SHEPHERDVILLE COLLEGE

(FORMERLY JESUS THE LOVING SHEPHERD CHRISTIAN COLLEGE)

Talojongon, Tigaon, Camarines Sur, Philippines
S/y 2021-2022

MODULE ON
CONTEMPORARY
WORLD

TOPIC: THE STRUCTURES OF

GLOBALIZATION
(Market Integration)

PREPARED BY:

LEE ANN O. DACER, LPT

INSTRUCTOR

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This Module exposes the learners to economic and political arenas as structures of
globalization. In section 1: The global Economy, the discussion focuses on the process of
making the world economy an integral element of a whole. Also, it elaborates on the
important players of economic globalization. Section 2: Market Integration covers the
position of international financial institutions in the global market integration. In section 3:
The Global Interstate System, the discussion tackles the consequences of globalization on
governments and institutions that govern nation-state relations. Section 4: Contemporary
Global Governance presents the United Nations’ role, function, and the challenges of
global governance.

At the end of the module, the students are expected to:

1. Explain the role of multinational corporations in the creation of a global economy.
2. Determine the significance of international companies; and
3. Infer the attributes of global corporations.

Instructions: Put a (♥) if you think the statement is correct; if not, draw a (▲).
1. The Hong Kong Shanghai Banking Corporation is an international financial
institution. 1. _________
2. SM Investment Corporation is a global corporation. 2. _________
3. The Asian Development Bank is headquartered in Singapore. 3. _________
4. Chowking is a Filipino-based restaurant chain that expanded in Indonesia and the
US in 2008. 4. _________
5. Global market integration does not happen overnight 5. _________

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 After the Second World War, almost all countries around the world faced the great
challenge of bringing their feet back on the ground. As a substitute to the unsuccessful
League of Nations, the United Nations (UN) was established on October 24, 1945.
Primarily, it was tasked to promote international cooperation and to restore international
order. Earlier in 1944 at the Monetary and Financial Conference in Bretton Woods, New
Hampshire (US), the first government-sponsored international financial institutions were
established--- the World Bank
(WB) and the International
Monetary Fund (IMF). There
are two types of international
financial institutions:
intergovernmental and private.
The WB is an inter-
governmental institution. Its
aim is to end extreme poverty
and promote shared prosperity
in a sustainable way
(worldbank.org). there are five
organizations that belong to the
WB Group, namely, the International Bank for Reconstruction and Development,
International Development Association, International Financial Corporation, Multilateral
Investment Guarantee Agency, and International Center for Settlement and Investment
Deputes. These organizations facilitate the granting of loans and financial assistance to
developing countries. The IMF, also an intergovernmental institution, works to foster
global monetary cooperation, secure financial stability, facilitate international trade, and
more (imf.org/en/About). Like the WB, it also grants financial assistance and loans to
developing countries.
In the 1960s, regional development banks were established: The Asian
Development Bank (ADB) in 1960 and the Africa Development Bank (AfDB) in 1964.
These two are intergovernmental financial institutions that were created to spur social
progress and economic growth in order to address and reduce poverty. As financial
institutions, ADB and AfDB are anchored on the goal fostering sustainable development
in their respective member countries.
There are also private international financial institutions such as Citigroup and
Merril Lynch. Citigroup is an American Multinational investment banking and financial
corporation. It is the fourth largest bank in the US. On the other hand, Merril Lynch is the
wealth management division of the Bank of America. Both institutions provide investments
around the world. Investments can be in a form of foreign direct investments, stocks, or
financial loans.

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 Both intergovernmental and private financial institutions help facilitate the
functionality of a global economy by lending money to their member states and global
corporations. For example, the World Bank helps in project lending, establishes structural
reforms, provides support and technical assistance, and helps design modern and durable
social safety nets for the benefit of both developed and developing nations (Stiglitz, 1998).
It also provides international capital like foreign direct investments, short-term capital, and
long-term investments. The international Monetary Fund, on the other hand, helps establish
institution al bodies to address and reduce poverty like African Regional Technical Centers
(AFRITACs) in 2001, and assists in creating the conditions of mobilization of private and
domestic and foreign capital and
job generation growth (Kohler,
2002). Moreover, the Asian
Development Bank lends money
for the building of infrastructures
that leads to growth in business.
Clearly, these global institutions
are active agents in fostering
social and economic
development by providing
various forms of help to improve
the national and the global
economies.
Global Market Integration did not happen overnight. It was the result of the
establishment of a global economy that involved the homogenization of trade and
commerce. Prior to the trends in globalization of the 20th century, international trade and
exchange of goods and services were already practiced. Harvey (1990) sees that cities and
countries were able to extend their reach beyond borders and pattern of trade and
technology because of developments in shipping and navigation. This was observable in
the development of maritime transport throughout history. Colonialism and Imperialism
rose as new ways of putting order to the economic interrelationships among countries.
Equity, corporate ownership, management subsidiaries, and central headquarters which
supply and distribute goods and services were established through colonialism. The
Spanish government in the 1600s, for instance, made use of its colonies like the Philippines
and Mexico as suppliers of its resources for trade.
The integration of the global market started when big American corporations began to
emerge after the Second World War with the rise of new conglomerates. International
Telephone and Telegraph bought Avis Rent-a-Car, Continental Banking, Sheraton Hotels,
and Hartford Fire Insurance (American History, 2018). Later, Japan and Europe followed
suit. Japanese global automobile corporations like Toyota, Nissan, and Isuzu took after the
giant American companies flourished. These companies prospered as the primary and
global markers of trucks for the Japanese military (Dower, 1992). Renault automobiles, a
French multinational automobile manufacturer, was also used to help in the military post-

