CHAPTER 2: THE CONTEMPORARY WORLD

Economic Globalization and Global Trade

 Economic Globalization - refers to the increasing interdependence of world economies as a result of
the growing scale of cross border trade of commodities and services.
TWO TYPES OF ECONOMIES IN ECONOMIC GLOBALIZATION
1. Protectionism - a policy of protecting domestic industries against foreign competition
2. Trade Liberalization - is the removal or reduction of restrictions or barriers on the free exchange of
goods between nation
 Globalization made countries gain more in the global economy at the expense of other nations. There
are various ways.
 Free Trade - is a trade policy that does not restrict imports or exports
 Fair Trade - concern for the social, economic, and environmental well being of marginalized small
producers
Example: American coffee chain such as Starbucks and Dunkin’ Donuts.

Economic Globalization and Sustainable Development

 Economic Globalization
– is a historical process of an increasing integration economies around the world, particularly through
trade and financial flows.
– is a worldwide phenomenon wherein countries economic situations can depend significantly on other
countries.
 Sustainable Development
– is a development of our world today by using the Earth's resources and the preservation of such sources
for the future.
– is development that that meets needs in the present without compromising the ability of future
generations to meet their needs. The improvement of trade had affected the environment as well.

Environmental Degradation
 Environmental Degradation - is the deterioration (causing degenerative harm) of the environment
through exhaustion of natural assets such as water, soil, and air including the ecosystem, habitat
intrusion, wildlife extermination, and environmental pollution.
CAUSES OF ENVIRONMENTAL DEGRADATION

 Global Climate Change - This phenomenon is a result of the unintended consequences of burning fossil
fuels and releasing staggering amounts of carbon dioxide into the atmosphere.
 Industrialization - The industrial revolution increased human life expectancy and gave us the affordable
luxuries of the modern world.
 Overconsumption - As countries become wealthier, they consume more resources per capita.
 Overfishing - Improvements in fishing techniques allowed humans to fully exploit or deplete over 90
percent of the fish in the ocean. While fishing companies made excellent profits for years, those same
companies have collapsed as fish stocks have disappeared.
 Deforestation - Another case of humans becoming too successful in their ability to harvest resources,
deforestation has destroyed various habitats, erasing those resources from the world forever.
 EFFECTS OF ENVIRONMENTAL DEGRADATION

 Increased Poverty - The depletion of natural resources leads to a loss of livelihood, leaving communities
in poverty.
 Weather Extremes - The increasing frequency and intensity of tropical storms, and the increasing
intensity and duration of droughts, has been attributed to climate change. These weather extremes
increase soil erosion, affect food production and can have devastating effects on cities and towns.
 Species Loss - Species have already gone extinct due to the habitat destruction caused by the
destruction of the Amazon rainforest, and many others are now endangered.
 Disease - The World Health Organization estimates that thirteen million people die every year as a result
of preventable environmental causes. Asthma rates are rising as a result of increasing air pollution and
rises in malaria and cholera have been blamed on deteriorating ecosystem.

Food Security

Economic Globalization, Poverty, and Inequality

 Economic and trade globalization is the result of companies trying to outmaneuver their competitors.
 The result is that labor-intensive products like shoes are often produced in countries with the lowest
wages and the weakest regulations.
 This process creates winners (corporations, stockholders, consumers) and losers (high wageworkers).
 Multiplier Effect (John Maynard Keynes)
 – An increase in one economic activity can lead to an increase in other activities.
 – One person’s spending, becomes another person’s income.
 Muhammad Yunus - is a Bangladeshi social entrepreneur, banker, economist, and civil society leader
who was awarded the Nobel Peace Prize for founding the Grameen Bank and pioneering the concepts
of microcredit and microfinance.

Global Income Inequality

The Third World and the Global South

 First World Problem - a relatively trivial or minor problem or frustration (implying a contrast with serious
problems such as those that may be experienced in the developing world).
What are the implications of talking about countries as First or Third World?

 Let us begin by deconstructing the idea of First, Second, and Third World by looking at their origins and
implications.
 The date then back to cold war when policy maker began talking about the world as three distinct political
and economic blocs (Tomlinson, 2003).
 The terms "First World," "Second World," and "Third World" countries were used to differentiate between
democratic countries, communist countries, and those countries that did not align with democratic or
communist countries.
 After World War ll, the world was divided into three sides:
o Capitalist bloc - The First World countries are those countries which were democratic, capitalist,
and industrialized and in the capitalist bloc. The First World included most of North America and
Western Europe, Japan, and Australia.
o Communist bloc - The Second World countries are those countries which were in the communist
bloc. The Second world included the Soviet Union, Eastern Europe, Russia and China.
 o Neutral / Non-aligned countries - The Third World countries are those countries which were not
in the capitalist bloc as well as the communist bloc, Africa , Latin America etc.
 Second World Countries - described the communist-socialist states. These countries were, like First
World countries, industrialized.
These areas share common problem and issues having to do with economy and politics:

 The term "Global North" and "Global South" are away in the south to make a stand about the common
issues, problems and even causes in order to have equality all throughout the world.
 This distinction points largely to racial inequality, specifically between the Black and White.
o According to Ritzer (2015), "At the global level, Whites are disproportionately in the dominant
North, While Blacks are primarily in the south. The differences between the "Global North" and
"Global South" are shaped by migration and globalization.
o The economic differences between the wealthy Global North and poor Global South. According
to (Winant,2001)"have always possessed a racial character".

