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Chapter 9
Foundations of Economic Globalization
1) What does Economic Globalization mean.
“Globalization refers to the process of reducing barriers
between countries and encouraging closer economic,
political and social interaction. Globalization could
vastly increase the ability of people everywhere to
improve their living standards by sharing knowledge
and the fruits of human labor across those barriers.
This, of course, does not happen.” – William K. Tabb
(economist).
- There are winners and losers in economics.
- The Oil sands in Fort McMurray create wealth and
opportunity to many Albertans.
- As does a rancher with cattle, there are many
opportunities.
- Both industries however are affected by world
markets which dictate the price of their
commodity. If price is high then there is economic
prosperity however if prices are low there are
economic problems and assistance required.
??What does Economic Globalization mean in your
life?? Page 217*
- Some multinational Corporations have grown so
big and powerful they are wealthier then some
countries in the world.
- Products contain parts made in several countries
and assembled in other countries this situation can
create instability because a crisis in one country
can cause serious global economic problems.
- Some people believe this interdependence may lead
to more stability because countries may not see war
as an option anymore because of trade.
Some Factors that affect the Global Economy
1) War ( civil and External )
2) Famine
3) Natural disasters
4) Changes in Investors’ confidence
5) Price changes for non- renewable energy
6) Government Economic policies ( tarrifs,
regulations )
7) Economic Uncertainty ( Resource depletion,
political change)
2) How did 20th century world events shape
contemporary economic globalization.
A) WWI (1914-1918)
- 15 million soldiers/civilian deaths.
- 66,000 Canadian Soldier deaths.
- Europe was destroyed (roads, cities,
factories, farms…).
- Europeans countries borrowed large
amounts of money from US government –
Most economies ruined.
- By 1919 manufactured goods 25% lower
then in 1913.
- After the war countries restricted trade until
country rebuilt.
- Treaty of Versailles ( Peace agreement )
forced Germany to repay enemies for the war,
many countries including Canada thought
repayment too high
?? Why might some countries want to charge
Germany huge sums of money for the war
while others want a Germany to only spend a
little??
- Canadian Income tax introduced to help pay
for the war.
- Cost of War to Canada $2.5 million /day.
- Worker Shortages in Canada because many
men joined the war effort.
B) Russian Revolution (1917)
- Russian empire 1/6 of total world land mass.
- 4,000,000 Russian soldier deaths in WWI.
- Peasants were very poor in Russia, lived
under an absolute monarch.
- Food and supply shortages.
- Czar and his family killed in the Revolution.
- Civil war lasted until 1922 with the Reds (
Communists) winning.
- 1920-1922 a draught caused the further
deaths of 5,000,000 peasants.
C) Communist Russia (1922-1991) Map 221
- USSR created out of imperial Russia ( Union
Of Soviet Socialist Republics ).
- Created a classless society where all people
are equal.
- In 1929 Dictator Joseph Stalin makes the
USSr an industrial and military power.
- 5 year plans introduced to control all
production.
- During the 1932 famine in the USSR, 2
million tones of grain exported to foreign
countries while millions of people starved to
death in the USSR.
?? Even though Stalin made the USSR very
strong many people believed life was harder
under Stalin then the Czar’s rule??
?? Can you find proof to support this
statement??
D) The Great Depression (1929- 1938)
- The price of a stock or share in a company is
a representation of the profits the company
will give to investors.
- In the 1920’s people were buying and selling
stocks higher and higher without realizing the
actual worth of the profits for the company,
this made the stocks artificially inflated in
value.
- On October 29, 1929 ( Black Tuesday ) stock
markets around the world crashed.
- Stock values fell sharply.
- The collapse started a chain reaction:
1 banks ran out of money
2 people stopped buying goods
3 unemployment rose
4 which caused wages to drop
- Trade barriers were created to save domestic
economies, international trade declined.
(graph 222)
- Canada also affected by the Great
Depression, drop of exports especially grain.
E) World War II (1939- 1945)
- Germany especially hurt by the Great
Depression, Germany elects and extremist
leader Adolf Hitler ( Nazi Party) promises to
violate the Versailles treaty and also to put
Germans back to work ( both accomplished).
- Hitler declared, absolute leader.
- Germany took over Austria, Czechoslovakia.
Many German people lived in these countries.
- September 1, 1939 Germany invades Poland
– WWII declared.
- December 7, 1941 Japan attacks Pearl
Harbour - USA joins the war against Japan
and it’s allies Germany and Italy.
- 50 countries involved in the war.
- 60 million people die.
- German death camps to kill undesirable
people( according to Hitler).
Canada – 42,000 deaths.
 Government Spending increased.
 Farms became more mechanized.
 Women joined work force.
 End of the war only 1% of
Canadians unemployed.
3) What factors laid the foundations of contemporary
Global Economics?
- As a result of World War II countries came
together to create an organization that would:
1. Support people who wanted to
choose their own government.
2. Help countries co-operate on trade
issues.
3. Protect smaller countries against
invasion by larger countries.
4. Ensure that no single country
controlled the world seas.
- This organization is known as the United
Nations (UN).
- The United Nations sponsored a conference
called "The
UN Monetary and Financial
Conference" in 1944 to try to
avoid any
repeat of economic problems that occurred in
1919 after WWI.
- Economist Keynes believed that governments
should play important roles in their nations