CHAPTER 28
IN THIS CHAPTER
Summary: The twentieth century witnessed active commercial and trade interactions in virtually every region of the globe. The Great Depression illustrated the impact of a decline in trade in one region over trade throughout the world; an example was the manner in which the imposition of national tariffs in Western Europe and the United States weakened global trade in general. Price and supply manipulations by oil-producing nations in 1973 and 1979 affected the globe. Multinational corporations, often using cheap labor in developing nations, increased their influence. Especially after the decline of communism, more nations implemented free-market economies. Regional trade associations were organized to facilitate trade, and mass consumerism created a truly global marketplace. The following sections summarize key events in global trade between 1914 and the present.
Key Terms
euro*
European Economic Community
European Union*
import substitution industrialization*
McDonaldization
North American Free Trade Agreement (NAFTA)*
Organization of Petroleum Exporting Countries (OPEC)*
World Trade Organization (WTO)*
Middle East (Southwest Asia)
• In 1960, the Organization of Petroleum Exporting Countries (OPEC) was founded to regulate oil prices and control oil distribution.
• Southwest Asia participated in the international drug trade.
Asia
• By the 1920s, Japanese exports of silk were reduced after the West began production of synthetic fabrics.
• Between the world wars, China prospered in the global drug trade.
• Southeast Asian economies based on rubber exports were damaged by the decline of the U.S. and European automobile industries during the Great Depression.
• By the 1930s, Japanese industrial manufacturers were entering international trade markets.
• By the 1930s, Vietnam had become one of the world’s leading exporters of rice. Like other plantation economies, the production of an export crop left the Vietnamese people without sufficient crops for their families.
• Before World War II, Japan’s regional empire supplied it with food and raw materials. Korean peasants were forced to produce rice for export to Japan and other countries.
• In the 1960s and 1970s, the production of automobiles and electronics in Japan cut into U.S. and Western European manufacture of those products.
• By the 1970s, South Korea was producing inexpensive consumer goods, textiles, steel, and automobiles for worldwide markets.
• By the 1970s, Taiwan competed successfully in global textile trade, including supplying a variety of products to Japan.
• By the 1980s, Hong Kong was noted for its exports of clothing and heavy industry.
• The “McDonaldization ” of world trade extended to the Soviet Union, which opened a McDonald’s in Moscow during the Gorbachev regime.
• Singapore became the world’s fourth largest port. Its factories produced textiles, electronics, and refined oil.
• Indonesia exported exotic woods.
• Korea’s Hyundai Corporation exported automobiles, supertankers, and electronics.
• In 2001, China joined the World Trade Organization (WTO) .
• Because of significant industrial growth, India and China have markedly increased their demand for oil.
• China, India, the Philippines, and other Asian nations benefitted from employment that was outsourced by U.S. companies. By 2008, India, for years the foremost location for outsourcing, lost some of its outsourcing contracts to other nations such as China and the Philippines.
• The global economic crisis of 2008 to 2009 negatively affected the volume of world trade.
Africa
• After World War I, most African nations did not have the economic resources to purchase industrial goods from other regions.
• European and South African miners prospered in the 1930s from exports of gold and copper from South African mines.
• Since World War II, African nations have had to rely on the sale of minerals and cash crops to finance their fledgling industries. Constant fluctuation in the prices of these goods hampered economic growth.
• Nigeria was an oil-producing country and a member of OPEC.
• Africa exported native art.
Europe
• During World War I, European nations, and Great Britain in particular, failed to recover their dominant export position, losing out to the United States and Japan.
• In the first half of the twentieth century, most Eastern European nations were primarily agricultural, relying on sales of their products to Western Europe.
• The European Economic Community (Common Market) was organized in 1958 by West Germany, France, Italy, Belgium, Luxembourg, and the Netherlands. It reduced tariffs among member nations and created a common tariff policy for other world nations.
• In 1992, Great Britain joined the European Economic Community, and was later joined by Ireland, Denmark, Greece, Spain, and Portugal.
• In the mid-1990s, Finland, Sweden, and Austria joined the economic community, now called the European Union .
