Economic Globalization

Summary

The video script delves into economic globalization, contrasting protectionism with trade liberalization and their impacts on international commerce. It highlights the role of tariffs, free trade agreements like NAFTA and the Canada-Korea deal, and the influence of organizations such as the WTO, IMF, and World Bank. The script also addresses the environmental challenges of globalization, advocating for sustainable development and the knowledge economy as pathways to balance economic growth with ecological stewardship.

Takeaways

• 🌐 Economic globalization is the expansion of trade, transportation, and communication systems worldwide to foster international commerce.
• 🛡 Protectionism involves creating trade barriers to shield an economy from foreign competition, typically through tariffs on imports or exports.
• 🌟 Trade liberalization is the reduction of trade barriers to facilitate easier international trade between countries.
• 📈 Tariffs are fees imposed on imported or exported goods, effectively increasing the cost of goods in the importing country.
• 🥛 Canada's high tariffs on dairy products exemplify protectionism, while trade agreements like the Trans-Pacific Partnership aim for trade liberalization.
• 🆓 Free trade agreements, like the Canada Korea Free Trade Agreement, eliminate or reduce tariffs, promoting the exchange of goods and services without additional costs.
• 🔗 Trade blocs, such as NAFTA, are agreements between countries to reduce or eliminate trade barriers, fostering economic integration.
• 🏭 Outsourcing is the transfer of jobs from developed to developing nations to reduce production costs, often facilitated by free trade agreements.
• 🏦 Key international organizations like the World Bank, WTO, and IMF support international trade, discourage protectionism, and aim to prevent global conflicts.
• 🌳 Economic globalization raises environmental concerns, with sustainability and stewardship becoming critical for balancing economic growth with environmental responsibility.
• 💡 Investing in the Knowledge Economy, which leverages education, research, and technology, can contribute to a nation's prosperity while maintaining environmental safety.

Q & A

What is economic globalization?

Economic globalization refers to the spread of trade, transportation, and communication systems on a global scale, aimed at promoting international commerce.

What are the two types of economies mentioned in the script?

The two types of economies mentioned are Protectionism and Trade Liberalization.

How does protectionism affect international trade?

Protectionism affects international trade by creating trade barriers to protect a country's economy from foreign competition, often through tariffs on imports or exports.

What is an example of a trade barrier mentioned in the script?

An example of a trade barrier mentioned is Canada's high tariffs on food items, such as dairy products.

What is the Trans-Pacific Partnership and how does it relate to trade liberalization?

The Trans-Pacific Partnership is an agreement that, if established, would facilitate trade liberalization by reducing trade barriers, making it easier for countries to import and export goods, such as Canada importing food.

What is the difference between free trade and a trade bloc?

Free trade involves trading goods or services between countries without tariffs or taxes, while a trade bloc is an agreement between governments to reduce or eliminate trade barriers within a group of countries.

What was the outcome of the Canada Korea Free Trade Agreement signed in 2014?

The Canada Korea Free Trade Agreement resulted in Canada removing 98.7% of its tariffs on imported goods from Korea, and Korea removing 98.2% of its tariffs on imported Canadian goods.

What is the North American Free Trade Agreement (NAFTA) and its significance?

NAFTA is a free trade agreement and trade bloc between Canada, the United States, and Mexico, established to eliminate trade barriers, increase investment opportunities, and reduce trade disputes.

What are the roles of the World Bank, World Trade Organization, and the International Monetary Fund in international trade?

The World Bank aims to reduce poverty and increase growth in developing countries, the IMF provides short-term loans during emergencies, and the WTO deals with trade rules, settles disputes, and conducts trade negotiations.

What is the issue of economic disparity mentioned in the context of the WTO?

The issue of economic disparity refers to the WTO's focus on developed nations, which can widen the economic gap worldwide and potentially harm developing countries.

How does the script suggest addressing sustainability concerns in the context of globalization?

The script suggests investing in a Knowledge Economy, which involves using education, research, and innovative ideas to increase wealth and prosperity while maintaining environmental safety.

