Contemporary World Reviewer

UNIT 1: INTRODUCTION TO GLOBALIZATION

LESSON 1: DEFINING GLOBALIZATION
Globalization refers to the process by which more people across large distances become
connected in more and different ways. They can become connected very simply by doing or experiencing
the same sort of things. For example, Japanese cuisine “globalizes” when more people on different
continents enjoy the test of the sushi. Since the 19th century Soccer has become globalize as player and
fans in many countries took an interest in the game.

THE FORCES OF GLOBALIZATION

 Globalization is an interaction of people and primarily an economic process of integration which
has social and cultural aspects as well
 Such instructions, which have emerged in many areas of human activity, reflect increasingly
common knowledge and awareness.
 Eating sushi and getting a hepatitis Bs shot involve elements of world culture- the meaning of sushi
and patients regardless of their location
 Even they do not know the larger structures, their everyday life is nevertheless embedded in a
world culture that transcends their village, town, or country and that becomes part of individual and
collective identities.
 Globalization thus involves growing diffusion, expanding interdependence, more transnational
institutions, and an emerging world culture and consciousness- all aspects of the connectedness at
the heart of globalization, all elements of the world globalization is creating (Lechner, 2015)
THE MEANING OF GLOBALIZATION
Globalization is the set of processes by which more people become connected in more and
different ways across ever-greater distances.
A more academic version of this idea is to equate globalization with “deterritorialization”, the
process through which the constrains of physical space lose their hold on social relations .
It is also defined as the process by which capitalism expands across the globe as powerful
economic actors seek profit in global markets and impose their rules everywhere, a process often labeled
“Neoliberalism.”
THE MEANING OF GLOBALIZATION TO DIFFERENT PEOPLE
According to Lechner (2015), globalization means different things to different people.
 To a Korean Pentecostal missionary, it means a new opportunity to spread the faith and convert
lost souls abroad.
  To a Dominican immigrant in the United States, it means growing new roots while staying deeply
involved in the home village
 To an Indian television viewer, it means sampling a variety of new shows, some adapted from
foreign formats.
 To a Chinese apparel worker, it means a chance to escape rural poverty by cutting threads off
designer jeans
 To an American shoe company executive, it means managing a far-flung supply chain to get
products to stores.
 To a Filipino global justice advocate, it means rules of the global game that favor the rich North
over the poor South.
THEORIES OF GLOBALIZATION
According to Lechner (2015) states the following are the theories or perspective in the emergence of
globalization:
1. World-System Theory
 A perspective that globalization is essentially the expansion of the capitalist system around the
globe.
 At the time Marx was writing in the mid-nineteenth century, the world was becoming unified via
thickening networks of communication and economic exchange
 At the “core” of the system, resources, and trade opportunities, most notably in “peripheral” areas.
 Buffer countries in the “semi periphery” helped mitigate tensions between core and helped to keep
the system remarkably stable.
 The central purpose of the world system is capital accumulation by competing firms, which go
through cycles of growth and decline.

2. World Polity Theory

 In this theoretical perspective, state remains an important components of world society, but primary
attention goes to the global cultural and organizational environment in which states are embedded.
 What is new in world society, from this perspective, is the all-encompassing “world-polity, and its
associated world culture, which supplies a set of cultural rules or script that specify how institution
around the world should deal with common problems.
 Globalization is the formation and enactment of this world polity and culture.
 One of the world polity’s key elements is a general, globally legitimated model of how to form a
state.
 Guided by this model, particular states widely varying circumstances organize their affairs in
surprisingly similar fashion.
 Because world structured as a polity with an intensifying global culture, new organization-business
enterprises educational institutions, social movements, leisure and hobby groups, and so on-spring
up in all sorts of countries to enact it precepts.
 As a carrier of global principles, these organizations then help to build and elaborate world culture
and world society further.
 3. World Culture Theory
 This perspective agrees that world culture is indeed new and important, but it is less homogenous
than world-polity scholars imply.
 Globalization is a process of relativization.
 Societies must make sense of themselves in relation to a larger system of societies while
individuals make sense of themselves as a larger whole in relation to a sense of humanity as a
larger whole.
 World society thus consists of a complex set of relationship among multiple units in the “global
field”. In this model, world society is governed not by a particular set of values but by the
confrontation of different way of organizing this relationship.
 Globalization compresses the world into a single entity, and people necessarily become more
aware of their relationship to this global presence.
 Of central importance to this process is the problem of “globality”: how to male living together in
one global system meaningful or even possible.
 Not surprisingly, religious traditions take on new significance insofar as they address in new
predicament that compels societies and individuals to “identify themselves in new ways.
 It concludes that a “search for fun fundamentals” is inherent in globalization.

REASONS WHY GLOBALIZATION WILL NOT MAKE THE WORLD HOMOGENEOUS

According to Lechner (2015), the reasons why globalization will not lead to a homogeneous world
are:
1. General rules and models are interpreted in light of local circumstances. Thus, regions respond to
similar economic constraints in different ways; countries still have great leeway in structing their
own policies; the same television program means different thighs to audiences; McDonald's adapts
its menu and marketing to local tastes.

2. Growing similarity provokes reactions. Advocates for many cultures seek to protect their heritage or
assert their identity. Witness the efforts of fundamentalists to reinstate what they consider
orthodoxy, the actions of indigenous people to claim their right to cultural survival.
3. Cultural and political differences have themselves become globally valid. The notion that the
people and countries are entitled to their particularity of distinctiveness is itself part to global
culture. The tension between homogeneity and heterogeneity is integral to globalization.

THE INTERDISCIPLINARY UNDERSTANDING OF GLOBALIZATION

1. Political Scientist
 With global ecological changes, an ever more integrated global economy, and other trends,
political activity increasingly takes place at the global level.
 Under globalization, politics can take place above the state through political integration schemes
such as the European Union, the ASEAN integration where Philippines is involved, though the
intergovernmental organizations such as the International Monetary Fund, the World Bank and the
World Trade Organization.
 Political activity can also transcend national borders through global movements and Non-
Governmental Organizations (NGO’s). Civil society organizations act globally by forming alliances
with organizations in other countries, using global communication systems, and lobbying
international organizations and other actors directly, instead of working though their national
governments (Global Policy Forum 2017).

2. Economist
 According to Franker (2017), economists have his own view of globalization.
 First, it is integration through international trade of markets in goods and services as a reflected in
variety of possible measures.
 These include direct measures of barriers like tariffs and transport costs, trade volumes and price
related measures. Globalization also means foreign direct investment, increased trade in
intermediate product, international outsourcing of services like the call center industry here in the
Philippines, and international movement of persons like our Overseas Filipino Workers (OFW).
 Globalization would also include the international spread of ideas, from consumer tastes like Coke
and Hershey’s to intellectual ideas like technological patents and management principles and
accounting standards.

3. Sociologist
 Cole (2017) states that globalization, according to sociologists is an ongoing process that involves
interconnected changes in cultural and social spheres.

 As a process, it involves the spread and diffusion of ideologies-values, ideas, norms, beliefs and
expectations-that foster, justify and provide legitimacy for economic and political globalization.

 It fueled by globally integrated communication systems like social media such as Facebook and
Twitter, media coverage of the world’s elite and their lifestyles, the movement of people around the
world via business and leisure travel, and the expectation of these travelers that host societies will
provide amenities and experiences that reflect their own cultural norms.

4. Historian
 Historians follow rather than led the way.
 Globalization is not new as a phenomenon but the word itself took hold only recently which records
shows first use in English in 1930 and shows that usage soared suddenly in the 1990’s.

 Why globalization “hot” now and what does it portend for the study of history. Hunt (2014) states
that globalization defined most succinctly as the interconnection of places far distant from each
other.
  When the Soviet Union collapse and end the Cold War globalization filled the ideological vacuum
created by the end of Cold War division between Capitalism and Communism. Cultural history has
lost its luster. Theory no longer excites passionate and debate and perhaps most important, the
nation-state no longer seems as self-evident as the necessary unit of historical analysis. Moreover,
globalization is still too much entangled with world history, global history and transnational history.
MARKET GLOBALISM

 Market globalism is an idea that reflects the concepts of globalization. It seeks to endow
globalization with free market norms and neoliberal meanings. Steger (2005) states that the term
‘globalization’ gained in currency in the late 1980s. The persistence of academic divisions on the
subject notwithstanding, the term was associated with specific meanings in public discourse during
the 1900s. With the collapse of Soviet-style communism in Eastern Europe, loosely affiliated power
elites concentrated in the global north stepped up their ongoing efforts to sell their version of
‘globalization to the public in the ideological form of ‘market globalism’.
 These power elites consisted chiefly of corporate managers, executives of transnational
corporations, corporate lobbyist, high-level military officers. Prominent journalist and public-
relations specialist, intellectual writing to a large public audience, state bureaucrats and influential
politicians. By the mid-1990s, large segments of the population in both the global north and south
had accepted globalism core claims., this internalizing large parts overarching neo-liberal
framework that advocate the deregulation of markets, the liberalization of trade, the privatization of
state-owned enterprises.

THE FIVE CORE CLAIMS OF MARKET GLOBALISM

The five core claims of market globalism according to Steger (2005) are:

1. Globalization is about liberalization and global integration of markets

The first claim of market globalism is anchored in the neo-liberal ideal of the self-regulating market
as the normative basis for a future global order.

According to this perspective, the vital functions of the free market – its rationality and efficiency, as
well as its alleged ability to bring about greater social integration and material progress – can only
be realized in a democratic society that values and protects individual freedom. Embracing the
classical liberal idea of the self-regulating market, Claim One seeks to establish beyond dispute
‘what
globalization means,’ that is, to offer an authoritative definition of globalization designed for broad
public consumption.

It does so by interlocking its two core concepts and then linking them to the adjacent ideas of
‘liberty’ and ‘integration.’ Globalization is about the triumph of markets over government. Both
 proponents and opponents of globalization agree that the driving force today is market, which are
suborning the role of government. The truth is that the size of governments has been shrinking
relative to the economy almost everywhere. The driving idea behind of globalization is free-market
capitalism – the more you let market forces rule and the more you open your economy to free trade
and competition, the more efficient your economy will be, globalization means the spread of free-
market capitalism to virtually every country in the world.

2. Globalization is inevitable and irreversible

The second mode decongesting ‘globalization’ turns on the adjacent concept of ‘ inevitability’. At
first glance, the belief in the historical inevitability of globalization seems to be a poor fir for a
globalist ideology based on neo liberal principles. According to the market-globalist perspective,
globalization reflects the spread of irreversible market forces driven by technological innovations
that make the global integration of national economies inevitable. In fact, market globalism is
almost always intertwined with the deep belief in the ability of markets to use new technologies to
solve social problems far better than any alternative course. Governments, political parties, and
social movements had no choice but to ‘adjust’ to the inevitability of globalization. Their sole
remaining task was to facilitate the integration of national economies in the new global markets.

