unit 3 review social 10. the global economy protectionism tariffs: taxes on imports subsidies:...

Unit 3 ReviewSocial 10

The Global EconomyProtectionism

Tariffs: Taxes on imports

Subsidies: Government payments or support to particular industries.

Protectionism is designed to protect a local economy at the expense of a global one.

Free Trade

Defined by an absence of protectionist barriers (tariffs and subsidies).

Allows goods and services to move across borders without hindrance.

Has led to the expansion of economic globalization.

Friends of Free TradeTrading Blocs

• European Union (EU)

• North American Free Trade Agreement (NAFTA)

International Organizations

• World Trade Organization (WTO)

• World Bank (WB)

• International Monetary Fund (IMF)

Foundations of Economic Globalization• Using your copy of the mind map add two or three

more links to the diagram in your formative booklet.

Foundations of Economic Globalization

• World War I and the economic rivalry of the European powers.

• Most major countries involved had economic interests in different colonies around the world.

• These interests came into conflict as each power sought to improve its access to natural resources.

• Each power thought that by defeating their competition they could improve their economic situation.


• The economic costs were extremely high.

• Towns and Cities of Europe destroyed

• Railroads disrupted

• Ports and Ships damaged or destroyed

• Farms, roads, and factories demolished

• Many European countries were forced to borrow money from the United States and by 1918 they owed over $7 000 000 000.

• The economies of Europe were devastated. They would never again be as powerful as they had been.


• The Russian Revolution• For hundreds of years before WWI Russia was ruled by

the Czars (monarchs).

• By WWI it was the largest state in the world.

• The Czars were absolute monarchs. This means their control over the people was absolute.

• Huge gaps emerged between the small ruling elite and the poor masses made up of serfs (peasant farmers) and workers.


• Food and oil shortages within Russia caused massive riots in all major cities.

• Soon soldiers began to desert their posts and join the rebellion.

• The small but determined Communist Party took advantage of the situation and staged a revolution in October of 1917.

• Soon the Communists lead by Vladimir Lenin took control of the country, murdered the Czar and his family, and withdrew Russia from the war.


• Finally, in 1922, the communist emerged as the only political power in Russia.

• They established the Union of Soviet Socialist Republics (U.S.S.R) to replace the old Russian empire.

• The U.S.S.R became the first communist state in history and advocated a complete reversal of the capitalist system, including:

• Outlawing private property

• Outlawing private ownership

• Equality for all people

• Good of the community, not the individual


• The U.S.S.R became a one-party state. That party controlled all means of production (every factory, farm, and store).

• Lenin was succeeded by Joseph Stalin in 1922. He lead the U.S.S.R through a time of forced industrialization.

• Between 1922 and 1939 The U.S.S.R emerged as a world economic and military power.

• But the costs of Stalin’s brutal dictatorship were high.


• The crash of the market was felt throughout the world market

• People could not longer pay their bills, mortgages, or employees.

• Thousands of people were laid off and many businesses went bankrupt.

• Soon international trade declined and the gains of the 1920s were wiped from the map.


• World War II• Hitler wanted to expand the power of Germany and the

“master race”.

• On September 1, 1939 he invaded Poland. Britain and France then declared war on Germany.

• France was defeated on June 22, 1940 and Britain was alone.

• Russia was forced to join in June of 1941 and The United States were pushed in on December 7, 1941.


• So what post-war events and factors laid the foundation of contemporary economic globalization?

• The establishment of the United Nations (U.N.)

• The Bretton Woods Conference

• The reorganization of economic systems (Keynes and Hayek)

• The World Bank

• The International Monetary Fund (IMF)

• The Global Agreement on Tariffs and Trade (GATT), later known as the World Trade Organization (WTO)


• The Purpose of the United Nations• There were four key concerns:

• To support people who wanted to choose their own government.

• To help countries cooperate on trade issues

• To protect smaller countries against invasion by larger countries.

• To ensure that no single country controlled the world’s oceans.

