189
2. The Columbian Exchange between the Old World and New World in the century
following the opening of the Americas by the Spanish in 1492 (Mann 2011),
3. The creation of the International Monetary Fund and the World Bank as part of
the United Nations system (1945) to promote economic stability and development
(see Sect. 6.2.3),
4. The launch of the internet by the USA (1983), and
5. The Pax Americana following the collapse of the USSR and the lifting of the Iron
Curtain, including the founding of the World Trade Organization (1991 and 1995).
Globalization is the trend toward a dramatically increased exchange between
cultures and nations. Today, except for a few exceptions like North Korea, every
global culture and nation on Earth is strongly connected via trade and communication (Baldwin 2016).
Nations have widely differing trade policies that reflect a blend of openness versus protectionism (e.g., producer subsidies, price controls, quotas, and tariffs).
Neoliberal economics argues that free and open trade enriches all parties and
maximizes resilience (Wolf 2004). However, there are real-world consequences of
globalization, including a loss of local social and political control and the “race to
the bottom,” which occurs when a nation with low social or environmental standards undercuts a more responsible and healthy nation on price (Sassen 1999).
Trade and globalization of trade have created stark winners and losers among
nations and demographic segments, and have arguably benefitted high-skilled
specialist labor and also those with mobile capital, that is, banks and the “rich,” to
the detriment of most “ordinary” laborers. Globalization has dramatically benefitted
“developing” countries that have adopted an export-oriented manufacturing strategy,
including notably the petro-states of the Middle East and the “Asian Tiger”
economies like Japan, South Korea, and especially China.
Those involved in exporting industries expand their enterprise and increase their
revenue. However, those involve in those same industries at the site of import, see
the price for their products lowered by the presence of cheap imports. For example,
exports of many grain crops by US farmers increases their income. However, any
producer of that same crop in a country importing it from the USA sees its revenue
decline. As a result, each nation, when setting up trade relations, balances the
benefits of low prices to its citizens against any negative impacts on domestic
industries. For example, countries balance the benefits of lower-cost food products
for their citizens against negative economic impacts on their farmers. For better or
worse, globalization has created a world where a region’s economic growth—and
economic collapse—benefit and harm everyone around the world.
In prior centuries, the colonial trade model of “mercantilism” was perfected by
nations including the Netherlands and England for the purpose of extracting natural
resources, monopolizing valuable trade routes, and enriching the home country
through lending and value-added manufacturing monopolies. More recently, cartels
like the Organization of Petroleum Exporting Countries (OPEC) have attempted to
manipulate trade to their members’ advantage by forming oligarchies and
monopolies to control the supply of rare goods or services. One of the original and
7 Trade
2. The Columbian Exchange between the Old World and New World in the century
following the opening of the Americas by the Spanish in 1492 (Mann 2011),
3. The creation of the International Monetary Fund and the World Bank as part of
the United Nations system (1945) to promote economic stability and development
(see Sect. 6.2.3),
4. The launch of the internet by the USA (1983), and
5. The Pax Americana following the collapse of the USSR and the lifting of the Iron
Curtain, including the founding of the World Trade Organization (1991 and 1995).
Globalization is the trend toward a dramatically increased exchange between
cultures and nations. Today, except for a few exceptions like North Korea, every
global culture and nation on Earth is strongly connected via trade and communication (Baldwin 2016).
Nations have widely differing trade policies that reflect a blend of openness versus protectionism (e.g., producer subsidies, price controls, quotas, and tariffs).
Neoliberal economics argues that free and open trade enriches all parties and
maximizes resilience (Wolf 2004). However, there are real-world consequences of
globalization, including a loss of local social and political control and the “race to
the bottom,” which occurs when a nation with low social or environmental standards undercuts a more responsible and healthy nation on price (Sassen 1999).
Trade and globalization of trade have created stark winners and losers among
nations and demographic segments, and have arguably benefitted high-skilled
specialist labor and also those with mobile capital, that is, banks and the “rich,” to
the detriment of most “ordinary” laborers. Globalization has dramatically benefitted
“developing” countries that have adopted an export-oriented manufacturing strategy,
including notably the petro-states of the Middle East and the “Asian Tiger”
economies like Japan, South Korea, and especially China.
Those involved in exporting industries expand their enterprise and increase their
revenue. However, those involve in those same industries at the site of import, see
the price for their products lowered by the presence of cheap imports. For example,
exports of many grain crops by US farmers increases their income. However, any
producer of that same crop in a country importing it from the USA sees its revenue
decline. As a result, each nation, when setting up trade relations, balances the
benefits of low prices to its citizens against any negative impacts on domestic
industries. For example, countries balance the benefits of lower-cost food products
for their citizens against negative economic impacts on their farmers. For better or
worse, globalization has created a world where a region’s economic growth—and
economic collapse—benefit and harm everyone around the world.
In prior centuries, the colonial trade model of “mercantilism” was perfected by
nations including the Netherlands and England for the purpose of extracting natural
resources, monopolizing valuable trade routes, and enriching the home country
through lending and value-added manufacturing monopolies. More recently, cartels
like the Organization of Petroleum Exporting Countries (OPEC) have attempted to
manipulate trade to their members’ advantage by forming oligarchies and
monopolies to control the supply of rare goods or services. One of the original and
7 Trade