Globalization is the tendency of businesses, technologies, or philosophies to
spread throughout the world, or the process of making this happen. The global
economy is sometimes referred to as a globality, characterized as a totally
interconnected marketplace, unhampered by time zones or national boundaries
 The relationship between a nation’s imports and its
exports is called its balance of trade
 Investopedia video clip
 When a nation exports more than it imports it has a
positive trade balance
 When a nation imports more than it exports it has a
negative trade balance
EOC study guide
Globalization #11 & 12
 Come up with a list of the top five countries we import goods from…..
 Come up with a list of the top five countries we export to….
Rank
Country
Imports
Percent of Total
Imports
---
Total, All Countries
2,084.9 Billion
100.0%
---
Total, Top 15 Countries
1,586.6 Billion
76.1%
402.9
19.3%
305.4
14.6%
258.3
12.4%
127.3
6.1%
105.1
5.0%
1
2
3
4
5
China
Canada
Mexico
Japan
Germany
Rank
Country
Percent of Total
Exports
Exports
---
Total, All Countries
1,448.2 Billion
100.0%
---
Total, Top 15 Countries
1,033.6 Billion
71.4%
277.0
19.1%
208.2
14.4%
108.9
7.5%
59.9
4.1%
44.0
3.0%
43.8
3.0%
1
2
3
4
5
6
Canada
Mexico
China
Japan
United Kingdom
Germany
 Began in 1970s when OPEC dramatically raised the price of oil
 Imports of foreign oil continue to account for the large US
trade deficit
 Americans love of imported goods also plays a part
 Lower labor and production costs in other countries
contribute
 Protectionist policies in other countries contribute
EOC study guide
Globalization #3
Protectionism is the use of trade barriers to
protect a nation's industries from foreign
competition
 they can also be used to “punish” a foreign
government
 Tariff—a tax on imported goods
EOC study guide
Globalization #3 b
 Export subsidies—a Government
payment to firms in its own country
allowing the firms to sell their goods at
lower prices
 Quota—a limit on the amount of a good
that can be imported
 Why is their corn in your coke?
EOC study guide
Globalization #3c
But, How Do I Benefit From Trade?
Determine where the shirt you are wearing
was produced. (Look for the "Made in _______" tag.)
1. How do you benefit from being able to buy
goods made in other countries?
2. Would you favor a policy that would raise
the price on T-shirts and reduce the amount
available?
 Trade barriers increase prices for
foreign goods
 This is bad for
 Consumers
 This is good for
 Domestic producers of that good
 Sanctions are domestic penalties applied by
one country (or group of countries) on
another country
 may include trade barriers and restrictions on financial
transactions
EOC study guide
Globalization #4a
 Embargoes are the partial or complete
prohibition of commerce and trade with a
particular country.
 As of May 2013, the United States has sanctions against:
 Burma, since 1997
 Cuba, since 1962
 Iran, since 1979
 Libya, since 2011
EOC study guide
 North Korea, since 1950
Globalization #4b
 Sudan, since 2002
 Syria, since 1986
Tariff
In 1979, a group of radical students in Tehran
seized the American embassy and took the people
inside hostage.
President Carter issued Executive Order 12170
freezing about $12 billion in Iranian assets,
including
Sanction
Quota
Tariff
Arms Embargo
Export subsidy
 How could the US reduce its trade deficit?
 Tariffs, quotas, and other protectionist measures
that encourage consumers to buy American rather
than imported goods
 After WWII representatives from 44 countries
created a fixed exchange-rate system for the US
and much of western Europe
 Because the US had the strongest economy with
the most stable currency, the US dollar was at the
center of the new system
 Beginning in 1945, the conference participants
agreed to fix their currencies to the US dollar
 The International Monetary Fund (IMF) was
created to make the system work
EOC study guide
Globalization #7 continued
 The foreign
currency exchange rate is
the value of a foreign nation’s currency in terms of
the home nation’s currency
The dollar price you would pay to buy a euro is called the
exchange rate

Suppose the exchange rate is $1 =₡0.80, then for every dollar
you will get 0.8 Euros in exchange
 An increase in the value of a currency is called appreciation
 A decrease in the value of a currency is called depreciation

EOC study guide
Globalization #13
 Outsourcing is when a company obtains goods or
services from a foreign supplier who can provide it
cheaper
 Examples:
 Dell buying some of its computer components from another manufacturer
in order to save on production costs.
 A business outsourcing book-keeping duties to an independent
accounting firm, because its cheaper than retaining an in-house
accountant.
 Investopedia video clip
EOC study guide
Globalization #14