capital flows.

Globalization has occurred for a number of reasons. Improvements in shipping, as illustrated by the container

ship in Figure 1.10, and air cargo have driven down transportation costs. Innovations in computing and
22 1 • Welcome to Economics!

telecommunications have made it easier and cheaper to manage long-distance economic connections of

production and sales. Many valuable products and services in the modern economy can take the form of

information—for example: computer software; financial advice; travel planning; music, books and movies; and

blueprints for designing a building. These products and many others can be transported over telephones and

computer networks at ever-lower costs. Finally, international agreements and treaties between countries have

encouraged greater trade.

Table 1.2 presents one measure of globalization. It shows the percentage of domestic economic production
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