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Globalization

Globalization. Manufacturing. Mass production of goods for sale. US Dominant 1880-1950 Small markets, industrial revolution, EU trade organization Banana republics, textile industry Inexpensive everyday items, electronics, cars. Natural resources. Raw materials found in the environment.

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Globalization

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  1. Globalization

  2. Manufacturing • Mass production of goods for sale • US Dominant 1880-1950 • Small markets, industrial revolution, EU trade organization • Banana republics, textile industry • Inexpensive everyday items, electronics, cars

  3. Natural resources • Raw materials found in the environment • Gold, ports • Oil, Coal, Gas • Poppy, opium, ancient trade route • Diamond • Water • Timber

  4. Human Resources • Skills, background, knowledge, and training of workers • China is the largest population (coasts are developed, villages are not) • India will be most populous (caste system) • Some populations are not prepared due to war, famine, genocide, communism, cold war

  5. Physical Capital • Man-made items used in production of others • Heavy industry • Light manufacturing • War vs. consumer goods • Political instability

  6. Specialization • Focus on production of one or few products that the country is most efficient • Oil • Luxury items (marble, wine, leather) • Lumber, chemicals, financial services, food stuff

  7. Why Trade? • Ability to out produce another country • USA • Fuel • Fossil • Renewable • Food • Cars • Ability to produce at a lower opportunity cost • Value of the alternative choice • Saudi Arabia • UAE • BurjKalifa • Masdar City Absolute Advantage Comparative Advantage

  8. Free Trade? • Textiles • Electronics • Plastic • Steel • Cars • Chemicals • Technology • Financial Services • Food • Business Management US Imports US Exports

  9. Protectionism • Tools used to limit foreign imports (save domestic jobs?) • Tariff – tax on imports • Quota – restrict number or percent of g/s from a specific place • Standards – regulate quality and production

  10. Opening Up Trade • MFN – Most Favored Nation • 1 on 1 trade agreement with no barriers • NAFTA • EU • APEC • CAFTA • MNC • Multi-national Corp.

  11. Exchange Rates • Fixed – set % • Flexible – based on GDP growth • Strong Dollar • More imports, more foreign investment • Weak Dollar • More exports, less interest in US dollar

  12. Reflection • What is your recommendation for US trade policy, specifically concerning NAFTA, CAFTA, the EU, China, India, and APEC? Be sure to identify why you favor free trade or trade with restrictions.

  13. Statistical Comparisons • Oil Reserves • Venezuela • Saudi Arabia • Canada • USA #13 • Coal Reserves • China • USA • Australia • Natural Gas Reserves • Russia • Iran • Turkmenistan • USA #5 • Car/1000 • Monaco, Lichenstein, US -100 • Togo - 2 • Radios/1000 • US, Finland, Guam - 2000 • Azerbijan - 220 • TV/1000 • US, Malta, Canada – 800 • Rawanda - 0.162 • Internet/1000 • Greenland, Netherlands, • Antiqua and Barbuda – 900 • US - #13 • Liberia – 0.32

  14. More Stats • GDP (trillion) • World $60 • USA $15 • EU $17 • China, Japan • Tuvalu - $32 million • Sq Miles (million sq. mi.) • Russia 6.5 • Canada 3.8 • USA 3.7 • Population • China 1.3 B • India 1.2 B • USA 313 M • GDP/Capita • Lichtenstein $141,100 • Qatar %102,700 • Luxembourg $84,700 • USA $48,100 • Congo $300 • Growth rate • Qatar – 18.7% • Ghana – 13.5% • Mongolia – 11.5% • World Average – 3.7% • USA – 1.5% • Greece – -6%

  15. Final Comparisons • Life Expectancy • Mozambique/Japan • Adult Literacy • Barkino Faso/Finland • Enrolled in School • Tanzania/USA • Infant Mortality • Afganistan/Monaco • Per Capita • GNP - Mozambique • Calories - Ethiopia • Energy - Nepal • Credit Risks • Singapore Iraq • Hong Kong Zimbabwe • Chile Myanmar • Youngest Oldest • Yemen Italy • Niger Greece • Uganda Germany • Congo Japan • Democratic • Sweden N Korea • Iceland CAR • Netherlands Chad • Peaceful • Norway Syria • New Zealand Sudan

  16. Less Developed Country (LDC) • Population • Education • Health • Infrastructure • Resources • Human capital • Physical capital • Politics • Debt • Not simple • Cannot just give away • Lasting help • Part of global market • Exploitation • Resentment • $251 B – 2007 • USA = 17% • UK = 7.5 % Problems Solutions

  17. Foreign Aid • Direct Investment • Individuals/Portfolios • Micro-business • NGOs – Non-governmental organizations • United Nations • World Bank – loans to countries • IMF – monetary/currency stabilization • UNDP – development aid for infrastructure • WFP – food to poorest

  18. Reflection • After considering all the comparative statistics and the problems LDCs face, write a list of the specific initiatives that you think should be done to help the people who live in these countries.

  19. Homework Assignment • Choose one advanced country around the world and explain its level of manufacturing and its endowed natural, human, and capital resources. • Choose one LDC around the world and describe the biggest problems and most creative solutions being offered in relief. • CIAworldfactbook.org

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