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Social Sci LibreTexts

16.2D: Capitalism in a Global Economy

  • Page ID
    8471
  • Some thinkers argue that in the last few decades trends associated with globalization have increased the mobility of people and capital.

     

    LEARNING OBJECTIVES

     

    Analyze the shift in the job market and increase in international trade due to an increase in globalization

     

    KEY TAKEAWAYS

    Key Points

     

    • The world economy generally refers to the economy based on the national economies of all of the world’s countries.
    • Although international trade has been associated with the development of capitalism for over five hundred years, some thinkers argue that a number of trends associated with globalization have acted to increase the mobility of people and capital since the last quarter of the 20th century.
    • The global financial system is the financial system consisting of institutions and regulators that act on the international level, as opposed to those that act on a national or regional level.
    • Globalization refers to the increasing global relationships of culture, people, and economic activity.
    • The establishment of the WTO in 1995 led to an anti-globalization movement that was primarily concerned with the negative impact of globalization in developing countries.
    • Critiques of economic globalization typically look at both the damage to the planet as well as the human costs.

     

    Key Terms

     

    • global financial system: The global financial system is the financial system consisting of institutions and regulators that act on the international level, as opposed to those that act on a national or regional level. The main players are the global institutions, such as International Monetary Fund and Bank for International Settlements, national agencies and government departments, e.g., central banks and finance ministries, private institutions acting on the global scale, e.g., banks and hedge funds, and regional institutions, e.g., the Eurozone.
    • WTO: The World Trade Organization (WTO) is an organization that intends to supervise and liberalize international trade. It officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. It deals with regulation of trade between participating countries and provides a framework for negotiating and formalizing trade agreements and for resolving disputes.
    • globalization: A common term for processes of international integration arising from increasing human connectivity and interchange of worldviews, products, ideas, and other cultural phenomena. In particular, advances in transportation and telecommunications infrastructure, including the rise of the Internet, represent major driving factors in globalization and precipitate the further interdependence of economic and cultural activities.

    The term “world economy” refers to the economic situation of all of the world’s countries. It is common to limit discussion of world economy exclusively to human economic activity. World economy is typically judged in monetary terms, even in cases in which there is no efficient market to help valuate certain goods or services, or in cases in which a lack of independent research or government cooperation makes establishing figures difficult.

    The global financial system is the financial system consisting of institutions and regulators that act on the international level, as opposed to those that act on a national or regional level. The main players are global institutions, such as International Monetary Fund, World Bank, and the Bank for International Settlements; national agencies and government departments (e.g., central banks and finance ministries); private institutions acting on the global scale (e.g., banks, hedge funds), and regional institutions such as the Eurozone.

    Although international trade has always existed, some thinkers argue that a number of trends associated with globalization have caused an increase in the mobility of people and capital since the last quarter of the 20th century. Today, these trends have bolstered the argument that capitalism should now be viewed as a true world system, given that all national economies trade with capitalist states and are therefore influenced by capitalist policies.

    Globalization refers to the increasing global relationships of culture, people, and economic activity. It is generally used to refer to economic globalization: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import quotas; and the reduction of restrictions on the movement of capital and on investment. Globalization may contribute to economic growth in developed and developing countries through increased specialization and the principle of comparative advantage.

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    Globalization: Singapore embraced globalization and became a highly developed country