T

HE GLOBAL
ECONOMY

Bachelor of Science
Bulacan Date Developed:
JULY 2020
in Accounting Polytechni Date Revised: Page 1 of 4
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 Information Sheet TCW 113-2

THE CONTEMPORARY WORLD

Learning Objectives:
After reading this INFORMATION SHEET, YOU MUST be able to:
1. Define economic globalization
2. Identify the actors that facilitate economic globalization
3. Define the modern world system
4. Articulate a stance on global economic integration

INTRODUCTION

We will begin with the discussion of economic history which made

possible the economic structures that affect globalization today. The discussion
of economic flows is closely associated with economic structures.
The global economic system, beginning in 1896, had reached its peak in
1914. There are various changes and improvements that characterize economic
globalization before and at present. Structures of transportation,
communication, and capital are comparable then and now.
Surpluses and Deficits
A good place to get a quick snapshot of global trade (Mann and Pluck,
2007:1159-66), as well as net economic flows in and out of nation-state, is by
looking at an nation’s trade surpluses and deficits.
Economic Chains and Networks
Trade in goods and services is clearly central to the global economy.
Supply chains. These are general label for value-adding activities in the
production process. A supply chain begins with raw materials and follows the
value-adding process through variety of inputs and outputs and ultimately to a
finished product.
International production networks. These involve the networks of
producers involved in the process of producing a finished product.
Global commodity chains. Gereffi and Korzeniwics (1994) bring
together the idea of value-adding chains and the global organization of
industries.
Global value chains. Gereffi argues that global value chains are
emerging as the overarching label for all work in this area and for all such
chains.

Bachelor of Science
Bulacan Date Developed:
JULY 2020
in Accounting Polytechni Date Revised: Page 2 of 4
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Global Value Chains: China and the US
To give specify to the idea of global value chains, look at the several
specific examples of such chains, all of which involves trade between China
(Brandit and Rawski 2008) and the US, although many other countries in the
world are involved in these or similar chain.
Scrap Metal
Waste Paper
T-shirts
iPhones
Increasing Competition for Commodities
One of the most striking developments in recent years has been the
increasing global competition for various commodities.
Demand for commodities has increased.
This is absolutely a fundamental change in the global economic structure
(Krauss 2008)
The result of this was massive increases in the price of all sorts of
commodities, which reached record highs in 2008, before the Great Recession
Outsourcing
Outsourcing is the transfer of activities once performed by an entity to a
business or businesses in exchange for money.
Consumption
Consumption is highly complex, involving mainly consumer objects,
consumes, the consumption process and consumption sites (Ritzer,
Weldenhoft, and Goodman 2001:410-27).
Consumer Objects and Services
Much of consumption revolves around shopping for and
purchasing objects of all kinds (Quarter Pounder, snowboards, and
automobiles, among to various service (legal, accounting, and educational,
among others).
Consumer
Increasing numbers of people throughout the world are spending
more and more time as consumers.
Consumption Processes

Bachelor of Science
Bulacan Date Developed:
JULY 2020
in Accounting Polytechni Date Revised: Page 3 of 4
Information Systems c
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 Includes knowing how to work their way through a shopping mall,
use a credit card, or make purchase online.

Global Resistance
The global spread of chain stores, theme parks, and among others, has
led to many concerns and to resistance in many parts of the world (one now
even sees resistance, or at least increasing concern in the US).
The Modern World-System
The Modern-system, by definition, is a largely self-contained system with
a set of boundaries and a definable life span; that is, does not last forever.
Worldwide Division of Labor and the Development of the Modern World-
System
Not all countries or areas are equal in the modern world-system according to
Wallerstein. A three-level hierarchy is a remarkable feature of the modern
capitalist world-economy. The world is now divided into three categories and
thereby creating the worldwide division of labor. They are the following:
a. Core. These are areas that dominate the capitalist world-economy
and exploits the rest of the system (e.g., US and Japan)
b. Periphery. These are areas that provide raw materials to the core
and are heavily exploited (e.g., many countries in the African
region)
c. Semi-periphery. A residual category that encompasses a set of
regions somewhere between exploiting and the exploited (e.g.,
India)
The Pressure of Incorporation
Why are countries being pulled toward this system? Can the countries or
areas of the world “resist” being part of it? Ritzer (2010:310) explained:
“The pressure for incorporation into the world-economy comes not from
the nations being incorporated but ‘rather from the need of the world-economy
to expand its boundaries, a need which was itself the outcome of pressures
internal to the world economy” (Wallerstein 1989:129)

Bachelor of Science
Bulacan Date Developed:
JULY 2020
in Accounting Polytechni Date Revised: Page 4 of 4
Information Systems c
College
THE
CONTEMPORARY Document Developed by:
No. ROCELLA J. Revision # 0
WORLD FUENTES
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