3. Nobody is in charge of globalization

The third mode of de-contesting globalization hinges on the classical liberal concept of the ‘self-
regulating market.’ The link between ‘globalization-market’ and the adjacent idea of ‘leader
lessness’ is simple: if the undisturbed working of the market indeed preordains a certain course of
history, then globalization does not reflect the arbitrary agenda of a particular social class or group.
In other words, globalist is not ‘in charge’ in the sense of imposing their own political agenda on
people. Rather, they merely carry out the unalterable imperatives of a transcendental force much
larger than narrow partisan interest. The idea that nobody is in charge serves the neo-liberal
political agenda of defending and expanding global capitalism. Like the market-globalist rhetoric of
historical inevitability, the portrayal of globalization as a leaderless process seek to both
depoliticize the public debate on the subject and demobilize global justice movements. The
deterministic language of a technological progress driven by uncontrollable market law turns
political issues into scientific problems of administration. As ordinary people cease to believe in the
possibility of choosing alternative social arrangements, market globalism gains strength in its ability
to construct passive consumer identities. This tendency is further enhanced by assurances that
globalization will bring prosperity to all parts of the world.

4. Globalization benefits everyone

This de-contestation chain lies at the heart of market globalism because it provides an affirmative
answer to the crucial normative question of whether globalization represents a ‘good’ phenomenon.
The adjacent idea of ‘benefits for everyone’ is usually unpacked in material terms such as
‘economic growth’ and ‘prosperity’. However, when linked to globalism’s peripheral concept,
 ‘progress.’ the idea of ‘Benefits for everyone’ taps not only into liberalism’s progressive worldview,
but also draws on the powerful socialist vision of establishing an economic paradise on earth –
albeit in the capitalist form of a worldwide consumerist utopia Thus, Claim Four represents another
bold example of combining elements from seemingly incompatible ideologies under the master
concept ‘globalization.’ Even those market globalist who concede the strong possibility of unequal
global distribution patterns nonetheless insist that the market itself will eventually correct these
irregularities, television, radio and the internet frequently place existing economic, political and
social realities within a neo-liberal framework sustaining the claim that globalization benefits
everyone through omnipresent affirmative images, websites, banner, advertisements, and sound
bites.

5. Globalization furthers the spread of democracy in the world

The fifth de-contestation chain links ‘globalization’ and ‘market’ to the adjacent concept of
‘democracy’ which also plays a significant role in liberalism, conservatism and socialism. Indeed, a
careful discourse analysis of relevant text reveals that globalist tend to treat freedom, free markets,
free trade and democracy as synonymous terms. Persistently affirmed as common sense, the
compatibility of these concepts often goes unchallenged in the public discourse. The most obvious
strategy by which neo-liberals generate popular support for the equation of democracy and the
market are by discrediting traditionalism and socialism After all, the contest with both pre capitalist
and anti-capitalist forms of traditionalism such as sovereignty and individual rights have been
enshrined as the crucial catalyst for the technological and scientific achievements of modern
market economies.

THE GLOBALIZATION EXPERIENCE

No one experience globalization in all its complexity but globalization is significant insofar as it
reshapes the daily lives of billions of people. Increasingly, the larger the world is present locally. The
obvious applies to a Bill Gates (founding chairman of Microsoft), conscious contributors to globalization.
American textile workers sense the global in the local through the impact of intense foreign competition and
outsourcing to overseas companies. Soccer fans regard as routine the fact to the World’s Cup every four
years, Business people travelling internationally witness globalization daily in the media offerings in their
hotel rooms. Migrants’ wo call home, send money back, or make return visits bring a bit of that wider world
to the villages they left. These people, and many more, experience globalization. Experiencing
globalization, as the examples indicate, do not mean that some abstract, impersonal force overwhelms
individuals. People participate and respond in different ways. They can shape, resist, absorb, or try to avoid
globalization. They can seek opportunity in it, feel the harm of it, or lament the power of it. For some,
globalization is a central reality; for others; it is still on the marine of their lives. In short, there is no one
experience of globalization. That, in itself, is an important aspect of the process. The formation of a new
world society does not involve all people in the same way and it does not create the same texture in
everyone’s everyday life. But there are some commonalities in the global experience of globalization. To
one degree of another, globalization is real to almost everyone. It transforms the prevailing sense of time
and space, now globally standardized. Its envelope everyone in new institutions. It poses a challenge, in
the sense that even marginally affected groups must take a stance toward the world. Globalization raises
identity problems for societies and individuals alike.
Focusing on a different kind of global food, James L. Watson, another anthropologist, describes
McDonalds’s customers in Hong Kong, including children, as critical consumers to whose expectations
about food and service the multinational corporation must adapt. Far from imposing a new dietary standard
McDonalds’s blended into an already heterogeneous urban landscape. Watson concludes that in places
like Hong Kong, the transnational is the local.
How does one explain the phenomenal success of American-style fast food in Hong Kong and,
increasingly, in Guangzhou – the two epicenters of Cantonese culture and cuisine? Seven of the world’s
ten busiest McDonalds’s restaurants are located in Hong Kong. When McDonalds’s fist opened in 1975,
few thought it would survive more than a few months. By January 1, 1997, Hong Kong had 125 outlets,
which means that there was one McDonalds’s for every 51,200 residents, compared to one for every
30,000 people in the United States. Walking into these restaurants and looking at the layout, one could well
be in Cleveland of Boston. The only obvious differences are the clientele, the majority of whom are
Cantonese-speakers, and the menu which is in Chinese as well as English. (Watson 2015).

NEOLIBERALISM
 Is in the first instance a theory of political economic practices that purposes that human well-being
can be advance in liberating individual entrepreneurial freedoms and skills within an institutional
framework characterized by strong private property rights, free markets, and free trade. The role of
the state is to create and preserve an institutional framework appropriate to such practices. The
state has to guarantee, for example, the quality and integrity of money. It must also set up those
military, defense, police and legal structures and functions required to secure private property
rights and to guarantee, by force, if need be, the proper functioning of markets. Is in the first
instance a theory of political economic practices that proposes that human well-being can best be
advance by State interventions in markets must be kept to a bare minimum because, according to
the theory, this cannot possibly possess enough information to second-guess market signals
(prices) and because powerful interest groups will inevitably distort and bias state interventions
(particularly in democracies) for their own benefit.

PRIVATIZATION
 Is the process of transferring an enterprise or industry from the public sector to the private sector.
Some of the government owned and controlled corporations in the Philippines transferred already
from public to private sector are Philippine Airlines (PAL), Philippine Long-Distance Corporation
(PLDT), Manila Electric Company (MERALCO) and Manila Waterworks and Sewage System
(MWSS) which are now Maynila Water Services and Manila Water Company.
CHARACTERISTIC OF NEO-LIBERALISM
1. Government must limit subsidies
 2. Make a reform to tax law in order to expand tax base
3. Reduce deficit spending
4. Limit protectionism
5. Open markets
6. Removal of fixed exchange rates
7. Back deregulation
8. Privatization

UNIT II: THE STRUCTURES OF GLOBALIZATION

LESSON I – THE GLOBAL ECONOMY
ECONOMIC GLOBALIZATION
Benczes (2014) defines economic globalization as the increasing integration of economies around
the world. Particularly the movement of goods, services, and capital across borders. The term sometimes
also refers to the movement of people and knowledge across international borders.
INTERCONNECTED DIMENSIONS OF ECONOMIC GLOBALIZATION
1. The globalization of trade of goods and services
2. The globalization of financial and capital market.
3. The globalization of technology and communication
4. The globalization of production

 For hyper globalist a state ceased to exist as a primary economic organization unit in the wake of
global market. People are consuming highly standardized global products and services produced
by global corporations in a borderless world. Globalization transform, the national economy into a
global one where there will be no national products or technologies, no national corporations, no
national industries.
 Globalization redefine the role of the nation-state as an effective manager of the national economy.
It is therefore, misleading to assume that globalization has relegated the nation state and its
policies to an obsolete or irrelevant status government instead are acting the midwives of
globalization. Even liberals recognize the economic openness has increased vulnerability, also
admitting that states are not influenced by globalization.
 As new actor appears on the stage of political and cultural globalization (such as the UN) or Non-
Governmental Organization (NGOs) economic globalization produces its own new entrants as well.
In all probability the major players of present-day global economy are the transnational corporation.
(TNCs). For some contemporary globalization is equated primarily with TNCs, the main driving
forces of economic globalization of the last 100 years, accounting for roughly two-third of world
export. On the other hand, for realist TNCs still represent national interest, while others such
 representatives of the dependency school are liable to identify TNCs with the means through which
the rich can exploit the poor. What is important to note is that TNCs are constantly evolving as
economic integration is becoming more intensive, production disintegrates as a result of the
outsourcing activity of multinationals.

THE ECONOMIC GLOBALIZATION PHENOMENON

 Just as there is no single definition of globalization, there is no consensus on its origin. Yet if we
accept that economic globalization is the process that creates an organic system of the world
economy, it seems reasonable to look beyond the last 30 years or so. The question that
necessarily arises is how far we should look back. Globalization processes have been ongoing
since Homo Sapiens began migrating from the African continent ultimately to populate the rest of
the world. Minimally, they been ongoing since the 16th century connections of the American to
Afro-Eurasia.
 The origin of globalization to the distant past the existence of the same world system in which we
live stretches back at least 5,000 years. The best-known example of archaic globalization is the
Silk Road which connected Asia, Africa, and Europe. Adopting Fernand Braudel’s innovative
concepts of long duration i.e., slow moving, almost imperceptible framework from historical
analysis, world system analysis identifies the origins of modernity and globalization with the birth of
16th century long-distance trade.
 When Adam Smith wrote his Magnum Opus, an inquiry of nation (1776) he considered the
discovery of America by Christopher Columbus in 1492. And the discovery of direct sea route to
India by Vasco de Gama in 1498 as the two great achievements in human history. In the course of
couple of decades these two remarkable achievements were overshadowed by breathtaking
technological advances and organizations methods of British Industrial Revolution, From the early
1800 following the Napoleonic wars. The industrial Revolution spread on Continental Europe and
North America, too.
 The economic nationalism of the 17th and 18th centuries coupled with monopolized trade did not
favor, however, international economic integration. The total number of ships sailing to Asia from
European countries rose remarkably between 1500 and 1800, but world export to world GDP did
not reach 1 to 2% in that period. If global economy did exist in this period, then it was only in the
sense of trade and exchange, rather than production, Countries were mostly self-sufficient, the IK
and Netherland being the only exception.
 The real breakthrough came only in the 19th century. The annual average compound growth rate
of world trade saw a dramatic increase of 4.2% between 1820 and 1870, and was still relatively
high at 3.4 % 2001. By 1913, trade equaled to 16-17% of world income, thanks to the transport
revolution steamships and railroad reduced transaction cost and holstered both external
international exchanges. The relatively short period before WWI is often referred to as the golden
age of globalization characterized by relative peace free trade and financial and economic stability.
 The structural transformation of the Western world was, therefore, both a cause and an effect of
intensified economic integration. By the second half of 19th century, the division of labor entwined
modern world economy. Consequently, sceptics of globalization, recognize the origin of
 globalization to this particular era and argue that in some respect, 19th century world economy was
even more integrated than the present. (Benczes, 2014).

