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The oldest known international trade

route was the Silk Road-a network of

pathways in the ancient world that
spanned from China to what is now the
Middle East and to Europe.
 According to Dennis O. Flynn and Arturo Giraldez
, the age of globalization began when “all
important populated continents began to
exchange products continuously both with each
other directly and indirectly via other continents
and in values sufficient to generate crucial impacts
on all trading partners”.

 Trace this back to 1571 with the establishment of

the galleon trade that connected Manila in the
Philippines and Acapulco in Mexico.
 During world war I, when countries depleted
their gold reserves to fund their armies,
many were forced to abandon the gold
 Global economic crisis called the great
depression started during the 1920s and
extended up to the 1930s. This depression
was the worst and longest recession ever
experienced by the western world.
 Today,the world economy operates based on
what are called fiat currencies –currencies
that are not backed by precious metals and
whose value is determined by their cost
relative to other currencies.
The Bretton Woods System was inaugurated in
1944 during the United Nations Monetary and
Financial Conference to prevent the
catastrophes of the early decades of the
century from reoccurring and affecting
international ties.

Global Keynesianism- increased

government expenditures and lower tax
to stimulate demand and pull the global
economy in depression.
Two Financial Institutions

1.International Bank for Reconstruction and Development

(IBRD or World Bank).

2.International Monetary Fund (IMF).

In 1947, various countries also committed themselves to

further global integration through the General Agreement on
Tariff and trade (GATT).
Neoliberalism & Its Discontents

Neoliberalism- minimal government

spending to reduce government debt.
Privatization of government-
controlled services.
Stagflation- persistent higher inflation
combined of high unemployment and
stagnant demand in a country’s
 Neoliberalism came under significant strain
during the global financial crisis of 2007-08
when the world experienced the greatest
economic downturn since the great
 The scaling back of regulations continued
until the 2000s paving the way for brewing
crisis. In their attempt to promote the free
market , gov’t authorities failed to regulate
bad investments occurring in the USA housing
 Since there was so much surplus money
circulating, the demand for MBS increased as
investors clamored for more investment
 Financial experts wrongly assumed that, even if
many of the borrowers were individual and
families who would struggle to pay, a majority
would not default.
 Banks also assumed that housing prices would
continue to increase. Therefore, even if
homeowners defaulted on their loans, these
banks could simply reacquire the homes and sell
them at a higher price, turning a profit.
 The crisis spread beyond the US since
many investors were foreign gov’t,
corporation, and individuals. The loss of
their money spread like wildfire back to
their countries.
 The US recovered relatively quickly
thanks to a large keynesian-style
stimulus package that President Barack
Obama pushed for in his first months in
 Economics Globalization refers to the increasing
interdependence of world economies as a result of growing
scale of cross-border trade of commodities and services, flow
of international capital and wide and rapid spread of
 The united states, japan, and the member- countries of the
european union were responsible for 65 percent of global
exports while the developing countries only accounted for 29
 the beneficiaries of global commerce have been mainly
transnational corporations (TNCs) and not governments.