Chapter 10 Notes

1. Chapter 10 Notes Expanding Globalization Social 10-1 Mrs. Callihoo

2. What Factors contribute to expanding globalization?

3. Globalization creates changes in all aspects of one’s life, such as what kind of work they do, what they eat the clothes they wear, what they read, watch and listen to. • Outsourcing: a business strategy that involves reducing costs by using suppliers of products and services in countries where labour is cheaper and government regulation may be less strict. • -This is one of the changes that affect the work people do.

4. Communication Technologies: • Technological convergence is increasing the rate of globalization. convergence brings together media companies. For example, a newspaper, phone company, TV network and a movie production may all be owned by a single transnational corporation.

5. Trade: • Today a typical product is designed, developed, manufactured, and assembled by a host of companies, which may be located practically anywhere in the world. • The expansion of trade has occurred because countries have allowed foreign products and investment to enter their country. In exchange, businesses and industries in the country have opportunities to sell their goods in international markets.

6. Reshaping Trade Patterns: • Before the 1970’s, most goods and services moved between developed countries in North America, Europe, and the Asia-Pacific region, especially Japan. Developing countries supplied raw materials and brought some manufactured goods. • Today goods and services flow more frequently between developing countries, and more manufactured goods are also flowing out of developing countries to more developed countries. • Today exports from developed countries make up 75% of the world’s total exports, while developing countries produce 25% of the world’s exports. This however, is quickly shifting.

7. Containerization: the key to shipping goods more cheaply and efficiently. The Media: • Media contributes to expanding globalization by running commercials that encourage consumers to buy products. This expands the market.

8. How do international agreements and organizations contribute to expanding globalization?

9. Trade Liberalization: A key element in expanding globalization is reducing trade barriers so that goods and services can move around the world more easily. • To achieve this, countries must eliminate tariffs, quotas, regulations, and standards that protect and regulate businesses within their border. This results in Free Trade: In theory businesses benefit because they can sell their goods or services in other countries, local companies can expand into new markets. In turn this creates new jobs, and reduces the cost of consumer goods (supply and demand)

10. The World Trade Organization: • The WTO ensures that the terms of trade agreements are followed, settles trade disputes between governments, and conducts trade negotiations. • When one country says another member country is treating it unfairly in trade, the WTO must settle the dispute. The WTO officials will hear the arguments of both sides and then make a decision. This decision may force one of the countries to change its economic actions such as trade boycott.

11. Perspectives on the WTO: Those who oppose the WTO have said: • The WTO has too much power. It can force countries to change their laws and regulations to make them fit WTO rules. • The WTO is not democratically accountable. Hearings on trade disputes are closed to the public and the media. • The WTO does not care enough about the problems of developing countries. It has not forced rich countries to fully open their markets to products from developing countries. • The WTO has not done enough about the environment, child labor, workers’ rights, or health care.

12. The North American Free Trade Agreement: • The Free Trade Agreement between Canada and the United States went into effect in 1989. It was later expanded on January 1st, 1994 to include Mexico. Thus becoming the largest free trade area in the world. • NAFTA, which was the largest free trade zone at the time, immediately eliminated half the trade barriers between the three countries. The remaining barriers were to be phased out over the next 15 years. Check out page 248 for specific details of how much trade increased.

13. The European Union: • A liberalized trade area in Europe since 1991. It had eliminated most obstacle’s to cross-border trade among Europe.

14. How do transnational corporations contribute to expanding globalization?

15. Transnational Corporations reduce cost and increase profits by building factories, service centers, and retail outlets in various countries. They do this to ensure that they have: • The resources and parts needed to manufacture their products • A steady, reliable source of labour • Markets where they can sell their goods and services Increased trade liberalization has led to a huge increase of transnational corporations. In 1990 there were about 35 000 transnational corporations, in 2002 there were more than 65 000. About 70% of global trade transactions involve transnationals.

16. Transnational Corporations dominate some key parts of the world economy such as: • They control most of the world’s energy and extract most of its mineral resources. • They manufacture a huge share of the world’s chemicals, medicines, cars, aircraft, communication satellites, and home and office electronics. • 85% of the world’s grain supply is controlled by six companies.

17. To attract transnationals, some governments have used strategies like reducing taxes, selling natural resources at bargain prices, and adopting policies that transnationals will find helpful. Thus making some transnationals very powerful.

18. Transnational corporations and poverty reduction: • Many economists believe that one way to reduce poverty in developing countries is to invest in business and infrastructure. In the past, money for investments like these came from foreign aid from governments of wealthy countries. Ex. In 1990- 75% of investment in developing countries came from foreign aid. Today, 75% of investment in developing companies comes from transnational corporations.

19. How do communication technologies contribute to expanding globalization?

20. We could say that communication technologies have made globalization possible however; access to these technologies is not equal everywhere in the world. The difference in financial status, education, skills, age and geographic location can widen the digital divide.

21. E-Commerce ( Electronic Commerce) • Online stores that allow people to buy what they want 24 hours a day, and have their purchases shipped to their homes. In 2005, online spending amounted to $7.9 billion in Canada. • People in developing countries do not have access to the information and communication technologies that would enable them to share in the benefits of this technology.