LESSON 1 WHAT IS THE GLOBALIZATION?

Globalization: A working Definition

Most accounts view globalization as primarily and economic process. When a newspaper reports the
nationalists are resisting “globalization,” it usually refers to the integration of the national markets to a wider global
market signified by the increased free trade. When activists refer to the “anti-globalization” movement of the
1990’s, they mean resisting the trade deals among countries facilitated and promoted by global organizations like the
World Trade Organization.
Globalization scholars do not necessarily disagree with people who criticize unfair international trade deals
or global economic organizations. In fact, many are sympathetic to the critique of economic globalization.
Academics differ from journalists and political activists, however, because they see globalization in much broader
terms. They view the process through various lenses that consider multiple theories and perspectives. Academics
call this an interdisciplinary approach, and it is this approach used by the general education (GE) courses that you
will be taking alongside this one.
The best scholarly description of globalization provided by Manfred Steger described the process as “the
expansion and intensification of social relations and consciousness across world-time and across world space.”
Expansion refers to “both the creation of new social networks and the multiplication of the existing connections that
cut across traditional political, economic, cultural, and geographic boundaries.” These various connections occur at
different levels. Social media, for example, establish new global connection between people. When international
groups of non-governmental organizations (NGOs) are networks that connect a more specific group-social workers
and activists-from different corners of the globe.
Intensification refers to the expansion, stretching and acceleration of these network. Not only are global
connections multiplying, but they are also becoming more closely-knit and expanding their reach. For example,
there has always been a strong financial market connecting London and New York. With the advent of electronic
trading, however, the volume of that trade increases exponentially, since traders can now trade more at higher
speeds. The connection is thus accelerating. Apart from this acceleration, however, as the world becomes more
financially integrated, the intensified trading network between London and New York may expand and stretch to
cover more and more cities. After China committed itself to the global economy in the 1980’s, for example
Shanghai steadily returned to its old role as a major trading post.
It is not only in financial matters you can find these connections. In 2012, when the Monsoon rains flooded
Bangkok, the Honda plant making some of the critical car parts temporarily ceased production. This had a strong
negative effect on the Honda-USA which relied heavily on the parts being imported from Thailand. Not only was it
unable to reach the sales target it laid out, but the ability of the center service nationwide to assist Honda owners
also suffered. As a result, the Japanese car companies’ global profits also fell.
The final attribute of this definition relates to the way people perceive time and space. Steger notes that
“globalization processes do not occur merely at an objective, material level but they also involve the subjective
plane of human consciousness. In other words, people begin to feel that the world has become a smaller place and
distance have collapse from thousands of miles to just a mouse-click away. One can now e-mail a friend in other
country and get a reply instantaneously, and as a result, begins to perceive their distance as less consequential. Cable
TV and the internet has also exposed one to news from across the globe, so now, he/she has this greater sense of
what is happening in other places. Steger posits that his definition of globalization must be differentiated with an
ideology he calls globalism. If globalization represents the many processes that allow for the expansion and
intensification of global connections, globalism is a wide spread belief among powerful people that the global
integration of economic markets is beneficial for everyone, since it spreads freedom and democracy across the
world. It is a common belief forwarded in the media and policy circles. In the next lesson you will realize why it is
problematic.
For now, what is a crucial to note is that when activists and journalist criticize “globalization,” they are,
more often than not, criticizing some manifestation of globalism. Often, these criticisms are warranted.
Nevertheless, it is crucial to insists that “globalization” as a process refers to a larger phenomenon that cannot
simplify be reduced to the ways in which global markets have been integrated.

GLOBALIZATION (LIQUIDS, FLOWS, AND STRUCTURES)

