GEC 8

MODULE 2

Governor Mariano E. Villafuerte Community College- Siruma

Poblacion, Siruma Camarines Sur
gmvcc.siruma@gmail.com
MODULE OBJECTIVE

At the end of this module, students should be able to:

1. Define what is economic globalization

2. Identify which actors facilitates economic globalization

3. Define the modern world system

MODULE CONTENT

Economic Globalization 2

Global Actors that facilitate economic globalization 2

Economic integration 5

Modern World System 6

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Economic Globalization

Economic globalization is one of the three main dimensions of globalization commonly found in
countries, academic literature, with the two others being political globalization and cultural
globalization, as well as the general term of globalization

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, flow of international
capital and wide and rapid spread of technologies.

The rapid growing significance of information in all types of productive activities and
marketization are the two major driving forces for economic globalization. In other words, the
fast globalization of the world’s economies in recent years is largely based on the rapid
development of science and technologies, has resulted from the environment in which market
economic system has been fast spreading throughout the world, and has developed on the
basis of increasing cross-border division of labor that has been penetrating down to the level of
production chains within enterprises of different countries. The process of economy
globalization is also the process of global industrial restructuring and readjustment. With the
development of science and technology and increase of income level, industrial structures of all
the countries have been also undergoing readjustment and upgrading.

Global Actors that facilitate economic globalization

A global actor refers to any social structure which can act and influence and engage in the
global or international system. This Gateway highlights these specific actors:

International Economic and Financial Organisations

International economic and financial organizations provide the structure and funding for many
unilateral and multilateral development projects. Such organizations deal with the major
economic and political issues facing domestic societies and the international community as a

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whole. Their activities promote sustainable private and public sector development primarily by:
financing private sector projects located in the developing world; helping private companies in
the developing world mobilize financing in international financial markets; and providing advice
and technical assistance to businesses and governments.

International Governmental Organizations (IGOs)

IGOs have international membership, scope and presence. Their primary members consist of
sovereign states. These organizations bring member states together to cooperate on a
particular theme or issues that have global impacts and implications such as human rights,
trade, development, poverty, gender or migration.

Media

As the world becomes ever more complex and interconnected, access to information must play
an increasingly central role in every problem facing development specialists. At the individual
level, access to information allows people to make informed choices—to decide how to vote, to
educate themselves on critical health issues, to get the market data they need to sell their
products, and ultimately to participate in the global community.

Multilateral Development Banks

Multilateral development banks are international financial institutions owned by countries. In

addition to the World Bank Group, there are four regional multilateral development banks: the
Inter-American Development Bank, the African Development Bank, the Asian Development
Bank, and the European Bank for Reconstruction and Development. These institutions provide
loans, grants, guarantee, private equity and technical assistance to public and private sector
projects in developing countries.

Nation States

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Nation-states refer to a certain form of state that derives its political legitimacy from serving as
a sovereign entity for a nation within its sovereign territorial space. The state is a political and
geopolicial entity while the nation is a cultural and/or ethnic entity The term "nation-state"
implies that the two geographically coincide, and this distinguishes the nation state from the
other types of state, which historically preceded it.

Non-Governmental Organisations (NGOs)

Non-governmental organization (NGO) refers to a legally constituted organization created with

no participation or representation of any government and driven . These organizations are task-
oriented perform a variety of service and humanitarian functions. Some are organized around
specific issues such as human rights, environment, gender, or health. In many jurisdictions
these types of organization are defined as "civil society organizations."

Trans-National Corporations (TNCs)

"Transnational Corporations exert a great deal of power in the globalized world economy. Many
corporations are richer and more powerful than the states that seek to regulate them. Through
mergers and acquisitions corporations have been growing very rapidly and some of the largest
TNCs now have annual profits exceeding the GDPs of many low and medium income countries.
It is important to explore how TNCs dominate the global economy and exert their influence over
global policy making."

United Nations (UN) System

The name "United Nations", coined by United States President Franklin D. Roosevelt was first
used in the Declaration by United Nations of 1 January 1942, during the Second World War,
when representatives of 26 nations pledged their Governments to continue fighting together
against the Axis Powers.

24 October 1945 || The United Nations officially comes into existence

In 1945, representatives of 50 countries met in San Francisco at the United Nations Conference
on International Organization to draw up the United Nations Charter. Those delegates
deliberated on the basis of proposals worked out by the representatives of China, the Soviet
Union, the United Kingdom and the United States at Dumbarton Oaks, United States in August-
October 1944.

