Unit 3

Vocabulary

Economics: The study of how societies use scarce resources to produce valuable commodities and distribute them among different people

Sustainability: The ability to meet the needs of the present without compromising the ability of future generations to meet their own needs.

Prosperity: the condition of being successful or thriving: especially: economic well-being

Capitalism: An economic system that encourages economic decisions to be determined by individual’s wants (demand) and owner’s supply decisions. It encourages self-reliance, competition, and freedom from government intervention because it is considered to be inefficient and disruptive.

Sustainable Prosperity: the pursuit of economic growth that meets current needs without compromising the ability of future generations to meet theirs. It focuses on balancing economic development, environmental protection, and social equity.

Economic Globalization: The increasing economic interdependence among countries, characterized by the expansion of international trade, investment, and capital flow

Reparations: the act of making amends or compensation for a wrong or injury, often involving the payment of damages or other forms of restitution

Trade Liberalization: the reduction or elimination of trade barriers, such as tariffs and quotas, to encourage a more open and competitive marketplace in international trade

Protectionism: the economic policy of restraining trade between countries through restrictions such as tariffs and quotas, aimed at protecting domestic industries from foreign competition.

  • Protectionism = Economic Nationalism

Comparative Advantage: the theory that a country should specialize in producing goods and services in which it has a lower opportunity cost compared to other countries, allowing for increased efficiency and trade benefits.

Outsourcing: the practice of obtaining goods or services from an outside or foreign supplier, often to reduce costs or increase efficiency, which can lead to significant economic shifts in both the domestic and international markets.

Free Trade: the economic policy of allowing goods and services to be traded across international borders with minimal government intervention, promoting competition and potentially lowering prices for consumers.

Fair Trade: a movement aimed at ensuring that producers in developing countries receive a fair price for their goods, supporting sustainable development and ethical practices in global trade.

Communism: a political and economic ideology advocating for the collective or state ownership of property and the means of production, with the goal of creating a classless society where wealth and resources are distributed evenly among all citizens.

Foreign Investment: the investment of capital by individuals or entities in one country into businesses or assets in another country, often aimed at gaining financial returns and fostering economic growth.

Transnational (or multinational) corporation : a business organization that operates in multiple countries, often engaging in international trade and production, with the aim of maximizing profits and expanding their market reach.

Trading Bloc


World War timeline

1914: World War I begins in Europe

1917: Revolution and civil war

begin in Russia

1918: World War I ends

1922: Civil war ends in Russia with the

Communist Party in control

1929: Great Depression begins when stock

markets crash in major cities

1939: World War II begins in Europe

1939–1941: Great Depression ends

in various countries

1941: World War II expands to Asia when

Japanese forces bomb Pearl Harbor

and capture Hong Kong

1945: World War II ends with the

surrender of Germany and Japan

Notes

Communism

  • From the beginning, communism opposed

    capitalism and capitalist countries such as the United States. In the USSR,land and other property were to belong to everyone. Everyone would work for the benefit of all and would receive help as he or she needed it.

The United Nations Monetary and Financial

Conference at Bretton Woods (July 1944)

  • conference delegates were already trying to figure out how

    they could prevent the kind of economic turmoil that could lead to another

    world war

WHAT FACTORS LAID THE FOUNDATIONS OF

CONTEMPORARY GLOBAL ECONOMICS?

  • Britain, the United States, Canada, and other countries worked together to build the UN, an organization that would:

    • support people who wanted to choose their own government

    • help countries co-operate on trade issues

    • protect smaller countries against invasion by larger countries

    • ensure that no single country controlled the world’s oceans

Keynes & Hayek

  • John Maynard Keynes, the British economist who had warned that the

    peace treaty that ended World War I was doomed to fail, led the British

    delegation at Bretton Woods.

    Keynes believed that the unrestricted capitalism that had existed before

    World War I and between the two world wars

    had failed.

  • Friedrich Hayek disagreed with Keynes’s views on the economic role of

    government. Hayek mistrusted government control, whether this was

    complete control, like that in the Soviet Union, or the partial control

    exercised by Western governments after World War II.

Left and Right Wing Perspective on Globalization

  • LW perspective: (can include centre-left positions)Collectivism, public ownership, government interventions. Supporters ted to favour equality over profits

    • Want govt. to impose regulations and limits on things like environment, labour regulations etc

      • Ex. Believes globalization causes job loss (manufacturing jobs have moved to countries with cheap labour) and widened inequality (the rich get richer and the poor get poorer, within and between countries)

      • Ex. of inequality within countries: USA and DRC

  • RW perspective: Capitalism, individualism, pro-business and free market. Supporters prefer free market with less govt. intervention. Profit motive and private ownership are valued

    • Ex. Believe in increased trade & growth (global economic growth and jobs have boosted) and access to cheaper goods (consumers benefit from lower prices and more product choices)

Economic Globalization: Pros (RW) & Cons (LW)

  • Pros

    • increased trade & growth

    • access to cheaper goods

    • spread of green technology

    • global cooperation (ex. acid rain fix USA & Canada)

    • improve conditions for workers (ex. USA, Canada)

  • Cons

    • resources depleted

    • landfill wastes

    • globalization causes job loss

    • widened inequality

    • more pollution and resource use

    • free labour or earning less in developing companies (exploitation)

    • weaker unions

Sustainable Prosperity - History of Economics

Adam Smith

  • The Father of Capitalism

  • Self-Interest (decisions are rooted in self interest and profit)

  • Free Market Economy (decisions are based on supply and demand)

  • Invisible Hand (self-regulating nature of a free market economy)

  • Against mercantilism (limiting imports, encouraging exports) and pro free-trade

  • Promoted LAISSEZ-FAIRE economics (less regulation)

How is climate change connected to globalization?

  • Shared Problem: Climate change affects the whole world—no borders.

  • Global Response: Both agreements show countries working together to solve a global issue.

  • Economic Links: Climate actions involve global trade, energy, industry, and finance—key parts of globalization

  • Kyoto Protocol (1997): Rich countries promised to reduce pollution (greenhouse gases). Poor countries didn’t have to.

  • Paris Agreement (2015): All countries—rich and poor—agreed to try to limit global warming together. Each country sets its own goals.

Controversies Around Climate Agreements

  1. Unfair Burden:
    Developing countries argue rich nations caused most pollution but still expect everyone to act equally.

  2. Weak Enforcement:

    Paris goals aren’t legally binding, so countries can set low targets or miss them without real consequences.

  3. Big Polluters Lag Behind:
    Some major emitters (e.g., China, U.S. at times) have been slow or inconsistent in their climate efforts.

  4. Too Slow:
    Many critics say agreements move too slowly while climate impacts worsen quickly.

IMF and the World Bank

IMF

  • Original Goals:

    • To set dependable international

      exchange rates for world currencies

    • To establish international economic

      stability and promote foreign trade

  • Current Goals:

    • To lend money to help war-torn

      countries rebuild

    • To speed up economic progress

      and industrialization in countries

    • To help countries develop their

      natural resources

    • To negotiate long-term loans to

      increase productivity in countries