Chapter 1 IB

Globalization

The merging of historically distinct and separate national markets into one huge global marketplace.

The Globalization of Production

Sourcing goods to take advantage of differences in cost and quality of factors of production.

Robert Reich suggests “global products.” Impediments prevent optimal dispersion of activities:

Formal and informal barriers to trade. Barriers to foreign direct investment. Transportation costs. Political and economic risk. Challenge of coordinating globally dispersed supply chain

World Trade Organization (WTO)

Polices the world trading system. Ensures nation-states adhere to the rules. Facilitates multinational agreements among members. As of 2021,164 nations that account for 98 percent of world trade were WTO members.

International Monetary Fund (IMF)

Established to maintain order in the international monetary system. Often seen as the lender of last resort. In return for loans, requires nation-states to adopt specific

economic policies aimed at returning their economies to stability and growth.

World Bank

Promotes economic development. Focused on making low-interest loans to cash-strapped governments in poor nations that wish to undertake significant infrastructure investments.

United Nations (UN)

Promotes peace through international cooperation and collective security. 193 member countries.

UN Charter has four basic purposes:

Maintain international peace and security. Develop friendly relations among nations. Cooperate in solving international problems and in promoting respect for human rights. Be a center for harmonizing the actions of nations.

Group of Twenty (G20)

Comprises finance ministers and central bank governors of the 19 largest economies in the world, plus representatives from the European Union and the European Central Bank.