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Difficulty: MediumThe Digital Revolution and Economic Globalization

“The globalization of the economy, driven by rapid technological change and corporate-led trade policies, has created a world in which capital and goods flow freely across borders while workers' rights and living standards are pushed downward. Computer systems and global communications networks now allow companies to coordinate production globally, bypassing the regulatory and social protections that workers spent decades building in industrial democracies. In this new global labor market, American manufacturing workers find themselves in direct competition with workers in developing nations who are paid a fraction of their wages...”

— AFL-CIO Executive Council, statement on globalization, 1997

Which of the following economic shifts in the United States during the late twentieth and early twenty-first centuries was most directly accelerated by the technological and corporate trends described in the excerpt?

  1. A
    The adoption of mercantilist trade restrictions that barred foreign goods from entering domestic markets
  2. A decline in the percentage of the workforce employed in traditional manufacturing sectorsAnswer
  3. C
    A massive expansion of federal public works projects to employ displaced factory workers
  4. D
    The relocation of major industrial production centers from the Sun Belt back to rural New England towns

Answer

A decline in the percentage of the workforce employed in traditional manufacturing sectors
The correct option is correct because the combination of digital communication tools (which allowed real-time global coordination of supply chains) and trade liberalization policies (like NAFTA and GATT) facilitated the relocation of manufacturing jobs to countries with lower labor costs. This led to a significant decline in the share of the US workforce employed in traditional manufacturing and accelerated the growth of the service and information sectors.

Step-by-Step Solution

1
Analyze the stimulus to identify the central argument and context.
The 1997 AFL-CIO statement argues that technological advancements (computers, networks) and corporate-led trade policies enabled corporations to offshore production and put American manufacturing workers in competition with global labor.
Understanding the source's focus on technological connectivity and trade policies is necessary to link it to broader historical trends.
2
Evaluate the options to identify which economic shift matches the trends of globalization and the digital revolution.
The decline in domestic manufacturing employment (deindustrialization) and growth of the service sector directly match the impact of global production networks and offshoring.
This connects the technology-enabled offshoring described in the text with the macroeconomic reality of the late twentieth century.
3
Rule out incorrect options based on historical evidence.
Mercantilism is from the colonial era; public works expansion contradicts the supply-side focus of the era; and industrial relocation did not return to rural New England.
This ensures that distractors representing historical misconceptions or different eras are eliminated.

Key Concept

The transition from an industrial to a service and information economy driven by technological innovation and global trade agreements.
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Topics

The Digital Revolution and Economic Globalization

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