CHAP 4 - Global Economy
CHAP 4 - Global Economy
CHAP 4 - Global Economy
GUIDE QUESTIONS:
Global per capita GDP rose over five-fold in the second half
of the 20 th century
Created large Asian economies like Japan, China, Korea, Hong
Kong, and Singapore
Economic globalization remains an uneven process
First world countries are often protectionists
Beneficiaries of global commerce have been mainly
transnational corporations and not governments
The Global Trade
Trade Surplus – when a country exports more than it
imports
Trade Deficits– a country has more imports than exports.
9 Dragons Paper:
1) Mountains of waste paper are collected in the US
2) These are then shipped to China for re-cycling into
container boxes
3) Boxes are used to ship goods to various places around
the world
4) After its use, they are turned again into scrap and the
process continues….
Example #2: GVC
T-Shirts:
1) Cottons grown in the US
2) These are then shipped to China for manufacturing
3) The T-shirts are then delivered back in the US market
4) The American consumers buy the shirts and eventually
dispose them
5) Used shirts are then shipped and then sold in Africa.
Impact of Global Trade:
“Race to the Bottom”
- Countries involved in a downward spiral of
competitiveness.
- For countries to compete in the global economy, they
must undercut the competition in many ways e.g.
offering low wages, poorer working conditions etc.
Impact of Global Trade:
“Industrial Upgrading”
- Nation-states, firms and even workers move from low
value to relatively high-value production
- e.g. Case of China as they have begin to move up
towards producing high-value products
Impact of Global Trade:
“Outsourcing”
- Transfer of activities once performed by an entity to a
business in exchange for money
e.g. Marketing: A company outsources the support of social media
channels to an external service provider (e.g. an agency).
“Offshore Outsourcing”
- Transfer of activities to entities in other countries
- e.g. call-center industry
Impact of Global Trade:
Consumption
- The expediting of global flows of consumer goods and
services of all types and of financial processes and
instruments that expedite those flows
- e.g. Visa and Master cards are increasingly accepted
and used throughout the world. This, however, leads to:
Hyper-consumption (buying more than one can afford)
Hyper-debt (owing more than one will be able to repay).