What is the catalyst for globalization?

Economic Globalization• Some ppl believe that globalization is all about

economics. • Those who hold this view believe:

– global trade– global transportation and communication systems (that increase

prosperity for some people,)– the unequal distribution of wealth– the conflicts between ppls and countries over natural resources – are all rooted in economics.

• Economic globalization: the spread of trade, transportation, and communication systems around the world in the interests of promoting worldwide commerce.

A Way to Ease Conflict• Even before the end of WW II, ppl knew they had to

find a way of avoiding another similar global conflict. As a result, representatives of Britain, the US, Canada, and other countries worked together to build an organization that would:– Support ppl who wanted to choose their own gov’t –Help countries cooperate on trade issues–Protect smaller countries against invasion by larger

ones– Ensure that no 1 country controlled the world’s

oceans

What organization do you think emerged from these talks?

• The organization that was built was the…

United Nations!!!

“We the peoples of the United Nations, determined to save succeeding generations from the scourge of war, which twice in our lifetime has brought untold

sorrow to mankind…do hereby establish an international organization to be known as the United

Nations.” (Opening of UN charter)

Bretton Woods

• July 1944: – representatives of 44 countries – met in the small New Hampshire town of Bretton Woods

for a conference sponsored by the (newly founded) United Nations.

• WW II was not yet over, but conference delegates were already trying to figure out how they could prevent the kind of economic turmoil that could lead to another world war.

• Voices pg. 226

John Maynard Keynes

• Keynes led the British delegation (group) at Bretton Woods.

Keynes Wants Gov’t

• Keynes believed: – unrestricted capitalism that had existed pre-WW I and

between the two World Wars had failed. • He said: – collapse of global trade, – worldwide unemployment of the Great Depression, and – the worst world wars in history – proved:• the idea of gov’t playing a very limited role in a country’s

economy was wrong.

The Gov’t Creates Demand!

• Keynes believed, for example, that:– when a business laid off workers because there was no

market for its goods or services (like what happened in the Great Depression),• the gov’t should set up programs to hire the unemployed.

• He said putting people to work would ensure that people had money to spend, and:

• would generate demand.

– Businesses would then need to rehire laid-off workers to produce more goods and services.

Friedrich Hayek

• Hayek disagreed with Keynes’s views.

– He mistrusted gov’t control.

The Gov’t Should Stay Out

• According to Hayek, a gov’t should protect the market by:– ensuring that it rules and laws do not interfere with

competition between businesses.

• Hayek believed:– competition and the market would keep an economy

healthy– gov’t should stay out of the way.

Keynes vs. Hayek

• Assignment booklet: Make a chart comparing the two economic thinkers.

• Use: notes and text pgs 226-227

World Bank & IMF

• The World Bank and the Int’l Monetary Fund, (IMF) were mapped out at the Bretton Woods meeting.

• These organizations would be supported by the UN and would help expand int’l trade.

• Intent:– persuading countries to agree on a set of rules would get

int’l trade working again, and – avoid the kind of conflict that might lead to another

world war.

Copy the Venn Diagram on the top on pg. 228

Pros & Cons of World Bank & IMF

• Supporters of the World Bank and IMF: – these organizations have helped stabilize the global

economy and brought prosperity to many countries.• Critics:– they have become too influential – their help, especially in developing countries, comes at

too high a cost. • For example, when the IMF lends money to countries, it may

order the gov’t to reduce spending.

General Agreement on Tariffs & Trade

• The General Agreement on Tariffs and Trade, (GATT):– trade rules that were signed in 1947– GATT members agreed to:• gradually eliminate tariffs and other trade barriers between

themselves to make trade freer.

• The World Trade Organization emerged from the GATT in 1995. The WTO regulates world trade in goods and services.

• FYI pg. 228

Keynes Loses Popularity• From end WW II (1945) until the 1970s, Keynes’

theories were popular and Hayek’s weren’t.• By the 1970s:– some gov’ts were spending so much on expanding their

economy that they had built up huge debts. – In addition, inflation was rising, and so was

unemployment.• According to Keynes’s theories, these things were

not supposed to happen at the same time. Keynes became unpopular.

What did you think happened to Hayek when Keynes’ theories

became unpopular?

Hayek Becomes In Style

• As Keynes’s theories became unpopular, Hayek’s views, (and his student Milton Friedman), began to gain support.