The Charter was signed on 26 June 1945 by the representatives of the 50 countries. Poland,
which was not represented at the Conference, signed it later and became one of the original 51
Member States.

The United Nations officially came into existence on 24 October 1945, when the Charter had been
ratified by China, France, the Soviet Union, the United Kingdom, the United States and by a
majority of other signatories. United Nations Day is celebrated on 24 October each year.

The United Nations System consists of the United Nations, and the six principal organs of the
United Nations: the General Assembly, Security Council, Economic and Social Council
(ECOSOC), Trusteeship Council, International Court of Justice (ICJ), and the UN
Secretariat,[1] along with various specialized agencies and affiliated organizations. The executive
heads of some of the United Nations System organizations and the World Trade Organization,
which is not formally part of the United Nations System, have seats on the United Nations System

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Chief Executives' Board for Coordination (CEB). This body, chaired by the Secretary-General of
the United Nations, meets twice a year to co-ordinate the work of the organizations of the United
Nations System.

The United Nations System includes the United Nations and its subsidiary bodies (such as the
separately-administered funds and programmes, research and training institutes, and other
subsidiary entities), specialized agencies, and affiliated organizations. Some of the organizations
of the United Nations System predate the founding of the United Nations in 1945 and were
inherited after the dissolution of the League of Nations.

What Is Economic Integration?

Economic integration is an arrangement among nations that typically includes the reduction
or elimination of trade barriers and the coordination of monetary and fiscal policies. Economic
integration aims to reduce costs for both consumers and producers and to increase trade between
the countries involved in the agreement.

Economic integration is sometimes referred to as regional integration as it often occurs among

neighboring nations.

Economic Integration Explained

When regional economies agree on integration, trade barriers fall and economic and political
Specialists in this area define seven stages of economic integration: a preferential trading
area, a free trade area, a customs union, a common market, an economic union, an economic
and monetary union, and complete economic integration. The final stage represents a total
harmonization of fiscal policy and a complete monetary union.

Advantages of Economic Integration

The advantages of economic integration fall into three categories: trade

benefits, employment, and political cooperation.
More specifically, economic integration typically leads to a reduction in the cost of trade, improved
availability of goods and services and a wider selection of them, and gains in efficiency that lead to
greater purchasing power.

Employment opportunities tend to improve because trade liberalization leads to market

expansion, technology sharing, and cross-border investment.

Political cooperation among countries also can improve because of stronger economic ties,
which provide an incentive to resolve conflicts peacefully and lead to greater stability.

The Costs of Economic Integration

Despite the benefits, economic integration has costs. These fall into two categories:

Diversion of trade. That is, trade can be diverted from nonmembers to members, even if it is
economically detrimental for the member state.

Erosion of national sovereignty. Members of economic unions typically are required to adhere to
rules on trade, monetary policy, and fiscal policies established by an unelected external
policymaking body.

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Because economists and policymakers believe economic integration leads to significant benefits,
many institutions attempt to measure the degree of economic integration across countries and
regions. The methodology for measuring economic integration typically involves multiple
economic indicators including trade in goods and services, cross-border capital flows, labor
migration, and others. Assessing economic integration also includes measures of institutional
conformity, such as membership in trade unions and the strength of institutions that protect
consumer and investor rights.

Real-World Example of Economic Integration

The European Union (EU) was created in 1993 and included 28 member states in 2019.
Since 2002, 19 of those nations have adopted the euro as a shared currency. According to the
International Monetary Fund (IMF), the EU accounted for 16.04% of the world's gross domestic
product.

The United Kingdom voted in 2016 to leave the EU. In January 2020 British lawmakers
and the European Parliament voted to accept the United Kingdom's withdrawal. The goal is to
finalize the exit by January 2021.

Modern World-System Analysis

On the surface, world-system analysis, as eloquently formulated by the American

sociologist Immanuel Wallerstein (b. 1930) in the 1970s, appears deceptively simple.
Wallerstein's world-system analysis is a grand narrative of world historical development from
the sixteenth century to the present, with boundaries, structures, member groups, rules of
legitimation, and coherence. The world-system is dynamic and constantly evolving, with
"conflicting forces which hold it together by tension, and tear it apart as each group seeks
externally to remold it to its advantage" (Wallerstein 1974) .