 Globalization - it usually refers to the integration of the national markets to a wider global market
signified by the increased free trade.
 Anti-Globalization - movement in the 1990’s, they mean resisting the trade deals among countries
facilitated and promoted by global organizations like the World Trade Organization.
 Globalization by Manfred Steger - the expansion and intensification of social relations and
consciousness across world-time and across world space. globalization processes do not occur merely at an
objective, material level but they also involve the subjective plane of human consciousness.
 Expansion - both the creation of new social networks and the multiplication of the existing connections
that cut across traditional political, economic, cultural, and geographic boundaries.
 Intensification - refers to the expansion, stretching and acceleration of these networks.
 Globalization is increasingly omnipresent. Omnipresent means always existing.
 Globalization is clearly a very important change; it can even be argued that it is the most important
change in human history.
 This is reflected in many domains, but particularly in social relationships and social structures, especially
those that are widely dispersed geographically. “In the era of globalization… shared humanity faces the
most fateful of the many fateful steps” it has made in its long history.
 Globalization - is a transplanetary process or set of processes involving increasing liquidity and the
growing multidirectional flows of people, objects, places and information as well as the structures they
encounter and create that are barriers to, or expedite, those flows.
 Transnationalism - processes that interconnect individuals and social groups across geo-political
borders. It is limited to interactions that cross geo=political borders, especially those associated with two or
more nation-states.
 Globalization includes such connections, but it is not restricted to them and encompasses a far wider
range of trans planetary processes. Further, geo-political borders are only one of the barriers encountered,
and often overcome, by globalization.
 Transnationality - the rise of new communities and formation of new communities and formation of
new social identities and relations that cannot be defined through the traditional reference point of nation-
states.
 Transnationalism is clearly a more delimited process than globalization.
 Solidity - a world in which barriers exist and are erected to prevent the free movement of all sorts of
things. It was the nation-state that was most likely to create these “solid” barriers (for example, walls [e.g.,
the Great Wall of China; the wall between Israel and the West Bank], border gates and guards), and the
state itself grew increasingly solid as it resisted change.
 Liquids and Gases - at an increasing rate over the last few centuries, and especially in the last
several decades, that which once seemed so solid has tended to “melt” and become increasingly liquid.
Instead of thinking of people, objects, information, and places as being like solid blocks of ice, they need to
be seen as tending, in recent years, to melt and as becoming increasingly liquid. Everywhere we turn, more
things, including ourselves, are becoming increasingly liquefied. Furthermore, as the process continues,
those liquids, as is the case in the natural world (e.g., ice to water to water vapor), tend to turn into gases of
various types. much of the information now available virtually instantly around the world wafts through the
air in the form of signals beamed off satellites.
 It should be noted that they are metaphors. They are metaphors designed to communicate a sense of
fundamental changes taking place as the process of globalization proceeds.
 Flows - movement of people, things, information, and places due, in part, to the increasing porosity of
global barriers.
 Multi-directional flows - Globalization is not a one-way process as concepts like Westernization
and Americanization seem to imply. While all sorts of things do flow out of the West and the United States
to every part of the world, many more flow into the West and the US from everywhere (e.g., Japanese
automobiles, Chinese T-shirts, i-phones manufactured in China, and so on.)
 Interconnected flows - The fact is that global flows do not occur in isolation from one another;
many different flows interconnect at various points and times.
 Take the example of the global fish industry. That industry is now dominated by the flows of huge
industrial ships and the massive number of frozen fish that they produce and which is distributed
throughout the world. In addition, these huge industrial ships are putting many small fishers out of business
and some are using their boats for other kind of flows (e.g., transporting illegal immigrants from Africa to
Europe).
 Conflicting flows – Trans planetary processes not only can complement one another, but often also
conflict with one another (and with much else). In fact, it is usually these conflicting flows that attract the
greatest attention.
 Reverse flows - In some cases, processes flowing in one direction act back on their source (and much
else). This is what Ulrich Beck has called the boomerang effect. In Beck’s work the boomerang effect takes
the form of, for example, pollution that is ‘‘exported’’ to other parts of the world but then returns to affect
the point of origin.
 Globalization (especially global flows and structures) is increasingly ubiquitous. Indeed, our everyday
lives have been profoundly affected by this process. Global flows and structures have become an
inescapable part of our everyday experience.
 Ubiquitous - Existing everywhere.

DEFINITIONS OF TERMINOLOGIES
 Globalization: Transplanetary processes involving increasing liquidity and growing multi-directional
flows as well as the structures, they encounter and create.
 Transnationalism: Processes that interconnect individuals and social groups across specific geo-
political borders.
 Transnationality: Rise of new communities ang formation of new social identities and relations that
cannot be defined as nation-states.
 Globality: Omnipresence of the process of globalization.
 Metaphors: Use of one term to help us better understand another.
 Solidity: People, things, information, and places “harden” over time and therefore have limited mobility.
 Liquidity: Increasing ease of movement of people, things, information, and places in the global age.
 Flows: Movement of people, things, information, and places due, in part, to the increasing porosity of
global barriers.
 Economic globalization: Growing economic linkages at the global level.

LESSON 2 GLOBALIZATION THEORIES

GLOABLIZATION THEORIES
 Homogeneity – refers to the increasing sameness in the world as cultural inputs, economic factors,
and political orientations of societies expand to create common practices, same economies, and similar
forms of government. Homogeneity in culture is often linked to cultural imperialism. They are powerful
and dominant.
 Heterogeneity – pertains to the creation of various cultural practices, new economies, and political
group because of the interaction of elements from different societies in the world. Heterogeneity refers to
the differences because of either lasting differences or of the hybrids or combinations of cultures that can
be produced through the different trans planetary processes.

DYNAMICS OF LOCAL AND GLOBAL CULTURE

 Cultural Differentialism – emphasizes the fact that cultures are essentially different and are only
superficially affected by global flows. The interaction of cultures is deemed to contain the potential for the
“catastrophic collision” Samuel Huntington’s theory on the clash of the civilizations proposed in 1966 best
exemplifies this approach.
 Cultural Hybridization – approaches emphasize the integration of local and global cultures.
 Cultural Convergence – approach stresses homogeneity introduced by globalization. Culture is
deemed to be radically altered by strong flows while cultural imperialism happens when one culture
imposes itself on and tends to destroy at least parts of another culture.

THE GLOBALIZATION OF RELIGION

 Globalization has played a tremendous role in providing a context for the current revival and resurgences of
religion.
 Globalization of religion provided a fertile milieu to scattered on a global scale. As Scholte (2005) made
clear: “Accelerated globalization of recent times has enabled co-religionist across the planet to have greater
direct contact with one another.
 Globalization has allowed religion or faith to gain considerable significance and importance as a non-
territorial touchstone of identity.

ORIGINS AND HISTORY OF GLOBALIZATION

 Hardwired. Adapting the most powerful country. According to Nayan Chanda (2007), it is because of
our basic human needs to make our lives better that made globalization possible. Therefore, one can trace
the beginning of globalization from our ancestors in Africa who walked out from the said continent in the
late ice age.
 Cycle. For some, globalization is a long-term cyclical process and thus, finding its origin will be daunting
task. Subscribing to this view will suggest adherence to the idea that other global ages have appeared.
There is also the notion to suspect that this point of globalization will soon disappear and reappear.
 Epoch. These are also called “waves” and each has its own origin.
▫ Globalization of religion (fourth to seventh century)
▫ European colonial conquest (late fifteenth century)
▫ Intra-European war (late eighteen to early nineteenth century to 1918)
▫ Post – World War II period
▫ Post – Cold War period
 Events. Specific events are also considered as part of the fourth view in explaining the origin of
globalization.
 Broader, More Recent Changes
▫ The emergences of the United States as the global power (Post – World War II)
▫ The emergences of Multinational corporations (MNCs).
▫ The demise of Soviet Union and end of the Cold War.