• It was believed that economic recession like the Great Depression often leads to conflict, therefore creating prosperity for all people was seen as a foundational goal of the organization.


• Debate at Bretton Woods• John Maynard Keynes (leader of the British delegation to

the conference).

• Believed that the unrestricted capitalism that existed before and between the wars caused great unemployment and hardship, leading to conflict.

• He believed that the government should intervene to alleviate people’s suffering during difficult times.

• Unemployment insurance

• Welfare

• Work Programs

• Health Care


• Friedrich Hayek disagreed with Keynes

• Hayek stated that it was governments with too much control that led to conflict (the Nazi government had total control).

• He also believed that government interference would obstruct healthy economic competition and therefore create poorer economies.

• His suggestion was that governments should stay out of the economy and let it run on its own.


• GATT (General Agreement on Tariffs and Trade).• The conference at Bretton Woods established that trade

was the answer to many of the worlds problems.

• In 1947 GATT was formed to encourage global trade by.

• Reducing or eliminating tariffs (taxes on imports)

• Reducing or eliminating trade barriers by coordinating different systems (banking, telecommunications, etc.)

The End of Poverty?

• Neoliberalism is a political philosophy whose advocates support economic liberalization, free trade and open markets, privatization, deregulation, and decreasing the size of the public sector while increasing the role of the private sector in modern society.

The End of Poverty?

• Neo-colonialism (also Neocolonialism) is the geopolitical practice of using capitalism, business globalization, and cultural imperialism to control a country, in lieu of either direct military control or indirect political control, i.e. imperialism and hegemony.


• Changing the Foundations of Economic Globalization

• The cold war brought two systems into conflict

• GATT, IMF, and the World Bank were designed to operate within a capitalist system, but almost half the world was either communist or aligned with the communists.

• The decisions at Bretton Woods required open borders, free communication, and access to world markets, none of which was compatible with communism.

Expanding Globalization

• Trade patterns over the last forty years indicate that exports and imports have increased dramatically.

• Initially this was in favour of developed countries (U.S., Canada, Western Europe, Etc.).

• There has been a shift in recent years indicating that developing countries like those in Asia (especially China) are overtaking the West in exports.


• Each one of these agreements/organizations help to expand globalization by reducing or eliminating barriers to trade. This process is known as Trade Liberalization

• Remember that after WWII it was widely believed that increased trade would lead to increased prosperity and therefore decreased conflict. The WTO, NAFTA, and the EU abide by this philosophy.


• The World Trade Organization• Formerly known as GATT (Global Agreement on Tariffs and Trade).

Changed to WTO in 1995.

• Purpose: to lower trade barriers between member countries and encourage free trade. Also to enforce the terms of trade agreements.

• In theory member countries must abide by WTO decisions.

Expanding Globalization• The WTO is open to a great deal of criticism.

• Too much power. The WTO can force nations to abide by its rules. Who do you think these rules are in favour of?

• Not democratically accountable. Hearings on trade rules and disputes are closed to the public, even though the decisions will have a deep impact on the public.

• The WTO is biased in favour of the rich western nations as opposed to Global South.

• The WTO does not concern itself with other prosperity issues like the environment, child labour, worker’s rights, health care, etc.


• North American Free Trade Agreement• Created in 1989 between Canada and the United States.

• Expanded to include Mexico in 1994.

• The agreement immediately eliminated half the trade barriers between the three nations and has been phasing out the other half ever since.


• The EU and NAFTA are similar in many ways, but the EU goes much further.

• The EU links economic progress with social progress, meaning they do not separate trade from its human impact.

• A European parliament has been established where member nations discuss and make decisions on issues that effect all of Europe.

• Worker’s Rights – Ending exploitation

• Environment – Creating sustainability


• Transnational Corporations control huge segments of the economy, including:

• Energy

• Mineral extraction

• Chemicals

• Pharmaceuticals

• Cars/Aircraft

• Communications

• Media

Perspectives on Corporations

• The Other Side of Outsourcing• Corporations filled the role of innovators and drivers of change.