The Global City

 Global City
– it is a city generally considered to be an important node in the global economic system
– it is where the rural-urban differentiation has a significant relationship to globalization
 Rural - a geographic area that is located outside towns and cities
 Urban - is the region surrounding a city
Globalization has deeply altered North-South relations.
Global cities best to describe the three urban centres:
1. Economic centres that exert control over the world’s political economy.
2. Cities can be seen as important nodes in a variety of global network.
3. Although cities are major beneficiaries of globalization, they are also the most severely affected by
global problems.

Theories of Global Stratification

People in countries around the world experience different access to resources and opportunities and different
standards of living, based on their position in the global hierarchy.
THEORY OF DEVELOPMENT AND MODERNIZATION

 Dependency Theory - It blames colonialism and neocolonialism (continuing economic dependence on

former colonial countries) for global poverty. Countries have developed at an uneven rate because
wealthy countries have exploited poor countries in the past and today through foreign debt and
transnational corporations (TNCs). According to dependency theory, wealthy countries would not be as
rich as they are today if they did not have these materials, and the key to reversing inequality is to relieve
former colonies of their debts so that they can benefit from their own industry and resources.
 World System Theory - It suggests that all countries are divided into a three-tier hierarchy based on
their relationship to the global economy, and that a country’s position in this hierarchy determines its own
economic development.
 Core Countries - Own most of the world’s capital and technology, and have great control over world
trade and economic agreements.
 Semi-peripheral Countries - Generally provide labor and materials to core countries, which benefits
core countries but also increases income within the semi-peripheral country.
 Peripheral Countries - Generally indebted to wealthy nations, and their land and populations are often
exploited for the gain of other countries.
Modernization Theory
 Modernization Theory
- One of the two main explanations for global stratification is the modernization theory.
- This theory frames global stratification as a function of technological and cultural differences between
nations.
2 HISTORICAL EVENT OF MODERNIZATION THEORY
1. Columbian Exchange - This refers to the spread of goods, technology, education, and diseases.
o This exchange worked out well for the European countries. They gained agricultural staples, like
potatoes and tomatoes, which contributed to population growth and provided new opportunities
for trade, while also strengthening the power of the merchant class. The Columbian Exchange
worked out much less well, however, for Native Americans whose populations were ravaged by
the diseases brought from Europe. It is estimated that in the 15 years following Columbus's first
trip, over 80% of the Native American population died due to diseases such as smallpox and
measles.
2. Industrial Revolution - This is when new technologies, like steam power and mechanization, allowed
countries to replace human labor with machines and increase productivity.
o The Industrial Revolution, at first, only benefited the wealthy in Western countries, Industrial
technology was very productive that it gradually began to improve standards of living for everyone.
Countries that industrialized in the eighteenth and nineteenth centuries saw massive
improvements in their standards of living and countries that did not industrialize lag behind.
Modernization theory rests on the idea that affluence could be attained by anyone. But why did
the Industrial Revolution not take hold everywhere? Modernization theory argues that the tension
between tradition and technological change is the biggest barrier to growth. A society that is more
steeped in family systems and traditions may be less willing to adopt new technologies and the
new social systems that often accompany them.

Walt Rostow’s Four Stages of Modernization

 Walt Whitman Rostrow - was an American economist, professor and political theorist who published
The Four Stages of Modernization.
THE FOUR STAGES OF MODERNIZATION:
1. Traditional Society - refers to societies that are structured around small, local communities with
production typically being done in family settings.
2. Take-off - is a short period of intensive growth, in which industrialization begins to occur, and workers
and institutions become concentrated around a new industry.
3. Drive to Technological Maturity - technological growth of the earlier periods begins to bear fruit in
the form of population growth, reduction of poverty levels, and more diverse job opportunities.
4. High Mass Consumption - it is when your country is big enough that production become more wants
than needs.

 Capitalism - an economic system characterized by private or corporate ownership of capital goods.

 Eurocentric - reflecting a tendency to interpret the world in terms of European or Anglo-American values
and experiences.

Dependency Theory and the Latin American Experience

  Dependency is the condition in which the development of the nation-states of the South contributed to a
decline in their independence and to an increase in economic development of the countries of the North
(Cardoso and Felato, 1979).
 Dependency theory was initially developed by Hans Singer and Raul Prebisch in the 1950s and has
been improved since then.
 Core nations and Periphery nations are the heart of dependency theory.
 1500s, European explorers spread throughout the Americas, Africa, and Asia, claiming lands for
Europe. At one point, the British Empire covered about one-fourth of the world.
 Transatlantic slaves are slaves that transported across the atlantic for slavery.
 Triangular Route
- route that transatlantic slaves or cycle.
- Europe for Guns and Factory made good sent to Africa for exchange of slaves to Colonies for
Tobacco and cottons then sent back to Europe.

The Modern World System

The History of Colonialism inspired American Sociologist Immanuel Wallerstein model of what he called the
capitalist world economy.

 Low-income countries (Wallerstein called the Perisphery) - whose natural resources and labor support
the wealthier countries, first as colonies and now by working for multinational corporations under
neocolonialism.
 Core - Wallerstein described high-income nations of the world economy.
 In Wallerstein model, the periphery remains economically dependent on the core in a number of ways,
which tend to reinforce each other.
 Poor countries are also more likely to lack industrial capacity, so they have to import expensive
manufactured goods from richer nations.
 Just as modernization theory had its critics, so does Dependency Theory.
 Innovation and technological growth can spill over to the other countries, improving all nations’ well-
being and not just the rich.
 Also, Colonialism certainly left scars, but it is not enough, on its own, to explain today’s economic
disparities.
 In direct contrast to what dependency theory predicts, most evidence suggest that, nowadays, foreign
investment by richer nations helps and do not hurt poorer countries.