jan 1, 1993 - North American Free Trade Agreement (NAFTA)

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G8:An organization of the leading capitalist industrial nations — United States, Britain, Germany, France, Italy, Japan, Canada, and Russia — that manage global economic policy (Russia was suspended in 2014 for its invasion of Crimea).
Nafta:A 1993 treaty that eliminated all tariffs and trade barriers among the United States, Canada, and Mexico. The agreement stimulated economic growth, but critics charged that it left workers in all countries vulnerable.
MNCs:Corporate organization that owns or controls production of goods or services in a country or countries other than its home country.


Americans have long depended on other countries to provide markets for export, products for import, and immigrants for domestic labor. But the intensity of that exchange has fluctuated over time. The end of the Cold War shattered barriers to international trade and impeded capitalist development of vast areas of the world. Perhaps most important, global financial markets became integrated to an unprecedented extent, allowing investment capital to “flow” across borders almost instantly.

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What were the major consequences for the United States of the economic rise of China and the European Union?

International Organizations and Corporations
International governmental organizations, many of them created in the wake of World War II, set the rules for capitalism’s worldwide expansion: the World Bank, the International Monetary Fund (IMF), and the General Agreement on Tariffs and Trade (GATT). During the final decade of the twentieth century, the leading capitalist industrial nations formed the Group of Eight (G8) to manage global economic policy. The G8 nations — the United States, Britain, Germany, France, Italy, Japan, Canada, and Russia — largely controlled the major international financial organizations (Russia was suspended from the G8 in 2014). In 1995, GATT evolved into the World Trade Organization (WTO), which formalizes and regulates trade agreements among close to 150 member states. Even more recently, in 1999, the Group of Twenty (G20) was founded, which included 19 individual countries plus the EU. With far broader membership than the G8 — including China, India, Brazil, Argentina, and Australia, among others — the G20 took a leading role in global economic policymaking.

As globalization accelerated, so did the integration of regional economies. To counter the economic clout of the European bloc, the United States, Canada, and Mexico signed the North American Free Trade Agreement (NAFTA) in 1993. This treaty, as ratified by the U.S. Congress, created a free-trade zone covering all of North America — where goods could cross borders without tariffs or duties. Though NAFTA would eventually stimulate the economies of all three nations, critics charged that the agreement provided few protections for workers — including when manufacturing left the United States for Mexico or Canada, creating joblessness. In East Asia, the capitalist nations of Japan, South Korea, Taiwan, and Singapore consulted on economic policy; as China developed a quasi-capitalist economy and became a major exporter of manufactures, its Communist-led government joined their deliberations. The principle at work in these regional trading partnerships is that bigger is better — the larger a trading network is, and the more integrated the nations within it are, the more leverage it has in negotiating terms with competing networks.


Governmental and international organizations set the rules, but multinational corporations (MNCs) were the greatest facilitators of globalization. In 1970, there were 7,000 corporations with offices and factories in multiple countries; by the early 2000s, that number had exploded to 63,000. Many of the most powerful MNCs were and still are based in the United States. Walmart, the biggest American retailer, is also one of the world’s largest corporations, with 7,000 stores in other nations and more than $500 billion in sales in 2018. Apple, maker of the iPhone and iPad, grew spectacularly in the 2000s and now has more than $250 billion in annual global sales. Beginning in 1954 with Ray Kroc’s original franchise in San Bernardino, California (see “Fast Food and Shopping Malls” in Chapter 25), the McDonald’s restaurant chain had 1,000 outlets outside the United States by 1980; twenty years later, there were nearly 13,000, and “McWorld” had become a popular shorthand term for globalization.

These corporate giants crossed borders to access new markets — and to find cheaper sources of labor. Many American-based MNCs closed their factories at home and outsourced manufacturing jobs to plants in Mexico, Eastern Europe, and especially Asia. The athletic sportswear firm Nike was a prime example. Founded in 1964 in Oregon, Nike grew from a modest shoe retailer into a behemoth in a few short decades. By the 2010s, Nike had 700 factories in more then 40 countries worldwide employing more than 700,000 workers, most of whom received low wages, endured harsh working conditions, and had no health or pension benefits.

A Nike Factory in Vietnam In 2000, Nike was the largest foreign investor in Vietnam, where the company produced shoes and sportswear in ten subcontracting factories employing nearly 40,000 workers. Most of the workers were young women from small, rural villages who earned the equivalent of about $60 a month. Those wages were low, but still above the country’s minimum wage. Nike in Vietnam epitomized the globalization of manufacturing and trade and the quest by American companies for a low-wage workforce. Nike also dramatically expanded its presence in China during the 2000s, where the company’s products were produced in 124 subcontracted factories.

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