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Thomas Friedman states that “globalization is not just some economic fad, and it is
not a passing trend.” He also argues that the
“relevant market today is planet Earth.”
The basic globalization force that will
probably not be overcome—no matter how
strong the political forces may be against
it—is the human inclination that the
founder of modern economics, Adam
Smith, noticed more than 200 years ago.
Smith said that human beings want to trade
with each other. In fact, it is the desire to
trade that separates us from all other
species, he says. In his words, “Man is an
animal that makes bargains: no other ani- Defining Terms
b. offshoring Reviewing Facts and
2. Identify two costs
and two benefits of
globalization. mal does this—no dog exchanges bones
In other words, we want to trade with
people. We want to trade with our nextdoor neighbor, the person on the other
side of town, the person
in the next state, the
“The relevant market today is
person on the other side
of the country, and
finally, the person on
the other side of the
world. Some economists
go on to suggest that this “trading” inclination we possess is a good thing, in that
when we trade with people we not only
will tolerate them, but have much less reason to fight with them. 3. Why does it make less
sense to speak of different
economic systems in a
global economy than in a
world of national
4. What does “changing
technology” have to do
with globalization? Critical Thinking
5. Why might it be easier to
recognize the costs of
globalization than the
benefits? Applying Economic
6. If globalization continues
over the next few decades,
how might your life be
Section 2 Globalization 51 02 (030-053) EMC Chap 02 11/17/05 4:14 PM Page 52 Economics Vocabulary
Be sure you know and remember the following
key points from the chapter sections. Section 1
All nations must answer three economic
• What goods will be produced?
• How will the goods be produced?
• For whom will the goods be produced?
The two main economic systems are free enterprise and som.
Free enterprise, also known as capitalism or a
market economy, is an economic system in
which individuals own most, if not all, the
resources and control their use.
In som, government controls and may
own many of the resources.
The ideas of Adam Smith, an eighteenth
century economist, provided the foundation
for capitalism, or free enterprise.
Karl Marx, a highly influential economic
thinker, proposed an alternative to free enterprise, and helped formulate the vision for
som and communism. Section 2
Globalization is a growing integration of the
national economies of the world into a single
worldwide economy and is closely aligned with
free enterprise, freer markets, and greater
movement of people and goods.
The end of the Cold War, advancing technologies, and governments’ policy changes al...
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- Winter '14