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Summary chapter 11.1 is the balance of economic power shifting?
Production of industrial goods decreases in western countries and
increases in other countries. This has two reasons:
1. they have been relocating their manufacturing industries to low-wage
countries.
2. the emerging countries form an interesting market. Purchase power is
increasing.
A large part of the world trade shifted from the core countries to the
countries in the periphery, and especially the semi-periphery (BRICS).
Many goods are made here that are destined for the western countries. In
addition, the volume of the world trade increased. This is because:
The production chain is divided. For example in Wolfsburg they
put together a car that consist of parts that have already made a trip
around the world. Every part comes from a place where it is sold the
most cheaply.
The transport of goods had become faster and cheaper, especially
due to the arrival of the container. Products from all over the world
will be delivered in just-in-time.
Trade borders are disappearing mainly under pressure of the WTO
(world trade organization)
Effects of the increase of the world trade:
Globalisation accelerates. A trade war could slow this down.
The economic centre of gravity in the world shifts (global shift)
The global economy will perhaps become more multipolar
Globalisation= process in which areas in the wold become more and ore
connected in a number of fields (economical, cultural, social and political)
Global shift= the shift of the economic core area in the world. Often this
is defined as the shift from the edges of the northern Atlantic ocean to the
edges of the Pacific ocean.
Multipolarity in the global economy= an economy in which important
economic core areas are located in multiple places. This system replaces
the global system of core, semi-periphery and periphery.
, 1.2 development of the world economy
Colonial relationships (1500-1945)
1. 1500-1800: the phase of trade colonialism.
2. 1800-1950: the phase of industrial colonialism. (= the time period in
which European colonising countries establish colonies that they
themselves control, with the objective of securing the supply of raw
materials and a market for their industrial final products)
Tightening its grip on the colony in:
Education
Administration
Trade
Culture
On the way to independence (1945-1990)
The second world-war has caused some important changes to the world
order:
1. decolonisation (= the colonies are rapidly becoming independent).
2. the world is being re-arranged; three blocks are created: the western,
communist and LEDC’s. After the cold war (1990), this picture changes.
The free market economy with free trade is of paramount importance.
Free trade changes the world (after 1990)
The free market economy is becoming the most important economic
system:
- Free entrepreneurship
- Establishment of the price of goods and services through the law of
supply and demand
A free market economy thrives best in a world trade borders (free trade).
Free trade has the advantage that:
A country can specialise in production of goods or services that that
country can best, or most cheaply produce. (NL for example is great
is building dykes)
Companies have access to foreign markets. This way they can
become much larger than when they could only sell their products
on the domestic market (= binnenlandse markt)
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