I. Costs and Benefits of International Trade A. Trade between countries rarely involves directly swapping one resource for another. 1. Some countries may have many resources while others have relatively few. A. Trade allows the people of a country to enjoy goods they might not otherwise have. 1. The U.S. imports; coffee, bananas, sugar, copper, and rubber.
C. Interdependence- It is unlikely that any single nation has all the resources it wants, so each one depends on other to supply its needs and wants.D. Because different countries have different resources, the key to this type of trade is specialization. 1. Specialization is when countries specialize in selling goods they can produce quickly, easily, or in large quantities. i. Saudi Arabia-Oil ii. Sell the oil for money. iii. The money is spent on the countries needs, such as food.
I. OPEC (Organization of Petroleum Exporting Countries)-10 country members control most of the world’s supply. They set production quotas low to keep demand high.II. Tariffs and trade A. Tariff- is a tax placed on goods that are imported into a country. 1. The policy of using tariffs and other barriers to foreign trade is known as protectionism. 2. One of the ways governments protect their homelands’ industries.
B. During the early years of the U.S., tariffs had two purposes; protect industries and to raise money. 1. Intended to make foreign goods more expensive than the same goods produced in the U.S.C. Protectionism gradually gave way to freer trade; most countries still protect at least a few of their industries from some foreign competition. 1. The U.S. has retaliated against Japanese tariffs on American rice by putting tariffs on certain Japanese products sold in the U.S.
III.The Global Market A. Global economy is the movement toward freer international trade. 1. Falling trade barriers between countries make the globalization of the economy much easier. 2. Globalization encourages more trade and freer trade. A. In the global economy, business can pick and choose from a worldwide menu of raw materials, labor forces, and markets. 1. Businesses do it because they can get the best prices for the supplies they need by shopping in the global marketplace.
C. One criticism of the global economy is that capital—the money that makes the global economy run—is concentrated in the U.S., Western Europe, and Japan. 1. The labor force, meanwhile, is increasingly found in the poorer countries of South America, Asia, and Africa. i. Companies shop for labor in these areas because it’s less expensive. ii. Large supply of workers = lower price of labor.
IV.The Labor Market A. Countries often must reshape their trading policies to reflect global conditions, and the global economy changes the nature of labor markets as well. 1. Countries struggle with the problem of excess workers. i. Globalization and technology mean that many industries need fewer workers.
2. Countries such as the U.S., which has traditionally paid its manufacturing workers high wages, is seeing manufacturing jobs to other areas in which companies can get the same work done with less expensive labor.A. The global economy presents workers, consumers, businesses, and governments with challenges unlike any faced in human history.
1. Many multinational corporations have bigger “economies” than many countries, what roles are governments supposed to play? i. Can they still protect their citizens, their industries, and their environments?2. Free trade is a benefit to businesses and consumers in many ways, what will become of the people who lose their jobs and their purchasing power because of it?3. World leaders of the 21st century must deal with these issues and others that have yet to appear.