The+Global+Economy

The Global Economy

**Economic Globalization**

**Free Trade-** Freedom from state imposed limits and constraints on trade across the borders.

** GATT- ** "General Agreement on Tariffs and Trade;" 23 non-communist nations signed the GATT in 1947. They held negotiations with intent of removing or loosening free trade barriers.

** WTO- ** "World Trade Organization;" they took over in 1995 and settled international trade dispute with the power to enforce its decisions.

** Global Corporations- ** International companies evolved into multinational companies, which conducted their business in several countries but had to operate within the confines of specific laws and customs of a given society; in these countries, the resources and labor were cheaper. Where the businesses were set up at, the company would have to contribute to the welfare of their respective home communities. Global corporations have increasingly replaced the more traditional international or multinational forms of corporate enterprises.

** Economic Growth in Asia **

Japan benefited from direct U.S. financial aid, investments, and timely abandonment of war reparations; and there were no restrictions on the entry of Japanese products into the U.S. market. Japan was hampered by a large populations and a lack of natural resources. Japan's economic planners sidestepped many of these disadvantages by promoting an economic policy that emphasized export-oriented growth supported by low wages and a large work force that was willing to work in poor conditions. Although Japanese Industries had to pay for the import of most raw materials, the low cost of Japanese labor ensured the production of goods that were cheap enough to compete on the basis of price. Initially, Japan churned out goods such as textiles, iron, and steel slated for export; then, Japanese companies used their profits to switch to more capital-intensive products such as radios, television sets, motorcycles, and automobiles. In the following decade, Japanese corporations shifted their economic resources toward technology-intensive products such as memory chips and CD-ROM drives. However, in 1990, the Japanese economy sputtered into a recession that has continued into the 21st century.
 * Japan- **

The earliest and most successful imitators of Japanese economy were Hong Kong, Singapore, South Korea, and Taiwan. Their remarkable and rapid growth rates earned them the name the "four little tigers." By 1980, they became major economic powers; like Japan, all four countries suffered from a shortage of capital, lacked natural resources, and were over-populated. They produced cheaper versions of Japanese goods and before long, Indonesia, Malaysia, and Thailand joined the "four little tigers."
 * The Little Tigers- **

The government Mao Zedong started to place the economy under state control and began a series of five-year plans. China's leaders launched economic reforms in the late 1970s that reversed some earlier policies and opened Chinese markets to the world, encouraged foreign investment, and imported foreign technology. In effect, the planned economic system of the past gave way to a socialist market economy, where the demands for goods and services determined production and pricing. China became the major exporter and was a destination for foreign investment and in 2001, China joined the World Trade Organization.
 * <span style="color: #ff00ff; font-family: 'Palatino Linotype','Book Antiqua',Palatino,serif; font-size: 140%;">The Rise of China- **

<span style="color: #ff00ff; font-family: 'Palatino Linotype','Book Antiqua',Palatino,serif; font-size: 140%;">**Perils of the New Economy-** <span style="font-family: 'Palatino Linotype','Book Antiqua',Palatino,serif;">Foreign supports started to withdrawal from Thailand in mid-1997; the currency dropped and the stock market lost all value and Thailand went into a depression. This later happens then to the rest of the "four little tigers."

<span style="font-family: 'Palatino Linotype','Book Antiqua',Palatino,serif;">** Trading Blocs **

<span style="font-family: 'Palatino Linotype','Book Antiqua',Palatino,serif;">** European Union- ** <span style="font-family: 'Palatino Linotype','Book Antiqua',Palatino,serif;">In March of 1957, representatives from France, West Germany, Italy, the Netherlands, Belgium, and Luxembourg signed the Treaty ofRome which established European Economic Community. The Maestricht Treaty of 1993 created the European Union. Fifteen European nations signed the Maestricht Treaty and became part of it, and 11 of the 15 share the same currency.

<span style="font-family: 'Palatino Linotype','Book Antiqua',Palatino,serif;">** OPEC- ** <span style="font-family: 'Palatino Linotype','Book Antiqua',Palatino,serif;">"Organization Petroleum Exporting Countries;" created in 1960, the countries involved are Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, Qatar, Libya, Indonesia, Abu Dhabi, Algeria, Nigeria, Ecuador, and Gabon. The mostly Arab and Muslim member states of OPEC wanted the prices of oil to increase, so they ordered an embargo of U.S. oil shipments and quadrupled the price of oil from 1973-1975. This huge increase in cost of oil triggered a huge economic downturn in the later 1970s. Their influence diminished in the 1980s due to overproduction and disagreement among its members over the Iran-Iraq War and the Gulf War.

<span style="color: #ff00ff; font-family: 'Palatino Linotype','Book Antiqua',Palatino,serif; font-size: 140%;">**ASEAN**-

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<span style="font-family: 'Palatino Linotype','Book Antiqua',Palatino,serif;">"Association of Southeast Asian Nations;" established in 1967y by foreign ministers of Thailand, Malaysia, Indonesia, Singapore, and the Philippines. Its principal objectives were to accelerate economic development and promote political stability throughout SE Asia. In 1992 the members agreed to establish a free trade zone and to cut of tariffs on industrial goods over a fifteen year period.======

<span style="font-family: 'Palatino Linotype','Book Antiqua',Palatino,serif;">** NAFTA- ** <span style="font-family: 'Palatino Linotype','Book Antiqua',Palatino,serif;">"North American Free Trade Agreement" (with Canada and Mexico). It was established in 1993 and was a regional alliance. It was the 2nd largest free trade in the world and has plans to expand to all non-communist nations in the Americas.

<span style="font-family: 'Palatino Linotype','Book Antiqua',Palatino,serif;">** Globalization and Its Critics- ** <span style="font-family: 'Palatino Linotype','Book Antiqua',Palatino,serif;">The supporters of Globalization liked how the global economy became efficient, speedily directed goods and services, and they thought it was the best way to establish global prosperity. The critics thought that globalization was untamed, the rewards were few, it diminishes the sovereignty of governments, it destroys the environment, and threatens local and traditional crafts and economies.