Globalization and Its Impact on Economics After 1900

Spread of Free Market Economics

Globalization has led to an interconnected global economy.
Post World War and Great Depression, governments played a significant role in economic decisions.
By the 1980s, a shift towards free market policies of neoliberalism was observed.
- Neoliberalism includes lowering trade barriers, deregulating industry, and privatization.
- Example: US economy under Ronald Reagan and UK under Margaret Thatcher focused on deregulation, reduced taxes for the wealthy, and privatization of state assets.
- Chile under Augusto Pinochet also adopted free market policies advised by the "Chicago Boys".
- Effects varied: Reduced inflation and economic growth, but increased inequality and weakened labor unions.

Post-1970s, rise in domestic manufacturing costs led to a global redistribution of work.
- Knowledge economy emerged in wealthier countries, focusing on intellectual rather than manual labor.
- Example: Finland's investment in tech and education, and Japan's transition to a knowledge economy.
Manufacturing shifted to developing countries where labor costs are lower, significantly in Asia (Vietnam, Bangladesh) and Latin America (Mexico, Honduras).

Institutions like the World Trade Organization (WTO) emerged to regulate global trade, fostering globalization through trade deals, dispute moderation, and development initiatives.

European Union (EU) started as an economic agreement among six countries, evolved into a singular economic unit of 27 countries.
Association of South East Asian Nations (ASEAN) aims to facilitate trade among Southeast Asian countries by keeping trade barriers low.

Corporations operate in multiple countries, employing knowledge workers domestically and manufacturing goods in other countries for global sales.
- Example: Nestle sources and manufactures in West Africa, sells globally. Mahindra and Mahindra, based in India, operates in multiple continents.