Economics in the Global Age Notes

Market Economy vs. Democracy: Market economy is likened to democracy in governance—flawed but preferable over worse options (Charles Wheelan, Naked Economics).
Essential Question: Examine changes and consistencies in the global economy from 1900 to present.

Post-Cold War, global trade surged due to:
- Advocated policies by leaders like Ronald Reagan (USA) and Margaret Thatcher (UK).
- Focus on market-oriented policies, reducing taxes and government aid to stimulate growth.
- Emphasis on technology growth leading to knowledge economies in certain regions.
- Industrial production increasingly relocated to Asia and Latin America.

Definition: The reduction of government restrictions on trade to promote free-market policies.
Shift occurred as Eastern Bloc nations transitioned from Soviet control to trade with capitalist countries (post-1970s).

Leader: Augusto Pinochet (U.S.-backed coup).
Focus on:
- Economic policies prioritizing free-market approaches via privatization and inflation control.
- Utilized economists known as the Chicago Boys—advocated reforms leading to economic growth but neglected social concerns like poverty.
Outcome: Subsequent leadership balanced free-market growth with social welfare policies, reducing poverty.

Leader: Deng Xiaoping.
Policies promoted economic growth by allowing market mechanisms:
- Peasant-reformed land leasing.
- Factories producing a variety of goods for markets.
- Special economic zones attracted foreign investment (with low labor costs).
Political unrest: 1989 Tiananmen Square protests met with military force, raising concerns over human rights despite economic advancements.

Definition: Economies that create and harness information and knowledge.
Examples include:
- U.S.: Silicon Valley as a hub of technological innovation.
- Finland: Transformed from agrarian to knowledge-based post-Soviet era through investments in education and technology, leading to global success in mobile tech and software development.
- Japan: Post-WWII policies promoting exports and education, evolving toward high-tech and banking industries despite initial consumer challenges related to high product costs.
- Asian Tigers: Hong Kong, Singapore, South Korea, and Taiwan adapted similar policies, experiencing rapid economic growth and poverty reduction.

Decline of manufacturing in traditional Western centers with relocations to:
- Vietnam and Bangladesh: Known for low labor costs and textile industries. Protests over working conditions and wages are common.
- Mexico and Honduras: NAFTA facilitated U.S. companies to set up maquiladoras in Mexico; concerns arose over labor practices and repurposing of occupations for cheaper labor.

GATT and WTO
- GATT lowered tariffs, promoting global trade post-WWII; pivotal in aiding Europe’s recovery.
- WTO succeeded GATT in 1995, managing over 90% of international trade but faced criticism for prioritizing corporate over ethical standards.

Definition: Corporations engaged in production/sale of goods in multiple nations.
Characteristics:
- MNCs capitalize on knowledge and low-wage labor globally.
- Examples include: Microsoft and Google contributing to India’s economic growth.
- Contrasting views on ethical practices: companies like Mahindra & Mahindra recognized for responsible practices, while others like Nestlé face controversies over labor practices and sustainable sourcing.

Economic:
- Economic liberalization
- Free market
- Knowledge economy
- Multinational corporation
Organizations:
- NAFTA
- GATT
- WTO
- ASEAN
- Mercosur
Historical Figures:
- Ronald Reagan
- Margaret Thatcher
- Deng Xiaoping
- Augusto Pinochet

The evolution of the global economy reveals significant shifts toward market liberalization and globalization, fostering economic interconnectivity worldwide while simultaneously raising issues of social equity, labor rights, and environmental sustainability.