Outlines

00:00

🌐 Economic Globalization and Trade Policies

This paragraph introduces the concept of economic globalization, highlighting its impact on international commerce through the expansion of trade, transportation, and communication systems. It contrasts two economic strategies: Protectionism, which involves creating trade barriers to shield domestic industries, and Trade Liberalization, which seeks to reduce these barriers for smoother international trade. The paragraph uses the example of tariffs to illustrate how trade barriers can affect the cost of goods in different countries. It also discusses specific agreements like the Trans-Pacific Partnership and the Canada-EU Comprehensive Economic and Trade Agreement as examples of trade liberalization. The narrative further explores free trade agreements, trade blocs, and the role of organizations such as the World Bank, World Trade Organization, and International Monetary Fund in promoting global trade and economic cooperation.

05:01

🌳 Challenges and Considerations of Global Trade

The second paragraph delves into the challenges and implications of economic globalization, focusing on the World Trade Organization's role in resolving trade disputes and the criticisms it faces, such as increasing economic disparity and neglecting labor rights and environmental concerns. It also addresses the environmental impact of globalization, emphasizing the importance of sustainability and sustainable development, as exemplified by Canada's Federal Sustainable Development Act. The paragraph discusses the concept of stewardship and the ecological footprint, using the Canadian Living Planet Report to highlight the need for reducing environmental impact. It concludes by exploring the Knowledge Economy as a potential solution for balancing economic growth with environmental sustainability, encouraging individuals and businesses to leverage education, research, and innovation for constructive economic advancement.

Keywords

💡Economic globalization

Economic globalization refers to the expansion of trade, transportation, and communication systems across the globe with the aim of fostering international commerce. It is the overarching theme of the video, highlighting how countries interconnect economically. The script discusses the impact of globalization on trade policies, such as protectionism and trade liberalization, and the role of international agreements in shaping global economic interactions.

💡Protectionism

Protectionism is an economic policy that shields a country's domestic industries from foreign competition by imposing trade barriers like tariffs. In the context of the video, protectionism is contrasted with trade liberalization, and Canada's high tariffs on dairy products serve as an example. Protectionism is portrayed as a hindrance to the free flow of international trade, which the video suggests is less favored in a globalized world.

💡Trade Liberalization

Trade liberalization involves reducing or eliminating trade barriers to facilitate international trade. The video emphasizes trade liberalization as a preferred approach in the globalized economy, with examples including the Trans-Pacific Partnership and the Comprehensive Economic and Trade Agreement between Canada and the European Union. It suggests that such agreements lead to economic benefits by lowering trade restrictions.

💡Tariffs

Tariffs are taxes imposed on imported or exported goods and are a common form of trade barrier. The script uses the example of a pen being priced one dollar in one country and becoming six dollars in another due to a five-dollar tariff to illustrate how tariffs increase the cost of goods and affect international trade dynamics.

💡Free Trade

Free trade is the concept of trading goods or services between countries without the imposition of tariffs or taxes. The Canada Korea Free Trade Agreement mentioned in the script is an example of free trade in action, where both countries removed a significant percentage of tariffs on each other's imports, promoting easier trade and economic cooperation.

💡Trade Bloc

A trade bloc is a group of countries that have agreed to reduce or eliminate trade barriers among themselves. The North American Free Trade Agreement (NAFTA), which includes Canada, the United States, and Mexico, is highlighted in the script as an example of a trade bloc, facilitating the exchange of goods and services across borders and increasing economic integration.

💡Outsourcing

Outsourcing is the practice of transferring jobs or business processes to another country, often to reduce costs. The video discusses how the creation of NAFTA led to the outsourcing of manufacturing jobs from developed nations like the United States to developing nations like Mexico, where labor is cheaper and regulations are fewer.

💡World Bank

The World Bank is an international financial institution that aims to reduce poverty and support economic development in developing countries. The script mentions the World Bank's investments in education in countries like Bangladesh, Chad, and Afghanistan as an example of its efforts to promote growth and reduce poverty.

💡International Monetary Fund (IMF)

The IMF is an organization that provides financial assistance to countries facing economic difficulties, offering short-term loans to help stabilize their economies. The video cites the example of Yemen receiving financial support from the IMF during its struggle with terrorism, illustrating the fund's role in managing international financial crises.

💡World Trade Organization (WTO)

The WTO is responsible for regulating international trade and settling trade disputes between nations. The script discusses the WTO's role in promoting fair trade practices, as demonstrated by its ruling against Ontario for discriminating against foreign renewable energy firms, showcasing the organization's function in ensuring trade justice.