THE INTERNATIONAL MONETARY SYSTEM

 Cohn (2005) that international system is the most central area in international economy, because
the most important transaction in the international economy-including trade, investment and
finance-all depend in the availability of money and credit. Thus, one long term of global monetary
issues ha stated that the most critical issue to hegemonic stability theorist should not (be) what the
hegemon does or does not in trade but what it does or fails to do to maintain peace and what it
does or fail to do to keep the monetary system stable credit flowing in a steady fashion.

 About 29% of the world’s circulating currency is located outside the country issuing it, during the
mid-1990s at least 300$ billion. Of the top currencies (the US dollars, German Deutsch mark, and
Japanese yen) were largely from advances in communications, technology difficult to regulate
economic activities. Realist scholars by contrast, argue that financial transaction have increased
with the permission of the most powerful states and that these states continue to dictate the terms
for such transactions.

 Realist point to the fact that international monetary transaction will still rely primarily in the
existence of separate national currencies. Some assets such as special drawing rights are
international scope, and the establishment of new “euro” currency members of the European
Economic and Monetary Union (EMU) is posing major challenge to the predominance of the
nationally based, US dollar. Nevertheless, the global monetary regime continues to function
primarily in a world of separate national currencies, where states are inevitably concerned, about
current surplus. On the other hand, permits a country to have a capital account deficit through
investment abroad or the accumulation of foreign assets.

 In addition to this current and capital accounts the balance of payments included two less important
items. The statistical discrepancy items result partly from errors in collecting and computing data,
but mainly from a government’s failure to include all the goods, services and capital that cross its
borders. The final item is in change official reserves. in reserves. Each country has a Central Bank
that holds foreign exchange and gold reserves. When a country has a deficit in its current and
capital accounts, this amount should be matched by an equivalent in reduction When a country has
a surplus in its current and capital accounts, it accumulates the surplus in the reserves. The total of
a country’s current accounts statistical discrepancy, and change in reserves equal zero, hence the
term balance of payments.
  Although the balance-of-payments account always balance (i.e., equals zero) in a bookkeeping
sense, this does not indicate that a country never has payments difficulties. In the country, a
country may have a balance-of-payments surplus or a balance-of-payments deficits. These terms
refer only to the current and capital accounts, and exclude any change in an official financing. A
government with a balance-of-payments surplus reduces its liabilities to foreign governments and
or adds to its official reserves, whereas a government with a balance-of-payments deficit increases
its liabilities and or reduces its official reserve. The main body of the balance of payments therefore
informs us about a state’s overall position in terms of financial assets and liabilities.

THE FOUR MONETARY REGIMES

Cohn (2005) states that the modern period of international monetary relations commonly refers to
the existence of four monetary regimes: The classical gold standard from the 1870s to the outbreak of WWI
in 1914: a gold exchange standard during the first part of the inter war period: the Bretton Woods system
from 1944 to 1947 and “non-system” and floating and fixed exchange rates from 1973 to the present.

THE CLASSICAL GOLD STANDARD REGIMES (1814 TO 1914)

 The Classical gold standard was a fixed rate regime in which government announce and adhere to
specific exchange rate form their currencies in relation to gold: By making the national currency
values more stable, the gold standard facilitated trade and other transaction between economies.
For example, if the U.S. dollar and British pound were pegged at $35 and at £ 14.5 per ounces of
gold, the exchange rate of dollar and the pound would remain constant at 2.41 dollar per £1.

 Although all countries had to undergo adjustment to maintain their exchange rate, the gold
standard functioned reasonably well because, it was backed by British hegemony and by
cooperation among the major powers (especially British, France and Germany). British assumed
leadership role in stabilizing the gold standard by providing public goods or to other countries , such
as investment capital, loans, and an open market for imports, thus Western Europe and the United
States generally, maintained their official gold parties for about 35 yrs.

 The gold standard based on orthodox liberal ideas in some important respect. The primary
objectives were to promote monetary openness and stability through the maintenance of stable
exchange rate. It was a period before John Maynard Keynes introduced interventionist liberal ideas
to combat unemployment, and countries were expected to sacrifice domestic social objectives for
the sake of monetary stability. Orthodox liberal sometimes refer to the gold standard on highly
idealized terms, and in 1981 President Ronald Reagan even created a special commission to
determine whether the US should return to the gold standard. However, critics maintain that the
poorest countries and the poorest classes within countries often assumed the largest burden of
adjustment under the gold standard through sacrifices in welfare and employment.
THE GOLD EXCHANGE STANDARD REGIME (1914 TO 1944)
 WWI completely disrupted international monetary relations, but after the war, Britain attempted to
establish a gold exchange standard regime. A gold exchange standard, like a gold standard, is
based on fixed exchange rate among currencies. However, a country’s international reserves
under the 19th century gold standard were officially held in gold, whereas official reserves under a
gold exchange standard consist of both gold and reserve currencies which is the British pound in
the inter war period. Although the Central Bank had in fact held reserve currencies, as well as gold
in earlier years. The gold exchange standard institutionalized this practiced. Because gold is in
scarce supply and depend on new discoveries, a gold exchange standard reserve. I more flexibility
in increasing international reserves.

 Although British efforts to maintain a gold exchange standard continued for several years, they
eventually failed. This, monetary relations for much of the interwar period were marked by
competitive devaluation, a shift to floating rather than fixed exchange rate destabilizing speculative
capital flows, and increased trade protectionism, which culminated in the Great Depression. Some
theories maintain that the failure to tr-establish monetary stability was the growing reluctance of
countries to sacrifice domestic goals such as full employment for the sake of currency stability.
Those who argue that domestic factor was mainly responsible point to the differences in domestic
politics before and after WWI.

 Before the warm voting in most countries was limited, labor unions were weak, farmers were not
organized, and left parties were restricted. Thus, governments generally felt too free to raise rates
and taxed and decrease government expenditures to bolster the value of their currencies, even if
these policies contribute to domestic hardships such as unemployment. By the end of the WWI,
however, domestics group had gained more influence through the extensions of suffrage,
legalization of labor unions, organization of farmers, and development of mass political parties, it
was no accident that Keynes introduced his interventionist liberal ideas with domestic economic
problems. Thus, governments could no longer easily sacrifice the welfare of their citizens to
maintain the gold exchange standard, and one government after responded to economic problem s
during the interwar period by turning away from international openness.

THE BRETTON WORLD SYSTEM REGIME

WWII was marked by a breakdown of monetary cooperation and a period of exchange controls,
and planning for post-war monetary regime culminated in 1944 Bretton Woods conference. The Bretton
Wood monetary regime was gold exchange standard in which the value of each country ‘s currency was
pegged to gold or the U.S. dollar Unlike the two previous regimes, however, the Bretton Wood system was
based on the post-war interventionist liberal compromise. On the other hand, the planners assumed that
the pegged exchange rate would provide sufficient monetary stability to permit a resumption of normal
international trade. On the other hand, the planners ensured that there was some flexibility and assistance
so that countries could pursue domestic objective related to employment and inflation. This marked a
contrast with the classical gold standard in which long term exchange rate stability took precedence over
domestic requirements.

According to Cohn (2005), the internationalist liberal has three major elements
1. The first element was the Post-war gold exchange standard which was in fact an adjustable peg
exchange rate rather than exchange rate system. Although countries were to maintain the par
values of their currencies in the short terms. All countries other than the US could devalue or
revalue their currencies under IMF guidance to correct chronic balance-of-payments problems. The
devaluation lowers the value; revaluation raises the value of a currency. The Bretton Wood
negotiations hoped that the cooperative IMF framework for changing currency values would
provide flexibility that was lacking with the classical gold standard and avoid competitive such as
those of the interwar period.
2. The second element of the interventionist liberal compromise was the IMF, which would provide
short-term loans. Short term loans are provided to countries with temporary balance-of-payments
problems and thus alleviate domestic problems resulting from the need to maintain exchange rate
stability.

3. The third element of the compromise was support for national controls over capital flows,
Speculative capital flows had contributed to great instability during the interwar period, and the post
was negotiators feared that such speculations could undermine efforts to pegged exchange rates
and promote freer trade wood regime. under the Bretton Wood regime. The chief negotiator also
believed that unrestricted capital flows would interfere with the functioning of the welfare state. If
corporations and citizens could freely move capital abroad to evade taxes this jeopardize funding
the state required social welfare expenditure.

THE CREATION OF INTERNATIONAL MONETARY FUND

The most important international organization embedded is the Bretton Wood Monetary regime
was the International Monetary Fund (IMF), located in Washington D.C. The IMF was created to stabilize
exchange rate and provide member states with short-term loans for temporary balance-of –payments
problems. Under the IMF article of Agreements, members were required peg their currencies to gold or to
U.S. dollar, which was valued to at $34 per ounce of gold. Member states where also to contribute to a pool
of national currencies that would be available for the IMF loans to deficit countries. Each IMF members was
given a quota on its relative economic importance, which determined the size of subscription or contribution
to IMF resource pool. Under the IMFs weighted voting system, the most economically powerful states have
the largest quotas and subscription and the most votes. At regular intervals of not more than five years. The
IMF decides whether to propose adjustment in the members quotas in accordance with change in their
relative economic positions.
THE FUNCTIONING OF THE BRETTON WOOD MONETARY REGIME
Cohn (2005), States that Bretton Wood was gold exchange regime in which the main reserves gold
and U.S. dollar. Economist generally ask three questions about the adequacy of reserve assets in
upholding a monetary regime. Are there sufficient reserve (e.g., gold and the U.S. dollar) for liquidity, or
financing purposes, as interdependence increases, more liquidity is necessary to cover the growing number
of economic transactions, but if there is a surplus of liquidity, inflation, and other problems can result. Is
there a confidence problem with the existing reserve asset? When countries lack confidence that an asset’s
value will remain reasonably stable, they are reluctant to hold the asset in their reserve. Confidence
problems have led to periodic efforts to sell of British pound and U.S. dollars. What adjustment options do
reserve-currency countries have in dealing with their balance-of-payments deficits? An effective regime
should provide all deficit countries with a sufficient range of adjustment options.

