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Lecture 11 Trade, Interdependence, and Globalization Globalization • Variety of definitions, centering around the world becoming “smaller” and more interconnected in the areas of commerce, culture, and politics • Causes: technological advances in communication, travel, and computational power, expansion of trade Globalization • Consequences cited by various scholars and activists: • Cheaper goods and services • Growing wealth for certain actors • Environmental damage • Exploitation of labor • The Upside of Globalization Globalization • Consequences cited by various scholars and activists (cont.): • Mixing of cultures: • Dominant Western culture eroding traditional cultures • Backlash from those who want to maintain traditional cultures • “Lexus and the Olive Tree” (Friedman) • “Jihad vs. McWorld” (Barber) Globalization • Consequences cited by various scholars and activists (cont.): • Diseases spread more rapidly • Economic crises spread more rapidly • Increased trafficking of humans and drugs • Terrorism/asymmetric warfare made easier • The Downside of Globalization Trade • A key element of economic globalization • Dramatic increases in trade over the past 200 years • Technological advances (most notably the steam engine) powered expansion of trade in 19th and early 20th centuries • After setback of Great Depression and World War II, trade grew again, accelerating with collapse of communist bloc and advances in information technologies Trade • A key element of economic globalization • Dramatic increases in trade over the past 200 years (cont.) • Institutions such as GATT (later WTO) have facilitated trade globally • Growth of regional free trade blocs Trade • Approaches to trade • Mercantilist/autarkic practices • Liberal, “free trade” policies • A mix of the two extremes (protecting certain domestic industries, etc.) Trade • Differences in countries’ exports (primary products vs. high-tech manufactured goods) can lead to dependency relationships and inhibit development of poorer countries • “Free trade” vs. “fair trade” • Comparative and absolute advantage (see lecture #10) Trade • Free trade and barriers to trade • WTO (previously GATT) • Most favored nation and reciprocity principles • Efforts to reduce tariffs, subsidies, quotas, and other barriers to free trade (and ongoing disputes, such as agricultural subsidies by wealthy countries) • Regional free trade agreements (e.g., NAFTA) • Conflict with WTO goals