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lecture 3

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globalization: increasing economic interdependence of national economies across the
world through a rapid increase in cross-border movement of goods, services, technology,
and capital
* leads to the emergence of a global marketplace or a single world market
international trade: exchange of goods, capital, and services on an international scale
* butterfly effect - what happens in one country has a huge effect in others
foreign direct investment (FDI): investment in other parts of the world
* progressively growing around the world
internationalization of commercial exchanges: measured with export of goods/services
* geographical specialization of different countries (manufacturing production, technology
goods based on research, raw materials) -- comparative advantage
Integration of Economies
- made possible by:
communication networks
internet access
growth of economic cooperation
trade blocs (NAFTA, EU, etc)
international treaties of free trade (GATT)
Multinational Corporations
- companies or transnational enterprises with headquarters in one country but business
operations in many countries
- 1980 = 7000, in 2002 = 64 000 MNCs, controlling 870 000 branches and 54 million
employees (70% of global trade flows)
Pro-Globalization Argument
liberalization Æ increases growth
increased growth Æ increases wealth
increased wealth Æ decreases poverty
decreased poverty Æ increases health
increased health Æ increases growth
- neo-colonialism -- for developed to take most of the resources of developing
- inequalities within regions
- globalization allows countries to compete on the same level
- differences in annual growth - history of growth/stabilization/lack of
* life expectancy in low-middle, and high income countries are converging - improving
- maternal mortality - less reduction in Sub-Saharan Africa
- 30 countries with the shortest life spans, 29 are in Africa; 40, 35 in Africa
- birth/death rates are slowly converging in sub-Saharan Africa in time - but slowly
- after collapse of USSR, people are receiving more university level education
- 3.3 billion people live in urban areas
- more than 850 million people live in slums - projected 1.4 billion in 2010 in the absense of
effective political interventions (UN, 2009)
- infant mortality is lower in urban areas - but more unequally distributed depending on
income/financial state
- India/China - China has higher survival rate HOWEVER increase in wealth is
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