Chapter 2: The Structures of Globalization
2.1 The Global Economy
Economic Globalization
 One of the three main dimensions of
globalization commonly found in academic
literature, with the two others being Political
Globalization and Cultural Globalization.
 Refers to the widespread international
movement of goods, capital, services,
technology, and information.
 Protectionism – protecting one’s economy from
foreign competition by creating trade barriers.
 Trade Liberalization – reducing trade barriers to
make international trade easier between
countries
 Tariff – required fees on imports or exports.
Various ways to make trade easier:
 Free Trade – trading of goods and services
between two or more countries without tariffs or
taxes.
 China, India, Japan, South Korea, Australia,
New Zealand – ASEAN FTA
 Trade Bloc – agreement made between
governments to reduce or eliminate trade
barriers
 ASEAN Free Trade Area (AFTA),
 European Free Trade Association (EFTA),
 The North Atlantic Free Trade Agreement
(NAFTA)
Outsourcing – an agreement in which one company
hires another company to be responsible for a planned
or existing activity that is or could be done internally,
and sometimes involves transferring employees and
assets from one firm to another.
Economic Integration
An arrangement between different regions that often
includes the reduction or elimination of trade barriers,
and the coordination of monetary and fiscal policies.
Examples of Economic Integration:
Trade Blocs (NAFTA, AFTA, EFTA, EU-CANADA FTA, EU-
JAPANESE FTA, US-SOUTH KOREA FTA)
These are some of the Trade Agreements of the
Philippines:
1. World Trade Organization
2. ASEAN Free Trade Area
3. European Federation Trade Organization
Factors influencing Globalization are as follow:
1. Historical
The trade routes were made over the years so that
goods from one kingdom or country moved to another.
The well known silk-route from east to west is an
example of historical factor.
2. Economy
The cost of goods and values to the end user
determine the movement of goods and value addition.
The overall economics of a particular industry or trade is
an important factor in globalization.
3. Resources and Markets
The natural resources like minerals, coal, oil, gas,
human resources, water, etc. make an important
contribution in globalization.
The mineral based industries like steel, aluminum,
coal in Australia are examples. Few of these Australian
mining and metal companies are owned by European /
Japanese / American companies.
Near distance to end user or consumer also is an
important factor in globalization. The large markets as
consumer bases in Asian countries have led many
European, Korean to Japanese manufacturing
conglomerates and shift their manufacturing and trading
bases in Asian countries.
4. Production issues
 Utilization of built up capacities of production
sluggishness in domestic market and overproduction
makes a manufacturing company look outward and go
global.
Example: the development of overseas markets and
manufacturing plants in autos, four wheelers, and two
wheelers.
5. Political
The political issues of a country make globalization
channelized as per political bosses. The regional trade
understandings or agreements determine the scope of
globalization.
Examples: Trading in European Union and special
agreement in the erstwhile Soviet block and SAARC.
6. Industrial Organization
The technological development in the areas of
production, product mix and firms are helping
organizations to expand their operations.
7. Technology
The stage of technology in a particular field gives rise
to import and export of products or services from or to
the country.
Modern World System
The World Systems Theory developed by
Immanuel Wallerstein is a way of explaining world
history that shows that some nations benefit from the
world economic system, while others do not and are
even exploited.
Under the World Systems Theory, there are three
different divisions: the core countries, which are the
industrialized capitalist nations in the world, the semi-
periphery countries, which are mostly capitalist and are
industrializing, and finally, the periphery countries that
are less developed than core and semi-periphery
countries.
1. Core Countries
 These are the industrialized capitalist countries
on which periphery countries and semi-
periphery countries depend.
 Core countries control and benefit from the
global market.
 They are usually recognized as wealthy nations
with a wide variety of resources and are in a
favorable location compared to other states.
 These countries possess the ability to exercise
control over other countries or groups of
countries with several kinds of power such as
military, economic, and political power.
 The United States, Canada, Europe, Japan, South
Korea, Australia and New Zealand are examples
of present core countries that have the most
power in the world economic system.  
2. Semi-Periphery Countries
 These are the industrializing,
mostly capitalist countries which are positioned
between the periphery and core countries.
 Semi-periphery countries have organizational
characteristics of both core countries.
 Plays a major role in mediating economic,
political, and social activities that link core and
peripheral areas.
 World-systems theory describes the semi-
periphery as a key structural element in the
world economy. The semi-periphery exists
because it needs to divide the economic power
between the core and the periphery. 
Examples: China, India, Argentina, Brazil, Mexico,
etc.
3. Periphery Countries
 These are less developed than the semi-
periphery and core countries.
 These countries usually receive a
disproportionately small share of global wealth.
 They have weak state institutions and are
dependent on – according to some, exploited by
– more developed countries.
 These countries are usually behind because of
obstacles such as lack of technology, unstable
government, and poor education and health
systems. 
Examples: Philippines, Bangladesh, Bolivia, Chile, etc.