Class21 - Globalization The Politics of Trade and Money in...

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Globalization The Politics of Trade and Money in the Global Economy What is Globalization? The world economy has become more integrated as it has grown (more than fivefold since 1950): Trade has risen from 7% to 26% of Gross World Product from 1950 to now. Interstate financial flows (stock purchases, debt) have increased four-fold since 1980. Foreign direct investment (FDI) has increased six times since 1980. I will not discuss aspects of globalization outside of political economy, such as culture. Concerns about Globalization Does trade lead to exploitation of labor in developing countries? Do free financial flows destabilize currencies and create crises? “The Race to the Bottom”: labor law, environmental standards, taxes on capital Who Benefits from Freer Trade? When a country opens to trade, plentiful factors benefit and scarce factors lose. In developed countries, capital and skilled labor are plentiful; unskilled labor scarce. In developing countries, unskilled labor is plentiful; capital is scarce.
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This note was uploaded on 09/27/2008 for the course POLISCI 160 taught by Professor Morrow during the Fall '08 term at University of Michigan.

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Class21 - Globalization The Politics of Trade and Money in...

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