THE ROLE OF THE US DOLLAR

Because the Bretton Woods monetary regime was based on a gold exchange standard, central
bank could hold their international reserves in two forms, - gold and foreign exchange- in any proportion
they chose. It is ironic, however, that the original attraction of gold as reserve asset-its scarcity- became a
liability as increased trade and foreign investment led to growing demand for international reserves. With
gold mining sources limited and Western Europe recovering from WWII, the U.S. dollar was the only
currency that could meet this need with increase liquidity. Monetary relations immediately after the war
were more unstable than expected, with balance-of-payments deficits and lack of foreign exchange
seriously hindering Europe’s recovery. Thus, Western Europe was severely lacking in the main source of
liquidity is required for making payments – US balanced-of-trade surpluses in the late 1940s contributed to
a dollar shortage. To remedy the problem, the US distributed dollars throughout the world through
economic aid and military expenditures from 1947 to 1958.
From the liberal perspective, the US provided public goods to Europeans and others during this
period opening its market to imparts, providing long term loans and grants through the Europeans
Recovery Program or Marshal Plan, and supplying the dollars as the main source of international liquidity,
to gold for their reserves and international transactions; dollars (unlike gold) earned interest and did not
have to be shipped and stored.
Although the US as global hegemon was providing its currency as a public good to meet
international liquidity needs., it was also receiving the private benefit of seignorage. Seignorage is the profit
that comes to the seignourn or sovereign power, from the issuance of money, As the supplier of the key
world currency, the US gained financial power and influence and it was largely exempt from the discipline
the international financial system imposed on other state. The US was also able to trade and borrow in
domestic currency and thus avoid exchange rate risks and transaction costs, and the dollar leading role
enabled New York City to retain its position as the world ‘s financial capital US policy from 947 to the late
1950s was therefore based on a mixture of altruism and self-interest, and other countries acquiesced to US
monetary leadership because of the benefits they received.
 Despite the early emergence of the US as hegemon in the global monetary regime, several
changes in the late 1950s led to concerns about its continued leadership. The US regularly had a
substantial balance-of trade surplus to the post war period, but it had even a larger debt because of the
economic and military financing, it was providing through the Marshall Plan and other assistance program .
As a result, the US had an overall balance-of-payments deficit beginning in 1950s. US payments deficit
averaged about $1.5 billion per year for most of the decade., but they increased rapidly in the late 1950s,
and observers began to speak of a dollar glut rather than dollar shortage. In 1960s, the US payments deficit
rose to $3.7 billion, and foreign dollar holdings exceeded US gold reserve for the first time. Thus, European
which have eagerly sought to obtain dollar, became reluctant to accumulate excessive dollar reserves . A
major change that raised question about US control over military relations was the growth of the
Eurocurrency market. Eurocurrencies are national currencies traded and deposited in banks outside the
home country. As the name connotes, Eurocurrencies originally develop in Europe.

A SHIFT TOWARD MULTILATERALISM

As US balance-of-payments deficits continued to increase the dollar slipped from top currency to
negotiated currency status during the 1960s. A top currency is favored for international monetary
transaction because other has confidence in the strong economic position of the issuing state. A negotiated
currency does not benefit from this high degree confidence, do the issuing state must offer inducement to
others to continue accepting its leadership, and must be open to more multilateral management. Thus, the
G-10 established the General Arrangement to Borrow (GAB) in 1962 under which they agreed to lend the
IMF to $6 billion in their own currencies if needed for supplementary resources to cope with international
monetary problem. The G-10 represented a shift from unilateral US management to more collective
management of monetary issues because it had to approve each request for supplementary support.

THE GROUP OF TEN MEMBERS(F-10)

The G-10 could supply a substantial of financial resources, but there were concerns that even G-10
resources were not sufficient to depend the dollars if it came under attack, indeed, a rush to change the
dollar into gold became more likely as the U.S. balance-of-payments deficits to continue to increase. A
series of measures were therefore adopted to bolster the dollar, and the US sought to improve its balance
of payments by reducing capital outflows. In 1965, for example the US impose limits on foreign investment
and loans by US firms and banks. Despite these efforts, US gold stocks fell from $22.7 billion on 1950 to
$10.7 billion in 1970. Thus, by 1968 the dollar in the effect had become convertible into gold.
1. Belgium
2. Canada
3. France
4. Germany
5. Japan
6. Netherlands
7. Sweden
 8. United States
9. Italy
10. United Kingdom
11. Switzerland
THE FLEXIBLE EXCHANGE RATES REGIME
 The Breton Wood agreement had outlawed freely floating exchange rates, so all the major trading
nations were “living in sin” by 1973. The IMF meeting to Jamaica in January in 1976 finally
legalized this situation by permitting each government to decide whether to establish a par value
for its currency markets, and the market alone determine currency evaluations. In recent years IMF
members have in facts relied extensively on managed floating, in which central banks intervene to
deal with disruptive such as excessive fluctuation in exchange rates. Although managed floating, or
“manipulating exchange rates. In order to prevent effective balance-of-payments adjustment or to
gain an unfair competitive advantage.” Today the monetary regime is mixed in nature. Major
industrial countries such as the US, Japan and Canada (and a number of LDCs)) independently
float their currencies, the EU countries seek increase regional coordination of their policies: and
many LDCs peg the value of their currencies to key currencies or basket of currencies. It is not
surprising that some observers refer to the current system of monetary relations as a “no system”.
 The move floating rates had an intellectual appeal for both some liberals and realist. Orthodox
liberals in particular argued that floating rates were preferable because of adjustment of
international exchange rates would depend on market pressures rather than government
investment. Thus, as early as 1953, Milton Friedman wrote a classic article favoring the
establishment of “a system of exchange rates freely determined in open market, primarily by the
private transaction, and the simultaneous abandonment of direct controls over exchange
transaction.” Although some liberal feared that floating rates would lead to Instability because of
speculative capital flows, as had occurred in 1930s, Friedman argued that instability during the
1930s had resulted more fundamental economic and financial problem. Ironically, floating rates
were also appealing to some realist because of the view that government would be able to adopt
independent monetary policies.

 In a fixed exchange regime, “monetary policy must be subordinated to the requirements of maintain
the peg, effectively eliminating the discretion of authorities.” A floating regime by contrast “allows
monetary policy to be set autonomously, as deemed appropriate in the domestic context (e.g., for
stabilization purposes, and the exchange rates because a residual, following whatever path is
consistent with the stabilization policy. By the 1970s there were additional reasons of liberal
communist to favor a shift to floating rates. With the marked increase in capital flows and
speculative pressure, governments could no longer defend fixed exchange rates and floating rates
would contribute to rapid adjustment of international payments imbalance in response to market
pressure (Cohn 2005)

GLOBAL ACTORS IN ECONOMIC GLOBALIZATION

  International Government Organization (IGO) - It refers to an entity created by treaty involving two
or more nations, to work in good faith, on issues of common interest. The IGO strive for peace,
security and deal with economic and social questions. Examples include: The UN, the WB and on
a regional level are North Atlantic Treaty Organization (NATO) and Association of South East
Asian Nation (ASEAN) where the Phils. also belong.

 International Non-Government Organization (NGOs) – The NGOs work towards solutions that can
benefit undeveloped countries that face the backlash of economic globalization. Classifies as any
non-profit, voluntary citizen’s group which is organized on a local, national or international level.
NGOs perform various services and humanitarian functions, bring citizen concerns to
governments, advocate and monitor policies and encourage political participation through provision
of information. Example of these is Red Cross, Greenpeace and Amnesty International.

 Multinational Corporations (MNCs) – MNCs are corporation which have overseas branches. One of
the many changes they have brought to developing countries is increase in automation.
Automation means the use of various control systems for operating equipment such as machinery
with minimal or reduced human interventions. It may damage less automated local firms and
require workers to develop new skills in order to transition into the changing economy, leaving
some behind. Corporation also outsourced in recent years. Example of MNCs which are also
present in the Philippines are Ford Motor Corp., Fujitsu, GE, GlaxoSmithKline, and Adidas.

THE EFFECT OF ECONOMICS GLOBALIZATION ON DEVELOPING COUNTRIES

Mohr (2017), states that financial and industrial globalization is increasingly substantially and is
creating new opportunities for both industrialized and developing countries. The largest impact has been on
developing countries, who are now able to attract foreign investors and foreign capital? This has both
positive and negative effect for those countries.
Increased Standard of Living – Economic Globalization gives government of developing nations access to
foreign lending. When these funds are used in infrastructure including roads, health care, education, and
social services, the standard of living in the country increases. If the money is used selectively, however,
not all citizens will participate in the benefits.
Access to New Markets – Globalization leads to freer between countries. This is one of largest benefits to
developing nations. Home-grown industries see trade barriers fall and have access to a much wider
international market. The growth this generates allows companies to develop new technologies and
produce new products and services.
Widening Disparity in Income – while an influx of foreign companies and foreign capital creates a reduction
in overall unemployment and poverty, it can also increase the wage gap between those who are educated
and those who are not. Over the longer term, education level will rise as the financial health of developing
countries rise, but in short term, some of the poor become poorer. Not everyone will participate in an
elevation of living standard.
Decreased Employment – The influx of foreign companies into developing countries increases employment
in many sectors, especially for skilled workers. However, improvements in technology come with the new
businesses and that technology spreads to domestic companies. Automation in the manufacturing and
agricultural sectors lessens for unskilled labor and unemployment rises in those sectors.

LESSON II – MARKET INTEGRATION

INTERNATIONAL FINANCIAL INSTITUTIONS
 International Financial Institution (IFIs) are institutions that provide financial support via grant and
loans for economic and social development activities in developing countries. IFI include public
banks, such as the world bank, International Monetary Fund, and Regional Development Banks.
They provide loans, grants, and technical assistance, to governments, as well. as loans to private
business investing in developing countries. They also play a significant role in the privatization and
regulation in public utilities and natural resources.
 These multilaterals share a mission of combating poverty. It is usually chartered by more than one
country and its owner and shareholder are national governments. Some of the IFIs are created
after the WWII to assist the reconstruction of Europe and other countries affected by the
devastation of the war (Global Green fund Grants 2017).
INTERNATIONAL FINANCIAL INSTITUTION
1. World Bank (WB)
2. International Monetary Fund (IMF)
3. European Investment Bank (EIB)
4. Islamic Development Bank (IDB)
5. Asian Development Bank (ADB)
6. European Bank for Reconstruction and Development (EBRD)
7. Development Bank of Latin America (CAF)
8. Inter-American and Development Bank Group (IADB)
9. African Development Bank (AfDB)
10. Asian Infrastructure Investment Bank (AIIB)

THE WORLD BANK

 The World Bank is the world largest development institution. It has worked to help more than 100
developing countries and countries transaction adjust to these changes by offering loans and
colored knowledge and advice. The bank group work with country governments, the private sector,
civil society, organizations, regional development bank, think tanks, and other international
 institutions on issues ranging from climate change conflicts and food security to education,
agriculture, finance and trade. All of these efforts support the Bank Group’s twin goals of ending
extreme poverty by 2030 and hosting shared prosperity of the poorest 40% of the population to all
countries.

