Oh, hey there and welcome back to Himler's History. Now, we've been going through unit 9 of the AP world history curriculum and trying to come to terms with globalization after 1900. And in this video, we're going to consider economics in the global age. So, if you're ready to get them brain cows milked free market style, then let's get to it. So, our aim in this video is as follows. Explain the continuities and changes in the global economy from 1900 to the present. And there are three main movements we need to consider. Number one, the proliferation of free market economics. Number two, the rise of knowledge economies. And number three, the rise of transnational free trade organizations and multinational corporations. Okay, first let's spend some time on the proliferation of free market economics. This trend of economic liberalization was accelerated by the end of the cold war and the collapse of the Soviet Union. Now before the collapse of the Soviet Union, Mikuel Gorbachev did introduce some limited free market economics under his paristriko reforms. But after the USSR was dismantled, that implementation was only accelerated. New nations in Eastern Europe, formerly part of the Soviet block, threw off communism and established free market economies along with democratic governments. Additionally, nations that position themselves in the non-aligned movement during the Cold War now had greater opportunity to implement more open free market economies. And they did. So, let me give you some examples of this increasing economic liberalization across the world. The most obvious examples are those bastions of Western capitalism, the United States and Great Britain. The US under the leadership of President Ronald Reagan and Great Britain under the leadership of Margaret Thatcher fiercely encouraged the growth of free market economies throughout the world. Another example is Chile under the leadership of Agusto Pinocha. Now, despite being a gradea turd, Pinocha did lead the Chilean economy away from state control and into the area of free market. Most responsible for this change was a group of economists known as the Chicago Boys who graduated from the University of Chicago and set out to solve the economic problems in Chile. The Chicago boys were able to address Chile's rampant inflation and privatized state-run businesses. And the truth is the reforms were fairly unpopular because Pinocha enforced them with brutality like that nasty authoritarian that he was. But even so, with this free market groundwork laid, later Chilean leaders were able to guide Chile into a fairly balanced economy. What's that? You want another example? I got one for you. China. Now, China, of course, was communist under the leadership of Deng Xiaoing, who came to power in 1981. And surprisingly, Deng actually relaxed some of China's communist economic policies, like he allowed peasants to lease land and sell at least part of their own crops at market. He allowed private ownership of some businesses and on and on. And you know what? Big mistake. As the Chinese people began tasting the economic freedom of the free market, they began to long for other basic freedoms like freedom of the press and freedom of speech. And this new yearning for freedom culminated in the protest at Tianman Square which was crushed brutally on which more in the next video. Okay, so that's the proliferation of free market economies after 1900. Now let's talk about the rise of knowledge economies during the same period. Toward the end of the 20th century, new revolutions in communication and information technology gave rise to a new kind of economy, namely a knowledge economy. By definition, a knowledge economy is one which depends on the quality and quantity of information available which can then be monetized as a commodity. Essentially, workers in a knowledge economy aren't people who make things. They're like people who think about things. For example, like engineers and teachers and lawyers and bald-bearded gap tooth men who make AP World History videos on YouTube. And this kind of work has quickly become a major player in the globalized world. For example, let's talk about the knowledge economy in Finland. In the 1990s, Finland invested heavily in communication technology and education. And a big part of what that investment yielded was a healthy share of the world's cell phone and software development markets. And this was a massive shift for Finland since as late as the 1950s it was mainly an agrarian society. A second example is Japan. They also invested heavily in education to transition into a knowledge economy. However, there was some drag because Japan's economic policies in many ways resembled the old mercantalist economies which emphasized exports above imports. They did this by subsidizing manufacturing in order to keep costs low and enacting steep tariffs to stifle imported goods. But workers were the ones who paid for this progress since their wages were kept low enough that they couldn't even afford to buy the things they were manufacturing. As a result, labor unions began gathering strength and were able to agitate for themselves an agreement for higher wages. The point of all this is that during the 20th century, Japan became a churning engine of manufacturing. But they eventually diversified their economy and in the later part of the 20th century became a world leader in the knowledge economy by focusing on banking, finance, and the development of information technology. Now related to this heading about the rise of knowledge economies, we need to talk about what's happening to the world's manufacturing sector. I mean you know it's fine and all if the world is transitioning into a thinkythinky place, but our stuff still has to get made. And the general trend is that nations where knowledge work has increased, manufacturing work has decreased. So where did all those manufacturing jobs go? Well, mainly Asia and Latin America. For example, much of the developed world's clothing is now made in Bangladesh and Vietnam. It's a good chance that if you look at the tag on your shirt, it's going to say that it was made in one of those two places. And why? It's because it's much cheaper to manufacture those goods in Asia because workers are paid much lower wages. In fact, many of the garment workers in these manufacturing nations barely make a livable wage. On occasion, they will gather their collective strength in a strike for better wages, but whatever they gain is almost never enough. Okay, now let's turn the corner and talk about the rise of transnational free trade organizations and multinational corporations. And let's start with the transnational free trade organizations. What are they? Well, essentially it's an agreement between nations that eliminates barriers of exchange between them. So, an example of a barrier to exchange would be tariffs. And some of these agreements are regional in scope and others are global in scope. An important regional free trade agreement is the North American Free Trade Agreement, otherwise known as NAFTA. This was a deal struck between the United States, Canada, and Mexico. And the agreement was that Mexican factories would produce goods and then export them tariff-free to the US and Canada. And this worked because in Mexico, workers in the manufacturing sector received much lower wages and worked in conditions that were worse than was legally allowed in Canada and the US. On the other side of the world, you have the Association of Southeast Asian Nations, which includes Southeast Asian nations like Indonesia and Thailand and Singapore, Malaysia, the Philippines, etc. This regional trade agreement has played a central role in the integration and growth of these nations. Okay, so those two are examples of regional free trade agreements. Now, let's look at global free trade agreements. And for that, let me introduce you to the World Trade Organization or the WTO. At the time of this recording, the WTO has 164 member nations who represent over 95% of global trade and goods, services, and intellectual property. The aim of this agreement is similar to the regional agreements, namely to reduce barriers in trade in the form of tariffs and quotas. Now, there are a lot of critics of regional and global trade agreements like this, but it's beyond question that criticism notwithstanding these agreements have very much facilitated the globalization of the world's economies. Okay, now let's talk finally about the rise of multinational corporations in this globalized economy. Now, by definition, a multinational corporation is an entity which is incorporated in one country but manufactures and sells goods in other countries. And the architecture of these corporations is as follows. These corporations employ knowledge workers in their own countries. They manufacture goods for sale in other countries and then they sell those goods on a global market. One example of a multinational corporation is Nestle. This company is headquartered in Switzerland, purchase and manufacture their chocolate with low-wage work in West Africa and in some cases child and enslaved labor and then sell that tasty treat on the world market. Another example of this kind of company is Mahindra and Mahendra which is an Indian company that makes automobiles and farm equipment and many other things. They have operations in Africa, China, Southeast Asia and the United States. So all this to say with the globalization of the economy some massive changes have occurred in the world after 1900. All right, that's what you need to know about unit 9, topic four of the AP World History curriculum. If you need help getting an A in your class and a five on your exam in May, then click right here and grab Viewpack. If you were helped by this video, you want me to keep making them, then you can let me know that by subscribing. You know me, I shall oblige. I'm La.