You're probably all familiar with the expression "money makes the world go around." Well that's true in globalization. A large part of what happens in globalization is just this oodles of money, not necessarily in paper form, although that can happen, but in electronic form. And we have to think of globalization really as this movement of money. It's the process of linking disparate parts of the world through money, and this money can be investments, it can be loans, it can be financial instruments, it could be remittances. Or, by the way, it can also be you being in a foreign country and using your ATM card to get local currency. So let's talk about this. What are the various parts of that movement of money? A big part of that is the relationship between banks. There's now global banks, banks that are linked in some ways to other banks. They're no longer isolated in their small towns. They might have offices in large parts of the world. More importantly they're linked through a whole variety of instruments to other banks. And you can see some central banks. There's the China Construction Bank, PNB Paribas, CIT Group, Morgan Stanley, the State Bank of India, the Bank of China, the Royal Bank of Scotland. All these are linked through a set of obligations: money they have borrowed, money they have lent, money they have deposited with each other, partnerships and certain kind of hedge funds, et cetera, we will talk about much later on in the course. So think of globalization as this web of banks and this relationship between all of these banks. You can also see it in flows of direct investment. That is money that—let's say I want to invest not in something in my own country but I want to invest in another country, whether it's in a company or through buying their state bonds, or buying real estate, et cetera. And we see that that also has increased as a share of global GDP. There have been peaks. There are moments when it peaks, let's say in the late 1990s, and right before the global financial crisis in 2007 and 2008. It was starting to increase again. What we might see, and we'll talk about this later, we might see a new wave of FDI following COVID, as the global supply chains get redesigned and as companies have to make investments in a whole new set of countries. But again we'll come to that later. Remittances are an incredible part of this flow of money. And remittances are basically the money that people who migrate from a relatively poor country to a wealthier country, they send back. Okay? So this is the money that the migrants, often men but not always men, will send back to their families. And some countries depend on these very, very much. Certainly in the case of the Americas, Mexico, but particularly central America depends on this money, usually coming from the United States. Parts of Africa depends on their sons and daughters in a sense being largely in Africa, and partly around the Persian Gulf, okay, and then sending money back. India and Nepal, roughly a third of the Nepalese economy consists of these payments that are coming in from abroad. The Philippines is another country that is very dependent on these remittances. So these flows of money can be massive, it could be billions and billions of dollars that a bank might lend a major corporation or it can be the $50 or $100 a week that one worker, multiplied by millions, sends home. Now the combination of these massive amounts of investment and remittances means that the amount of the currency trading —and I want you to think about this— Daily currency, okay? Now again this is difficult to measure, but they estimate that around 6 trillion dollars every single day is being exchanged in one way or another for a whole variety of other currencies. A single transaction might involve a jump from two or three or four or five currencies. So part of globalization is not just this money flowing through, but these markets that make it possible for that money to flow through, that make that money to be fungible, that a dollar is a dollar is a dollar, but it's also a pound can be a dollar, or a ruble, or a peso, depending on what happens in these currency trading markets. There's also dark money. This is the money that operates on the dark part of the web for example. Terrorism, money that goes to support terrorism, but probably the most well-known sources of dark money are the drug trade. You've got global trafficking flows of cocaine, so you've got product flowing largely, in the case of cocaine, largely out of Latin America. The product is flowing to the United States, to parts of Europe. What's coming after that? Money. In this case, sometimes literally physical cash, not just electronic funding. The same thing with opiates. Opiates are centered, there are some in Latin America and particularly Mexico, but the world's center still remains south Asia and southeast Asia. So that is part of this transfer of money. Again, think—it involves all the things that we've talked about. Money, people, and goods, well all three might be involved in the drug trade. You might have someone who is carrying the merchandise, you have the merchandise itself, and then you have the cash going back to that producing country of the merchandise. That money is usually paying for something. And let's, I want to come back to this. I said this was a central part of globalization, and I want to spend more time on this talking about how trade is at the very heart of globalization.