chapter 38 Flashcards
a world without borders
Name some forces that drove the world economy towards globalization?
- advances in communication technology
- enormous expansion of international trade
- emergency of new global enterprises
- governments and international organizations that favored market-oriented economics
What US president called the USSR “the evil empire”, noted for his anti-communism?
Ronald Reagan
Reagan’s cold war rhetoric and budgets challenged ________ and the ________ ability to match US spending, but internal changes in the Soviet Union and eastern Europe worked most effectively to end communism and the cold war.
détene; Soviet
Who was the new Soviet leader who came to power in 1985, and represented an effort to address economic deterioration of the Communist regime?
Mikhail S. Gorbachev
As communism unraveled throughout eastern and central Europe, Mikhail S. Gorbachev desperately tried to save the Soviet Union from disintegration by doing what two main things?
- restructuring the economy
- liberalizing society
The Soviet Union collapsed in what year?
1991
Including economic stagnation, an accelerated arms race with the United States that further strained the economy, and obvious signs of discontent, what other main factor contributed to the collapse of the Soviet Union (regarding its leaders)?
the rulers of eastern and central Europe were too reluctant to confront the challenge and restructure their ailing systems
What doctrine, enforced by Gorbachev, replaced the Brezhnev Doctrine?
the “Sinatra doctrine” (“I did it my way”)
- each country would be responsible for its own destiny
The end of communism came first in what eastern European country? What two factors pressured the rule of the Communist Party to crumble?
Poland
1. combined trade union
2. nationalist movement
What movement did the Polish government legalize and afterwards agree to multiparty elections in 1989 and 1990?
legalized the previously banned Solidarity movement
Who was the leader of the Solidarity movement and became the president of Poland?
Lech Walesa (1943–)
Who was eastern Europe’s longest-surviving communist dictator who was forced to resign from rule of Bulgaria in November 1989?
Todor Zhivkov (1911-1998)
- two months later, national assembly began dismantling the communist state of Bulgaria
What revolution in Czechoslovakia swept communists out of office and restored democracy by 1990?
a “velvet revolution”
Where did the term “velvet revolution” originate to describe the restoration of democracy in Czechoslovakia?
derived from the fact that aside from the initial suppression of mass demonstrations, little violence was associated with the transfer of power in societies formerly ruled by an iron fist
What did the “velvet divorce” of Czechoslovakia in 1993 do to the nation?
split Czechoslovakia into two new nations: the Czech Republic and Slovakia
In contrast to the nonviolent transfer of power in Czechoslovakia, what happened to the dictator Nicolae Ceausescu of Romania?
he refused to acknowledge the necessity of reform
- in 1989 Secuitate, a brutal secret police force, savagely repressed demonstrations, setting off a national uprising that ended within four days and with Ceausescu and his wife dead
Who was the aging leader of East Germany who openly objected to Gorbachev’s ideas and clung to Stalinist policies, but was removed from power by his party as East German citizens were fleeing the country through openings in the iron curtain?
Erich Honecker (1912-1994)
In what year did the two Germanies, previously divided by the cold war, form a united nation?
1990
Describe the feedback loop that contributed to the decline of the Soviet standard of living after collective farms failed to feed the population.
collective farms unable to feed entire population = Soviet government imported grains from the US, Canada, and elsewhere = government imposed rationing to cope with scarcity of essential consumer goods and food = economic stagnation = decline of Soviet standard of living
The state-sponsored health care system in the Soviet Union, resulted in what two demographic trends (regarding infant mortality and life expectancy)?
- infant mortality increased
- life expectancy decreased
Under what slogan did Gorbachev try to revive the Soviet economy?
“uskorenie” or “accleration”
What were the old methods of boosting production and productivity that Gorbachev tried to use, but ultimately showed the drawbacks of centralized economic control?
- bureaucratic exhortation
- harassment
Instead of “uskorenie” or “acceleration”, what method did Gorbachev try using instead after realizing the drawbacks of centralized economic control?
“perestroika” or “restructuring”
- efforts at decentralizing the economy
How did Gorbachev make his program of perestroika or “restructuring” work in Soviet society?