• People began to embrace the idea that markets, not the gov’t, should control a country’s economy.

• By 1974, Hayek’s ideas had become so popular that he won the Nobel Prize in Economics. Friedman won the award 2 years later.

What is a market economy? Is Canada a market economy?

Moving Toward a Market Economy• Because of Hayek and Friedman, many countries in

the world began to move toward a market economy, in which individuals were more free to make their own decisions with little intervention from the gov’t and where resources are the private property of individuals or companies.

• However, there are many who are critical of market economies. Canada, for example, has continued to maintain a mixed economy, in which both the public and private sectors play a significant role. Some resources are privately owned, but others are publicly owned. (FYI pg. 231)

What does outsourcing mean?

Outsourcing

• Outsourcing: reducing costs by using suppliers of products and services in less developed parts of the world.

• Pros and cons to outsourcing?• Risks?

• http://www.fourhourworkweek.com/

• (August 8th, 2013: How Risk-Averse Entrepreneurs Succeed: Low-Cost Testing Using Reddit, PayPal, In-Person Pressure, and More )

• http://www.fourhourworkweek.com/blog/

Communication Technologies• Today, communication technologies are changing so

quickly that the rate of change has become far faster than ever before. Cellphones, TV, radio, computers, and the Internet have come to affect nearly every aspect of people’s lives.

• Technological convergence is also increasing the rate of globalization. Cellphones, for example, can do a variety of things like send e-mails and take photographs. Convergence also brings together media companies. Today, a newspaper, textbook publisher, phone company, TV network, and movie production company may all be owned by the same transnational corporation.

• (Figure 10-2 pg. 238)

Trade• Technology plays an important role in the expansion

of global trade. – Today, a typical consumer product is designed, developed,

manufactured, and assembled by a host of companies, which may be located practically anywhere in the world.

• Expansion of trade has occurred because:– countries have opened their economies to outside

influences. – Gov’ts have allowed foreign products and investment to

enter their country. • In exchange, businesses and industries in the country have

opportunities to sell their goods in int’l markets.

• Figure 10-3 pg. 239

Reshaping Trade Patterns• Globalization has been reshaping int’l trade

patterns. – Before: developed countries would trade goods and

services among each other – developing countries:

– supplied raw materials – bought the manufactured goods that the developed countries

produced.

– Today: – manufactured goods are being produced in the

developing countries as well. They are flowing more frequently to both developed and developing countries.

– Fig. 10-4 pg 240

Developed Countries Still Dominate

• Still, exports from developed countries dominate the percentage of the world’s total exports.– Developed countries make up about 75% of the world’s

exports– developing countries make up about 25%.

• But this balance is starting to shift. The balance of trade between China and the US has been in China’s favour for several years.

The People’s Republic of China

• Assignment: Read pgs 232-233.• Respond to #1 and Assignment bklt.

Transportation• 2nd half pg. 240 , FYI pg. 240 - containerization• What is a warehouse? Could increased transportation

affect warehouses? How so?

• The just-in-time delivery and inventory system used today by many manufacturers means:– parts are ordered and scheduled to arrive at the factory at

the moment they are needed. – They are shipped, unloaded from containers, and moved

directly onto the factory floor. – This saves handling and storage costs because parts no

longer need to be kept in warehouses until they are required.

The Media• The media play a distinct role in expanding

globalization. • One way the media contribute to expanding

globalization :– running commercials that encourage consumers to buy

products. • This expands the market for goods and services.

Being Part of the Media• Media convergence has also resulted in the

commercialization of news. • News programs often dictate which news stories to

cover in their efforts to achieve the highest ratings possible. (instead of..?)

• Also, due to globalization, you can be part of the media. – With a cellphone that takes pictures and records videos, you

can contribute to local and global newsmaking by sending your information to news programs or posting it on social networking sites.

– www.theweathernetwork.ca

http://www.youtube.com/watch?v=ww7HzqJwwz4

http://www.youtube.com/watch?v=Ml9KHwDfVko

Why do people “take away” from the environment?

People & the Environment

• People cannot live without having some effect on the environment. Everyone needs:–Materials to make homes, clothing, tools, etc.– Fuel for heat, transportation, and electricity– Food to stay healthy–Water for drinking, cooking, cleanliness, and

health

Ecological Footprint• Scientists use the term ecological footprint to

describe the load people impose on nature. – Your ecological footprint represents the area of the earth’s

surface necessary to sustain the level of resources you use and the waste you create.

