Lecture 2: The Global Economy

Question 1

___ refers to the increasing integration of economies around the world through the movement of goods, services, and capitals across borders.

Answer 1

Economic Globalization

Question 2

____ is a type of investment in which a company establishes a business in another country for the production of goods and services and still takes part in managing that business.

Answer 2

Foreign Direct Investment

Question 3

____ refer to the framework of rules, agreements, and institutions that govern the exchange of goods and services across borders. They provide the legal and institutional framework for international trade and help to facilitate the flow of goods and services between countries.

Answer 3

International Trading Systems

Question 4

___ is a network of trade routes connecting China and the Far East with the Middle East and Europe.

Answer 4

Silk Road

Question 5

When do you think the “full economic globalization” began?

Answer 5

Some historians argue that economic globalization can be traced back to the 19th century, with the rise of international trade and investment flows facilitated by advances in transportation and communication technologies. Others suggest that the Bretton Woods system established after World War II, which created a stable framework for international monetary and trade relations, marked the beginning of the modern era of economic globalization.

However, it was not until the 1980s and 1990s that economic globalization truly took off, with the liberalization of trade policies and the growth of multinational corporations driving increased cross-border flows of goods, services, capital, and labor. The advent of the internet and other digital technologies in the late 20th century further facilitated the integration of global markets and enabled the rise of new forms of global business activity, such as e-commerce and outsourcing.

Question 6

When did the “full economic globalization” begin?

Answer 6

According to historians Dennis Flynn and Arturo
Giraldez, the age of globalization began when,
“All important populated continents began to exchange products continuously- both with each other directly and indirectly via other continents – and in values sufficient to generate crucial impacts on all trading partners.”

Question 7

The ____ connected Manila and Mexico; the first time that Americans were directly connected to Asian trading routes.

Answer 7

Galleon Trade

Question 8

What are the three [3] actors that facilitate Economic Globalization?

Answer 8

1. International Monetary System
2. Nation-State
3. Global Corporations

Question 9

____ refers to when European nations and the US shifted to gold at the international monetary conference in Paris. It was believed to guarantee a non-inflationary, stable economic environment, a means for accelerating international trade.

Answer 9

The Gold Standard

Question 10

____ refers to when countries promised that their central banks would maintain fixed exchange rates between their currencies and the dollar.

Answer 10

The Bretton Woods System

Question 11

Through the Bretton Woods System, two [2] financial institutions were created and those were:

Answer 11

1. International Bank for Reconstruction and Development [IBRD], now known as World Bank
2. International Monetary Fund [IMF]

Question 12

Which do you think is better and more effective, the Gold Standard or the Bretton Woods System?

Answer 12

The gold standard is a monetary system where the value of a country’s currency is directly linked to a specific amount of gold. This system was widely used in the 19th and early 20th centuries, and it provided a stable framework for international trade and investment. However, the gold standard had limitations, including a fixed supply of gold, which could limit economic growth and expansion.

The Bretton Woods system, established after World War II, was a modified version of the gold standard. Under this system, the US dollar was fixed to gold at a rate of $35 per ounce, and other currencies were fixed to the US dollar. The system provided stability and predictability for international trade and investment, but it had limitations, such as the inability of the US to maintain the fixed exchange rate in the face of mounting trade deficits.

Question 13

____ acts as a mediator between the effects of globalization and the national economy.

Answer 13

Nation-State

Question 14

____ refer to companies that work to have a foothold in a large number of countries.

Answer 14

Global Corporations

Question 15

A global company is generally referred to as a ____.

Answer 15

Multinational Corporation [MNC]

Question 16

Does economic globalization unites or further divides the world?

Answer 16

1. On the one hand, economic globalization can promote greater economic integration and cooperation between countries, leading to increased trade, investment, and growth. This can help to create new opportunities for businesses and consumers around the world and can help to promote greater economic prosperity and stability.
2. At the same time, however, economic globalization can also lead to increased inequality within and between countries, as some countries and individuals benefit more from globalization than others. This can lead to social and economic divisions, as those who are left behind by globalization feel excluded and marginalized.