Notes on Globalization and Economics After 1900

economics in a global age 9.4

• Globalization and Interconnectedness

  • Globalization has created an interconnected global economy, continuing trends from earlier economic events while introducing new dynamics.

  • Contrast with earlier periods (like the World Wars and Great Depression) where government played a predominant role in economic decisions.

• Neoliberalism

  • Emerged in the 1980s as a rejection of government intervention in favor of free market policies.

  • Key characteristics include:

  • Lowering of trade barriers

  • Deregulation of industries

  • Privatization of public sector industries

  • Emphasizes minimal government involvement in the economy.

Key Examples of Neoliberalism

• Ronald Reagan's Policies (USA)

  • Elected as an opponent of New Deal policies: decreased taxes for the wealthy and reduced business regulations.

  • Cut spending on social programs, but military spending increased.

• Margaret Thatcher's Policies (UK)

  • Similar approach to Reagan with an emphasis on deregulation and reduction of taxes.

  • Notable impact on labor unions, leading to significant income inequality.

• Augusto Pinochet's Policies (Chile)

  • Implemented neoliberal reforms with the help of the 'Chicago Boys'.

  • Shifted the Chilean economy from state control to free market, despite heavy authoritarian enforcement.

  • Established a foundation that led to a more balanced economy post-Pinochet.

Economic Shifts in the Late 20th Century

• Geographical Distribution of Economic Activities

  • Before the 1970s, industrialized nations dominated manufacturing, but rising costs pushed production to developing regions.

  • Shift from labor-intensive work to a focus on a knowledge economy characterized by jobs demanding intellectual capabilities.

Knowledge Economy Examples

• Finland

  • Investments in communication technology and education in the 1990s led to prominence in software and cell phone markets.

• Japan

  • Transitioned into a knowledge economy but retained mercantilist policies that limited imports and subsidized exports.

  • Labor unions began to strengthen as workers demanded higher wages amidst the shifting economy.

Global Economic Institutions

• World Trade Organization (WTO)

  • Formed to regulate trade globally, facilitating negotiations and acting as a mediator in disputes.

  • Driven by globalization and in turn fosters further globalization through its initiatives.

Regional Trade Agreements

• European Union (EU)

  • Originated post-World War II as an economic agreement between six countries they agreed to integrate their coal and steel operations by removing various to trade between them, evolving into a political and economic body with 27 member states.

  • Encourages economic integration, enhancing collective economic power.

• Association of Southeast Asian Nations (ASEAN)

  • Promotes trade among member countries by reducing trade barriers like tariffs, contributing to economic growth over non-member countries.

Rise of Multinational Corporations

• Definition

  • Entities incorporated in one country but operate across multiple countries for manufacturing and selling goods.

Notable Examples

• Nestlé

  • Headquartered in Switzerland, sources chocolate from West Africa where labor practices may include child and forced labor.

• Mahindra and Mahindra

  • Based in India with diverse operations worldwide, includes sectors such as automobiles and agriculture.

Conclusion

• The dynamics of globalization have led to significant economic shifts across the globe—both within developed nations focusing on the knowledge economy and through the outsourcing of manufacturing to developing countries, alongside the rise of multinational corporations influencing global trade.