Transcript CH. 19 THE CHALLENGES OF GLOBALIZATION

CH. 19
THE CHALLENGES OF
GLOBALIZATION
GLOBALIZATION
Refers to the creation of a
single global economy and
community
 Caused by the
international exchange of
goods, services, cultures,
and ideas
 Driven by technological
advances in
communication and
transportation networks

INFLUENCE OF GEOGRAPHY ON
ECONOMIC ACTIVITIES
Physical geography influences where
productive resources and consumers can be
found
 Resources are unevenly distributed throughout
the world
 Climate and physical barriers play a big role

PRODUCTIVE RESOURCES

1.
2.
Productive Resources - the types of resources
needed for economic activities, 4 types
Natural Resources - provided by nature and used by
people to create goods and provide services
Human Resources - all the human labor that is
required to produce something.

Includes education, training, development of ideas, etc.
PRODUCTIVE RESOURCES
3.
Capital Resources - goods used to make other
goods and services
4.
Entrepreneurship - people who bring together and
organize all productive resources; business starters
and managers
LOCATION OF ECONOMIC ACTIVITIES
Economic activities are often located near
natural resources and human resources
 Geography plays a big role in the location of
both of these types of resources

 Ex.
Coal in Pennsylvania = steel center of U.S.
 Ex. Oil refineries near reserves
LOCATION OF ECONOMIC ACTIVITIES
Climate plays a big role in the location of
economic activities
 Climate can:

 Influence
the types of crops that can be grown in an
area
 Influence the location of human resources
 Have devastating effects which can impact
production negatively
LOCATION OF ECONOMIC ACTIVITIES

Infrastructure – structures and facilities
necessary for economic activity and the
functioning of a society
 Communications
networks, transportation
networks, buildings, etc.
ACCESS TO CONSUMERS
Geography can also affect the location
of economic activities by limiting or
facilitating access to consumers
 Physical barriers like mountains, forests,
and deserts can block resources being
brought to some areas
 Areas of flatlands, valleys and rivers
usually make it easier to bring resources
to consumers
 Businesses closer to population centers
will usually have more success

TRADE
Refers to the exchange of goods and services
 Countries have to trade because resources are
not spread out evenly and no country produces
everything it needs

 Ex.
petroleum- a resource all countries need.
SPECIALIZATION
Refers to focusing production on certain
goods/services
 Countries specialize in the goods and services
they make best (faster/more efficiently) and
based on available resources.
 Comparative Advantage - regions will produce
things it makes at the lowest cost

SPECIALIZATION
Countries do not make everything they need
 Countries rely on both exports and imports

 Exports
– products a country makes and sells to
another
 Imports – products a country buys from another
WORLD TRADE
Trade has existed throughout history
 One of the most important was the Columbian
Exchange - goods exchanged between the
Americas to Europe.

WORLD TRADE



General Agreement on Tariff and Trade (GATT) 1947 promoted trade and removed trade barriers
Became World Trade Organization (WTO) - oversees
trade agreements amongst 159 member nations and
promotes free trade zones
Free trade zone – geographic area in which tariffs are
eliminated
WORLD TRADE
North American Free Trade Association (NAFTA)
enacted in 1994, created a FTZ between Canada,
the United States, and Mexico
 Gave rise to maquiladoras – American owned
factories operated in Mexico for cheaper labor,
goods are then exported back into the U.S.
 European Union serves as a FTZ

OUTSOURCING AND OFFSHORING

Offshoring - Companies move their production
to countries where costs are lower
 Apple

producing and assembling products in China
Outsourcing - Companies hire other companies
to do some of their work
Ex. Call centers in India
 Can also happen domestically

BENEFITS OF GLOBALIZATION
People enjoy goods and services from all over
the world
 Better connectivity - easier and faster
communication
 Access to diverse cultures at the fingertips
 Advances in technology and medicine spread
quickly and can lead to higher standards of
living

COSTS OF GLOBALIZATION


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Offshoring & outsourcing can lead to domestic loss
of jobs
Increased pollution and global climate change
Pandemics - diseases spread quickly
Threat of global recession - a financial crisis can
spread quickly
Local cultures are losing some of their unique
qualities.