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war operations. The rise of American, Japanese, and, European global corporations paved
the way for the further development of international trade. Iwan (2012) identifies the
differences among international, multinational, transnational, and, global companies:
1. International companies
are importers and exporters
with no investments
outside their home
countries.
2. Multinational companies
(MNCs) have investments
in other countries, but do
not have coordinated
product offering in each
country. They are more
focused on adapting their
products and services to
each individual local
market.
3. Global companies have investments and are present in many countries. They
typically market their products and services to each individual local market.
4. Transnational Companies (TNCs) are more complex organizations that have
investments in foreign operations, have a central corporate facility but give
decision-making, research and development, and marketing powers to each
individual foreign market.
American corporations operating internationally were at a great advantage after the war
for they had no competition. They had the capacity to produce, organize, and distribute
products because America was not devastated by the war. Literatures officially traced the
start of the contemporary market integration from the return of the Japanese and European
corporations to the global market. It was acknowledged in 1974 that the major global
economic actors were MNCs. Collectively, they were described to be a particular corporate
form dominate global production and exchange (Neubauer, 2014). Caroll (2003) termed
the emergence of international, multinational, global, and transnational companies in the
United States(US), the European Union (EU), and Japan as the triad—the major economies
of the world.
Gereffi (2001) identifies three structural periods in the existence of global corporations
after the war. They are investment-based period (1950-1970), trade based period (1970-
1995), and digital globalization (1995 onwards). The development of global corporations
can be examined from the sources and the levels of foreign direct investments (FDIs). The
United Nations Conference on Trade and Development (UNCTAD) defines FDIs as
funding made to acquire lasting interest in enterprises operating outside the economy of
the investor in which their purpose is to gain an effective voice in the management of

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enterprises (UNCTAD, 2011). In 1960, UN cited FDIs as the major drivers of global
corporate development and in the 1990, FDIs tripled (Hedley, 1999). With this, around
20,000 new corporate alliances were formed in a span of two years (Glipin, 2000). During
the trade-based period, global corporations were controlled by producer-driven
commodities. As a result, firms were characterized by large amounts of concentrated
capital focused on large-scale or capital-intensive manufacturing. More so, digital
globalization affected the operation of global corporations since technology became
integrated in both production and consumption. Producer-driven value streams have
integrated their corporate structures to reduce the effects of time and distance in the
production and consumption of goods while buyer-driven value streams have changed the
behavior of corporations in retailing their goods and services via the internet (Neubauer
2014). As Cammett (2006) observed, designing, ordering, factory processing, inventory,
delivery, branding, and advertising are driven by digital operations since the 1990s.
The ascent of global corporations is a reflection of a globalized market integration.
TNCs and MNCs are no longer limited to their home countries. They are able to expand
their reach to other continents and countries.
These global corporations have common attributes. Neubauer (2014) identifies three of
them--- an agent of desired economic development, an economic prominence, and a very
powerful entity that can create a crisis. These corporations may hit their target of economic
development by making
their consumer products
available in many parts of
the globe. As an example
is Nestle. Some TNCs and
MNCs were only able t
reach their global and
annual growth target by
exploiting the
environment. In the Asian
Financial Crisis of 1997,
global corporations
brought chaos to the economy of the Asian region by controlling the foreign direct
investments that resulted in the increase of real estate values, aggressive government
infrastructure projects and huge corporate spending all funded by bank borrowings.

On the whole, international financial institutions play an important role in the

social and economic development programs of developing and transitional nations.
They are instrumental in the functionality of the global economy which is reliant on
global corporations.

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Instructions: Complete the table below:

1. International
1. 1.
companies

2. Multinational
2. 2.
companies

3. Global companies
3. 3.

4. Transnational
4. 4.
Companies

Instructions: Identify one (1) multinational corporation. In a bullet form, write down its
history and role in improving globalization. (5-10 statements)
Note: You may use the blank space of the paper as an extension for your answers.
Name of MNC: __________________________________________________________

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 

References:
The Contemporary World, Tumuroh C. Brazalote & Ryan M. Leonardo, Published in 2019
by C& E Publishing, Inc.
Dacles, Darwin, Don M. & Maslang, Kenneth L. (2018), the Contemporary World.
Bayombong, Nueva Vizcaya: SMU Publishing House
Haywood, A. Politics. London: Palgrave Mcmillan. 2012.
The-Contemporary-World.pdf (ched.gov.ph)

Images:
https://www.telegraph.co.uk/business/2016/07/20/revealed-the-biggest-companies-in-the-
world-in-2016/

https://www.careeraddict.com/biggest-companies

https://news.abs-cbn.com/business/05/19/21/world-bank-begins-managing-bangsamoro-
trust-fund

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