 It was founded in 1944, the International Bank of Reconstruction and Development – soon called
World Bank – has expanded to a closely associated group of five development institutions.
Originally, its loan helped rebuilds countries devastated by WWII. Intime. The focus shifted from
reconstruction to development, with a heavy emphasis on infrastructure such as dams, electrical
grids, irrigation system, and roads. With the founding of the International Finance Corporation in
1956, the institutions became able to lend to private companies and financial institutions in
developing countries, And the founding of International Development Association in 1960 put
greater emphasis on the poorest countries, part of a steady shift toward the eradication of poverty
becoming the Bank’s Group’s primary goal. The subsequent launch of the International Center for
Settlement of Investment Dispute and the Multilateral Investment Guarantee Agency further
rounded out the Bank’s Group ability to connect global financial resources to the needs of
developing countries.
 Today the Bank Group’s work touches nearly every sector that is important to fighting poverty,
supporting economic growth, and ensuring sustainable gains in the quality of people’s lives in
developing countries. While sound project selection and design remain paramount the Bank Group
recognizes a wide range of factors that are critical to success – effective institutions, sound policies
continuous learning through evaluation and knowledge – sharing and partnership, including with
the private sector World Bank, 2017).

GOALS OF WORLD BANK (WB)

The WB is a vital source of financial and technical assistance to developing countries around the world. We
are not a bank in the ordinary sense but a unique partnership to reduce poverty and support development
According to WB (2017) it has set 2 goals for the world to achieve by 2030.
1. End extreme of poverty by decreasing percentage of people living on less than $1.90 a day to no
more than 3 %.
2. Promote shared prosperity by fostering the income growth of the bottom 40 % every country.

THE FIVE ORGANIZATION OF WORLD BANK

 The International Bank for Reconstruction and Development (IBRD) – it leads to government of
middle-income and creditworthy low-income countries.
 The International Development Association (IDA) – it provides interest from loans – called credit –
and grants to government of the poorest countries. Together, IBRD and IDA make up the world
bank.
  The International Finance Corporation (IFC) – it is the largest global development institution
focused exclusively on the private sector. They help developing countries achieve sustainable
growth by financing investment mobilizing, capital to international financial market, and providing
advisory services to business and governments.
 The Multilateral Investment Guarantee Agency (MIGA) – created in 1988 to promote foreign direct
investment into developing countries to support economic growth, reduce poverty, and improve
people lives. MIGA fulfills this mandate by offering political risk insurance (guarantees) to investors
and lenders.
 The International Centre for Settlement of Investment Dispute (ICSID), The ICSID provides
international facilities for conciliation and arbitration of investment dispute.

INTERNATIONAL MONETARY FUND (IMF)

The International Monetary Fund (IMF) – is an organization of 189 countries, working to foster global
monetary cooperation, secure financial stability, facilitate international trade, promote high employment and
sustainable economic growth, and reduce poverty around the world. Created in 1945, the IMF is governed
by and accountable to the 189 countries that make up its near global membership.
The IMF also known as the Fund, was conceived at a UN conference in Bretton Woods, New Hampshire,
U.S. in July 1944. The 44 countries at that conference sought to build a framework for economic
cooperation to avoid repetition of the competitive devaluations that had contributed to the Great Depression
of the 1930s.
THE IMF RESPONSIBILITIES
The IMF’s primary purpose is to ensure the stability of the international monetary system, the system of
exchange rates and international payments that enables countries and their citizens to transact with each
other. The funds mandate was updated in 2012to include all macroeconomic and financial sector issues
that bear on global stability.

THE MISSION OF IMF

 According to IMF (2017) and IMFs fundamental mission is to 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.

Surveillance – the IMF oversees the international monetary system and monitors the economic and
financial policies of its 189 members countries. As part of this process, which takes place both at the global
level and in individual countries, the IMF highlights possible risks to stability and advises on needed policy
adjustment.

Lending – A core responsibility of the IMF is to provide loans to member countries experiencing actual or
potential balance of payments problem. This financial assistance enables countries to rebuild their
international reserves, stabilize their currencies, continue paying for imports, and resource conditions for
strong economic growth, while undertaking policies to correct underlying problems/ Unlike development
banks, the IMF does not lend for specific projects.

Capacity Development – IMF capacity development – technical implements economic policies that foster
stability and growth by strengthening their institutional capacity and skills. The IMF seeks to build on
synergies between technical assistance and training to maximize their effectiveness.

WHERE IMF GETS ITS MONEY

 Most resources for IMF loans are provided by member countries primarily through payments of
their quotas. Multilateral and Bilateral borrowing work as a second and third line of defense by
providing a temporary supplement to quota resources. These temporary resources played a critical
role in enabling the IMF to provide exceptional financial support to its member countries during the
global economic crisis. Concessional lending and debt relief for low-income countries are finance
through separate contributions-based trust funds.

MARKET INTEGRATION
Market Integration is a term that is used to identify the phenomenon in which market of goods and services
are somehow related to one another being to experience similar pattern of increase or decrease in terms of
the prices of those products. The term can also refer to a situation in which the pieces of related goods and
services sold in a defined geographical location also begin to move in some sort of similar pattern to one
another. At times the integration may be intentional with a governmental implementing certain strategies as
a way to control the direction of the economy. At other times, the integrating of the markets may be due to
factor such as shifts in supply and demand that have spillover effects on several markets.
When market integration exists, the events occurring within two or more markets are exerting effects that
also prompt similar changes or shifts in other market that focus on related goods. For example, if the
demand for baby dolls within a given geographical market were to suddenly be reduced by 50% there is a
good chance that a demand for baby doll clothing would also decrease in proportion within the same
geographical market. Should the baby doll market increase, this would usually, mean that the market doll
clothing, would also increase. Both markets would also have the chance to adjust pricing in order to deal
with the new circumstances surrounding the demand, as well as adjust other factors as production.
Market integration may also occur with just about any type of related markets. With a stock market
integration, similar trends in trading prices for assets related to a given industry may be found in two or
more markets around the world. In like manner, financial market integration may occur when leading rates
in several different markets begin to move in tandem with one another. In some cases, the integration
within a nation may involve the emergence of similar patterns within capital stock and financial markets
within trends coming together to exert profound influence on the economy of that nation (Shiferaw, 2017)

MARKET INTEGRATION AND HOW IT WORKS

Koester (2017) states that market integration is a state of affairs or a process involving attempts to combine
separate national economics into larger economic regions. Integration as a means of stimulating trade and
improving divisions of the labor among countries has been recommended by many economists. The
foundation of General Agreement on Tariffs and Trade (GATT) in 1948 gave further impetus to integration
by promoting, gender acceptance of the most favored nation principle. The Article 1 of the GATT states “all
contracting parties must accord any advantage favor, privilege of immunity granted to any product from
other country immediately and unconditionally to all other members. This resulted in significant integration
of world market in manufactured goods.
Moreover, the eight GATT pounds have led to considerable tariff reductions for trade in manufactured
goals, with average tariff level of less than 4% of OECD countries in 1997. Apart from integrating world
markets there is an increasing tendency to create new regional integration schemes. The European Union
(EU) is one of the most prominent examples
Integration can be achieved by different means (Reducing on-tariff barriers to trade can be the main tool for
integrating markets. This type of integration is known as negative integration. The term implies that a
government’s only role if no withdraw from interference in the movement of goods and factors of production
across national borders. Indeed, this may be sufficient to integrate some markets for manufactured goods,
where governmental regulations play a minor role.

FORM OF INTEGRATION
 Preferential Agreement – It involves lower trade barriers between those countries which have
signed the agreement. It is considered the first and smallest step on the road to further integration
such schemes imply that a country or region grants other countries preferential access the imports.
Preferences can be given in the form of tariff reductions, for unlimited volumes of imports from
specific countries or for specified import quantities.
 Free Trade Agreement – It reduces barriers to trade among member countries to zero, but each
member country has autonomy in deciding on the external rate of tariff for its trade with non-
member countries. The European Free Trade Area Is one of the examples of it.
 Customs Union – It represents a higher stage of economic integration than a Free Trade Area as
the member countries adopt a common external tariff. In the Custom Union, countries agree to
abolish tariff and non-tariff barriers to trade in goods flowing between them. In addition, they agree
 to a common external tariff. This was in fact the first phase of integration of the European
Community on the way to Common Market.
 Common Market – It goes beyond a Custom Union in allowing for free movement of labor and
capital within the Union. Hence, the intention of a Common Market is to integrate both product and
factors market of member countries.
 Economic Union – It is the highest form of economic integration. In addition to the conditions of a
Common Market, member countries also agree to ingrate monetary, fiscal and other policies.
It is obvious that the least developed forms of integration can rely on negative integration alone. However,
higher forms of integration demand agreement on adjustment or even harmonization of national policies.
For example, internal free movement of goods and factors not only requires removal of border restriction
(negative integration), but also removal of non-tariff trade barriers caused by different legislation in the
member countries (positive integration) Thus, deeper integration necessarily implies surrendering some
national autonomy.
THE EUROPEAN INTEGRATION
The European Union is a unique economic and political union between 28 European countries that
together cover much of the continent. The EU was created in the aftermath of the Second World War. The
idea being that countries that trade with one another become economically interdependent and so more
likely to avoid conflict.
The result was European Economic Community (ECC), created in 1958, initially increasing
economic cooperation between six countries, Belgium, Germany, France, Italy, Luxembourg, and the
Netherlands. Since then, a huge single market has been created and continues to develop towards its
potential.

LEGAL BASIS OF EUROPEAN UNION

The European Union is based on the rule of law. This means that every action taken by the EU is
founded on treaties that have been approved voluntarily and democratically by all EU member countries.
For example, if a policy area is not cited in a treaty, the Commission cannot propose a law in those areas.
A treaty is a binding agreement between EU member countries. It sets out Eu objectives, rules for
EU institutions, how decisions are made and the relationship between the EU and its member countries .
Treaties are amended to make the EU more efficient and transparent, to prepare for new member countries
and to introduce new areas of cooperation – such as the single currency.

