Chapter 1 - world economy: winners and losers
1.1 - is the balance of economic power shifting?
goods production shift
Over the last years the share of BRICS countries (Brazil, Russia, India, China, South
Africa) has increased from 10 to 35 percent.
this is because of two reasons:
1. since 1980, western MNO’s have been relocating their manufacturing
industries to low-wage countries, this is a cheaper way of production
2. emerging countries form an interesting market. purchasing power is
increasing
trade patterns are changing
the volume of world trade has increased, this is because
- the production chain is divided. every product is produced where it can be
done most cheaply. This leads to more trade and transport.
- transport of goods has become faster and cheaper. holding large stocks is
something from the last century.
- trade borders are disappearing. This makes it easier and stimulates world
trade. the world trade organization (WTO) therefore argues for the further
relaxation of international border traffic.
global shift
The balance of power is changing, China and other emerging countries are now also
making decisions. core countries are however, still the most important. This is called
global shift. an economy in which key economic areas lie in several places in the
world, is called a multipolarity in the global economy.
, 1.2 - Is the balance of economic power shifting?
colonial relationships (1500 - 1945)
there are two periods in the colonial relationships:
1. 1500 - 1800: the phase of trade colonialism. From the colonies, different raw
materials are transported to europe. plantations are also built in America,
where slaves, brought from Africa do the work.
2. 1800 - 1950: the phase of industrial colonialism. Due to the rise of industry it
becomes important for the European countries to be assured of the supply of
raw materials and a market for their industrial products.
on the way to independence (1945 - 1990)
the outcome of the second world war provides two important changes in the world
order:
1. The colonies are rapidly becoming independent. This is called decolonisation.
2. the world is being re-arranged. three blocks are created. The western and
the communist block are directly opposite to each other. because of the
threat of a nuclear war, the countries will never attack each other directly.
This period is called the cold war.
free trade changes in the world (after 1990)
after the fall of the soviet union, the free market economy is becoming the most
important economic system. This means free entrepreneurship and the
establishment of the price of goods and services through the law of supply on
0demand. a free market economy works best in a world without trade borders (free
trade). this has a number of advantages:
- a country can specialize in the production of goods or services that that
country can best, or most cheaply produce
- companies access to foreign markets. This way they can become much larger
than when they could only sell their products on the domestic market.
1.1 - is the balance of economic power shifting?
goods production shift
Over the last years the share of BRICS countries (Brazil, Russia, India, China, South
Africa) has increased from 10 to 35 percent.
this is because of two reasons:
1. since 1980, western MNO’s have been relocating their manufacturing
industries to low-wage countries, this is a cheaper way of production
2. emerging countries form an interesting market. purchasing power is
increasing
trade patterns are changing
the volume of world trade has increased, this is because
- the production chain is divided. every product is produced where it can be
done most cheaply. This leads to more trade and transport.
- transport of goods has become faster and cheaper. holding large stocks is
something from the last century.
- trade borders are disappearing. This makes it easier and stimulates world
trade. the world trade organization (WTO) therefore argues for the further
relaxation of international border traffic.
global shift
The balance of power is changing, China and other emerging countries are now also
making decisions. core countries are however, still the most important. This is called
global shift. an economy in which key economic areas lie in several places in the
world, is called a multipolarity in the global economy.
, 1.2 - Is the balance of economic power shifting?
colonial relationships (1500 - 1945)
there are two periods in the colonial relationships:
1. 1500 - 1800: the phase of trade colonialism. From the colonies, different raw
materials are transported to europe. plantations are also built in America,
where slaves, brought from Africa do the work.
2. 1800 - 1950: the phase of industrial colonialism. Due to the rise of industry it
becomes important for the European countries to be assured of the supply of
raw materials and a market for their industrial products.
on the way to independence (1945 - 1990)
the outcome of the second world war provides two important changes in the world
order:
1. The colonies are rapidly becoming independent. This is called decolonisation.
2. the world is being re-arranged. three blocks are created. The western and
the communist block are directly opposite to each other. because of the
threat of a nuclear war, the countries will never attack each other directly.
This period is called the cold war.
free trade changes in the world (after 1990)
after the fall of the soviet union, the free market economy is becoming the most
important economic system. This means free entrepreneurship and the
establishment of the price of goods and services through the law of supply on
0demand. a free market economy works best in a world without trade borders (free
trade). this has a number of advantages:
- a country can specialize in the production of goods or services that that
country can best, or most cheaply produce
- companies access to foreign markets. This way they can become much larger
than when they could only sell their products on the domestic market.