GLOBAL DEMOGRAPHY
 Demographic Transition is a singular historical period during which mortality and fertility rates
decline from high to low levels in a particular country to region. The broad outlines of the transition are
similar in countries around the world, but the pace and timing of the transition has varied considerably.
 Global Migration is the nuances of the movements of people around the world can be seen through
the categories of migrants.
 Vagabonds – move “because they have to be”.
 Tourist – move because they want to be and because they can afford it.
 GLOBALIZATION THEORIES (VIDEO)
 World-systems theory focuses on the importance of the world as a unit, rather than looking at
individual countries. The World-system theory is a fluid model, but it is criticized for being too focused on
the economy and the Core countries, and forgetting about the culture or even the class struggles of
individual countries. It divides the world into three regions:
 Core countries – include areas like Western Europe and United States. These countries have
a strong central government with enough tax to support it. They are economically diversified,
industrialized, and relatively independent of outside control. They have strong middle and
working classes, and focus on higher scope production of materials goods rather than raw
materials.
 Periphery countries – are those in Latin America and Africa, and tend to have a relatively
weak government. They tend to depend on only one type of economic activity like extracting raw
materials. There’s a high percentage of poor and uneducated people, as well as a small upper class
which controls most of the economy. And this creates a huge inequality in the population. These
countries are greatly influenced by core countries and transnational corporations. Which can harm
the future economic potentials of the periphery countries.
 Semi-periphery countries – like India and Brazil make up the middle ground between
Core and Periphery. They are often not dominant in international trade but they have a relatively
diversified and developed economy. These semi-periphery countries can come either from
Periphery countries moving up toward the industrialized Core countries, or from Core countries
declining toward Periphery status.
 Modernization theory proposes that all countries follow a similar path of development from a
traditional to a modern society. It assumes that with some help, traditional countries can develop into
modern countries in the same way that today’s modern countries developed in the first place. It looks at the
internal social dynamics as the country adapts to new technologies, and the political and social changes that
occur.
 Dependency theory was a reaction to modernization theory, and uses the idea of Core and Periphery
countries from the World-systems theory to look at the inequalities between countries. Basically, it is the
idea that Periphery or third world countries are poor and export resources to the wealthy core or first world
countries. Not because they are in an earlier stage of development, but because they have been integrated
into the World-systems as an undeveloped country. They have their own structures and features not seen in
developed countries, and will not accelerate to become a developed nation. They are in unfavorable
economic position that means they don’t even have the opportunity to improve and develop.
They’ll remain poor and dependent on wealthier nations.

 Hyper
- Legitimate
- One global society
 Skeptical
- Leading towards capitalism
 Transformationalist
- No specific cause and outcomes
- National Government changing
 - World is changing
- Uncertain patterns

LESSON 3 HISTORY OF GLOBAL ECONOMY

We begin our discussion of the history of the global economy with the following question. What has led to
such strong differences across regions of the world? The quick and dirty answer is simply that the "West" developed
first.  

BIRTH OF CAPITALISM
One can find examples of sustained economic growth throughout history, for example in the woolen
industry in 13th century Flanders, and in 14th century Florence. Starting with the 11th century, long distance trading
flourished connecting thriving pockets of growth, between Venice and the Netherlands. However, by and large,
living standards remained at subsistence levels for the majority of the world's population until the middle of the 18th
century.  
Over the centuries as commerce grew, albeit slowly, the power of the vassals of the feudal system declined,
being replaced by merchants and incipient capitalists. Innovations in sailing led to long distance trading. The
opportunities and challenges of sending a vessel abroad for years at a time brought about the institutions which
facilitated the growth of the modern capitalist system.  

INSTITUTIONS WHICH SPURRED

Principle of Private Property  Joint Stock Companies 

Deposit Banking  Insurance 

Formal Contracts  International Financial Markets 

Craft Guilds  Government Support of Opening Markets 

Merchant Associations 

At the same time burgeoning industrialization and urbanization further weakened the feudal economy,
changing both the political as well as the economic structure of Europe.  

THE QUESTION REMAINS WHY IN THE “WEST”?

Some of the factors contributing to these changes were:  

1) The Protestant Reformation – note that industrialization began in  

northern Europe. Protestant work ethic - fostered hard work, frugality,  
sobriety and efficiency, virtues which facilitated capitalism. 
 2) Rise of strong nation states – 16th through 19th century. The rise of strong nation-states
created conditions conducive to capitalism. It  
provided domestic markets free of barriers to trade, a uniform monetary system, contract and property laws,
police and militia protection, as well as, basic transportation and communications infrastructure.
Initially absolute monarchs wrested power from feudal lords and town authorities and consolidated territory
into nation states. Eventually, as the power of capitalists and the middle class or bourgeoisie rose, the
monarchs ceded power to a more representative structure.  
3) The Enlightenment – during the 17th and 18th century there were great scientific and social
advances. Discoveries of oxygen, electricity,  
calculus, among many other findings led to practical applications in agriculture and industry. This period
laid the scientific foundation for the industrial revolution. Social thought as expounded by David Hume,
Adam Smith and Thomas Jefferson stressed the rights and responsibilities of the individual. This weakened
the power of institutions such as the church and state, which had patronizing relationships with the masses.
This liberal philosophy emphasizing freedom from arbitrary authority further led to the rise of the middle
class and the overthrow of the landed gentry.  It eventually led to political revolutions in not only in the
United States, but also in England, Holland, and France.  
The profits earned by capitalist from international trade, and the flow of gold and silver from the
Americas, financed the accumulation of capital that furthered reinforced industrialization and capitalism.  