• The ecological footprint of an individual or group is a measure of – how much biologically productive land and water

resources are needed to keep them alive. – Dividing the bioproductive area of Earth by the total

population reveals that 1.89 hectares of productive area are available for each person.

Garbage Patches

• KY/NY/NJ – landfills, garbage island

• Garbage Patch – Great Pacific Garbage Patch and many other Garbage Islands – http://garbagepatch.net/greatpacificoceangarbagepatchfacts/

• New Ocean Blue (goto:News)• http://newoceanblue.org/

Predict Your Ecological Footprint• Think of your own personal ecological footprint.

What percentage of the land you use do you think goes to the following areas?

• Crop Land (land used to produce crops for food)• Sea Space (sea area used to produce fish & seafood)• Pasture Land (grazing land used to produce animal

products)• Forest Land (trees used to produce wood & paper)• Energy Land (forested area used to absorb carbon

dioxide produced by burning fossil fuels)• Built Area (land used for houses, factories, & roads)

Which Canadian City Most Negatively Affects the Environment?

• Rank the following Canadian cities that you think “takes the most from nature.”

• 1. Halifax, 2. Winnipeg, 3. Edmonton, 4. Windsor, 5. Saskatoon, 6. Quebec City, 7. Regina, 8. Calgary, 9. Vancouver, 10. Ottawa and 11. Toronto

Canada’s Ecological Footprint

• Figure 11-2, 3, and 4 (pg 260)• Earth’s resources are not shared equally. Canadians,

for example, have a much larger ecological footprint, (7.25 ha per person), than people in most other countries.

• How does this compare with the amount of bioproductive land available to each person on Earth?

Bangladesh’s Ecological Footprint

• While Canada has one of the biggest ecological footprints in the world, Bangladesh has one of the smallest: 0.6 hectares per person.

A Poor Country• Bangladesh is one of the world’s least developed

countries. – Bangladeshis have little money to spend on consumer

goods, large houses, and expensive vehicles.• Only 33% of people have access to electricity. – As a result, their consumption of resources is far lower

than that of Canadians. And because Bangladeshis consume less, they produce less waste.

• Figure 11-5, 6, and 7 pg. 261

Comparison: Examine Figure 11-5 on pg. 261.

1. How many times larger is Bangladesh’s population than Canada’s?

2. How many times larger is Bangladesh’s population density than Canada’s?

3. How many times faster is Bangladesh’s growth rate than Canada’s?

4. How many times more is Canada’s GDP per person than Bangladesh’s?

Global Perspective on Ecological Footprints

• The ecological footprint of 70% of the world’s people– is smaller than the 1.89 hectares available for each

person. • The remaining 30% of ppl take much more than

their share:– We consume about 90% of the world’s ecological

capacity.• Figure 11-8, pg. 262

The Kogi

• Read The Kogi – At the Heart of the World (txt 262).

• Assignment booklet

The Resource Gap• The gap between the resources the earth can

reasonably supply (1.89 ha per person), and what the ppl of the world now consume (2.8 ha per person) presents a challenge. – To meet this deficit, people are using up resources that

could be left for future generations.• Think about what would happen to a family that

spends more money than it earns and borrows to make up the difference. – At some point in the future, this debt must be repaid.

The same thing is happening with the environment.

Population Growth• At some point, the earth will not be able to sustain

actions like this. The debt will have to be repaid.

• Over the next 4 or 5 decades, the world’s population is expected to grow by 2 to 5 billion. – The earth’s resources are fixed, but an ever-increasing

number of ppl will need to share them.• How do you think this situation might affect smaller,

less developed countries with limited access to natural resources?

• How do you think North Americans will respond to this challenge? (Figure 11-10, pg 263)

Consumption of Resources

• Many of the world’s people are striving to improve their material well-being by consuming more goods and services.

• The more they consume, the larger their ecological footprint grows.

• As the same time, individuals and groups are warning that consumption of resources will affect sustainability: the ability of the earth to provide the resources necessary to meet ppl’s needs.

Stewardship

• These individuals and groups are promoting the idea of environmental stewardship: accepting responsibility for ensuring that the earth’s resources remain sustainable.

• What would happen if all the world’s population were to achieve the same consumption levels as Canadians?