Soviet leader linked it to glasnost, a term that referred to the opening of Soviet society to public criticism and admission of past mistakes
Why was perestroika more difficult to implement that Gorbachev imagined?
Gorbachev pushed economic decentralization, the
1. profit motive and
2. cost-accounting methods
he instituted encouraged hostility amongst those of privileged positions that depended on the old system
How did glasnost (the opening of Soviet society to public criticism and admission of past mistakes) lead to the demise of Gorbachev?
discontent with Soviet life burst into the open, long-repressed ethnic groups and nationalist sentiments bubbled to the surface, posing a threat to the multiethnic Soviet state
The pressures on the Soviet system were exacerbated by an ill-considered and costly Soviet military intervention in 1979 to save a ________ regime in _____________.
Marxist; Afghanistan
For nine years, who did the well-equipped Soviet forces fight a brutal, unsuccessful campaign against, as they gradually gained control of most of the countryside?
Afghan mujahideen, or Islamic warriors
Who were the first group of nations to declare their independence from the Soviet Union in August 1991?
the Baltic peoples–Estonians, Latvians, and Lithuanians
What was the largest and most prominent of the Soviet republics?
the Russian Soviet Federated Socialist Republic
What did Boris N. Yeltsin do to contribute to the collapse of the Soviet Union? What was his position in The Soviet’s largest and most prominent republic, the Russian Soviet Federated Socialist Republic?
Yeltsin was the recently elected president and led the drive for independence
- crushed a coup of discontented party functionaries, disillusioned secret police officials, etc. with the help of Red Army that had tried to seize power while Gorbachev was vacationing in the Crimea
- became leader after Gorbachev’s political career disintegrated and led country toward market-oriented economic reforms after dismantling the Communist Party
After the coup of discontented police and party functionaries tried to seize power while Gorbachev was away, what happened to Gorbachev’s career? Who replaced him?
his political career had ended, Boris Yeltsin dismantled the Communist Party and pushed the country toward market-oriented economic reforms
What were the three main perspectives the cold war shaped of nations and peoples of the world in terms of their ideological beliefs?
- saw themselves as good capitalists fighting evil communists
- as progressive socialists battling regressive capitalists
- or as nonaligned peoples striving to follow their own paths
The end of the cold war suggested the possibility of a radical shift in power relations, a global realignment that marked a new era of world history devoid of the categories embraced during the cold war.
yes.
After the spectacular collapse of communism in 1990 (in the Soviet Union), economists pointed to new economic order characterized by what things?
- expansion of trade between countries
- the growth of foreign investments
- the unfettered movement of capital
- the privatization of former state enterprises
- a wave of deregulation that undermined the control that national governments once exercised over economic activity
- emergence of new breed corporations
Define globalization.
Globalization refers to the reduction and removal of barriers between national borders to facilitate the flow of goods, capital, services, and labor
- The breaking down of traditional boundaries in the face of increasingly global financial and cultural trends.
What does the phrase “free trade” imply?
freedom from state-imposed limits and constraints on trade across borders
What was the main vehicle for the promotion of unrestricted global trade/what was the name of the agreement?
the General Agreement on Tariffs and Trade (GATT)
- signed by representatives of 23 noncommunist nations in 1947
In 1994, the member nations of GATT signed an agreement to establish what organization, which took over the activities of GATT in 1995?
the World Trade Organization (WTO)
- developed into a forum for settling international trade disputes,
- has power to enforce its decisions
- has 153 member nations, which account for 97% of all world trade
International companies were born out of the desire to extend business activities across borders in pursuit of specific activities such as what (three things)?
- importation
- exportation
- extraction of raw materials
During the past 25 years, the transformation of the corporate landscape has resulted in the birth of some ______ thousand global corporations.
50
What are some characteristics of multinational companies?
conducted their business in several countries, but had to operate within the confines of specific laws and customs of a given society
What are some characteristics of global corporations?
relies on a small headquarters staff while dispersing all other corporate functions across the globe in search of the lowest possible operating costs
- treat the world as a single market and act as if the nation-state no longer exists
What is a specific example/consequence of electronic media and the messages they carry emanating from advanced capitalist societies, and influencing the consumers they reach?
