AP® Comparative Government and Politics review sheet from Aim for Five (aimforfive.com/comp-gov/units/5/5-1)
Unit 5 · Topic 5.1
5.1 Impact of Global Economic and Technological Forces
Globalization is the growing connection of countries through trade, investment, technology, information and migration. It brings growth and new technology but limits how much any one government controls its own economy. International financial institutions and multinational corporations are major channels of that pressure.
Key terms
- globalization
- multinational corporation (MNC)
- IMF
- World Bank
- WTO
What globalization means
Globalization means goods, money, people and ideas cross borders faster and in larger amounts. Technology speeds it up: container shipping lowered the cost of trade, and the internet lets information, money and services move instantly.
For governments it's a trade-off. Opening up can bring investment, jobs and technology. It also exposes the country to global price swings, competition for local businesses and outside rules.
Migration links countries too. Money sent home by migrants, called remittances, is a major source of income for many families in Mexico and Nigeria.
International financial institutions
Membership shapes policy. China joined the WTO in 2001 and had to cut tariffs and open some sectors. Russia joined in 2012. Iran is not a member. Mexico accepted IMF-backed reforms after its 1982 debt crisis. Nigeria adopted its own structural adjustment program in 1986 with World Bank support, after a public debate in which it turned down an IMF loan.
| Organization | What it does | Pressure it creates |
|---|---|---|
| IMF (International Monetary Fund) | Lends to countries in financial crisis | Loans often come with conditions like cutting spending and subsidies |
| World Bank | Lends and gives grants for development projects | Projects and loans often tied to market reforms and governance standards |
| WTO (World Trade Organization), since 1995 | Sets trade rules and settles trade disputes | Members must lower trade barriers and follow its rulings |
Multinational corporations
A multinational corporation (MNC) operates in many countries. MNCs bring investment, jobs and technology, but they can clash with national rules on labor, taxes and the environment, and they can move to countries with lower costs. Governments compete to attract them with tax breaks and special zones.
Course examples: foreign oil companies work with Nigeria's state oil company in the Niger Delta, where oil spills and gas flaring have fueled local protest. Mexico's border factories (maquiladoras) assemble goods for export using imported parts. Many Western companies left Russia after 2022, and the state took over or forced the sale of some of their assets.
Technology and control
Technology also challenges governments' control of information. Social media helped organize protests in Iran in 2009 and 2022 and in Nigeria in 2020. Governments have responded with censorship, internet shutdowns and their own online platforms; China's Great Firewall is the most developed system for filtering foreign sites.
Gains, losses and backlash
Liberalization linked to these institutions has brought real gains for many people. Mexico's middle class has grown, and surveys in China and Nigeria have found majorities expecting their children to be better off than their parents.
Globalization also stirs conflict inside countries. Civil society groups make new demands. Students and groups who feel left behind protest, and some governments answer with arrests and social media restrictions. Nationalist and populist movements can gain support by blaming the government for economic and cultural change.
Common mistakes
- Treating globalization as purely economic. It also involves information, culture and migration.
- Mixing up the IMF and the World Bank. The IMF helps in financial crises; the World Bank funds development.
- Saying globalization affects all countries the same way. Its effects depend on each country's economy and policy choices.
On the exam
- Questions often ask how membership in an international organization limits a country's policy choices. Name the organization and the specific condition or rule.
- Pair a benefit and a cost of globalization for one country to show balance.
Connected topics
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Check yourself
4 questions on 5.1 Impact of Global Economic and Technological Forces. Pick an answer to see if you got it, and why.
Which course country is not a member of the World Trade Organization?
Which situation best illustrates a tension between a multinational corporation and a national government?
Joining the World Trade Organization most directly requires a country to
Which development best shows how technological globalization can challenge a state's control?
0 of 4 answered