Wallerstein's modern world-system is specifically a capitalist world economy

with capitalism defined as "the endless accumulation of capital". Wallerstein's modern world-
system is specifically a capitalist world economy with capitalism defined as
"the endless accumulation of capital"

THE TRIPARTITE WORLD-SYSTEM

Wallerstein's world-system divides the nations and areas of the world into three units,
designated core, peripheral, and semi-peripheral (in the past some areas remained external to
the system). These normative units are systemic and relational within the capitalist world
economy. All parts of the system are dependent upon and interact with each other; any change
in the system will impact upon the system as a whole. Core nations dominate the economic
structure of their historical time and strive to maintain or expand this authority. One fundamental
element of a core nation is the ability to produce and distribute products. Another characteristic
is a strong state machinery linked to a unified national culture. The state supports economic
influence wielded by private businesspeople, merchants, and financial institutions, which play a
vital role in core nations. Contemporary core nations dominate high technology, financial
institutions, and high-profit industries. Within the context of the world-system, core nations
compete among themselves for economic advantage

Peripheral areas or nations (often colonies from the sixteenth to the twentieth centuries and
defined as underdeveloped or semideveloped for a brief time in the twentieth century) serve

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the interests of the core nations. Peripheral areas provide agricultural products, luxury goods,
raw materials, and cheap sources of labor.

Peripheral areas are dependent upon core nations and have often been a source of conflict
between core nations. Core methods of domination range from various forms of colonialism to
anticolonial imperialism and economic dependency.

Last in the tripartite world-system are semiperipheral nations and areas. These serve as
intermediate trading areas between the core nations and the peripheral areas. They also have
small manufacturing sectors, geared to either local or international trade, and some capital
accumulation.

Historically, some areas remained external to the world-system either by choice or neglect. By
the twentieth century virtually every region on the globe had been consolidated into the
modern capitalist world-system.

A closer examination of the three components of the world-system reveals the complexity of
this analytical framework. Core, periphery, and semiperiphery are, in Wallerstein's apt phrase,
"a relational concept." What binds these three units into a system is interaction that generates
an ever-changing systemic dynamic. While there is an economic hierarchy of core, periphery,
and semiperiphery, the actions of one have an impact upon the others. Moreover, while the
defining structural process remains constant, the individual parts of the system change over
time.

One historical dynamic is the competition of core nations for advantage in the world-system
economically, politically, culturally, and often militarily. Wallerstein identifies several struggles
between core nations that result in warfare reverberating around the globe. Importantly,
peripheral areas and semi-peripheral areas are not passive participants in the system. In many
cases they strive to rise in status and often rebel, at times successfully, against the power and
control of the core nations and the hegemon. This creates policy disputes over strategy and
tactics within the core nations.

HEGEMONY

One other important concept plays a crucial role in the world-system: hegemony. During
various historical times, one core nation accumulated sufficient power to dominate the other
core nations. According to Wallerstein, hegemony "refers to those situations in which one static
combines economic, political, and financial superiority over other strong states, and therefore
has both military and cultural as well as economic and political power".

Wallerstein identifies three periods of hegemonic domination in the modern world: the United
Provinces (Netherlands) in the mid-seventeenth century, Great Britain in the mid-nineteenth
century, and the United States in the mid-twentieth century. In each of these cases, the
hegemon, from a position of dominant economic power, advocated freer trade. The economic,
military, and, at times, ideological burdens of maintaining a position of superiority, however,
threaten the hegemonic power, which must pour resources into retaining its dominant position
in the world-system.

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INTELLECTUAL ANTECEDENTS

World-system analysis arose during the 1970s, primarily through the writings of Immanuel
Wallerstein. Wallerstein identifies four intellectual antecedents that emerged between 1945 and
1970 as promulgating the emergence of world-system theory: (1) the study of Latin American
history, contemporary politics, and foreign relations, from which arose the conceptualizations of
core/periphery and dependency theory; (2) the Marxian idea of an "Asiatic mode of production";
(3) the historical debate about the transition from feudalism to capitalism; and (4) the scholarship
of Fernand Braudel and the Annales school of historiography.

Latin American scholars strove to understand the economic and social structures of their
region and its relationship to the United States. As succinctly stated by the nineteenth-century
Mexican statesman Porfirio Diaz (1830–1915): "Poor Mexico. So far from God and so close to the
United States." Emphasizing informal imperialism, dependency theory focuses on the subjugation
by core nations of peripheral and semiperipheral economies through new forms of domination,
such as financial coercion (dollar diplomacy) and, at times, military action. Since the 1940s
international organizations, such as the International Monetary Fund, have been created by core
powers to continue this dependency. Any economic development was primarily in the service of
the core nations.

