpin, 2001).

Unequal Exchange

Theory by Emmanuel (1972) and Amin (1976) on global economic inequality.

Stolper–Samuelson theorem

Trade benefits the abundant domestic factor of production (Rogowski, 1990).

Corn Laws

Their 1846 repeal symbolized the UK’s move toward free trade.

Cobden–Chevalier Treaty (1860)

Encouraged UK-France trade specialization.

Smoot–Hawley Act (1930)

U.S. law raising tariffs, which triggered a global trade collapse.

Reciprocal Trade Agreements Act (1934)

Reintroduced MFN principle, setting up future global trade systems.

General Agreement on Tariffs and Trade (GATT)

Established in place of the blocked ITO.

Uruguay Round (1986–1994)

Trade round that led to WTO and expanded scope to services, IP, and investments.

World Trade Organization (WTO)

Formed in 1995 to regulate global trade with legal enforcement powers.

TRIMS

Trade-related investment measures, part of Uruguay Round outcomes.

GATS

General Agreement on Trade in Services.

TRIPS

Trade-related aspects of intellectual property rights.

Developing countries in trade

Historically excluded, later adopted import-substitution industrialization.

UNCTAD

Formed in 1964 to support trade of developing nations.

New International Economic Order

Developing country proposal in the 1970s, failed after oil crises.

Nayyar (2002) on globalization

Rules favor capital and goods but restrict labor and tech flows—causing inequality.