This preview shows page 1. Sign up to view the full content.
Unformatted text preview: Cold War The Cold War
intensified after World War II and, most
agree, ended with the visible fall of the
Berlin Wall in 1989. This event occurred
while the Soviet empire was beginning to
crumble and many of the communist East
European countries were breaking away
from Soviet control.
As some explain it, the end of the Cold
War resulted in turning two different worlds
(the capitalist and communist worlds) into
one world. It resulted in a thawing of not
only political but economic relations
between former enemies.
Why was this important economically?
People are reluctant to trade with their enemies, but once that person or country is no
longer your enemy, the barriers begin to fade
away. The Cold War acted as a political barrier between certain groups of countries.
Once it ended, one giant barrier standing in
the way of trade was no longer there. In the past we
with certain people,
in certain countries.
Today, with the
enterprise, we are
more closely connected through trade
with people all
across the globe. In the past Today Section 2 Globalization 43 02 (030-053) EMC Chap 02 11/17/05 4:14 PM Page 44 Will
Sound of Music? ??? S uppose you had only 100
people to whom you could
sell some good. Given this small
number, if you want to sell something, you had better sell something
that some of these 100 people
want to buy. For example, if these
100 people don’t like fruit salad,
then you better not produce and
offer to sell fruit salad; if some of
these 100 people like bread, then
perhaps you should produce and
offer to sell bread.
Now increase the number of
people from 100 to 1 million. Is it
more or less likely that some people
within a group of 1 million will like
fruit salad, as compared to a group
of 100 people? The answer is that
as the size of the potential customer
base increases, the number of
things that you can sell increases
too. In a world of 100 people, you
can only sell bread; but in a world
of 1 million people, you can sell
fruit salad or bread.
Now suppose you are a musician. As a musician, you can play
different styles of music: jazz, pop,
classical, hard rock, metal, hip-hop,
and so on. If you are limited to selling your music to the people of a
single state of the United States,
there would be fewer styles of
music you could offer to sell than if
you could sell your music to the 44 people who reside in the United
The general point is a simple
one: the larger the size of the
potential customer base (simply
put, the more people you can possibly sell to), the greater the variety of
goods we are likely to see.
Globalization is, to a large
degree, expanding everyone’s
ability to potentially sell to more
people. American companies
aren’t limited to selling to only
Americans; they can sell to others
in the world too. Chinese firms
aren’t limited to selling to only the
Chinese; they can sell to others in
the world too.
As an example, consider some
musician in the United States who
is experimenting wi...
View Full Document
This document was uploaded on 01/16/2014.
- Winter '14