CAPITALISM AND COLONIZATION

Capitalism as an economic system spread beyond Europe, mainly to North America and Australia. One
may ask why capitalism and new technologies did not spread elsewhere. One possible answer is that the indigenous
peoples of North America and Australia were not particularly numerous as compared to other regions. As
the descendants of the English and French colonists grew in number and with new immigrant waves, primarily from
Europe, the European population overwhelmed the indigenous peoples who were (at best) pushed aside. The
European immigrants using their skills and by acquiring technologies from their home countries embarked on
creating new industries. However, in Africa, the Indian Subcontinent, East Asia, and in Latin America the
indigenous peoples were relatively numerous. Being greatly outnumbered, the colonist created an administrative
structure, which encouraged or more likely coerced, the indigenous peoples to produce primary products for export
to the home countries. These primary products were then transformed in the production process into
manufactured goods, some of which were re-exported back to the colonies. Under these conditions there was little
incentive to create new industries in these colonies.  

JAPAN
Japan proved to be an exception. Until the Meiji Restoration (1868) Japan was basically a closed society.
Feudal structures and a strong caste system were the main characteristics of this island nation. Being isolated and
having an insular culture, which mistrusted foreigners, the Japanese were caught unaware of the economic and
military power of the Western nations when Admiral Perry sailed into Yokohama harbor. The Japanese,
understanding their great disadvantage, began a frantic and zealous campaign to industrialize in the latter part of the
19th century. Borrowing western technologies, the Japanese managed to build steel industries, create a modern navy
and in1906 defeat the Russians in a naval battle in the Sea of Japan.  

BRITAIN’S DECLINE
 The world economy during the 19th century was centered on Britain's early start in the industrial
revolution. Current account surpluses led to the English Pound becoming the world’s major currency and the gold
standard was established creating a system of fixed exchange rates. By the end of the century British foreign
direct investment and the diffusion of technology spread industrial development to the European continent and
North America leading to greater international competition. However, towards the end of the 19 th Century Britain
did not respond to new technological and managerial realities. Their dominance began to diminish. The advent of
steel and chemical industries, which enjoy economies of scale, led to the creation of large corporations. The British
maintained the status quo with small to medium size family manufacturing industries. The US with its large and
growing internal market was better placed to exploit these new industries.  

TWENTIETH CENTURY
At the beginning of the 20th century the global economy was in turmoil. Financial crises were common.
Policies to protect domestic industries such as tariff measures stifled trade. Political alliances in Europe divided the
continent into two camps. The assassination of Archduke Ferdinand in the Balkans sparked the century’s first
World War. The advent of technology in warfare had devastating effects. The machine gun, armored tanks, and the
use of poisonous gas brought warfare to a new level of barbarity, shocking the world. In its aftermath, President
Woodrow Wilson advocated a new-world order centered on the League of Nations. While grand in concept the
political realities of the day made it ineffective. The cost of WWI to Britain resulted in the abandonment of the gold
standard, a system of exchange rates backed by gold. The post WWI era was marked by a resurgence of economic
prosperity, particularly in the United States.  However, Germany saddled with reparations, payments to Allied
powers (France in particular) for damages caused during the war faced devastating hardship. The Germany currency
suffered a hyperinflation making it near worthless. At the end of the 1920s Germany began to get back up on its
economic feet.  
The US stock market crashed in 1929. Inappropriate policy responses led to the Great Depression. Its
repercussions spread to Europe as competitive policies of trade protection and currency devaluations were
implemented in vain attempts to protect domestic economies. The US Congress passed the Tariff Act of 1930, better
known as the Smoot Hawley Tariff Act. These measures raised tariffs on imports to an average of 50%.
This "beggar thy neighbor" policy led to a vicious cycle of reciprocal tariffs and other restraints to trade.
International trade came to a halt in the mid-1930s deepening and lengthening the Great Depression both here at
home and abroad.  
Germany, resurfacing after a decade of deprivation, now faced a new economic challenge.   Political
turmoil ensued and the 1933 Germany elections saw the rise of the National Socialist Party headed by Adolf Hitler.
Embarking on a re-industrialization policy, the Nazis expanded their military capacity, built the famous Germany
highway system, the Autobahn, and encouraged production of the people’s car, Volkswagen. Flexing their
new found military might Germany under the Nazis, invaded Czechoslovakia in 1937 and later precipitated World
War II with the invasion of Poland in 1939.  

