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Todays World

Section 1

Todays World

Section 1

Trade and Globalization


Preview
Starting Points Map: World Per Capita GDP Main Idea / Reading Focus Economic Interdependence Global Trade Quick Facts: Major Trade Organizations and Agreements Cultural Exchange

Todays World
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Section 1

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Todays World

Section 1

Trade and Globalization


Main Idea
Trade and culture link economies and lives around the world.

Reading Focus
How does economic interdependence affect countries around the world? What are some patterns and effects of global trade? How does globalization lead to cultural exchange?

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Economic Interdependence
At the beginning of the twenty-first century, the world was divided over a number of political, cultural, and economic issues. Globalization
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

Interdependence
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

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Developed and Developing Countries


Economy
Goods, services nation provides and needs depend on 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 worlds 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

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Growth and Outsourcing


Multinational Corporations
Increasing interdependence and dramatic growth of multinational corporationslarge companies operating in multiple countries Benefits to companies Outsourcinghaving work done elsewhere to cut costs, increase production Manufacturing facilities in developing countries, where materials, labor relatively inexpensive Outsourcing Advocates say: creates jobs and wealth in developing countries Critics say: fails to improve standard of living, outsourcing causes job loss in companys home country

Todays World Global Economic Ties

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Certain events, actions can affect economies of many nations Global interdependence particularly evident in times of uncertainty
Early 2000s, 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

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Summarize How does economic interdependence affect the world?


Answer(s): helps to provide jobs in developing countries, increases production and decreases cost for multinational companies

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Global Trade
Globalization often leads to or promotes free trade, the exchange of goods among nations without trade barriers such as tariffs. This can lead to consumers purchasing higher-quality goods at lower prices. International Trade Organizations Many of these groups work to promote, regulate free trade 1948, General Agreement on Tariffs and Trade (GATT) Worked to limit trade barriers, settle disputes GATT, WTO, OPEC 1995, GATT replaced by World Trade Organization (WTO) Monitors national trade policies Organization of Petroleum Exporting Countries (OPEC) works to control oil production, price Regional Trade Regional trade blocs promote free trade, deal with economic issues of neighboring nations European Union (EU), North American Free Trade Agreement (NAFTA), others

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Todays World

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Effects of Global Trade


Benefits Global trade has clear benefits Developing countries can provide new, valuable markets for goods, services produced by developed countries Technology, services, money from developed nations can improve public services, raise standard of living of developing countries Anti-Globalization Opponents argue process benefits wealthy developed nations at expense of developing nations Free trade encourages practices that exploit workers, destroy environment Some promote fair trade, like fair trade coffee movement guaranteeing fair prices to coffee bean farmers

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Find the Main Idea How does global trade affect the world?
Answer(s): can provide opportunities for developing countries; opponents believe global trade exploits developing nations, supporters believe it provides for the production and sale of high-quality, low cost goods

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Cultural Exchange
Culture
Globalization; countries linked through trade and culture Modern transportation, communication allow faster exchanges of ideas, customs

Popular Culture
Globalization leads to changes in popular culture Culture traits: food, sports, music common within group of people

Spread of Traits
Globalization leads to cultural diffusion, spread of culture traits from one region to another Work, travel, permanent moves all play part

Mass Media
Television, movies, music most powerful methods of cultural diffusion Satellite news and Internet also ways of exchanging images, ideas

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Effects of Cultural Changes


Negative Effects
Some believe changes largely negative Mass media, advertising encourage growth of consumerism, preoccupation with buying consumer goods

Media
Opponents say market shaped by media and advertising, not actual needs Worry that globalization creating common world culture, allowing traditional cultures to lose uniqueness

World Community
Globalization linking people together through economics, culture Challenge to preserve valuable traditional cultures while providing enrichment from other places in world

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Summarize How is cultural exchange a part of globalization?


Answer(s): leads to cultural diffusion, more travel to other countries for work or vacation, exotic goods from other countries available