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• Economy


  The social institution that has one of the biggest impacts on society, composed of people who organise all production, consumption and trade of goods in the society
• Gross Domestic Product (GDP)


  A measure of the economy
• Three sectors of the economy

  • Primary sector (extracts raw materials)
  • Secondary sector (transforms raw materials into manufactured goods)
  • Tertiary sector (provides services)
• "When the economy sneezes, the rest of the world catches a cold"
• Globalization has brought economies closer together, so crises in a major economy can have a big impact on other countries
• After World War I, the Great Depression, and World War II, major economies suffered and wanted to restructure the world economy and ensure global financial stability
• Bretton Woods System


  A system established after WWII to restructure the world economy and ensure global financial stability
• Five key elements of the Bretton Woods System


  • Expression of currency in terms of gold or gold value to establish exchange rates
  • Central banks agreeing to exchange currencies at established exchange rates
  • Establishment of the International Monetary Fund (IMF) to oversee exchange rates
  • Elimination of restrictions on member states' currencies in international trade
  • The US dollar becoming the global currency
• The General Agreement on Tariffs and Trade (GATT) was established in 1947 as a forum for trade negotiations between member countries
• The World Trade Organization (WTO) was established out of the Uruguay Round of GATT negotiations

  
• The WTO is an independent multilateral organization responsible for trade in services, non-tariff barriers, and trade liberalization

  
• Criticisms of the WTO

  • Trade barriers created by developed countries cannot be countered enough by the WTO, harming developing countries
  • The decision-making process is heavily influenced by larger trading powers, excluding smaller powers
  • Lack of involvement from International Non-Governmental Organizations (INGOs) leading to protests

  
• International Monetary Fund (IMF)

  A bank that provides financial assistance to countries in economic trouble as a lender of last resort
• World Bank


  A bank that takes a more long-term approach, funding projects to help eradicate poverty in developing countries
• The IMF and World Bank's reputations have been damaged by practices like lending to corrupt governments and imposing ineffective austerity measures
• Organization for Economic Co-operation and Development (OECD)


  A club of the world's richest countries that sets international standards and provides advice on public policies
• Organization of Petroleum Exporting Countries (OPEC)

  An organization of major oil exporting countries formed to increase the price of oil
• European Union (EU)


  A political and economic union of 27 member states, with 19 members using the euro as a common currency
• Critics argue the euro increased prices and depressed economic growth in some Eurozone countries like Greece, Spain and Portugal
• North American Free Trade Agreement (NAFTA)


  A trade agreement between the United States, Mexico, and Canada created in 1994 to reduce trade barriers
• Negative impacts of NAFTA


  • Manufacturing jobs transferred from developed to less developed countries
  • Loss of over 682,000 manufacturing jobs in the US and Canada
  • Exploitation of workers in Mexico with low wages and fewer benefits
  • Harm to Mexican farmers due to falling prices
• Positive impacts of NAFTA

  • Lowered prices by removing tariffs
  • Opened up new opportunities for small and medium businesses
  • Quadrupled trade between the three countries
  • Created 5 million US jobs