Aim How does economic interdependence affect countries around

Aim: How does economic interdependence affect countries around the world? Do Now: a) Current Events Presentations b) Have you ever traded part of your lunch for a part of someone else’s lunch? Why? Homework: a) Continue working on Current Event Presentations – refer to schedule

Do Now: Have you ever traded part of your lunch for a part of someone else’s lunch? Why?

Economic Interdependence At the beginning of the twenty-first century, the world was divided over a number of political, cultural, and economic issues. Globalization Interdependence • Despite divisions, countries tied together like never before • Globalization is force behind closer relationships – Process in which trade, culture link countries – Improvements in transportation, communication make global trade easier • Major effect of global trade, increased economic interdependence – Relationship among countries in which they depend on each other for resources, goods, services – Occurs because countries vary in goods, services they provide, need

Economy Goods, services nation provides and needs depend on the level of economic development in that country • Countries grouped in two categories: developed, developing Developed • Industrialized nations have strong economies, high standards of living • 20 percent of world’s nations wealthy, powerful like Japan, United States • Have access to good health care, education, technology Developing • Less productive economies, lower standard of living; Guatemala, Philippines • People in these countries lack adequate education, health care • Poorest, least-developed countries located mostly in Africa, southern Asia

Growth and Outsourcing Multinational Corporations • Increasing interdependence and dramatic growth of multinational corporations—large companies operating in multiple countries

Growth and Outsourcing Benefits to companies • Outsourcing—having work done elsewhere to cut costs, increase production • Manufacturing facilities in developing countries, where materials, labor relatively inexpensive

Growth and Outsourcing • Advocates say: creates jobs and wealth in developing countries • Critics say: fails to improve standard of living, outsourcing causes job loss in company’s home country

Global Economic Ties • Certain events, actions can affect economies of many nations • Global interdependence particularly evident in times of uncertainty – Early 2000 s, price of crude oil rose dramatically – Factors: rising world demand, concern over available supply Oil Prices • All countries depend on oil for energy; rise in prices felt around world • Developed countries like United States faced with higher costs • Poor nations in Africa could not afford to import, faced shortages • Rise in oil prices led to increased demand for alternative energy sources, attempts to reduce consumption

Sum It Up!!!! How does economic interdependence affect the world? Answer(s): helps to provide jobs in developing countries, increases production and decreases cost for multinational companies