The Structures of Globalization: The Global Economy

A set of vocabulary flashcards covering the definitions, types, actors, and systems of economic globalization and global economic integration.

Economic Globalization (United Nations definition)

The increasing interdependence of world economies as a result of the growing scale of cross-border trade of commodities and services, flow of international capital, and wide and rapid spread of technologies.

Economic Globalization (IMF definition)

A historical process resulting from human innovation and technological progress, referring to the increasing integration of economies through the movement of goods, services, capital, people (labor), and knowledge (technology) across borders.

Protectionism

Government policies that restrict international trade with the intention to protect local businesses and jobs, increase local competitiveness against foreign entities, and encourage domestic production.

The Great Depression of 1929

The historical event that marked the peak of protectionism.

Tariff

An instrument of protectionism used to raise money for the government and protect domestic producers from foreign competition.

Trade Liberalization

The removal of trade barriers, such as the reduction of tariffs, non-tariff barriers, and quotas, between countries in order to encourage free trade.

Comparative Advantage

The principle where countries focus on products and services they are good at and can offer at the most competitive cost, allowing them to take advantage of efficiencies and economies of scale.

Structural Unemployment

A disadvantage of trade liberalization where uncompetitive companies decline or close down, leading to job losses that are not easily compensated for by overall economic gains.

Transnational Corporations (TNCs)

One of the main actors of economic globalization, along with the state, consumers, laborers, and regulatory institutions.

Modern World Systems

A theory formulated by American sociologist Immanuel Wallerstein in the 1970s describing a world-wide division of labor resulting from increasing political and economic interdependence.

Core Societies

The strongest and most powerful nations that are technologically advanced and act as producers and exporters of capital-intensive products.

Peripheral Societies (Periphery)

Low income nations with less mechanized economic activities that primarily export raw materials and agricultural goods.

Semi-periphery Societies

Industrialized Third World nations that lack the power and economic dominance of the core nations.

Economic Integration

An agreement among countries in a geographic region to reduce and ultimately remove tariff and non-tariff barriers to the free flow of goods, services, and factors of production.

Free Trade Area

A level of economic integration where member countries remove all barriers to trade among themselves but are allowed to set their own trade policies with non-member countries.

North American Free Trade Agreement (NAFTA)

An example of a Free Trade Area agreement among the United States, Canada, and Mexico.

Customs Union

A level of economic integration where member countries eliminate trade barriers between them and impose a common tariff against non-member countries.

Single Market

A level of economic integration where countries freely exchange all goods, services, labor, and capital.

Economic and Monetary Union

A level of integration where members share one trade policy with non-members and share a single currency, such as the European Union and the Euro.

Complete Integration (Political Union)

The highest level of integration where members pay smaller expenses to trade but have less flexibility to make adjustments that benefit their own nations individually.

Trade Diversion

A negative effect of economic integration where trade shifts from a lower cost producer outside the union to a higher cost producer inside the union.