GLOBAL FINANCE

1973: The OPEC oil cartel hikes the price of crude oil, throwing the
developed world into recession.

1970s: Stagflation (high inflation and unemployment) appears. Euro-
pean and Japanese firms grow to become MNCs. Keynesian ideas are
challenged by monetarism.

1980s: New classical economics and supply-side economics increase
in influence. Growth, especially in Asia, encourages a new generation
of MNCs to emerge from the newly industrialized countries (NICs).

1993: The Uruguay round of GATT is concluded.

1990s: Globalization and free markets are in the ascendancy, with
countries all around the world privatizing state-owned firms and
reducing barriers to free capital flows.

1995: GATT is succeeded by the World Trade Organization (WTO).

2000: A preliminary meeting of the WTO to discuss a new trade
round in Seattle collapses amid recriminations between devel-
oping countries, the US and the EC, while outside there are
violent protests. An anti-globalization movement gathers strength
(see Chapter 6).

KEY LEARNING POINTS

The Industrial Revolution brought massive opportunities for
growth, and a fierce debate over the relative benefits of free
trade versus protectionism developed that is still raging today.

The inability of governments to deal with the problems of the

Great Depression of the 1930s gave rise to Keynesianism, which
encourages state intervention to stimulate demand.

The end of WWII ushered in a new era of prosperity and

stability based on Keynesian principles and a new international
monetary system linked to the US dollar. GATT was established
to work towards lowering trade barriers around the world and to
encourage trade.

Since the 1950s, multinational companies have increased in

importance. Multinational companies first arose in America, then
in Europe and Japan, and finally in the NICs such as South Korea.
Today, MNCs are major players in world business, with their