English becoming the primary language of global communications systems, effectively restricting vernacular languages to a niche status
How have major corporations throughout the developed world impacted or contributed to the welfare of their respective home communities?
through
- a combination of collective bargaining agreements
- tax laws
- environmental regulations
these companies had to contribute to the welfare of their home communities
Competing with companies around the world, the global corporation has moved jobs from ______ _______ facilities to __________ locations where wages are ____ and environmental laws are weak or nonexistent.
high-wage; foreign; low
Just as western European countries had benefited from the Marshall Plan, how did Japan benefit from the US?
- direct US financial aid investment
- timely abandonment of war reparations
- no restrictions on the entry of Japanese products into the US market
How did Japan’s economy seem ill equipped for intensive economic growth at first?
- lost its overseas empire
- hampered by a large population
- lack of natural resources
How did Japan’s economic planners sidestep many of their original disadvantages for intense economic development?
by promoting an economic policy that emphasized export-oriented growth supported by low wages
What particular advantage did Japanese employers have with their workforce that workers in other nations would’ve considered intolerable?
they had a large and mostly compliant workforce that was willing to endure working conditions and wages considered intolerable by organized labor in western Europe and the US
The ____ cost of Japanese labor ensured the production of goods that were cheap enough to compete on the basis of _______.
low; price
Describe how the products exported and manufactured by Japan changed by the time the 1960s and 1970s came around?
initially, they churned out labor-intensive manufactured goods such as textiles, iron, and steel slated for export to markets with high labor costs
- 1960s: Japanese companies used their profits to switch to more capital-intensive manufacturing and produced radios, television sets, motorcycles, and automobiles
- 1970s: Japanese corporations took advantage of highly trained and educated workforce and shifted their economic resources toward technology-intensive products such as memory chips, liquid crystal displays, and CD-ROM drives
Where was the Japanese economy by the 1980s and 1990s?
1980s: seemed poised to overtake the US as the world’s largest economy
1990s: became clear that postwar growth rates not sustainable and the Japanese economy sputtered into a recession that has continued into the 21st century
What four Asian cities and countries were the earliest and most successful imitators of the Japanese model for economic development, and earned them the name of the “four little tigers”?
- Hong Kong
- Singapore
- South Korea
- Taiwan
Describe how the “four little tigers” had been just like Japan in their disadvantages to intense economic development, but also in how they transformed these disadvantages.
- similarly, the “four little tigers” suffered shortage of capital, lacked natural resources, and had to cope with overpopulation
- like Japan a generation earlier, they transformed apparent disadvantages into advantages through a program of export-driven industrialization.
Before long, what three Asian countries joined the “four little tigers” in their quest for economic development and prosperity?
- Indonesia
- Thailand
- Malaysia
After years of generous lending and growing national debts in Asian economies, what happened to the international investment community? How did they start a crisis?
The international investment community suddenly lost confidence in the booming economies and withdrew support
Where did the financial crisis in Asia begin in 1997?
Thailand, investments that once easily poured into the country now left it equally quickly, causing the value of the baht (Thai national currency) to plummet
The recovery of badly hit Asian economies was matched by other emerging economies, often identified as what?
BRICs, because they include the fast-growing and developing economies of Brazil, Russia, India, and China
In the aftermath of the cold war, the governments composing the BRICs initiated political and economic reforms that embraced __________ and allowed their countries to join the world economy.
capitalism
How did the BRICs nations make themselves more competitive especially after joining the world economy?
leaders have simultaneously emphasized
- education
- domestic entrepreneurship,
- foreign investment, and
- domestic consumption
China’s leaders during the 1970s did what three things (reversing policies) that launched economic reforms in the country?
- opened Chinese markets to the outside world
- encouraged foreign investment
- imported foreign technology
Besides acting as a major exporter, China benefited from its large pool of _______ labor and its enormous __________ markets have made the Chinese economy the destination of choice for foreign investment capital.
cheap; domestic
In what three ways do emerging nations have significant environmental impact?
