CHAPTER OVERVIEW This chapter introduces students to the international economy and to globalization. The first part of the chapter emphasizes the high degree of economic interdependence that characterizes today’s economies. Economic interdependence includes international trade and international finance. The chapter also focuses on the United States as an open economy. Data is provided that shows U.S. exports as a percent of gross domestic product and the value of U.S. trade with its major trading partners. The chapter notes that many U.S. firms source a portion of the production of their goods in foreign countries. The chapter discusses the nature of international competitiveness--for firms, industries, and nations. It is noted that exposure to global competition tends to improve the efficiency of firms. Finally, the chapter introduces the The potential effects that international trade has on workers is introduced. The chapter concludes with a look at the backlash against globalization that has emerged in recent years and summarizes the advantages and disadvantages of globalization. After completing the chapter, students should be able to: • Define economic interdependence. • Discuss the importance of international trade for the U.S. economy. • Examine the factors that make a company American. • Discuss the nature of competitiveness and how it applies to firms, industries, and nations. • Identify the advantages and disadvantages of globalization to workers and others. BRIEF ANSWERS TO STUDY QUESTIONS 1. Interdependence among today's economies reflects the historical evolution of the world's economic and