Lesson 9

• Global economy


  Interconnected worldwide economic activities that take place between multiple countries, such as the international exchange of goods and services, technology, and information
• Economic globalization


  • Increasing interdependence of world economies as a result of the growing scale of cross-border trade of commodities and services, flow of international capital, and wide and rapid spread of technologies
• Types of economies associated with economic globalization

  • Protectionism
  • Trade liberalization
• Protectionism


  Protecting one's economy from foreign competition by creating trade barriers
• Protectionism


  1. Giving preferential treatment to domestic producers

  2. Discriminating against foreign competitors

  3. Trade barriers like quotas and tariffs
• Tariff


  Required fee on imports or exports that makes foreign goods more expensive
• Import quota


  Limit on the amount of goods that can be imported
• Sanction


  Action one government takes to punish or put pressure on another country, often an embargo or official ban on trade
• Trade liberalization agreements


  • Trans-Pacific partnership
  • CETA (Comprehensive Economic and Trade Agreement) between Canada and the European Union
• Trade liberalization


  Reducing trade barriers to make international trade easier between countries
• Benefits of trade liberalization

  • Encourages competitive markets
  • Promotes cooperative relationships between countries
• Ways to make trade easier between countries

  • Fairtrade
  • Free trade
  • Outsourcing
  • Trade bloc
• Fairtrade


  Concern for the social, economic, and environmental well-being of marginalized small producers
• Fairtrade growth


  • American coffee chains like Starbucks and Dunkin' Donuts spending $2.2 billion on certified products in 2006, 24% more than the previous year
  • Coffee growers in Brazil getting at least $1.29 per pound of coffee beans compared to the current market price of $1.25
• Free trade


  Trading of goods and services between two or more countries without tariffs or taxes
• Free trade agreements


  • Canada - Korea Free Trade Agreement (CKFTA)
• Outsourcing


  Manufacturing jobs transferred from developed nations to developing nations to reduce the cost of products
• Outsourcing


  • Manufacturing from country A is outsourced to country B, giving job opportunities to citizens of country B and abolishing tariffs
• Trade bloc


  Agreement made between governments to reduce or eliminate trade barriers
• Trade blocs


  • NAFTA (North American Free Trade Agreement) between Canada, Mexico, and the United States
• Most countries have signed international free trade agreements in recent decades to encourage free trade
• The European Union is the largest trading block in the world
• The World Trade Organization (WTO) was formed in 1995 to make global trade more free and ensure trade flows as smoothly and freely as possible
• While the world economies have moved toward trade liberalization, controversy over trade continues, as seen in the backlash against trade liberalization in Brexit
• Overall, free trade is likely here to stay for a long time as it ultimately tends to provide a higher standard of living
• Sustainable development


  Development that meets the needs of the present without compromising the ability of future generations to meet their own needs
• The continuous production of the world's natural resources, such as water and fossil fuel, allows humanity to discover and innovate many things, but also puts our environment at a disadvantage through climate change
• Global food security


  Delivering sufficient food to the entire world population, which requires sustainability in areas like population growth, climate change, water scarcity, and agriculture
• A major environmental problem is the destruction of natural habitats
• There are different models and agendas pushed by different organizations to address the issue of global food security