Second, the "Asiatic mode of production" stresses the role of large, bureaucratic, and
autocratic empires in the world-system. For example, during the Cold War, China regulated its
economy to combat the capitalist world-system.

A third contribution to world-system theory was the debate on the timing and nature of
the transition from feudalism to capitalism. Did internal factors within individual nations, such as
consolidation of political power under a strong central government, or external factors, such as
the expansion of trade, take precedence in the emergence of capitalism?

Finally, Wallerstein pointed to the scholarship of French historian Fernand Braudel (1902–
1985) and the Annales school of scholars that he inspired. The Annales school emphasized total
history. Rejecting disciplinary constraints, total history sought to capture the spirit of particular
historical ages. This approach provided, according to Wallerstein, a theoretical framework for
shaping world-system analysis. Braudel's work introduced two ideas that influenced Wallerstein's
theory. First, Braudel's multidisciplinary approach to the interaction of nations provided a method
for understanding history. Second, Wallerstein's theory was influenced by the Annales school's
notion of longue durée (the long duration), which maintained that historical trends must be
studied over long periods of time.

From economics, Wallerstein appropriated the theory of the Kondratieff Wave to explain
economic fluctuations within the world-system. Nikolai Kondratieff (1892–1938), a Russian
economist, postulated that cycles of upward and downward swings, approximately fifty years
each, fluctuate in the world economy between expansion and contraction. Wallerstein takes
careful note of the complexity of this theory (i.e., some elements of the economy prosper during
periods of retraction and others suffer during expansion cycles). Wallerstein's reliance on the
Kondratieff paradigm has generated criticism from scholars who question the validity of the
Kondratieff Wave theory.

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COLONIALISM IN THE WORLD-SYSTEM

Wallerstein dates the origins of the world economy to the late fifteenth and early sixteenth
centuries. Determining the date of any historical movement is always an intellectual arena for
dispute, and, as noted above, Wallerstein's timeline for the decline of feudalism and the rise of
capitalism has become part of a longstanding historiographical debate. During this transition,
technological and political changes allowed for the expansion of capitalism. Areas such as the
Americas, which were external to the European economic sphere, became accessible and, over
time, were consolidated into the world-system. Stronger state governments, advances in sailing
techniques in the "era of exploration," and the maturation of economic institutions all combined
to incorporate the entire globe.

The subtitle of Wallerstein's first volume on the development of the modern world-system
is significant: Capitalist Agriculture and the Origins of the European World-Economy in the
Sixteenth Century (1974). Not only does he date the advent of the modern world-system in the
sixteenth century, but he emphasizes the idea that capitalism can be applied to agricultural
economies. During this time, mercantilism, that is, the economic nationalism revolving around
trade, became the preferred European state policy.

Colonialism is one form of interstate relationship within the capitalist world-system.

Colonialism emerged as a political method of incorporation of external areas. Wallerstein argues
that "incorporation into the capitalist world-economy was never at the initiation of those being
incorporated. The process derived rather from the need of the world-economy to expand its
boundaries" (Wallerstein 1989, p. 129). A colony serves the economic interests of a core nation.
It can be a source of needed raw materials for the core, such as the production of indigo in the
North American colonies or silver in Spain's Latin American colonies; a source of luxury goods; a
market for goods manufactured in the metropole; or any combination of the three.

also served as way stations for commerce on the trade routes that linked the world-
system and as bases to protect the trade routes or disrupt the commerce of rival core powers. At
times, a colony can also be one part of a broader trade system, such as the various seventeenth-
and eighteenth-century triangular trade routes. One example is the India-China-Britain triangular
trade of the eighteenth century. Britain purchased tea from China, which was paid for with Indian
raw cotton, and later with opium imported into China. In turn, Britain curtailed Indian domestic
production of finished cotton goods and encouraged the Indian merchants to import British cotton
manufactures.

Incorporation into the world-system induced changes in the economic, and even cultural,
patterns of the peripheral and colonial areas. The nineteenth century saw the famous competition
of European core powers for colonies in Africa and the Middle East.

Colonialism took several forms between the sixteenth and the twentieth centuries, ranging
from settler colonies to political control by a small group of core citizens over a large native
population. While economic factors were central, the creation of colonies was buttressed and
sanctified by the religious and ideological worldview of the core nations. This worldview included
racism, which justified dominance and often made peripheral populations feel culturally inferior.
Both Catholic and Protestant colonizers sought to expand their religious spheres of domination.

