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Globalization and Economic Liberalization
Definition: Increased integration of global economy since the 1970s.
Eastern Bloc: Trade freely post-Soviet control.
India and Nonaligned Countries: Relaxed trade restrictions in the 1990s.
Key Figures
Ronald Reagan and Margaret Thatcher: Advocated for free markets with minimal government control.
Corporate Response: Shifted jobs to countries with lower wages, taxes, and regulations.
Economic Liberalization in Chile
Pinochet's Rule: 1973-1990, U.S.-backed coup, used violent tactics.
Economic Shift: Moved from state control to free-market approach with the help of "Chicago Boys".
Outcome: Initial unpopularity due to social neglect, later balanced by subsequent administrations to reduce poverty.
Chinese Economic Reforms
Deng Xiaoping's Leadership: 1981, promoted economic growth over equality.
Key Reforms:
Replaced communes with peasant-leased plots, leading to agricultural surpluses.
Increased consumer goods production.
Attracted foreign companies to special economic zones.
Reopened Shanghai stock market, allowed private business ownership.
Political Impact: Tiananmen Square protests in 1989 met with government force.
Knowledge Economy Definition
Creation, Distribution, Use: Knowledge and information as economic drivers.
Example: Finland
Transformation: From agrarian to industrial to knowledge economy post-Soviet collapse.
Strategies: Entered global market, encouraged competition, invested in education and technology.
Example: Japan
Post-WWII Policies: Mercantilist, export-focused, discouraged imports, emphasized education.
Outcomes: Became a manufacturing powerhouse, later diversified into a knowledge economy.
Asian Tigers
States: Hong Kong, Singapore, South Korea, Taiwan.
Strategies: Government-business partnerships, high exports, strong education, low wages.
Impact: Significant poverty reduction.
Economic Continuities: Shifting Manufacturing
Shift in Manufacturing Locations
From US/Europe to Asia/Latin America: Driven by lower labor costs.
Key Sectors: Textiles, apparel, electronics.
Examples:
Vietnam and Bangladesh: Major exporters of clothing, faced labor strikes for better wages and conditions.
Mexico and Honduras: NAFTA led to maquiladoras in Mexico; Honduras focused on sustainable and fair labor practices.
Transnational Free-Trade Organizations
Post-WWII Growth
Organizations: European Economic Community, Mercosur, ASEAN.
GATT: Reduced tariffs, promoted international trade.
WTO: Governed 90% of international trade, controversial for corporate favoritism and closed meetings.
Multinational Corporations
Definition
Legally Incorporated: In one country, operates globally.
Historical Examples: British and Dutch East India Companies.
Modern Corporations
Dual Role: Employ knowledge economy workers and low-wage manufacturing workers.
Free-Market Perspective: Seen as beneficial for developed and developing countries.
Criticism: Lack of national identity, ethical concerns, tax avoidance.
Case Studies
Mahindra & Mahindra: Positive recognition for socially responsible practices.
Nestlé: Criticized for child labor and environmental impact, yet invests in sustainability.
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