POST-WORLD WAR II
In 1944 it became clear that the war was coming to an end, and the western Allied powers decided to again
to attempt building a new world order. Meeting at the Mount Washington Hotel in Bretton Woods, New Hampshire,
the US and English representatives, H.D. White and J.M. Keynes respectively, (yes, Keynes of the Keynesian
Macromodel!) set out to create institutions so to prevent the reoccurrence of the conditions which led to WWII.  
They proposed the creation of three organizations, with each organization playing a role in the smooth
functioning of global economy. These were:  
 1) The International Bank for Reconstruction and Development (IBRD or more commonly the World Bank)
whose original mandate was to rebuild the war-torn economies of Europe and Asia. It has evolved into the
world’s most influential lender of foreign aid to developing nations.  
2) The International Monetary Fund (IMF) whose primary purpose was to maintain a fixed exchange rate
system known as the Bretton Woods System. After the dissolution of the Bretton Woods System in the
early 1970s the IMF has become the world’s overseer of the international financial system, recently playing
a highly visible and controversial role in the aftermath of the East Asian financial crisis.  
3) The International Trade Organization (ITO), which was not ratified by the US Congress and consequently
did not become a reality. However, it’s primary function of liberalizing world trade was given to the
General Agreement on Tariffs and Trade (GATT). Several GATT trade negotiations are of note. The
Kennedy Round (early 1960s) originated due to US concerns with respect to the newly formed European
Common Market. It resulted in a reduction in world tariffs by approximately 30%. The Tokyo Round
(1970s) further reduced tariffs and addressed issues of non-tariff barriers, such as quotas. Most recently  is
the Uruguay Round, which concluded in 1994. Its major accomplishments included reduced barriers to
trade in services, protection of intellectual property and liberalization in agriculture. One consequence of
the Uruguay round was the transformation of GATT into the World Trade Organization (WTO), a new
institution with the same primary objective of trade liberalization.  
The Post-World War II era is marked by two major geopolitical events, the Cold War and the period of
decolonization. Some political scientists viewed the world as being divided into three groups of nations. The
Afirst-world@ consisted of the western democratic industrial nations. The Asecond-world@ was made up of
the communist nations and the Athird-world@ a term still in use today refers to the developing nations. The
Cold War was an ideological battle between the Afirst@ and Asecond@ worlds. Each believed the other wished
to spread its influence and dominate the world. The actual hostilities that took place were in the Athird@ world.
The Korean War, Vietnam War, and numerous other conflicts were at their core battles between the Afirst@
and Asecond@ worlds for the allegiance of Athird@ world nations. The end of the Cold War occurred in the
beginning of the 1990s with the fall of the Soviet Union.  

DE-COLONIZATION
This period also saw the birth of many new nations as the European powers decolonized. Shortly after
World War II, Great Britain de-colonized South Asia leading to the partition of British India into India and Pakistan.
France, as a result of the Algerian Civil war, decolonized later in late 1950s and early 1960s. Portugal, the last of the
European colonizer granted independence to the last of its colonies in the middle 1970s. This means that many
developing countries are relatively young, especially those in Africa, the Middle East and South Asia.  
These newly liberated countries had to choose which economic structure to adopt to achieve their
developmental objectives. Many of these countries adopted Socialist policies giving government a very large role in
their economies. Their choices, by and large, were a function of distancing themselves from their former colonial
masters.  Furthermore, Keynesian policy, whose central tenet was that government should play an active role in the
economy to combat recessions and unemployment, was being practiced in the United States and other stalwarts of
market economics. A third reason was the example of Stalinist Russia which in relatively quick time transformed the
Soviet Union from an agrarian to industrial society. 

IMPORT SUBSTITUTION
These new nations adopted government-controlled economies that relied on import substitution
industrialization strategies to achieve industrialization. Import substitution meant that these countries fostered the
growth of industries that produced goods that were being imported, usually from the former colonialist. The basic
premise for this policy was that their former colonial economic relationship was one in which the colonialist exploits
its colony by importing its raw materials and then exporting high-valued manufactured goods back to it. This cycle
of exploitation could be broken if the colony used its raw materials itself to manufacture its own goods. While the
notion might appear to be compelling, it is a movement away from efficient resource allocation.  Newly formed
manufacturing industries in the young nations were relatively inefficient and required fairly high levels of protection
from imports, mainly from the industrialized countries. Behind protectionist barriers these industries did not have
the incentive to become efficient. While import substitution policies did initially succeed in producing some
economic growth, they were not sustainable. Many nations in Africa, South Asia and Latin America saw their
economies stagnate after an initial growth spurt. Several Southeast Asian nations, after initially implementing import
substitution policies, adopted export promotion strategies. Here they would focus their industrial efforts on
producing goods that were competitive in global markets. They created industries whose products had high world
demand, required labor-intensive production, and had economies of scale.   What was not consumed at home could
be exported.  

OIL PRICE SHOCKS

The oil price shocks of the1970s forced many Americans for the first time to realize that the US economy
was not independent from the rest of the world. The recessions following the oil crises of 1973 and in 1979 led to
both recession and inflation simultaneously. The oil price shocks set into motion events that are still present
in today’s global economy.  
Many oil exporting countries, especially in the Persian Gulf area, saw their export earnings rise faster than
they could spend them. The surplus earnings, which were denominated in US dollars, found their way into the global
financial system. In other words, these petro-dollars were deposited in the major banks of the US and Europe.  These
banks now flush with new deposits had to find new borrowers in order to remain solvent. Many oil-importing
developing countries had a great need for these resources in order to finance the now higher cost of oil. Some oil-
exporting developing countries enacted development programs that outspent their oil earnings. The size of
many developing countries debt ballooned.  

