Globalization and economic interdependence

0:00- [Instructor] When you see these three pictures, does anything strike you as being interesting? Well, what we see in this left picture, this is actually a picture from the Forbidden City in Beijing, which was the imperial palace for over 500 years. And even common Chinese people weren't allowed to go there when it was the imperial palace.

0:24And this picture, there's no longer a Starbucks there. It was actually shut down in 2007, but I remember I went with my family in 2005 to Beijing, and we saw this Starbucks, and it blew my mind that not only were we allowed to go into the Forbidden City, but the only business that we could see was actually an American coffee shop.

0:46What we see in this middle picture, these are Americans eating sushi, which does not come from America. Most of y'all, I think, know it is Japanese food. What we see here on the right, this is a street, a picture of a street in India, and you see some very non-Indian brands on these storefronts.

1:04You see a bunch of things about Sony, a Japanese technology company, and you even see a little bit of Kodak here, which is an American photography, digital technology type of company. And so the common thread here is that you have the spread of economic influence.

1:22You have business influence. You have cultural influence being spread from one country to another. And so this idea of increasing interdependence of world's economies, cultures, and populations where you have more international trade, flow of people and ideas, the spread of technology, we call that globalization.

1:45Now part of globalization, as we just touched on, is this form of economic interdependence. And it might not be economically interdependence that these folks in, say, California are able to eat sushi. This is a phenomenon of globalization, but we can imagine examples of economic interdependence.

2:07For example, this label, actually had an AI generate this, but this is something you might actually see that places like Pakistan, Bangladesh, India, they produce a lotta garments. I encourage you to look at the tag on your shirt or actually look at the tag on anything you have.

2:22Look at the tag on your phone. You're likely to see that it was designed in California but made in China. Here we have a tag made in Pakistan, so this idea that you are getting, you're making something in one place, selling it in another place, and it oftentimes isn't even that simple.

2:39Sometimes you might get one component from one place, and then it gets assembled someplace else, and then that becomes a component into a bigger thing someplace else. And so you have what's called global supply chains where things are being shipped from place to place, and you can what they are shipped on, these big shipping containers, and this idea of containerization that these containers can go on these ships, and they can be put on trucks, and then they can be put on trains, and they can be moved around all over the place, not just for finished goods but even for intermediary goods.

3:15And so as the world has better transport containerization, people can move about. Better communication, including things like the Internet, you have this increasing economic interdependence, which is a facet of globalization. Now, for those who think it's a good idea, they'd argue that it generally increases standards of living.

3:38People have access to other things. People might have access to a bigger variety of things. They're able to produce things where it might be lower cost to produce it. It creates opportunities for business. And overall, it can lead to more economic growth. Now, on the other side, people might argue, "Hey, this interdependence, it might be good to a certain degree, but if the economy goes sour in one part of the world, it might affect another part of the world because of that economic interdependence."

4:09If you have a disruption to shipping, which we saw during the pandemic in certain cases, you might not be able to get the things you need because you're no longer self-sufficient in your own geography. People might be worried about losing domestic jobs. Maybe there were folks in your own country who were, say, manufacturing the phones or manufacturing cars, and now that has gone someplace else.

4:32People are even worried from a national security point of view. If, for example, we get the majority, even if we design our computer chips in the United States, if they're manufactured in Taiwan and then many of the computers, and then those chips go to China where they're put into a computer, well, what happens if there's a conflict with China?

4:50Will we still get access to our chips? Or the other way around, would the Chinese worry about getting access to their chips? And so there's definitely concern and even concern beyond that. In one country, you might have environmental regulations when you're producing something, but then if someone just produces it in another country where there aren't the labor regulations or environmental regulations and just ship it over, does that really help the situation?

5:15Other people might worry about exploitation in poorer countries, while other people might argue that's an opportunity for people that might not otherwise have jobs. So I'll let you go there. Hopefully, you got the high-level understanding of globalization and economic interdependence.

5:30But think about it because it's all around you. Look at the goods you're using. Look at the types of food you're eating. Look at the type of culture that you get to experience that probably people even 100, definitely 200 years ago had no access to.