Chapter 23 Responses

Chapter 23 Responses

2) What factors contributed to economic globalization in the second half of the twentieth century?

After World War II, the capitalist victors, particularly the United States, were determined to avoid any return to Depression-era conditions.  Because of this, they set up the International Monetary Fund, the World Bank, and other agreements of institutions which laid the foundation for postwar globalization.  This system negotiated the rules for commercial and financial dealings among the major capitalist countries in addition to promoting relatively free trade and high levels of capital investment.  In addition, new technologies dramatically lowered transportation costs, while fiber-optic cables and the Internet provided the communication infrastructure for global economic interaction.  Meanwhile, in the developing countries, population growth further fueled globalization as dozens of new nations entered the world economy.

3) In what ways has economic globalization more closely linked the world’s peoples?

World trade skyrocketed from a value of 57 billion in 1947 to 18.3 trillion in 2012.  Money achieved an amazing global mobility in three ways.  First was foreign direct investment, in which a firm opens up a factory in another country.  This practice practically exploded in the 1960s as companies in rich countries sought to take advantage of cheap labor, tax breaks, and looser environmental regulations in developing countries.  A second form of money in motion has been the short-term movement in capital, in which investors annually spend trillions of dollars purchasing foreign currencies or stocks likely increasing in value and often sold them quickly thereafter.  A third form of money movement involved the personal funds of individuals, with international credit cards taking hold almost everywhere.  Central to the acceleration of economic globalization have been transnational corporations, producing and delivering goods or services in many countries simultaneously.

5) What new or sharper divisions has economic globalization generated?

Although the economic growth was the most remarkable spurt in world history, and the overall life expectancy increased everywhere, accompanied by decreasing infant mortality and poverty rates and increasing literacy, a somewhat troubling trend has emerged in the instability of this emerging world economy and the distribution of the wealth it has generated.  While the economy has grown overall, recent world history has been shaped by periodic crises and setbacks.  Because most of the world is deeply interconnected, economic woes can be far-reaching in the consequences.  In addition, the ratio of income between the income of the top and bottom 20 percent of the world's population has increased dramatically, from 3:1 in 1820 to 68:1 in 1991.  Such gaps have led to great disparities in income, medical care, availability of clean drinking water, educational and employment opportunities, access to the Internet, and many other things.