INTERNATIONAL DEBT CRISIS

Two events in the US precipitated an international debt crisis. Mr. Paul Volker, then the  Chairman of the
Federal Reserve System, instituted a very tight monetary policy to fight the double-digit inflation in the US.
Reducing the money supply resulted in an increase in interest rates. This increase in interest rates increased the
interest payments that developing countries had to pay in order to service their huge debt. Secondly,
President Ronald Reagan instituted a supply-side economic policy plunging the US economy into the worst
recession since the Great Depression. With the economy in the US in a severe downturn the demand for developing
countries products fell. Developing countries were now between a rock and a hard place. On the one hand their debt
service payments were rising while at the same time their ability to earn the income to pay their debt obligations was
falling. Mexico, Argentina, Brazil and many other developing countries either defaulted on their debt or underwent
IMF restructuring programs requiring stringent austerity measures. On group of countries, however, weathered the
storm. Export promoters allowed price adjustments to shift their production away from energy intensive production.
Countries who followed import-substituting policies stagnated. The 1980s is often referred to as the “lost decade” in
Latin America. Using the Asian Tigers of Korea, Hong Kong, Taiwan and Singapore as a model, many import
substituting countries changed their policies. They became more market friendly, opening up their economies to the
global economy. One major example is Mexico, who joined the US and Canada in the North American Free Trade
Agreement in 1994. 
Most developing nations saw the benefits of becoming linked to the global economy.  Industrial nations no
longer were viewed as neo-colonial exploiters, but as markets for developing countries= goods. Further integration
of capital markets led to the emerging market phenomena. Investors in industrial countries could now purchase
equities from a variety of newly formed stock markets in Argentina, Chile, Thailand, Malaysia, and so on. This
inflow of financial capital allowed developing countries to invest in building new factories and infrastructure
speeding up their economic development.  
Also, at this time the Soviet Union disintegrated after its Eastern European allies overthrew their
communist governments. The example of a well-organized government-controlled economy turned out to be a myth.
The global movement towards more market friendly economic systems is the major outcome of the end of the Cold
War. Countries embracing markets, both internally and externally, have created a world of growing
interdependence. The events across the globe are transmitted everywhere through the global economy.  

THE GLOBAL ECONOMY

Discuss the arrangement of and the relation between the parts or elements of something that is complex but
not is limited to structures of globalization.

Global Economy (World Economy) refer to the interconnectedness worldwide of the economy as well as the
activities that took place or take place rather between multiple countries.
Economic Globalization refers to increasing interdependence of world economies as associated with economic
globalization – protectionism and trade liberalization as well as a fair trade.
 Protectionism is the economic policy of restricting imports from other countries through methods such as
tariffs on imported goods, import quotas and variety of other government regulation.
 Trade Liberations or Free Trade is the removal or reduction of restriction or barriers on the free exchange
of goods between nations.
 Fair Trade is a trading partnership based on dialogue, transparency and respect that seek greater equity in
international trade.

Market Integration occurs when prices among different location or related goods follow a similar pattern over a long
period of time, groups of good often move proportionally to each other and when this relation is very clear among
different market.

TYPES OF MARKET INTEGRATION

 Horizontal Integration occurs when a firm or agency gains control of the other firms or agency performing
similar marketing function at the same level in a marketing sequence.
 Same products and services that merged together.
 Vertical Integration is when the company either owns or control wherein to joint ventures multiple stages in
supply chain.
 Different products and services but same industry.
 Magkaiba ng product at serbisyo pero same industry. For example, nagbebenta ng sasakyan ang
main company tapos nakipagmerge sa isa pang company na nagbebenta ng gulong or parts ng
kotse.
 Forward Integration. If a firm assumes another function of marketing which is closer to
the consumption function, it is a case of forward integration.
 Backward Integration. This involves ownership or a combination of sources of supply.
 Balanced Vertical Integration. The third type of vertical integration is a combination of
the backward and the forward vertical integration.
  Conglomeration Integration involves a merger between two businesses that are not related to each other
completely different industries.

DEGREE OF INTEGRATION
 Ownership Integration occurs when all the decisions and assets of a firm are completely assumed by
another firm.
 Contract Integration involves an agreement between two firms on certain decisions, while each firm retains
its separate identity.

CONTEMPORARY WORLD (INTRODUCTION TO

GLOBALIZATION)

Globalization
 Defined by different authorities differently. One of those are as follows:
 It is the process of international integration arising from the interchange of world views, products,
ideas, and other aspects of culture.
 It is the networking and expansion of once local products, belief, and practices into universal
products, belief, and practices often through technology.

EXAMPLES OF GLOBALIZATION
Globalization in Economics
 Multinational corporations operate on a global scale, with satellite offices and branches in numerous
locations.
 Outsourcing can add to the economic development of a struggling country, bringing much needed jobs.
 Some automobiles use parts from other countries, as in a car being assembled in the United States with the
parts coming from Japan, Germany, or Korea.
 One shirt sold in the United States could have been made from Chinese cotton by workers in Thailand.
Then it could have been shipped on a French freighter that had a Spanish crew.
Globalization in the Blending of Cultures
 Christian missionaries from Europe added to the globalization of Christianity.
 Colonization all over the world was a major cause of globalization.
 Satellite television allows shows from one country to be broadcast in many others, adding to cultural
globalization.
Globalization in Technology
 The internet is a major contributor to globalization, not only technologically but it other areas as well, like
in cultural exchanges of the arts.
 Global news networks, like CNN, contribute to the spread of knowledge.
 Cellphones connect people all over the world like never before. Around 60 percent of all people in the
world use cellphone.
THREE CATEGORIES OF GLOBALIZATION

 Economic
 Political
 Social
Through the three are interdependent, economic, and political forces are usually the driving factors of
globalization, while social changes generally occur as a result of those activities.
Social globalization pertains to human interaction within cultural communities, encompassing topics
like family, religion, work and education.