• In 2002, a common currency, the euro , was accepted by most member nations of the European Union, with Great Britain serving as a notable exception.
Latin America
• World War I and European trade brought prosperity to Latin America. Latin American nations also had to produce for themselves the products they could no longer import from Europe during the war, a concept known as import substitution industrialization .
• The Great Depression caused a decline in the purchase of Latin American products.
• The United States was Cuba’s leading trade partner prior to 1959. Fluctuation in world demands for sugar made Cuban prosperity uncertain.
• After the Cuban Revolution, Cuba’s economy was tied into that of the Soviet Union. Cuba’s economy deteriorated rapidly after the fall of the Soviet Union.
• Colombia was a major participant in the international drug trade.
• Brazil exported exotic woods.
• Venezuela, an OPEC member, and Mexico were oil-producing countries.
• At the beginning of the twenty-first century, Latin American nations were more heavily industrialized than before.
North America
• During World War I, U.S. exports rose so rapidly that, for the first time in its history, the United States became a creditor nation.
• After World War I, the United States exported motion picture films. The United States also distributed food such as wheat and corn to war-torn European nations after both world wars. By the 1960s and 1970s, U.S. fast foods had reached locations around the globe, including the Soviet Union and the People’s Republic of China. Industrial supplies continued as a major U.S. export throughout the twentieth century.
• In 1994, the North American Free Trade Agreement (NAFTA) went into effect. NAFTA abolished tariffs between Canada, the United States, and Mexico. Opposition to NAFTA broke out among Indians in the Mexican state of Chiapas.
• In Seattle in 1999, demonstrators protested against the World Trade Organization (WTO). The WTO was established in 1995 in order to organize world trade.
• U.S. trade created a worldwide diffusion of its products and culture. Advertising led to familiar logos and global recognition of U.S. products.
Rapid Review
Twentieth- and twenty-first-century global economies were so interconnected that a crisis in one sector affected nearly all regions of the globe. Former colonial economies often had difficulty recovering from the production of a plantation cash crop to a diversified economy. East Asian nations proved fierce competitors in the export of automobiles, textiles, and electronics. OPEC oil prices became a major focus of world attention. Mass consumerism characterized the latter years of the twentieth century and the beginning of the twenty-first century as U.S. values and products diffused throughout most of the world.
Review Questions
1 . OPEC
(A) is an organization of Middle Eastern nations
(B) originated after the establishment of the European Union
(C) was founded after NAFTA
(D) has members in Latin America and Africa
2 . East Asian nations are noted for the export of all of the following products EXCEPT
(A) textiles
(B) films
(C) automobiles
(D) heavy industry
3 . The impact of regional trade on global trade in the twentieth century was especially noticeable
(A) on plantations during the imperialist age
(B) before and during the Great Depression
(C) after the establishment of NAFTA
(D) during the revolution in Chiapas, Mexico
4 . The European Union
(A) established a currency used by all its members
(B) originated with Great Britain
(C) has the same basic purpose as NAFTA
(D) does not adjust tariffs outside the European community
5 . Which of the following cultures has diffused most widely during the period 1914 to the present?
(A) Japanese
(B) Russian
(C) French
(D) U.S.
Answers and Explanations
1 . D Both Venezuela and Nigeria are OPEC members, making response (A) incorrect. OPEC originated about 30 years before the European Union (B) and NAFTA (C).
2 . B The United States is a key exporter of films, whereas the other items listed are exports of Taiwan, Japan, and Korea.
3 . B The imposition of protective tariffs in Europe and the United States during the Great Depression slowed down trade throughout the world. The plantation economies were a better example of the impact of global trade on regional trade (A). The impact of NAFTA is most noticeable in North America (C), as was the anti-NAFTA protest in Chiapas (D).
4 . C Both NAFTA and the EU are regional trade organizations. Some European nations, such as Britain, do not use the euro (A). Britain was not among the first members of the EU (B). The EU adjusted tariffs for other world nations (D).
5 . D The current global culture is most heavily influenced by the United States.