- they scour the earth for raw materials
- they are responsible for a steep rise in world energy demand and consumption
- cause an alarming increase in emissions of greenhouse gases and air pollution
Explain the role of once-poor nations in a world of international organizations and globalization.
once-poor world is getting richer, but also making its weight felt in international organizations on everything from trade issues to membership in the UN Security Council
- rich developed countries no longer dominate the global economy the way they did during the 19th and 20th centuries
Until the late 19th century, what two countries were the world’s biggest economies?
China and India
Accepting free trade and open markets mean acknowledging global economic interdependence; no _______ economic power could fully control ________ trade and commerce.
single; global
In acknowledging global economic interdependence, groups of nations have entered into economic _________ designed to achieve advantages and greater strength for their partners in the competitive global economy.
alliances
What is the most famous and most strongly integrated regional bloc that is characterized by a common market and free trade?
the European Union
- Established by the Maastricht Treaty in 1993, a supranational organization for even greater European economic and political integration.
Representatives of what six European nations signed the Treaty of Rome in 1957?
France, West Germany, Italy, the Netherlands, Belgium, and Luxembourg
What did the Treaty of Rome establish?
established the European Economic Community, renamed the European Community in 1967
What was the purpose of signing the Treaty of Rome and establishing the European Community?
dismantling of tariffs and other barriers to free trade among member nations
What Treaty of 1993 established the European Union?
the Maastricht Treaty of 1993
How many European nations have submerged much of their national sovereignty in the European Union, and since 1999 how many members have adopted a common currency?
23; 18
The oil-producing States of Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela, and later joined by Qatar, Libya, Indonesia, Abu Dhabi, Algeria, Nigeria, Ecuador, and Gabon established what producer cartel in 1960?
the Organization of Petroleum Exporting Countries (OPEC)
- An organization begun in 1960 by oil-producing states originally for purely economic reasons but that later had more political influence.
What did the mostly Arab and Muslim member states of OPEC seek to do under the organization and through cooperation?
sought to raise the price of oil
- demonstrated during the Arab-Israeli War of 1973 that cooperation had political as well as economic potential
OPEC’s policies contributed to the global __________ and debt crisis that hurt many developing nations, but its members–also developing nations–demonstrated how the alliance could exert control over the __________ world and its financial system.
recession; developed
What economic partnership was established in 1967 by the foreign ministers of Thailand, Malaysia, Singapore, Indonesia, and the Philippines?
the Association of Southeast Asian Nations, or ASEAN
What was ASEAN originally conceived as? What did its focus become after it signed cooperative agreements with Japan in 1977 and the European Community in 1980?
originally conceived as a bulwark against the spread of communism in the region
- ECONOMIC focus became sharper after signing agreements
- 1992, member states agreed to establish a free-trade zone and cut tariffs on industrial goods over a 15-year period
To its supporters, the global economy delivers markets that operate with ___________ efficiency, speedily directing goods and services wherever there is demand for them and always expecting the ________ returns possible.
maximum; highest
Who are some critics of globalization? What do they argue against the global economy?
nongovernmental organizations ranging from labor unions to tribal-rights activists
- argue global economy is an untamed juggernaut that is neither inevitable nor desirable, force that rewards few and impoverished many
- assert that globalization diminishes the sovereignty of local and national governments and transfers the power to shape economic and political destinies to transnational corporations and global institutions
Describe where local traditions were derived from at the turn of the 20th century compared to at the end of the 20th century thanks in part to advances in technology.
local traditions commonly derived from gender, social class, or religious affiliation, determined the cultural identity of the vast majority of people
advances in tech and communications, information and cultural practices were becoming global
New communications media have tied the world together and have promoted a global cultural integration whose Hallmark is ____________.
consumption
Beginning in the 18th century, what process and the subsequent rise to per capita income and gave birth to a type of society in which consumption of goods and services satisfied wants and desires rather than needs or necessities?
INDUSTRIALIZATION
Consumption has become a means of self-expression as well as a source for personal __________ and social __________.
identity; differentiation