THE EUROPEAN COUNTRIES

1. Austria
2. Belgium
3. Bulgaria
4. Croatia
 5. Cyprus
6. Czech Republic
7. Denmark
8. Estonia
9. Finland
10. France
11. Slovenia
12. Luxembourg
13. Germany
14. Greece
15. Hungary
16. Ireland
17. Italy
18. Latvia
19. Spain
20. United Kingdom
21. Lithuania
22. Sweden
23. Malta
24. Netherlands
25. Poland
26. Portugal
27. Romania
28. Slovakia
According to European (2017) the main treaties that help created European Union are:
 Treaty of Lisbon – signed on Dec 13, 2007 to make the EU more democratic, more efficient and
better able to address global problems such as climate change, with one voice.
 Treaty of Nice – Signed on 26 February 2001 to reform the institutions so that the Eu could function
efficiently after reaching 25 member countries.
 Treaty of Amsterdam – Signed on 2 October 1997 to reform the EU institution in preparation for the
arrival of future member countries.
 Treaty of European Union - Maastricht defined on 7 February 1992 to prepare for European
Monetary Union and introduce elements of a political union such as citizenship common foreign
internal and affair policy. Single European Act – Signed on 17 February 1986 in Luxembourg and
28 February 1986 in Hague, Netherlands to reform the institutions in preparation for Portugal and
Spain’s membership and speed up decision making in preparation for the single market.
 Merger Treaty – Brussels Treaty – Signed on 8 April 1965 to streamline the European institution. It
consists a single commission and a single Council to serve the then three European Commission
(EEC, Euratom, ECSC), Repeal by the Treaty of Amsterdam.
 Treaties of Rome : EEC and EURATOM treaties, - Signed on 25 March 1957 to set up the
Economic Community (EEC) and the European Atomic Energy Community (Euratom)
  Treaty Establishing the European Coal and Steel Community – Signed on 18 April 1918 to create
interdependence in coal and steel so that one country could no longer mobilize the armed forces
without others knowing This eased distrust and tensions after WWII. The ECSC expired treaty
2002.

EUROPEAN UNION, AN ECONOMIC UNION TO POLITICAL UNION

What began as a purely economic union has evolved into an organization spanning policy areas,
from climate, environmental and health to external relations and security, justice and migration. A name
changes from European Economic Community (ECC) to the European Union (EU) in 1993 reflected this.
The EU is based on the rule of law everything it does is founded on treaties, voluntarily and
democratically agreed by its member countries. The EU is also governed by the principle of representative
democracy, with citizens directly represented at Union level in the European parliament and Member States
represented in the European Council and the Council of EU.

A UNION OF SINGLE CURRENCY

The Eu has delivered more than half a century of peace, capability and prosperity, helped raise living
standard and launched a single European currency the sum. In 2012, the EU was awarded the Nobel
Peace Prize for advancing the causes of peace, reconciliation, democracy, and human rights in Europe.
Thanks to the abolition of border control between EU countries, people can travel freely throughout most of
the continent. And it has become much easier to live, work and travel abroad in Europe.
The single or “internal market is the main economic engine, enabling most good m services, money and
people to move freely. Another key objective is to develop also in other area like energy, knowledge and
capital markets to ensure that Europeans can draw the maximum benefit from it.

THE BENEFITS OF EURO

Being the euro area guarantee stable prices. The European Central Bank (ECB) sets key interest rates at
level designed to keep inflation close to, but below 2%. It also manages a portion of the euro area’s foreign
exchange reserves and can intervene in foreign exchange markets to influence the exchange rate of the
euro. The combined size and strength of the euro area also creates a stronger and more stable currency
that is better able to shield its members from external shocks and currency market turbulence, then
individual countries alone could achieve.
Used about by 340 million EU citizens, the single currency benefits everybody;
1. People no longer need to change money when travelling doing business within the Euro area,
saving time and transaction cost.
2. It cost much less or nothing at all to make cross-border payments
 3. Consumers and businesses can compare prices more easily, which encourage businesses
changing higher prices to bring them down.

A UNION OF HUMAN RIGHTS AND EQUALITY

One of the EU main goals is to promote human rights both internally and around the world. Human
dignity, freedom democracy, equality, the rule of law and respect for human rights: these are the core
values of the EU. Since the Lisbon Treaty’s entry in force in 2009, the EU’s Charter of Fundamental Rights
brings all these rights together in a single document. The EU’s institutions are legally bound to uphold
them, as are EU governments whenever they apply EU law.
The enlarge EU remain focused on making its governing institutions more transparent and
democratic. More powers have been given to the directly elected European Parliament, while national
parliaments play a greater role, working alongside the European institutions. In turn, European citizens
have an ever-increasing number of channels for taking part in the political services (Europa. Eu 2017)

ASEAN INTEGRATION
On 8 August 1967, five leaders- the Foreign Ministers of Indonesia, Malaysia, the Philippines,
Singapore and Thailand – set down together in the main hall of the Department of Foreign Affairs building
in Bangkok, Thailand and signed a document. By virtue of that document, the Association of Southeast
Asian Nation (ASEAN) was born. The five Foreign Minister who signed it – Adam Malik of Indonesia,
Narciso R. Ramos of the Philippines, Tun Abdul Razak of Malaysia, S. Rajaratnam of Singapore, And
Thanat Khoman of Thailand- would subsequently be hailed as the Founding Fathers of probably the most
successful governmental organization in the developing world today. And the document that they signed
would be known as the ASEAN declaration.
Association of Southeast Asia Nation or the ASEAN was established in 8 August 1967 in Bangkok,
Thailand, with the signing of the ASEAN Declaration (Bangkok Declaration) by the Founding Fathers of
ASEAN, Namely: Indonesia, Malaysia, Philippines, Singapore and Thailand. Brunei and Darussalam then
joined in 28 July 1995. Vietnam on 28 July 1995, Laos PDR and Myanmar on 23 July 1997 and Cambodia
on 30 April 1999, making up what is today the ten Member States of ASEAN.

ESTABLISHMENT OF THE ASEAN ECONOMIC COMMUNITY

The establishment of the ASEAN Economic Community (AEC) in 2015 is a major milestone in the regional
economic integration agenda in ASEAN offering opportunities in the form in the huge market of US % 2.6
trillion and over 622 million people. IN 2014, AEC, was collectively the third largest economy in Asia and
the seventh largest in the world.
The AEC Blueprints 2025, adopted by the ASEAN Leaders at the 27th ASEAN Summit on 22 November
2015 in Kuala Lumpur, Malaysia, provides broad directions through strategic measures for the AEC from
2016 to 2025. Along with the ASEAN Community vision 2025 and the ASEAN Political Security Community
(APSC) Blueprints 2025 and the ASEAN Socio-cultural Community (ASCC) Blueprint 2025, the AEC
Blueprint 2025 forms part of ASEAB 2025. Forging Ahead Together. It succeeded the AEC Blueprint 2008-
2015) which was adopted in 2007.
The AEC Blueprint 2025 is aimed towards achieving the vision of having an AEC by 2025 that is highly
integrated and cohesive competitive, innovative and dynamic with enhanced connectivity and sectoral
cooperation and a more resilient inclusive and people oriented, people centered community, integrated with
the global economy.

THE FIVE INTERRELATED AND MUTUALLY REINFORCING CHARACTERISTIC OF ASEAN

ECONOMIC COMMUNITY ARE:
1. A highly integrated and cohesive economy
2. A competitive, Innovative, and Dynamic ASEAN
3. Enhanced connectivity and Sectoral Cooperation
4. A Resilient, Inclusive, People-Oriented and People –centered ASEAN
5. A Global ASEAN
The AEC Blueprint 2025 sets outs the strategic measures under each of the five characteristics of AEC of
2025. To operationalize the Blueprints implementation, these strategic measures will be further elaborated
in and implemented trough the work plans of various sectoral bodies in ASEAN. The sectoral work plans
will be reviewed and updated periodically to ensure their relevance and effectiveness. Partnership
arrangement with the private sector, industry, association and the wider community as the regional and
national levels will also be actively sought and fostered to ensure an inclusive and participatory approach to
the integration process. Institutions will be strengthened and enhanced approaches to monitoring and
public outreach will likewise be developed to support the effective implementation of the blueprint.
The AEC blueprint 2025 Consolidated Strategic Action Plan (CSAP) comprises of key action lines that will
operationalize the strategic measure in the AEC Blueprint 2025. It takes into account the relevant sectoral
work plans, and will be reviewed periodically to account for developments in each sector.
The inaugural issue of the ASEAN Economic Integrated Brief (AEIB) was released on 30 June 2017. The
AEIB provides regular updates on ASEAN economic integration progress and outcomes, and is
demonstration of ASEAN, commitment to strengthen communication and outreach to raise stakeholder
awareness of the AEC.
The AEC Blueprint 2025 will lead towards an ASEAN that is more proactive in having had in place the
structure and frameworks to operate as an economic community, cultivating its collective identity and
strength to engage with the world, responding to new developments, and seizing new opportunities. The
new Blueprint will not only ensure that the 10 ASEAN members States are economically integrated, but
also sustainably and gainfully integrated in the global economy. Thus, contributing to the goal of shared
prosperity.
THE ASEAN FREE TRADE AREA (AFTA)
The ASEAN Free Trade Area (TAFA) has now neem virtually established. ASEAN member countries have
made significant progress in the lowering of intra-regional tariff through the Common Effective Preferential
Tariff (CEPT). Scheme for AFTA. More than 99% of the products in the CEPT Inclusion List (IL)of ASEAN-
6, comprising Brunei, Darussalam, Indonesia, Malaysia, the Philippines, Singapore and Thailand have
been brought down to 0.5 % tariff range.
ASEAN newer members Cambodia, Laos, Myanmar and Vietnam are not far behind in the implementation
of their CEPT commitments with almost 80 % of their products having been moved into their respective
CEPT ILS. Of these items about 66% already have tariffs within the 0.5 % tariff band. Vietnam has until
2006 to bring down tariff of products in the Inclusion List to no more than 5% duties, Laos and Myanmar in
2008 and Cambodia 2010
Following the signing of the Protocol to amend the CEPR-AFTA Agreement for the Elimination of Import
Duties on 30 January 2003, ASEAN-6 has committed to eliminate tariffs on 60% of their products in the IL,
by the year 2003, As of this date, tariffs on 60.12% of the products in the IL pf ASEAN -6 have been
eliminated. The average tariff for ASEAN-6 under the CEPT Scheme is now down to 1.51% from 12.76%
when the tariff cutting exercises started in 1993.
The implementation of CEPT-AFTA Scheme was significantly boosted in January 2004 when Malaysia
announced its tariff reduction for completely built up (Cbus) and completely knocked down (CKDs)
automotive units to gradually meets its CEPT commitment one year earlier than schedule. Malaysia has
previously been allowed to defer the transfer of 218 tariff lines of CBUs and CKDs until 1 January 2005
(ASEAN 2017)

PRINCIPLES OF THE ASEAN ECONOMIC COMMUNITY

The ASEAN countries are engaged in a process to transform ASEAN into a real economic community by
the end of 2015. Originally built as a political alliance to limit the spread of communism in Southeast Asia.
ASEAN gradually became a diplomatic organization to manage regional issue and expand trade with the
inclusion Vietnam, Cambodia and Laos and their opening in a market economy.
Having stood on a minimalist “smallest common denominator approach that emphasized harmonious
relation and respect of sovereignties, ASEAN countries nonetheless also came to great develop trade
through quite ambitious economic treaties and free-trade agreements for Southeast Asia.
ASEAN leaders have now embarked the Southeast Asian association to the next step of economic
development, which will also ultimately bring the Southeast Asian peoples closer. They have engaged
since 2007 towards the integration of ASEAN into an ASEAN Economic community based on 4 economic
pillars (ASEAN 2017).

