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GE3 Lesson 2 1

The global economy refers to international exchange of goods and services. It has a long history dating back to routes like the Silk Road connecting China to the Middle East. The first full economic globalization was the Galleon trade between the Philippines and Mexico in the 1500s. Modern systems like the gold standard and fiat currency provide a common basis for currency values. Key institutions like the World Bank and IMF were established at Bretton Woods to promote global prosperity. However, economic globalization remains uneven as some countries face more barriers than others.

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37 views

GE3 Lesson 2 1

The global economy refers to international exchange of goods and services. It has a long history dating back to routes like the Silk Road connecting China to the Middle East. The first full economic globalization was the Galleon trade between the Philippines and Mexico in the 1500s. Modern systems like the gold standard and fiat currency provide a common basis for currency values. Key institutions like the World Bank and IMF were established at Bretton Woods to promote global prosperity. However, economic globalization remains uneven as some countries face more barriers than others.

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Aiz wallenstein
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© © All Rights Reserved
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Download as PDF, TXT or read online on Scribd
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THE GLOBAL

ECONOMY
BY: MS. SARAH
Global Economy
Also referred to as "world economy".
Refers to the international exchange of goods
and services.
It may also mean as the free movement of
goods, capital, services, technology and
information.
History of Trading
Silk Road - route from China to Middle East
continued until Ottoman Empire closed it in
1453 BCE.
International trading (within continent only)
Galleon trade - first full economic globalization.
Connection of Philippines to Mexico (1571).
Age of mercantilism - multiple restrictions.
Basis for Currency
Gold Standard - developed common basis for currency
prices which all based on the value of gold.
World War I - forced countries to use their gold reserves
to support their armies.
Fiat Currency - "Let it be done", the government will
determine the value of your money.
Why can't we print money
Inflation
More demand, limited supply causes high prices.
Market Integration
A phenomenon in which markets for goods and services that are
in some way related to one another, experience similar patterns
of price increase or decrease.
For example, if the demand for baby dolls within a given
geographical market were to suddenly be reduced by 50%,
there is a good chance that the demand for baby doll clothing
would also decrease in proportion within that same
geographical market.
Another example - gasoline
The Bretton Woods System
John Maynard Keynes
to establish longer-lasting global peace by setting
up a network of global financial institutions that
would promote economic interdependence and
prosperity.
created the two financial institutions:
World Bank
International Monetary Fund
International Monetary Fund (IMF)
The International Monetary Fund (IMF) works to achieve
sustainable growth and prosperity for all of its 190 member
countries.
So how does it do that?
World Bank Group
It has 189 member countries, and the World Bank is one of the
most powerful institutions in the world, funneling billions of
dollars every year into ending global poverty.
World bank's goals for the past 45 years were to:
Reduce extreme poverty
Raise the income of the poorest 40% of each country's
population.
CHECKPOINT!
Discuss
shortly the
history of
trading.
Discuss Silk road - China to middle
east (international trading
shortly the only - does not include

history of routes to the American


continents.
trading. Galleon Trade - Philippines
to Mexico.
Discuss briefly
the gold
standard and
fiat currency
Discuss briefly Gold Standard - currencies
were all based on the value
the gold of gold. (World War 1)

standard and Fiat Currency - the


government will be the one
fiat currency to determine the value of
money. (Money Printing)
What is
World bank
and IMF?
World Bank - 189 member

What is countries, funneling money


for projects.
World bank International Monetary Fund

and IMF? - 190 member countries and


serves as a last resort of a
country in financial
assistance.
Oil Embargo (the early 1970s) - Organization of Arab Petroleum
Exporting Countries (OAPEC).
Decision of US and other countries to resupply Israeli military
with needed arms during the Yom Kippur War - stagflation &
inflation.
Neoliberalism - from the 1980s onward, a new form of economic
thinking or system.
Advocated for the privatization of government-run services
such as water, electricity, communications, and transportation
thinking that the free market can deliver the best results.
Regular taxing - still provide the government with a regular
stream of revenue, allowing them to pay and restructure debts
in a timely manner.
Corrupt bureaucrats would be removed from these industries
and that would be passed on to more active and independent
private investors.
Government officials failed to regulate risky investments in the
US housing market. - big investment banks went bankrupt.
Economic Globalization Today
COVID-19 slowed down global trade considerably, and major economies
recorded negative trends.
Russian Federation, China and India suffered the largest negative
decline in exports (-23.33%, -20.88% and -17.55%).
Economic globalization remains an uneven process, with some countries,
corporations, and individuals benefiting a lot more than others.
Japan - refusal to allow rice imports into the country to protect its
farming sector and to justify that rice is "sacred".
United States - protects their sugar industry by restricting sugar imports
and forcing consumers and sugar-dependent businesses to pay higher
prices instead of getting cheaper sugar from other countries.
Poorer countries can do very little to make globalization more just.
"It should be noted that economics is
just one window into the phenomenon
of globalization; it is not the entire
thing."
CHECKPOINT!
What
happened to
Oil Embargo?
What OAPEC - sieze oil imports to
the other countries as US,
happened to together with some countries

Oil Embargo? assists Israeli Military during


Yom Kippur War.
Explain the
system of
Neoliberalism.
Explain the privatization of government-
run services such as water,
system of electricity, communications,

Neoliberalism. and transportation thinking


that the free market can
deliver the best results.
Why is it the
economic
globalization
today is still
an uneven
process?
Why is it the
Rich countries can restrict
economic imports from other
globalization countries and can still stand
financially independent.
today is still Leads poor countries to
export their products to
an uneven another poor country.
process?
Thank you for listening!

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