Lesson 4.4

In this section you examined the events and ideas that formed the foundations of contemporary economic globalization. These events and ideas influenced how countries traded and economies operated. The adoption of these ideas varies among countries and times of economic boom and recession. At times, strong government regulation is called for by citizens. Many multinational corporations support ideas of a free market in society.

contemporary economic globalization: often used to refer to the post-Second World War period when economic policies and practices led to increased global trade and interdependence

economic freedom: the ability of an individual or country to produce, trade, or consume any goods or services without barriers as encouraged by democratic and free market principles

free market economy: an economic system characterized by competition, supply, and demand

It supports the view that the consumer dictates what is produced with a response to purchase or not purchase the product or service. It promotes as limited government involvement as possible.

free trade: a view supporting the removal of as many trade barriers as possible and encouraging free movement of goods and services between countries

freer trade: refers to further expanding the ability to trade freely between countries

This is often the motive for international trade agreements. Many supporters of freer trade believe freer trade will help the global economy and will resolve issues such as global poverty.

Friedman, Milton: a twentieth-century economist who promoted economic ideas that greater prosperity and political and social freedom would be achieved if there were less government control and more free market practices

Consumers would drive the economy with their spending and should adapt without government support if the economy struggles.

global giant: a business that expands to become a multinational or transnational corporation

Hayek, Friedrich: a twentieth-century economist who supported limits on the role of government in society, especially the economy

interdependence: the relationship between countries and their economies

The boom and bust of one country’s economy may have global impact on the economies of other countries.

Keynes, John Maynard: a twentieth-century economist who influenced economic policies and practices

He supported a strong government role in the economy. The government was essential in increasing the ability of consumers to spend and to keep the economy out of recession or a slump in economic activities for the country. He suggested that the government would increase or decrease taxes in response to consumer spending.

outsourcing/outsourced services: the hiring of one company by another company, often in another country, to complete certain tasks of production

trade agreement: a contract between two countries to trade freely between each other

trade liberalization: the reduction of barriers to allow for free trade between countries

transnationals: companies and/or people who have established corporate or home bases in two or more countries