10 7 Globalization What Causes Globalization The increasingly

[ 10. 7 ] Globalization

What Causes Globalization? The increasingly tight interconnection of producers, consumers, and financial systems around the world in known as globalization. • Transportation and Communication • • • Expansion of the Free Market • • Faster methods of communication and transportation, the widespread adoption of elements of the free enterprise system, and the growth of international trade agreements. Today’s communications revolution connects customers and suppliers on opposite sides of the world. The opening of more free market economies has created new investment opportunities. Trade Agreements • Regional trading blocs tie nations together in an interconnected world economy.

What Causes Globalization? Globalization consists of several elements, often interconnected. Analyze Charts Name two of the elements shown here, and explain why they have helped multinational corporations prosper.

Challenges of Globalization • Closely Linked Financial Markets • • Multinational Corporations • • • A financial crisis in one country affects other countries because the world financial markets are closely connected. Multinational corporations are a fact of globalization, but critics claim that multinationals do little to aid less developed countries because most of the profits go to foreign owners. Much of the debate over multinationals and globalization focuses on the impact on less developed countries. Loss of Jobs • However, people in developed nations are equally concerned about a related issue – the loss of jobs as companies move part of their operations to overseas.

Migration • Domestic Migration • • Globalization and development have accelerated population shifts. In many less developed countries, cities offer more job opportunities than rural areas. As a result, large numbers of people in villages are streaming into cities. International Migration • • • Each year, millions of workers leave less developed countries in the hopes of finding jobs in developed nations. Once they find work, many immigrants send regular cash payments to their families back home. • These remittances provide an important source of income. At the same time, many well-trained and educated people also leave LDCs for well-paying jobs in developed nations. • This “brain drain” may hurt development by siphoning off vital human capital.

Migration

Ongoing Issues Globalization has created new opportunities but also new challenges for the world’s economies. • A Greater Voice for the Developing World • Sources of tension between the developed world and the developing world. • Issues related to equal treatment and the environment are key causes of conflict, as is competition for scarce resources.

Ongoing Issues • Environment Versus Development • • • Environmental scientists – mostly based in developed nations – worry that rapid development can cause environmental damage. They seek to promote sustainable development, that is, the goal of meeting current development needs without using up the resources needed by future generations. Competition for Resources • One major issue that crosses national borders and impacts the world is deforestation, or large-scale destruction of forests.

Ongoing Issues Unsustainable fishing has caused a decline in fish populations in many areas.

The United States and the Global Economy • • A Changing Workplace Globalization poses challenges even for the world’s most successful economy – our own. • • The Pressure to Compete For the United States to compete in global markets, American workers must be ready to respond to changes in the workplace. • • The Need to Innovate And American companies must continue their long tradition of innovation.

The United States and the Global Economy This supply chain shows the steps that get a good from a producer in China to a consumer in the U. S. Analyze Charts Tell which steps will cost more if the price of fuel rises. Explain why.