IMPACT
Economic Impact
- Improvement in standard of living
- Increased competition among nations
- Widening income gap between the rich and poor
Social Impact
- Increased awareness of foreign cultures
- Loss of local culture
Environmental Impact
- Environmental degradation
- Environmental management

ADVANTAGES
 Peaceful Relations. Most of the countries have resorted to trade relations with each other in order to boost
their economy, leaving behind any bitter past experiences if any.
 Employment. Considered as one of the most crucial advantages, globalization has led to the generation of
numerous employment opportunities. Companies are moving towards the developing countries to acquire
labor force.
 Education. A very critical advantage that has aided the population is the spread of education. With
numerous educational institutions around the globe, one can move out from the home country for better
opportunities elsewhere.
 Product Quality. The product quality has been enhanced so as to retain the customers. Today the customers
may compromise with the price range but not with the quality of the product. low or poor quality can
adversely affect consumer.
 Cheaper Prices. Globalization has brought in fierce competition in the markets.
 Communication. Every single information is easily accessible from almost every corner of the world.
Circulation of information is no longer a tedious task, and can happen in seconds. The internet has
significantly affected the global economy, thereby providing direct access to information and products.
 Transportation. Considered as the wheel of every business organization, connectivity to various parts of the
world is no more a serious problem. today with various modes of transportation available, one can
conveniently deliver the products to a customer located at any part of the world.
 GDP Increase. Gross Domestic Product, commonly known as GDP, is the money value of the final goods
and services produced within the domestic territory of the country during an accounting year.
  Free Trade. A policy in which a country does not levy taxes, duties, subsidies or quota on the import/export
of goods or services from other countries.
 Travel and tourism. Globalization has promoted tourism to great heights. International trade among
different countries also helps in increasing the number of tourists that visit different places around the
world.
 External Borrowing. With the help of globalization, there is opportunity for corporate, national, and sub-
national borrowers to have better access to external finance, with facilities such as external commercial
borrowing and syndicated loans.

DISADVANTAGES
 Health Issues. Globalization has given rise to more health risks and presents new threats and challenges for
epidemics.
 Loss of Culture. People may adapt to the culture of the resident country. They tend to follow the foreign
culture more, forgetting their own roots.
 Uneven Wealth Distribution. It is said that the rich are getting richer while the poor are getting poorer. In
the real sense, globalization has not been able to reduce poverty.
 Environmental Degradation. The industrial revolution has changed the outlook of the economy.
 Disparity. Though globalization has opened new avenues like wider markets and employment, there still
exists a disparity in the development of the economies. Structural unemployment owes to the disparity
created. Developed countries are moving their factories to foreign countries where labor is cheaply
available.
 Conflicts. It has given rise to terrorism and other forms of violence. Such acts not only cause loss of human
life but also huge economic losses.
 Cut-throat Competition. Opening the doors of international trade has given birth to intense competition.
This has affected the local markets dramatically. The local players thereby suffer huge losses as they lack
the potential to advertise or export their products on a large scale. Therefore, the domestic markets shrink.

THE BRIGHT SIDE OF GLOBALIZATION

Globalization lets countries do what they can do best. If, for example, you buy cheap steel from another
country you don’t have to make your own steel. You can focus on computers or other things.
Globalization gives you a larger market. You can sell more goods and make more money. You can create
more jobs.
Consumers also profit from globalization. Products become cheaper and you can get new goods more
quickly.

THE DARK SIDE OF GLOBALIZATION

Globalization causes unemployment in industrialized countries because firms move their factories to places
where they can get cheaper workers.
Globalization may lead to more environmental problems. A company may want to build factories in other
countries because environmental laws are not as strict as they are at home. Poor countries in the Third World may
have to cut down more trees so that they can sell wood to richer countries.
Some of the poorest countries in the world, especially in Africa, may get even poorer. Their population is
not as educated as in developed countries and they don’t have the new technology that we do.
 Human, animal and plant diseases can spread more quickly through globalization.

THE GLOBALIZATION OF WORLD ECONOMICS

INTERNATIONAL TRADING SYSTEMS
International Trade
 International trade is the exchange of goods and services between countries. This type of trade gives rise to
a world economy, in which prices, or supply and demand, affect and are affected by global events.
Global Economy
 Economic globalization refers to the free movement of goods, capital, services, technology and
information.
 It is the increasing economic integration and interdependence of national, regional, and local economies
across the world through an intensification of cross-border movement of goods, services, technologies, and
capital.

TOP TRADING PARTNERS OF THE PHILIPPINES

 United States
 Japan
 Hong Kong
 China
 Germany
 Holland
 Singapore
 South Korea

GOALS OF THE BRETTON WOODS CONFERENCE (1944)

 Intended to govern currency regulations and establish legal obligations (through the IMF)
 Set a standard for exchange rates
 Establish international monetary cooperation
 Money pool from which member nations can borrow funds

 The World Bank and IMF are still active. Although, they have been severely criticized for some of their
policies.
o World Bank
 It is international financial institution that provides loans to countries of the world for
capital projects. It was established by the United Nations Monetary and Financial
Conference or the Bretton Woods Conference.
o International Monetary Fund (IMF)
 Ensure the stability of the international monetary system. It does so in three ways:
keeping track of the global economy and the economies of member countries; lending to
countries with balance of payments difficulties; and giving practical help to members.
o World Trade Organization (WTO)
 Regulates international trades
 Deals with the rule of trade between nations
  Ensures the trade will flows smoothly, predictably and freely as possible.
 Acts as forum in negotiation trade agreements
 Solves trade disputes between countries in a peaceful way
 But only focuses on developed nation
 Lowers the cost of goods and services for those developed nation
 To achieve low cost, labor rights and environmental concerns are ignored
 Promotes economic growth in developed countries
 Favor the rich nations and powerful trans-national corporation
o World Health Organization (WHO)
 Building a better, healthier future for people all over the world
 Concern about public health
 Prime concern is to eradicate and combat dangerous diseases like AIDS/HIVS
 Make researches in medicines and vaccines to eliminate diseases, and development of
nutritious foods
 Responsible for World Health Report and Survey

