Transcript Global Economy 9.5&.6

COMPETITION
IN THE MARKETPLACE
BUYERS & SELLERS
BUYERS = CONSUMERS
SELLERS = PRODUCERS
BUYERS & SELLERS COME TOGETHER TO
EXCHANGE THINGS OF VALUE
Market Structure
Competition
The rivalry between sellers to
attract customers while lowering
costs
Cooperation
the combination of persons for
purposes of production, purchase, or
distribution for their joint benefit
MONOPOLY
ONLY ONE PRODUCER
NO COMPETITON
CHARGE HIGHER PRICES
PRODUCE LESS
PROVIDE LESS QUALITY (WHY?)
 What is an example of a current monopoly?
OLIGOPOLY
Only a few producers
Operate between competitive markets
and monopolies
Examples: Utilities (what are they?)
CONGLOMERATES
Large Companies that combine to
form larger companies
Example: General Electric (GE) – They own NBC,
financial services and health care services
MULTINATIONAL
CONGLOMERATE
companies that operate their business in
more than one country.
Example: BP (British Petroleum)
Global Economy
Global Developments
Protectionism – idea that a country wants to prevent free trade
to safeguard the jobs, and the overall economy.
Developed Country – a country which is highly industrialized, with
high levels of technology, and a large middle class.
Developing Country – a country which is transitioning from a more
traditional economy to an industrialized nation. There are
various levels of developing nations.
INTERNATIONAL TRADE
 Comparative advantage – ability of one country to produce a
product at a lower opportunity cost than another country.
 Favorable balance of trade – a country exports more than they
import. Foreign trade is profitable to the nation.
 Unfavorable balance of trade – a country imports more than
they export. Foreign trade loses money for the nation.
United Nations
 Internationalism – nations should cooperate to promote common
aims, such as supporting economic development and fighting
terrorism.
Goals of the United Nations
 Promote peace
 Provide aid to nations
 Promote & Protect Democratic Elections
 Prevent Violence
 Provide aid to Refugees
Globalization
 Interdependence and interaction among individuals and nations
working across barriers of distance, culture, and technology.
Global Issues
1) Environmental Destruction
2) Economic Inequality
Human Rights
Declaration of Human Rights
1)
2)
Protection of Rights

Similar to US Bill of Rights

Additions – freedom of movement, right to asylum, right to
nationality, right marry/family, own property
Raising Standards of Living

Includes - right to security, right to work, equal pay for equal
work, right to form and join trade unions.

Additions – standard of living acceptable for health and wellbeing, right to education
Human Rights Violations
1)
Genocide – deliberate killing of members of a racial or
cultural group. (Nazi Germany, Rwanda)
2)
Apartheid – separating people based on race or ethnicity.
(South Africa, Similar Issues in Southern United States
– Jim Crow Laws)
Trade Barriers
A means of preventing foreign goods
from freely entering a nations
economy
These are usually used to protect
the nations industry from outside
competition
Tariffs
Is a tax on imported goods (ex. There
is a tax on imported steel)
Import Quotas
A limit on the amount of a good that
can be imported
TRADE BARRIERS
Embargo – a refusal to trade with another
country.
Trade Cartel – a group of nations band
together to control the supply & price of
a product. (OPEC)
OPEC COUNTRIES
Global Developments
Arguments for Supporting Development
1)
Higher per capita GDP.
2)
Opens markets to sell goods and services.
3)
Promotes democracy.
Issues for Supporting Development
1)
Environmental protection.
2)
Protection of Domestic Jobs.
World Bank
Provides development assistance to
developing nations
Offers loans, advice, and resources
International Monetary
Fund
Developed to help stabilize a nations
economy
Struggling nations are allowed to
lengthen the time they have to pay
back loans if they meet certain
conditions that the IMF says will help
to stabilize their economy
Foreign aid
Money given to nations to help with
industrialization, disaster relief, and
economic growth
Free trade
The idea that nations should not have trade
barriers
Arguments Against Free Trade
1. Job security is threatened.
2. Protection of nation’s economic
security is needed.
3. Protection of infant industries is
needed.
OPEC COUNTRIES
Arguments For Free Trade
1. Increased competition = improved
products.
2. Trade restrictions damage export
industries.
3. Specialization and comparative
advantage lowers prices.
Free Trade Agreements
NAFTA:
North American Free Trade Agreement
Is a treaty signed by Mexico, Canada, and
the United States that will get rid of
import tariffs on most products over the
next fifteen years
Allows for the free flow of trucks to and
from all three nations
CAFTA –
Central American Free Trade Agreement
 Between US, Central American Countries
WTO:
World Trade Organization
world wide organization whose goal to
encourage free trade
Helps negotiate new trade
agreements and settle disputes
between countries
European Union
A regional trade agreement of many
European nations
The agreement has freed trade in many
European nations and has allowed workers to
move between nations
Adoption of one currency, the Euro, has
made the EU a powerful economic force