9.4 Flashcards
Economics in the global age, 1900-present
Explain the spread of neoliberalism and examples of specific leaders that employed this ideology.
- new East European nations who previously composed the Soviet Bloc abandoned communism in favor of free markets and democracy
- Mikhail Gorbachev introduced some aspects of free market economics with Perestroika
- countries in the Non-Aligned movement often implemented free markets
US: Ronald Reagan
- Decreased taxes on the rich
- opposed New Deal and social welfare programs, cut their funding significantly
- reduced government regulation of business
- due to his policies, the rich-poor gap grew significantly, and the power of labor unions was undermined
- encouraged the global adoption of neoliberalism
Great Britain: Margaret Thatcher
- encouraged global adoption of free markets
- adopted policies similar to Reagan’s
Chile: Augusto Pinochet
- led Chilean economy into a free market, away from state control
- Chicago Boys economist group: addressed rampant inflation, and privatized state-run businesses
- unpopular, because he’d enforce his policies with brutality
China: Deng Xiaoping came to power in 1981, communist, but he relaxed communist policies
- allowed peasants to lease land and sell some of their own crops
- allowed some private ownership of businesses
*these freedoms led Chinese civilians to long and fight for other rights, like freedom of speech and freedom of the press, leading to the Tiananmen Square protest that was crushed brutally
What is neoliberalism?
Neoliberalism is an economic approach that focuses on free markets and the lowering of trade barriers.
It sought to remove tariffs, deregulate industries, and privatize public sector industries. It’s proliferation globally was instigated by the collapse of the USSR and the end of the Cold War.
What is a knowledge economy?
An economy dependent on the quality and quantity of information available that can be monetized as a commodity.
Includes professions such as teachers, lawyers, and engineers.
What are some examples of knowledge economies?
Finland:
- in the 1990s, there were heavy investments in communication technology and education
- led to Finland holding a massive global share of software/cellphone developer markets
*this was a massive shift, because previously Finland was an agrarian economy and society in the 1950s
Japan:
- invested heavily in education, but the process was slow because its economic policies resembled mercantilism in that it desired more exports than imports
*high tariffs
*subsidized manufacturing
- workers wages were ridiculously low, and labor unions grew in strength over time as a result
- 20th century: Japan became a global manufacturing hub and a leading information economy because they diversified their economy and focused on banking, finance, and developing information technology
What is the relationship between manufacturing work and knowledge work?
Increased knowledge work tends to yield decreased manufacturing work overall
Where is manufacturing work centralized?
Asia and Latin America
- esp. Vietnam and Bangladesh, which is where most clothes are made
What are transnational free trade organizations?
International agreements that eliminate exchange barriers like tariffs and quotas. They facilitates the globalization of economies.
Give examples of rising transnational free trade organizations.
North American Free Trade Agreement (NAFTA)
- USA, Canada, Mexico
- agreement that Mexico would produce good and then export them tariff-free to USA and Canada
*useful because the Mexican’s wages are significantly lower and their working conditions would otherwise be illegal in the USA and Canada
Association of Southeast Asian Nations
- Indonesia, Thailan, Singapore, Malaysia, Philippines, more
- this was central to developing and integrating the involved nations
World Trade Organization (WTO)
- primary aim is to reduce trade barriers like quotas and tariffs between international trade
International vs. transnational (multinational) companies
International corporations usually have a centralized structure with bases in their home countries even as they sell products on the world market, whereas transnational corporations have established quarters of manufacturing and operation in other countries
Give examples of multinational corporations.
Nestle
- headquarters in Switzerland
- manufactures/purchases chocolate in West Africa
- sells their products globally
Mahindra and Mahindra (an Indian company, makes cars, farm equipment, and more)
- operates in the USA, Africa, Southeast Asia, China
What is the basic composition of a multinational corporation?
1) employed knowledge workers in home country
2) manufactured goods in other countries
3) sell goods on the global market
