9.6 Economics in the Global Age

New economic institutions and agreements

After WWII, nations built institutions to manage the global economy: the World Bank and International Monetary Fund (IMF) provided loans and stability, while the General Agreement on Tariffs and Trade (GATT), later the World Trade Organization (WTO), reduced trade barriers. Regional blocs like the European Union (EU) and NAFTA promoted free trade among member states, deepening economic interdependence worldwide.

Multinational corporations and free trade

Multinational corporations (MNCs) expanded operations across borders, taking advantage of cheaper labor and resources in developing nations. Free-trade agreements and neoliberal policies—privatization, deregulation, reduced tariffs—accelerated globalization. Critics argue these practices increased economic inequality between and within nations, while supporters credit them with growth and technological diffusion.

Global economic crises and disparities

Interconnected markets meant crises spread rapidly, as seen in the 2008 global financial crisis, which began in the U.S. housing market and triggered worldwide recession. Structural adjustment programs from the IMF/World Bank often required debtor nations to cut spending, sparking debate over economic sovereignty. The gap between wealthy and developing nations, and within societies, remained a persistent global concern.

Key terms

World Bank & IMF

Post-WWII institutions providing loans and promoting financial stability and development worldwide.

GATT/WTO

International agreements/organizations aimed at reducing tariffs and expanding free trade.

Multinational corporation (MNC)

A company operating in multiple countries, often seeking cheaper labor and resources abroad.

Neoliberalism

Economic policy favoring privatization, deregulation, and free trade to promote growth.

2008 Global Financial Crisis

A worldwide recession triggered by the collapse of the U.S. housing market, showing global economic interdependence.

Try an AP-style question

Neoliberal economic policies emphasized…

1. central planning by the government
2. state ownership of major industries
3. free markets, privatization, and deregulation
4. high tariffs on imported goods