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Global Economy in Historical Context

Global Economy in Historical Context. Early Patterns of Global Finance and Trade, largely supported state building, war making, and colonization . 14 th C.-Florentine Merchant Banks (Peruzzi Company) Financed Trade with Asia “Super company”: also produced cloth transnationally

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Global Economy in Historical Context

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  1. Global Economy in Historical Context Early Patterns of Global Finance and Trade, largely supported state building, war making, and colonization. 14th C.-Florentine Merchant Banks (Peruzzi Company) Financed Trade with Asia “Super company”: also produced cloth transnationally 16th -18th C.- Antwerp, Belgium financial center Bank of England financed Britain's war with France British and Dutch East India Companies Hudson Bay Company 18th C.-Amsterdam and London are global cities

  2. Global Economy in Historical Context: 1850-WWII • MNCs establish colonial operations • Extractive and Primary Industries; • Mining, Logging • Agriculture: Plantations and Ranches; Fruit and Tea • Oil companies emerge • MNCs export textiles and decimate indigenous industries • Industrial Age: 1870-1914 • Classical Gold Standard Period: Skeptics argue that this was the only truly globalized era. • Telegraph drastically improves communication

  3. Global Economy in Historical Context: Interwar Years • Interwar (WWI and WWII) years: Global Monetary Disorder • Collapse of the Gold Standard • German Hyperinflation • Domestic investments predominate • Trade protectionism and cartels dominate remaining international business • Soviet Union withdraws from int’l market

  4. Global Economy: Bretton Woods • 1944 Meeting in Bretton Woods, New Hampshire • Marshall Plan • IMF: short term loans, also administered global financial order • Compromise between free trade and social democrats • Discrepancies between European and developing world • World Bank: Infrastructural Development • GATT: General Agreement on Tariffs and Trade

  5. Global Economy: Development 1950’s-1960’s • Decolonization: finished by early 1960’s: however global capital is afraid of conflict and turmoil • Marshall plan is completed, IMF and World Bank turn to new independent states. • Development = “Progress, modernization, infrastructure” • embedded in Cold War conflicts; used as geopolitical strategy

  6. 1971: Nixon delinks dollar from gold standard floating exchange rates OPEC cartel quadruples oil prices”petrodollars” US/Euro Banks have $50 billion to loan Developing countries receive this boon in the forms of government and private loans Global Economy: Big Changes in the 1970’s

  7. Global Economy: Neoliberal 1980’s • Early 1980’s-Debt crisis begins: world wide interest rates soar/ global recession/fall in commodity prices • IMF imposes Structural Adjustment Policies (SAPs) to justify additional loans. • “Green Revolution,” Industrial Agriculture and commodity “dumping” drive small farmers out of business • Rural-Urban Migration in Developing World • IMF riots • 1989-Fall of USSR and end of Cold WarMarket economy is the only game in town

  8. Global Economy in the 1990’s • Structural Adjustment continues and critique intensifies • GATTWTO (1995): “Free” Trade and Financial Flows) • Global Assembly Line- • MNC’s • Export Processing Zones • Industrial/Export Agriculture • Internal and External Migration continues • Rise of the Mega city and the Informal Economy • Rise of Transnational Communities

  9. The Global Assembly Line

  10. VW’s Global Assembly Line

  11. Country v. Corporate Economic Size:World Ranks-GDP and Sales

  12. The Rise of Multinationals • Overheads

  13. Comparative Wage Rates: US/Mexico • Differences in Wage Rates • Average wages of workers who make Suburbans • U.S. $18.96/hr. • Mexico $1.54/hr. • # of Suburbans produced • Mexico 80,400 • U.S. 83,000

  14. The Cost of a Shoe

  15. Globe-trotting Nike • Early 1960s - Oregon • 1967 – Japan • 1972 - S. Korea and Taiwan • 1986 – Indonesia, ChinaandThailand • 1994 - Vietnam

  16. Industrial relocation: non-labor factors • Government incentives and regulations • Provision of infrastructure (Export Processing Zones) • Reduced cost of land, water, electricity • Tax breaks and tariff reductions • Lower environmental pollution standards • Lower health and safety standards

  17. Global Growth in EPZs

  18. 61% MFG - 77% EXPORTS

  19. Map of world trade interconnectedness

  20. Intra-Firm Transfers -U.S. Corporations Data • Exports - • 1982 36 % • 1994 50 % • Imports – • 1982 31 % • 1994 42 %

  21. Global Production: Social Issues

  22. Health and Safety of Workers • Coercive Working Conditions • Anti Union Environment • Government Involvement in Coercion and Lack of Participation/Democracy in Decisionmaking • Child Labor http://www.ilo.org/public/english/standards/decl/intro/ilo_movie/index.htm

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