3.6: Student Resources

Key Terms/Glossary

• Capital: assets which are used to generate money or wealth
• Commodity: Anything which can be bought and sold in a market
• Division of labor: The separation of tasks among different parts of a workforce, typically focused on enhancing specialization and efficiency in production
• D-L-P formula The combined policies of deregulation, liberalization, and privatization
• Economic globalization: When economic activities become global in scope, for example the global circulation of goods and services or global migration of labor
• Entrepreneur: Someone who takes risks and establishes new enterprises, explores new markets, and breaks new frontiers
• Intergovernmental organization (IGO): An international organization comprising governments as members
• Market-based economy: A system in which buyers and sellers meet in marketplaces, real or virtual, and exchange goods and services. That exchange may be voluntary or coerced. Prices for goods and services rise and fall in response to demand and supply
• Neoliberalism: An ideology which draws on classical liberal ideas regarding the value of individual freedoms and extends these globally, with a supportive suite of international institutions and domestic policies
• Private ownership: Aspect of an economic system in which individuals or privately-held firms own key economic inputs
• Regional trade agreement (RTA): Treaty signed by countries to promote the free flow of goods, services, capital, and/or currency across international borders
• Soviet Bloc: Also known as the Eastern Bloc, Communist Bloc or Socialist Bloc, this group of Eurasian countries was led by socialist or communist parties and rejected capitalist institutions. Beginning in 1989, these countries experienced a series of revolutions and have since integrated with the international market-based economy

Summaries

3.1 Introduction: Our Global Economy

Economic globalization shapes many aspects of contemporary economic life. Many of the goods in our material lives, as well as less tangible but nonetheless impactful economic activity such as services, are now global in scope and source. Various components of the global economy include worldwide flows of goods, labor, services, and finance. There are serious critiques and controversies surrounding each, but none of these global forces appear to be diminishing anytime soon.

3.2 Background: Five Decades of Economic Globalization

Economic globalization took off with two major events: China’s integration with the global economy, beginning in 1978, and the collapse of the Soviet Bloc (1989-1991). Along with these events, various international organizations have supported economic globalization. This has all been complemented by technological breakthroughs, most notably the emergence of the internet.

3.3 Theories and Concepts: Global Capitalism, Neoliberalism

Two major ideologies animate present-day economic globalization, capitalism and neoliberalism. The spread of global capitalism is animated by the profit motive and a frontier mentality, where firms and individuals strive to create new commodities and markets while exploiting existing ones. Neoliberalism, which supports private property rights and market exchange, complements global capitalism and offers prescriptions for state policy and international economic organizations.

3.4 At Home and Abroad: Understanding Effects of Neoliberalism through the Case of NAFTA/USMCA

Regional trade agreements are one aspect of the free trade world envisioned by neoliberals. One prominent example of such agreements is the North American Free Trade Agreement (NAFTA), now the United States-Mexico-Canada Agreement (USMCA), which has a mixed record with regard to its effect on employment, economic growth, and environmental impact.

Suggestions for Further Study

Websites

• Council on Foreign Relations, World101: Globalization (Online resource featuring modules, some of which are interactive, that highlight various aspects of economic globalization)
• Group of 77, About the Group of 77 (Information about the largest IGO of developing countries in the world)
• International Monetary Fund, International Financial Statistics (IFS) (IMF’s repository of data related to international finance)
• World Bank, Open Data (World Bank’s open access portal to global development data)
• World Trade Organization, Regional Trade Agreements (Gateway webpage to the WTO’s resources on RTAs in force)
• World Trade Organization, Trade Dispute Settlement Mechanism (Description and repository of files related to trade disputes filed at the WTO)

Documentaries

• American Factory, a 2019 documentary film by Steven Bognar and Julia Reichert, on the lives of workers at a Chinese-owned auto glass factory in Moraine, Ohio, USA
• Maquilapolis: city of factories, a documentary film by Vicy Funari and Sergio de la Torre, focusing on the experiences of women who work in the factories in the border region of northern Mexico

Books

• Friedman, T. (2005). The World is Flat: A Brief History of the Twenty-first Century. Farrar, Straus and Giroux.
• Patel, R. and Moore, J. (2018). A History of the World in Seven Cheap Things. University of California Press

Review Questions

1. Which of the following did NOT contribute to the integration of the global economy?
   1. Invention of the internet
   2. Collapse of the Soviet Union
   3. Founding of Comecon
   4. China’s “reform and opening up”
2. Which of the following organizations provides loans to governments, typically when they are in financial crisis?
   1. World Trade Organization
   2. International Monetary Fund
   3. Federal Reserve
   4. World Bank
3. A commodity is:
   1. A kind of high-volume container ship
   2. Anything that crosses at least one international border
   3. Another term for banking regulations
   4. Anything that can be bought and sold in a market
4. Neoliberals tend to favor which of the following?
   1. Deregulation
   2. Free trade (in goods, services, currencies, etc.)
   3. Privatization
   4. All of the above
5. The most significant regional trade agreement affecting North American countries is:
   1. NAFTA/USMCA
   2. EEA
   3. SAFTA
   4. ASEAN

Critical Thinking Questions

1. Consider your favorite food. In what ways does it reflect the forces of economic globalization? Is this food available globally? If so, where and how?  
2. Recall the major components of global capitalism. Provide examples of each to show that global capitalism is a “really existing” system. What are some of the newest frontiers of global capitalism, and how do they impact you?
3. Consider the effect of international trade agreements such as NAFTA/USMCA on one of the following: your past or current job(s), what you buy, or the environment. What are some of the ways in which a trade agreement might affect your selected topic? What data would you need to collect to come to a fact-based conclusion about these effects?