Copyright

Globalization, Capitalism & Free Trade since 1990

An error occurred trying to load this video.

Try refreshing the page, or contact customer support.

Coming up next: Rise of Terrorism since 1990: Causes & Major Events

You're on a roll. Keep up the good work!

Take Quiz Watch Next Lesson
 Replay
Your next lesson will play in 10 seconds
  • 0:11 Globalization Since 1990s
  • 0:58 Free Trade
  • 3:06 Effects
  • 4:49 Lesson Summary
Save Save Save

Want to watch this again later?

Log in or sign up to add this lesson to a Custom Course.

Log in or Sign up

Timeline
Autoplay
Autoplay
Speed Speed
Lesson Transcript
Instructor: Christopher Sailus

Chris has an M.A. in history and taught university and high school history.

In this lesson, we explore the growth of capitalism and free trade since 1990. We'll also examine the globalization spurred by the removal of tariffs and trade barriers.

Globalization Since 1990s

The world, as the popular saying today goes, is getting smaller. In the 21st century, you or I can buy a product from the other side of the world easier, faster, and cheaper than ever before. Something as simple as the sweater you may be wearing right now is a perfect example. The cotton in your sweater could have been grown in India, the American southeast, or elsewhere. Then, it was likely shipped somewhere else to be sewn, such as Bangladesh or Europe. Then, it was shipped back to the United States where you bought it in the store. Indeed, that sweater may have traveled more miles in its first few months of existence than you ever will!

Historically speaking, this reality is a relatively new phenomenon. In this lesson, we'll explore how these types of goods have been able to move more freely as trade deals and other trends of capitalism have made globalization the defining economic trend since 1990.

Free Trade

For many, the fall of the Soviet Union and communism in Eastern Europe in the late 1980s and early 1990s signaled the triumph of capitalism as the premiere economic model in the world. Though there were still other communist nations to be sure (for example, China), politicians and economists alike foresaw a world where free trade and diplomacy ensured long-lasting peace and the economies of all nations rose with one another. To this end, the 1990s saw various international agreements tear down tariffs and trade barriers between nations.

While regional trade deals like NAFTA removed barriers between neighbors and encouraged large free trade regions, arguably the most important development for the promotion of free trade in the 1990s was the creation of the World Trade Organization. The WTO was founded in 1995 during the Uruguay Round of negotiations on the General Agreement on Tariffs and Trade (GATT). The WTO's mission was to monitor and amend the GATT moving forward and promote free trade in general across the world and its member nations.

Today, the WTO has 160 member nations (more than 3/4 of the world's countries), and nearly 3/4 of that number are considered developing nations. These are countries where the economy has not yet gone through the industrialization process most Western economies went through during the 19th and 20th centuries. Instead, their economies are still largely agricultural, relying on subsistence farming and basic, small-scale manufacturing.

Since 1995, the WTO has sought to increase trade between these developing nations and those nations whose economies are already developed. To this end, countries with membership in the WTO are largely required to remove tariffs and trade barriers that protect local industries from the international market.

In addition, the WTO is constantly looking for new members, trying to coax and cajole the remaining countries that are not part of its organization into becoming members. Though the WTO does not have many actual powers of oversight, it still routinely reviews the trade policies and internal politics of its members and issues statements that either commend or rebuke the policies of its member nations, always with an eye toward advocating free trade.

Effects

In its 20 years of existence, the WTO and its member nations have seen one of the largest increases in global trade and capitalism ever. Ancillary trade deals, such as NAFTA between member nations, have created ever larger free trade zones where international borders have little impact on commerce and the transfer of goods, services, and money.

To unlock this lesson you must be a Study.com Member.
Create your account

Register to view this lesson

Are you a student or a teacher?

Unlock Your Education

See for yourself why 30 million people use Study.com

Become a Study.com member and start learning now.
Become a Member  Back
What teachers are saying about Study.com
Try it risk-free for 30 days

Earning College Credit

Did you know… We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Try it risk-free for 30 days!
Create an account
Support