THE FOUR PILLARS OF THE ASEAN ECONOMIC COMMUNITY

Single Market and Production Base – The region as a whole must become a single market and production
base to produce and commercialize goods and services anywhere to ASEAN.
Competitive Economic Region – The region must emphasize on the competitiveness of its production and
capacity for export, as well as the free competition inside of its frontiers.
Equitable Economic Development – To receive the benefits of the AEC the people and businesses of
ASEAN must be engaged into the integration process of the AEC.
ASEANs –integration into globalized economy. ASEAN must not be isolated but an integrated part of the
global economy.

THE FIVE CORE PRINCIPLES OF THE ASEAN SINGLE MARKET AND PRODUCTION BASE
1. Free flow of goods
2. Free flow of services
3. Free flow of investment
4. Free flow of capital
5. Free flow of skilled labor

THE GLOBAL ECONOMY AND OUTSOURCING

Outsourcing means finding a partner with which a firm can establish a bilateral relationship and having the
partner undertake relationship specific investment so that it becomes able to produce goods or services
that fit the firm’s particular needs. We live in an age of outsourcing; Firms seem to be subcontracting an
ever-expanding set of activities, ranging from product design to assembly. From research and
developments to marketing, distribution and after sales service. Some firms have gone so far as to become
“virtual” manufacturers, owning design for many products but making almost nothing themselves. Virtual
disintegration is especially evident in international trade. A recent annual report of the World Trade
Organization (WHO) details, for example, the production of a particular “American” car.
 30% to the car’s value
 17.5% to Japan for components
 7.5% to Germany for design
 4% to Taiwan and Singapore for minor parts
 2.5% to the United Kingdom for advertising and marketing services
 1.5% to Ireland and Barbados for data processing
 37% only for the production value generated in the US
Similarly, the production of a Barbie doll procures raw materials such as plastic and hair from Taiwan and
Japan conducts assembly in Indonesia and Malaysia, buys the molds in the US, the doll clothing in China
and the paint used in decorating the dolls in the US. Indeed, many observers use the term “globalization”
they have in mind a manufacturing process similar to these.
Outsourcing means more than just the purchase of raw materials and standardized intermediate goods.
Often, but not always the bilateral relationship is governed by a contract, but even in those cases the legal
document does not ensure that the partners will conduct the promised activities with the same care that the
firm would use if it were to perform the tasks. Because outsourcing, involves more than just the purchase of
particular type of good or service, it has been difficult to measure the growth in international outsourcing
(Grossman et. Al. 2016)
In the Philippines, the call centers dominate the Filipino outsourcing industry with voice-based services
accounting for more than 70% of the Business Process Outsourcing (BPO) revenue generated in 2010.
The Philippines is currently ranked #1 in the world in terms of offshore voice-based services. The strong
growth of this BPO sector is likely to continue for at least another decade. The reason behind all of this
growth is simple the Philippines is the best source for fluent English language speakers who are accent-
neutral and familiar with Western diction and figures of speech. Filipinos are also very service-oriented
people making in overall customer satisfaction (Micro sourcing, 2017)

GLOBAL CORPORATION
Global Corporation is a business that operates in two or more countries. It also goes by the name
“multinational company”. Expanding your business globally can offer several advantages over running a
strictly domestic company, but operating in multiple countries also posed logistical and cultural challenges.
A major motive of becoming a global corporation is to expand revenue opportunities and to diversity
business risks. If you have a model that works well domestically and translates well in foreign markets, you
gain success to more customers and capital. Operating in multiple countries allow you to achieve success
in different types of economies. If your local or domestic company is stagnant or your market share has hit
a plateau, you might find more customers in a country whose economy is vibrant and expanding.

GLOBAL CORPORATIONS AND GLOBALIZATION

Globalization can also offer the benefits of economies of scope and economies of scale. Economies of
scope means that you can take advantage of different skill sets and market advantages. Many companies
for instance take advantage of efficient call center operations that Philippines and India offer. Economies of
scale means that where you use more equipment in production or by supplies and resale products in larger
quantities, you can get better coats per unit, increasing profitability. Culture variance is a major challenge
for global corporations. Developing a positive, effective work culture can be challenging enough in another
country. Getting workers to think globally when their values differ from that value of colleagues in other
countries is even harder. (Kokemuller, 2017).

LESSON III – THE GLOBAL INTERSTATE SYSTEM

THE INTERSTATE SYSTEM
State has been long recognized as fundamental actor in global politics. Within the borders, there is no
doubt that each State is expected to maintain its unchallengeable power because of its possessed
sovereignty. Eventually states begun to interact with other states and constitution beyond its territorial
boundaries as motivated by certain factors and events that demands cooperation and interdependence.
The attempt to explain these decisions, interactions and behavior that occur across boundaries of states
are what scholars refer as international relations, international studies or international politics. While the
relation of states (which traditionally in military), diplomatic and strategi9c terms) have been the center of
this discipline, its nature and focus has been significantly changing over particularly under the realm of
globalization.
Globalization is defined as the widening, intensifying speeding up and growing impact of worldwide
interconnected. (Held and McGrew, 1999). Thus, it expectedly results to intensification of relationship
among nation-state which may either Increase, decrease, or transform states that its usual position.
However, not all processes of globalization occur on the level of states as this extends to the politics and
political patterns of international institutions and organizations which are equally important to what states
and other political actors do.

STATE AND SOVEREIGNTY

The state emerged in 15th and 16th century Europe as a system of centralized rule that succeeded in
subordinating all other institutions and groups, temporal and spiritual (Heywood, 2011). The concept of
statehood was attributed to the Peace of Westphalia (1648), a package of treaties that ended the 30-year
war (1618-1648), where Europe’s ruler would recognize each other’s right to rule their own territories and
free from outside interference. In turn, the Westphalian system guarantees stability and unification for the
nations of Europe which was expressed by Giuseppe Mazzini (1805-72), an Italian nationalist. The
characteristic theme of this classical nationalism reflected in Europe is linked with the idea of the nation
based on the belief in popular sovereignty. This was mostly signified in US president Woodrow Wilson’s
“Fourteen Points” in 1918, a blueprint which proposed for the reconstruction of Europe after WWII. Nations
in Europe, according to Wilson, should achieve statehood that is anchored from principle of national-
determination. Its goal eventually led to the construction of a nation (Heywood, 2011)
During French Revolution the Westphalian system, was challenged by Napoleon Bonaparte, a French
leader who implemented the Napoleonic Code, with his principle of liberty, equality and fraternity against
the power of kings, nobility, and religion in Europe. But after his defeat in Battle of Waterloo in 1815, the
Royal power founded an alliance of great powers or the Concert of Europe-Austria, Russia, Prussia and
United Kingdom, and created a new system, which in effect revived the Westphalian system and restored
the sovereignty of states.
Therefore, these historical events established that the doctrine of sovereign statehood was significant not
only as the legal basis of modern statehood but also the constitution of modern world order. In fact, it was
stated in 1933 Montevideo Convention on the Rights and Duties of State as one of the four qualifying
elements (a.) a defined territory, (b) a permanent population, (c) an effective government, and the (d)
capacity to enter into relation with other states (Heywood, 2011)
While internal sovereignty refers to the state’s authority within, external sovereignty defines the relationship
of states to other states and international actors as it establishes state’s capacity to act as an independent
and autonomous entity in world affairs (Heywood, 2011) It is the same principle of how international law
was created. Thus, United Nations, as the principal framework and venue for convening member state’s
leader, guarantee equal participation in international relations that is according to the principle of sovereign
equality.

STATE AND GLOBALIZATION

In the advent globalization, debates about the power and significance of state in the world system have
been found. Two contrasting positions argue about the impact of the widening and speeding
interconnectedness brought about by the process of globalization. Some believed that it brings about the
demise of the sovereign states as global forces weaken the power of the states to control their own
economies and societies. (Ohmae, 1995 Scholte 2000; Baylis et., al, 2011).
Oppositely, some assumed that states remain as primary agent which could even shape the world order
(Krasner, 1999; Baylis et. Al, 2011) Between these two views lies another perspective, which recognizes
that globalization would transform the role, significance and nature of the sovereignty of the state.
Globalization as process is more than simply growing connections or interconnectedness between states.
Rosenau (1997) suggests that globalization implies a cumulative scale, scope, velocity and depth of
contemporary interconnectedness is dissolving the significance of the borders and boundaries that
separates the world into its many constituent states or national economic and political spaces (Baylis et. Al,
2011) Instead of looking at the interdependence or internationalization between nation-states, the concept
of globalization presents s dramatic shift leading to the organization of human affairs – from the world of
discreet but interdependent nation-states to the world as a shares social space, in sense concern about
economies and security transcend the world’s major regions and continents.
Similarly, globalization represents the process of deterritorialization, when social, political, and economic
activities are increasingly stretched across the globe and making geography and distance posing relative
significance. For instance, terrorist and criminal networks operate both locally and globally.
Some is true for national economic space which is no longer equivalent with national territorial space, under
the condition of globalization since UK’s largest companies have overseas headquarters. In this sense,
globalization can be defined as (Baylis et. Al, 2011)
As the definition enable us to differentiate globalization from spatially delimited processes such as
internationalization and regionalization, the nation state may no longer have the monopoly of power
resource. This is because of relative denationalization of power brought by globalization where power is
organized and exercised on a trans regional, transnational, or transcontinental basis while many actors,
from international organization to criminal networks. Exercise power from within, across, and against states
in an increasingly interconnected global system (Baylis et. Al, 2011)