FORCES SURROUNDING GLOBAL SYSTEM OF PRODUCTION

 National Governments. Deregulation refers to the easing of taxation, entry and pricing of products or
services dictated by government policy. Privatization refers to the ownership of former public sector
operations and firms by private corporations and enterprises.
 Enabling Technologies. Transport, communications, production and organizational improvements.
Explosion of enhanced transport and communication services such as air cargo, integrators offering definite
time delivery (FedEx and UPS), electronic mail and electronic data interchange (EDI). Advanced inventory
management such (just-in-time (JIT)) and new systems of distribution such as third-party logistics (3PL).
 Shifts in Market Conditions and Demand. Economic cycles affect markets and production, e.g., the Asian
financial crisis. Dramatic shifts in demand affect over time influence type of good being produced and
production schedules. Application of new technology can mean product obsolescence. These changes can
be described in part through product life cycle.

1st Quizziz
A negative side effect of globalization such as the spread of Covid-19 is caused
by
- Accelerated transmission of viruses due to increased travel

The interconnection of the world today is often referred to as

- Globalization

Increasing interdependence of nations and peoples across the globe.

- Globalization

According to CNN, the United States receives 80% of its avocados from Mexico.
Mexico receives most of its auto parts from the United States. This is an
example of the following.
- Interdependence

The development of a worldwide economy where resources flow fairly freely

across borders.
- Globalization

The birth rate and death rate determine a country’s

- Population growth

Number of children born each year for every 1,000 people

- Birth rate

Demography is the science that studies

- Population using vital statistics such as births, deaths, ages…

Better healthcare and improved living conditions reduce the

- Death rate
An asylum seeker is…
- a person who seeks safety from serious harm in a foreign country and awaits a decision on the application for
refugee status under relevant international laws.

A migrant is a…
- a person who has resided in a foreign country for more than one year irrespective of the causes, voluntary or
involuntary, and the means, regular or irregular, used to migrate.

A refugee is a…
- a person who owing to fear of being persecuted for reasons of race, religion, nationality or political opinion is
outside his/her country because s/he is unable to be granted protection in his/her country.

Which of the following is a push factor?

- Natural Disasters

Globalization is:
- the breakdown of traditional barriers between nations through technology and transport

What are some positive effects of Globalization?

- Increased freedom to travel and immigrate, better access to medicine, information, and technology.

2nd Quizziz

The powerful and wealthy "core" societies dominate and exploit weak and poor
peripheral societies.
- World System Theory
According to Leslie Sklair Globalization perpetuates inequality – global economic
system is inherently unfair
- False

Globalization has led to the creation of a “global risk society.”

- Anthony Giddens

What theory emphasizes that globalization is a network of production, culture,

and power that is constantly shaped by advances in technology, which range from
communications technologies to genetic engineering.
- The Network Society

It is a process whereby globalization causes one culture to consume another.

- Homogenization

Ethnoscapes is the migration of people across cultures and borders

- Arjun Appadurai

Marshall McLuhan describes the phenomenon of the world’s culture shrinking and
expanding at the same time due to pervasive technological advances that allow
for instantly sharing of culture.
- Global Village

GLOCALIZATION means that ideas about home, locality and community have
been extensively spread around the world.
- True

Theories of Globalization
- The Global Village-Marshall McLuhan
- Global Risk Society-Anthony Giddens
- The Network Society-Manuel Castells
- The World-System Theory -Immanuel Wallerstein

Homogenization is the name given to the process whereby globalization causes

one culture to consume another. It would tend to highlight the rise of world
beat, world cuisines, world tourism, uniform consumption patterns and
cosmopolitanism
- True

 It is the idea of a worldwide homogenization of cultures through the effects of

multinational corporations.
- Mcdonaldization

3rd Quizizz

Modernity is the product of social changes brought on by the Industrial

Revolution
- True

 Social change is controversial.

- True

Social changes result from invention, discovery, and diffusion.

- True

Modernization means that fewer people live in small, rural villages

- True

The phrase "essentially united in spite of all separating factors" is a good

description of what Tonnies called gemeinschaft.
- True

Emile Durkheim said that modern societies are held together by difference, a
process he called "organic solidarity."
- True

Emile Dukheim was more optimistic about modern life than Tonnies, but he still
thought people would feel isolated in modern life and feared anomie would
result.
- True

Mass-Society Theory argues that the scale of social life is increasing leaving
people feeling lost in a world of vast and impersonal bureaucracies.
- True

The theory of postmodernity claims that, in important respects, modernity has

failed to live up to its promise.
- True

Some societies change, others do not.

- False

Karl Marx claimed that conflict between classes had the effect of preventing
social change.
- False

Modernization typically reduces the range of personal choice about how to live.
- False
Tonnies described gesellschaft as based on the power of the community over the
individual.
- False

Durheim's mechanical solidarity parallels Tonnies gesellschaft.

- False

Weber had a concept of "anomie" in modern societies.

- False

Durkheim had a concept of "anomie" in modern societies.

- True

Postmodernity refers to changes brought on by the Industrial Revolution

- False

Modernity brought increased social diversity

- True

One indicator that a society has moved toward modernity is an increased

emphasis on time.
- True

Tonnies said that trust was hard to come by in modern life and people are
interested in themselves rather than the group.
- True

Max Weber said that modern life was based on rationalization.

- True

Marx said that modernization was synonymous with capitalism.

- True

Wallerstein was a dependency theorist

- True

Rostow was a modernization theorist

- True

Dependency theory says that rich nations help poor nations

- False