Selling Korean tractors in Italy: Introducing middle school students to global linkages
On a plane from Atlanta to Milan a few years ago, I sat next to a friendly man who spoke with a distinctive accent. As a long-time Georgian, I was able to identify him as someone born and raised in rural north Georgia. I asked him if he was going to Europe on vacation. He said no, he was on a business trip. I guessed that he might be in the carpet business, given the concentration of carpet makers in north Georgia.
"No," he replied. "Actually, I sell tractors."
"Oh, do you represent John Deere?" I naïvely asked.
"No, I work for a Korean tractor company," he answered. "There's a big trade show in Bologna, Italy, this week."
"Interesting! Do you speak Italian?" I asked him.
He laughed. "No, I don't speak Italian or Korean. Don't have to. The buyers in Europe all speak English."
He shook his head. "If you had told me 10 years ago, when I was trying to make a living as a farmer in north Georgia, that today I would be flying across the ocean to sell Korean tractors to the Italians, I would have said you had lost your mind. But things are changing fast."
The last two decades have seen more open markets, instant worldwide communication, dramatic improvements in transportation, and the rapid development of international financial relationships. As a result, goods, labor, and money are flowing around the world at a pace never seen before.
Middle school students sometimes complain that the subject of economics is too abstract and doesn't relate to them. So how can we get their attention? One way is to start with a concrete story illustrating economic globalization and ask them to think about how it relates to their own lives. Could they end up selling Caterpillars in Croatia? Medicine in Macedonia?
Globalization's second (or is it the third?) wave
Mann documents the powerful and disruptive effects of silver flowing from the New World to the Old World and devastating disease going in the other direction. Since middle school students in many states study world history and world cultures, teachers can point out that the current wave of globalization is actually the second time (or possibly the third, if you include the advent of air travel and the telephone 80 to 100 years ago) that technology and transportation have forged new links and created new conflicts among the world's economies.
We can introduce middle school students to the new global economy by focusing on two key linkages: trade in goods and services and the flow of labor.
The following charts (1–3) are from a July 2011 presentation by Mark A. Wynne, vice president, Federal Reserve Bank of Dallas, and are used here by permission of the author.
Chart 1 shows that the share of world gross domestic product (GDP) accounted for by exports has jumped from about 12 percent in 1960 to nearly 30 percent today.
In Georgia, state social studies standards for sixth grade require students to be able to "analyze the benefits of and barriers to voluntary trade, compare and contrast different types of trade barriers, and explain why international trade requires a system for exchanging currencies between nations." The voluntary national content standards in economics require eighth graders to understand that "voluntary exchange among people or organizations gives people a broader range of choices in buying goods and services."
Chart 2 shows that falling tariffs have boosted global trade.
To picture themselves in any of these scenarios, they must understand the fundamentals of how and why trade works. You can help your students understand that, although they will find themselves competing more and more for work with people from all over the world, they will also have more opportunities opening up to them.
Chart 3 shows the flow of laborers into the United States, drawn by the opportunity for higher wages. On the flip side, according to an October 17, 2009, article in the New York Times, an estimated 5.3 million workers in the United States now work for foreign employers.
In the classroom
International Trade is another booklet in the Everyday Economics series. It provides a deeper dive into the trade side of global economics. Like Globalization, it introduces concepts that are important to middle school teaching, such as opportunity cost, and explains them in clear, concise terms.
By Gary Tapp, director of economic education, Federal Reserve Bank of Atlanta, and editorial director, Extra Credit
February 14, 2012
Gross domestic product, or GDP: The total of all final goods and services produced in the economy during a given period, usually a year. (Definition from Ray and Anderson, Krugman's Economics for AP*, G-5.) According to Investopedia, the "GDP is commonly used as an indicator of the economic health of a country, as well as to gauge a country's standard of living."
Tariff: A tax the government of a country places on imports or exports, usually to protect the country's economy from what could be viewed as unfair competition. Excessive tariffs can lead to protectionism, which is a term that describes a country's economic policy of restricting trade.
Trade: When individuals or countries provide goods and services to others and receive goods and services in return. (Definition adapted from Margaret Ray and David Anderson, Krugman's Economics for AP*, G-13.