💡Sustainable Development

Sustainable development is a model of progress that meets the needs of the present without compromising the ability of future generations to meet their own needs. The video references the Federal Sustainable Development Act in Canada as an example of legislation aimed at integrating environmental sustainability into economic decision-making.

💡Ecological Footprint

An ecological footprint is a measure of the amount of land and resources required to support an individual's lifestyle. The script uses the Canadian Living Planet Report to highlight the large ecological footprint of the average Canadian, emphasizing the need for reducing this impact to ensure the Earth's resources are available for future generations.

💡Knowledge Economy

The knowledge economy is an economic model that emphasizes the importance of education, research, innovation, and information technology in generating wealth and prosperity. The video suggests that investing in the knowledge economy can contribute to positive globalization by promoting economic growth while maintaining environmental sustainability.

Highlights

Economic globalization promotes international commerce through the spread of trade, transportation, and communication systems.

Two key economic models are Protectionism and Trade Liberalization, with Protectionism involving trade barriers and Trade Liberalization reducing them.

Tariffs are trade barriers that increase the cost of imported or exported goods, exemplified by the pen tariff scenario.

Canada's high tariffs on dairy products illustrate protectionism, contrasting with trade liberalization efforts like the Trans-Pacific Partnership.

Trade liberalization is favored by most countries in a globalized world, facilitating international trade.

Free Trade agreements, like the Canada Korea Free Trade Agreement, eliminate tariffs on certain goods, promoting easier trade.

Trade Blocs, such as NAFTA, reduce or eliminate trade barriers between member countries, enhancing economic cooperation.

NAFTA's history and expansion to include Mexico exemplify the evolution of trade blocs over time.

The Keystone XL Pipeline was a significant topic during the 20th anniversary of NAFTA, highlighting trade-related environmental concerns.

Outsourcing, driven by free trade agreements, transfers jobs from developed to developing nations to reduce product costs.

The World Bank, WTO, and IMF are key organizations supporting international trade and economic stability.

These organizations have distinct roles, with the World Bank focusing on poverty reduction and growth in developing countries.

The IMF provides emergency financial assistance, as demonstrated by Yemen's loan in 2012.

The WTO's role in settling trade disputes and conducting negotiations was exemplified by the case between Japan, the EU, and Ontario.

Drawbacks of these organizations include increased economic disparity and potential neglect of labor rights and environmental concerns.

Economic globalization raises environmental issues, with sustainability and sustainable development being key concerns.

Canada's Federal Sustainable Development Act and GLOBE 2014 illustrate efforts to increase environmental sustainability.

The concept of Stewardship involves taking responsibility for Earth's resources for the benefit of future generations.

Investing in the Knowledge Economy, which leverages education and innovation, can contribute to both economic growth and environmental safety.

Transcripts

Economic globalization is the spread of trade, transportation and communication systems

on a global scale in the interest of promoting international commerce.

When talking about economic globalization,

there are two different types of economies you should know about:

1) Protectionism 2) Trade Liberalization

Protectionism is protecting one's economy from foreign competition by creating trade barriers,

while trade liberalization is the act of reducing trade barriers to make international trade easier between countries.

These trade barriers are usually tariffs which are required fees on imports or exports

This means that if this pen is one-dollar in country A

and Country B has a five-dollar tariffs on pens,

this pen would become six-dollars in Country B.

Canada's tariffs on food is a good example of protectionism

because Canada places high tariffs on foods like dairy products

but on the other hand if the Trans-Pacific Partnership

and the Comprehensive Economic and Trade Agreement

between Canada and the European Union is established

Canada would achieve trade liberalization when it comes to the importing of food.

Since the world that we live in is globalized,

the majority of the countries tend to side more with trade liberalization than protectionism.

There are various ways a country can make trade easier with other countries

Free Trade, which is the trading of goods or services between two or more countries without tariffs or taxes

is one of the many ways a country can make trading easier.

On March 11, 2014, Canadian Prime Minister Stephen Harper

and the South Korean President signed the Canada Korea Free Trade Agreement

which made Canada remove 98.7% of its tariffs

on imported goods from Korea like Kia and Hyundai cars

while Korea are removing 98.2% of its tariffs from imported Canadian goods like beef.

Another way to make trade easier is to create a Trade Bloc

which is an agreement made between governments to reduce or eliminate trade barriers.

Canada, United States, and Mexico are part of the North American Free Trade Agreement (NAFTA)

which makes them a trade bloc because of the goods and services

that can easily be exchanged to and from each country's borders.