• They created jobs, prosperity, and connected the world via infrastructure and technological development.

• They also filled an important philanthropic role.

• The End of Poverty?• Corporations and their leaders are predatory, taking advantage of the public at large and

exploiting the poor.

• They have grown more powerful than governments and are now able to destabilize the entire world.

• They are part of a larger system of neocolonialism, designed to divest the third-world of their land and resources.

Globalization and Sustainability

• Scientists use the term Ecological Footprint to describe the load people impose on nature.

• Your individual footprint measures how much productive land and water is used to maintain your lifestyle.

Figure 11-3

Figure 11-4


Figure 11-8


• The resource gap• Scientists have determined that the earth can supply

approximately 1.89 hectares worth of resources per person per year at current population levels.

• Two problems persist here:

• The current population is consuming 2.8 hectares worth of resources per person per year

• The population of the world continues to increase exponentially (currently around 6.6 billion).


• Have efforts to promote sustainability been successful?• This is a loaded question, containing varying points of view.

• There are several ways for us to become more sustainable.

• Reduce the level of resources that we use.

• Increase the efficiency of what we already use.

• Develop new technologies that are more sustainable.

Sustainable Prosperity – Challenges and Opportunities

• How can we measure prosperity?• Gross Domestic Product:

measures the total economic output in a country.

• Gross Domestic Product Per Person: measures the total economic output per person in a country.


• The Human Development Index as a measure of prosperity.

• HDI is more complete than GDP because it measures more than one aspect of prosperity

• Longevity: life expectancy at birth

• Knowledge: school enrollment and literacy

• Standard of Living: GDP per person

• What aspects of prosperity are still missing from this measure?


• There are five basic challenges and opportunities that are offered by expanding globalization.

• Economic Growth

• Trade Liberalization

• The Knowledge Economy

• Privatization

• Foreign Investment


• Economic growth and sustainable prosperity• Economic growth depends on the production and sale of goods on

an ever increasing scale of volume and speed.

• Many economists believe that continuous economic growth will lead to prosperity.

• There are problems with using this criteria for determining prosperity. What are they?


• Trade Liberalization and Sustainable Prosperity• The head of the IMF believes that sustained trade liberalization

will lead to prosperity around the globe. Do you agree with him? Why?

• Trade liberalization has made many people and countries very rich, but it has left even more people behind in an ever increasing income gap.


• The Knowledge Economy• The knowledge economy refers to businesses and people who use

knowledge, research, education, new ideas and information technology for practical purposes.

• This type of economy has led to great advances.

• But it leaves poorer countries behind because they can’t afford the high tech expertise required.


• Privatization• Another feature of rapid globalization is privatization of services.

• Traditionally basic services were provided by the government (Post offices, water, gas, electricity, etc.).

• There is a push by those who agree with Hayek and Friedman that these services should not be run by the government.


• Foreign Investment• Globalization opens borders and countries are now open to

corporations and investors that come from other places.

• This may increase business and productivity but it takes money out of the host country to be spent or saved somewhere else.

Co2 Emissions by Province

Greenhouse gas emissions by province and territory, Canada, 1990, 2005 and 2012

Province or Territory

1990 Greenhouse gas emissions(megatonnes of carbon dioxide equivalent)



Newfoundland and Labrador

9.2 9.9 8.7

Prince Edward Island

2.0 2.2 1.9

Nova Scotia 19.1 23.1 19.0

New Brunswick 16.0 20.1 16.4

Quebec 84.0 85.6 78.3

Ontario 177.2 206.5 166.9

Manitoba 18.7 20.9 21.1

Saskatchewan 43.5 71.1 74.8

Alberta 169.6 231.8 249.3

British Columbia 49.4 62.3 60.1

Yukon 0.5 0.5 0.4

Northwest Territories and Nunavut

1.5 2.0 1.7

Greenhouse gas emissions by province and territory, Canada, 1990, 2005 and 2012

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