Competition between core powers to consolidate areas external to the world-system was
the catalyst to colonialism. At first, European powers competed for control of precious raw

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materials (i.e., the fabled gold and silver of the Americas and the fisheries and pelts on and off
the coast of North America). Soon agricultural goods, such as sugar from the Caribbean and
tobacco, indigo, and, later, cotton from North America, became valued imports to the core
powers.

As labor-intensive agricultural products became more important, the transport and trade
of a labor force became an increasingly vital factor in the world-system and a source of rivalry
between core powers. The west coast of Africa was incorporated into the world-system as a
source of slaves, making the slave trade a central component in the sixteenth- and seventeenth-
century world economy and an integral part of the famous Atlantic triangular trade network
between Africa, the Americas, and Europe.

Struggles between core powers, and their attempts to maintain a balance of

power without any one power achieving hegemony, resulted in wars on the European continent.
These wars expanded into the colonies. Treaties terminating such conflicts reflected the
significance of the world-system. The Treaty of Utrecht of 1713, for example, which ended
the War of the Spanish Succession (1701–1714), gave England access to the slave trade
dominated by the Spanish.

By the middle of the eighteenth century, policymakers in the major European core
nations—England, France, Spain, and the Netherlands—realized that conflicts in the peripheral
colonial areas were as important toward maintaining the balance of power within the world-
system as wars on the continent. In the late 1750s, for example, the Duc de Choiseul (1719–
1785), French minister of foreign affairs, wrote to Charles III, king of Spain (1759–1788) and of
Naples and Sicily (1735–1759): "The King [of France] believes that it is possessions in America
that will in the future form the balance of power in Europe, and that, if the English invade that
part of the world, as it appears they have the intention of doing, it will result therefrom that
England will usurp the commerce of the nations, and that she alone will remain rich in Europe."
Until the early nineteenth century, France and Spain fought to deny England hegemony.

In a careful study of India, Wallerstein traces the colonization of the Mughal Empire, which
ruled much of the Indian Subcontinent during the sixteenth and seventeenth centuries. The
decision to incorporate India as part of the British Empire illustrates the dynamics of the
globalization of the world-system and the conflicts between the core powers. Contributing to
Britain's decision to colonize was competition with France, which also sought Indian riches.

Demonstrating the linkage between private business and government in the world-system,
three actors participated in the colonization of India: the British East India Company, the British
government, and individual traders. In the mid-eighteenth century, a debate arose in England
over the economic costs of colonialism (i.e., whether the costs of colonial rule outweighed the
trade advantages). This debate, in one form or another, occurred in all core colonial powers until
the demise of formal colonialism.

Within world-system analysis, colonies are not passive participants. In virtually every
colony, antisystemic forces disputed colonial status. Responses ranged from petition to revolution
and warfare. Beginning with the British North American colonies and the Spanish and French
colonial empires in the late eighteenth and early nineteenth centuries, anticolonialism gained
momentum. The successful anticolonial rebellion against the French in Haiti in 1804, moreover,
reinforced a racial fear of slave rebellions into the consciousness of European powers and the
United States.

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 By the late nineteenth century, anticolonial rebellions were occurring worldwide, and in
the twentieth century, core nations realized that the costs of colonialism outweighed the
advantages. By the twenty-first century, formal colonialism was essentially a relic of the past.
While many colonies rebelled against colonial status, most did not reject the basic structure of
the capitalist world-system. Ultimately, core nations found new methods of controlling the
economies of the newly independent nations in the periphery and semiperiphery. These methods
included economic coercion and military intervention.

References

https://www.un.org/en/development/desa/policy/cdp/cdp_background_papers/bp2000_1.pdf

https://www.investopedia.com/terms/e/economic-
integration.asp#:~:text=Economic%20integration%2C%20or%20regional%20integration,over
%20a%20loss%20of%20sovereignty

https://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/modern-
world-system-
analysis#:~:text=Wallerstein's%20modern%20world%2Dsystem%20is,%22%20(Wallerstein%
202004%2C%20p.

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Answer the following questions. Using your own words, Minimum of three hundred words.

1. Who is IMMANUEL MAURICE WALLERSTEIN?

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2. What is his contribution in the development of modern world system?

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3. What are the countries involved in United Nation?

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4. Give at least 3 IGO’s and state what are their role in economic globalization.

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5. What is economic globalization?

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