NAFTA was first created in 1989 with only Canada and the States as t rading partners,

but on January 1, 1994, Mexico joined, creating the official NAFTA.

Since NAFTA is a free trade agreement and also a trade bloc

it eliminates trade barriers between the North American countries

to increase investment opportunities and establishes procedures to reduce trade disputes

Recently on February 20, 2014, a gathering was held in honour of the 20th anniversary of NAFTA

and one of the big discussion topics that arose were about the Keystone Xl Pipeline.

The creation of NAFTA has caused manufacturing jobs from "developed" nations like Canada or the United States

to transfer to "developing" nations like Mexico in order to reduce the cost of products

because "developing" nations have less government regulations and cheaper labor.

This is called outsourcing and to give you an example

the United States outsourced approximately 791,000 jobs to Mexico in 2010

and it was quite easy to transfer all these jobs because of free trade agreements and trade blocs.

The World Bank, World Trade Organization, and the International Monetary Fund

are other significant organizations when it comes to trade

All 3 organizations were created

because of the Bretton Woods Conference that was held from July 1-22 in 1944

but the World Trade Organization was officially established on January 1, 1995

when it replaced the General Agreement on Tariffs and Trade (GATT).

The World Bank, WTO and the IMF have many similarities when it comes to their intended purposes.

All three support the expansion of international trade,

discourage protectionism and prevent conflicts that may lead to another world war.

But there are also significant differences too.

The World Bank increases growth and reduces poverty

in "developing" countries in a variety of different ways.

An example is their investment in education since 1962

in "developing" nations like Bangladesh, Chad and Afghanistan.

The IMF provides short-term loans to countries when an emergency occurs

like when Yemen received 93 million dollars from the IMF on April 5, 2012

due to Yemen's ongoing struggle with terrorism.

The WTO deals with the rules of trade between nations,

settles trading disputes and conducts trade negotiations.

In May of 2013, Japan and the European Union

brought a case to the WTO regarding unfair renewable energy services offered in Ontario,

therefore the WTO ruled that Ontario was found guilty

of discriminating against foreign renewable energy firms.

Although these organizations have many benefits,

they also have many drawbacks as well.

Let's take a look at the World Trade Organization as an example.

The WTO solves trade disputes between countries in a peaceful way,

however only focusing on the developed nations increases economic disparity all around the world.

The WTO also lowers the cost of goods and services for those who live in "developed" countries,

however in order to achieve these low costs,

labor rights and environmental concerns are usually ignored.

Finally, the WTO promotes economic growth in "developing" nations,

however they do so by favoring the rich nations and powerful transnational corporations

which may end up harming these "developing" countries even more.

With all of this trading going on,

you may start to wonder if there are any problems that arise from it.

One of the biggest issues created by economic globalization is issues regarding the environment.

Sustainability or the degree to which the Earth can provide resources

for human needs is one of the main concerns.

An example of increasing sustainability of oil and gas

is to use more renewable resources like wind and solar power.

Specifically developing the world in a way where the needs of the present day generation are met

while preserving resources for future generations is called sustainable development.

In 2008, Canada passed the Federal Sustainable Development Act

which changed the way Canada makes decisions and actions regarding environmental sustainability.

Another method to making the Earth more sustainable is Stewardship,

which is taking responsibility of Earth's resources

so that future generations will be able to have access to th em as well.

According to the 2007 Canadian Living Planet Report,

the average Canadian has such a big ecological footprint

that if every person from the globe lived like the average Canadian

it would take approximately 4.3 Earths to support the whole population.

To reduce Canada's ecological footprint

which is the measure of the amount of land it would take to meet the needs of one individual

GLOBE 2014, which is North America's largest International Environmental Business Summit

was held from March 26-28 in Vancouver, BC.

Now, what can one do to grow economically while also keeping in mind the sustainability of Earth's resources?

Well, investing in Knowledge Economy may be the answer.

Individuals or businesses that use education, research, innovative ideas, and informative technologies

for a variety of constructive purposes can increase the wealth and prosperity of their nation

while keeping the environment safe.

The cool thing about Knowledge Economy is that it directly applies to us.

By learning about economic globalization

we are able to find out about the issues that surround this topic,

think critically about solutions to the various problems we face

and eventually take action to contribute to globalization in a positive way.