SHIFTING FROM INTERNATIONAL POLITICS TO GLOBAL POLITICS

The politics in the world stage has been conventionally understood in international terms. But the term
international relations have not been used despite of the conflict and co-operation between and among
territorially based political units had been existed. Not until Jeremy Bentham, a British philosopher and legal
reformer, coined the term international relations that was introduced in his Principles of Moral and
Legislation (1789). In the late 18th century, the said term eventually was recognized as ‘Inter-national’ as
the territorially based political units, have gained clearer and genuine national character. Based on this
shifting concept from nationhood to statehood why most modern state and interact could effectively act with
one another on the global (world) system or also described as inter-state system. The origin of this view is
drawn from aforementioned Peace of Westphalia which center on the principle of sovereignty. Thus, state
sovereignty became the fundamental organizing principle of international politics.
However, internationalization should be differentiated from globalization. The former refers to growing
interdependence between states, its very idea presumes that state remain discrete national units with
clearly demarcated borders while the latter refers to a process in which the very distinction between the
domestic and the external breaks down. The distance and time are irrelevant in the sense that level events
and impacts may be diffused rapidly around the globe (Baylis et. At, 2011)
The growing number of complex political issues has eventually acquired a global character which in that
effect, extend actually or potentially to all parts of the world. For instance, the issue of terrorism and climate
change are two of the most important events that had been affecting all states because of increasing
impact and expansion of various terrorist group and from the nature operates it’s an interconnected whole.
These events and the following significant changes resulted to a shift of paradigm from the usual
‘international’ politics to ‘global’ politics (Heywood, 2011).
New Actors on the World Stage - Because of globalization, it is responsible to regard state as the only
significant actors in world stage. New key players have come to exert influenced and identified as
transnational corporation. (TNCs), non-government organization (NGOs) and a range of non-state
institutions. Similarly, groups and organizations like terrorist group of Al Qaeda, anti-capitalist movement
and Amnesty International to google HP and also contribute in shaping the world politics.
Increased Interdependence and Interconnected - As globalization results to a substantial growth in cross-
border or transnational, flows and transaction, - movements of people, good, money, information and ideas
the phenomenon also increased the relations among states with interdependence and interconnectedness.
Problems and issues that are global in nature like global warming, terrorism, and pandemic disease are
impossible to resolve by any states alone, except for powerful states. Thus, states generally resort on
collective effort as they work together to address the global issues. However, these may asymmetrical
rather than symmetrical where interdependence can lead on domination and conflict rather than peace and
harmony (Heywood, 2011).
The Trend towards Global Governance – Since 1946, a new framework of global governance and (regional
governance) has been recognized. This is attributed to established international organization such as IMF,
World Trade Organization, (WTO), the European Union, and must significantly, the United Nations, A
member of UN for instance, states observe accountability to international norm and principles set for: Most
importantly, the increasing number of member states reflects a growth of states who profess commitments
human rights and the rules of law.

CONCLUSION
The idea about international system was explained in this lesson. Starting with the recognition of the state
and the principle of sovereignty ; identifying a range of new actors; significant factors and events that
resulted to interstate relations; and the relative impact of globalization paved the way for a creation of
global governance or what others identified as the ‘new international order’ as reflected by the operating
international organization particularly, the United Nation.

LESSON IV – CONTEMPORARY GLOBAL GOVERNANCE

CONTEMPORARY GLOBAL GOVERNANCE
When people travel in multiple states; goods and services delivered to and from different countries by air,
land, sea, and cyberspace: Filipino working as OFWs (Filipino overseas Workers) ; and a different range of
cross-border transactions, are quite puzzling for some since there is no government or world government
that regulates, Even though, these activities still expect to be reliable safer, and secure for the people, firms
and government involved. While these are evidently effective with domestic sphere because of the
government which controls, how could exchange among states beyond their borders become possibly in
order; inevitable and stable.
For instance, as the world continuously expands and global mobility increases, the borders of states
expectedly are to be flooded of goods, services, persons, and information. This became possible when the
Universal Postal Union, the first modern international organization, was established in 1863.
Similarly, the growing number of worldwide problems like terrorism , climate change, threat of maritime
conflicts, nuclear proliferation and among others which are beyond the capacity of individual states to solve
on their own, has been receiving attention with the aim of securing international order and recognition of
sovereignty of every states. Analysis of these global activities and international problem are taken up in a
complex phenomenon called ‘global governance.
However, global governance is oftentimes confused with international organizations, an institutions with
states’ membership like European Union, UN, or ASEAN. This chapter explains how one must understand
the global governance and the role of international organization, particularly the UN, in framing and
contributing improvement which may lead to the desired International order.

UNDERSTANDING THE IDEA OF GLOBAL GOVERNANCE

With the absence of world government, the order, stability and predictability of various international
transaction are still possible because of the idea of global governance. Global governance is the sum of
laws, norms, policies and institutions that define, constitute and mediate trans-border relations between
states, culture, citizens, intergovernmental and non-governmental organization and the market—the
wielders and the object of the exercise of international public order (Weis and Thakur, 2010). As such, it
infers that engagement and relations between states in global system are regulated as everyone are
expected to observe. With the same idea. Karns and Mingst (2009) described global governance as the
collection of governance-related activities, rules and mechanism, formal and informal, existing at a variety
of levels in the world today (cited by Haywood, 2011).
Thus, it also refers to a collective and cooperative arrangements involving international institutions and
states as common features who are believed to facilitate governance i.e. coordination of social life—
ordered rule operating through a system of enforceable decisions- rather than government (Haywood,
2011), Being so, global governance is an order based on set rules without government.
Moreover, as a dynamic and complex process of interactive decision making at the global level, it also puts
emphasis to different international actors which are involved in formal and informal mechanisms. Global
governance is not only limited to states and governments, as the fundamental institutions for articulating
public interest that is extended to global community, but also involves intergovernmental and non-state
agencies. The growth and importance of non-state actors like civil society (activist, environmentalist,
feminist, scientist, etc.) and market are undeniably observed. They too, play an active role in shaping
norms, laws and policies in global system. Thus, the states centered structure (i.e., IGOs and particularly of
the UN system) share the governance stage with the pool of other factors with the purpose of ensuring
international system that made up the global politics. To simplify, the term global governance according to
Haywood (2011), is used more to refer to the institutions through which these interactions take place.
In global system, the following are commonly identified categories of political actors who are interacting
with a range of non-state actors (Baylis et. Al, 2011) Nearly 200 government including 193 members of the
UN (with the inclusion of Sudan in 2011; 82,100 transnational companies (TNCs) such as Wal-Mart,
Mitsubishi, Volkswagen, General Electric, Microsoft, Nestle, Hewlett-Packard, with these parent companies
having 807, 400 foreign affiliates. Around 9,500 single-country non-governmental organization, like
Population Concern (UK) or the Sierra Club (USA), which engage in significant international activities;
- 240 intergovernmental organization (INGOs) like Amnesty International, the International Chamber of
Shipping, Red Cross, plus a similar number of less-established international caucuses and networks of
NGOs.

THE ROLE OF INTERNATIONAL ORGANIZATION IN GLOBAL POLITICS

The ASEAN, IMF, WTO, WB, and UN are some of the high-profile international organizations which the
Philippines and most of sovereign state are members of. As a well-observed phenomenon, international
organizations foster cooperation among states particularly on global issues.
Sometimes called international governmental organization (IGOs), as opposite of international non-
government organization (INGOs), international organization is an institution with formal procedure and a
membership comprising three or more states. They are characterized by rules that seek to regulate the
relations amongst member states and by a formal structure that implement and enforces these rules
(Haywood, 2011).
International Organization, according to Rittberger and Zangl (2006), may be viewed as instrument, arenas
or actors. As instrument, they are mechanism through which states pursue their own interest. As they
facilitate debate and information exchange, it also serves as permanent institution of conference diplomacy
thus, regarded as arenas. And when states are enabled by IOs to take concern action, they are acting as
an actor.
Historically, the earliest considered international organization is the Concert of Europe after the Napoleonic
war and continued until WWI. The number and membership grew into 49 which had been in existence until
1944 and 1929, it had reached an inter-war peak of 83, just at the onset of world economic crisis. Then at
the end of WWII, the number of international organizations soared into 123 in 1949 that includes UN and
the institutions of the Breton Woods system. (INF, WB, WTC) . This shows not only an increasing
awareness of interdependence among states but more concerned with world economic crisis, human rights
violation, environmental degradation, disparities in terms of development and the hegemonic role of the
USA (Heywood, 2011). In mid-1980s, it had reached 378 but subsequently decline after Cold War due to
the dissolution of Soviet Bloc organizations. This result to s substantial increase in international agencies
and similar institution along with the continued growth of international organizations.
Although the rise of international organizations, Illustrate the emergence of a global governance system.,
the latter is wider and more extensive phenomenon than the former. Nevertheless, international
organization are often considered as key element in global governance, particularly in the process of
cooperative problem–solving that lies at the heart of global governance is usually facilitated by international
organization (Weiss and Kamran, 2009) This international organization are vital as formal or institutional
face of global governance.

THE UNITED NATIONS

The UN is considered as the world’s leading institutional organization that has indispensable part of the
global political arena. According to Thakurr (2011), it is both global governance actor and site. Composed
of universal state membership and mechanisms for involving non-state actors, the UN is also regarded as a
central clearing house for information and actions. The UN was founded on October 24, 1945(since known
as UN day by 51 countries of which Philippines was the one the founding members. It has, to date, a total
of 193 members, nearly every state in the world, and counting. As a result of initiatives moved by the
government od states that had led the war against the Germany and Japan in WWII, the UN Charter clearly
spelled out the following basic principles of international relations.
1. To maintain international peace and security
2. To develop friendly relations among nation
3. To cooperate in solving international problems and in promoting respect for human rights and
4. To be a center for harmonizing the action of nations.
In this sense, every member—rich and poor, large and small, with differing political views and social system
is givens voice and a vote in UN processes (Baylis et. Al, 2011). Is not the first constructed international
organization to ensure global peace and security. The League of Nation, is predecessor, was established at
the Paris Peace Conference of 1919 with very similar goals—enable collective security, to arbitrate over
international disputes and to bring about Disarmament. Heywood, (2011). Indeed, the league and UN were
both set up in the aftermath of world wars. But the former evidently suffered from major drawbacks which
even doubted its name as it was never properly a league of nations. Key states did not join particularly USA
(because of the isolationist Congress to ratify membership while other states abandoned the League. For
instance, Germany joined in 1926 but leave the organization after Nazis came to power in 1933, as Japan
was criticized for its invasion of Manchuria, also left in 1933; Italy walked out o in 1936 after its occupation
of Abyssinia; while the Soviet Union which entered in 1933 was eventually expelled in 1939 when it
attacked Finland (Heywood, 2011)
And by end of second World War, the league had failed to address the number of state’s set of aggression,
thus blamed to its ineffective power. Failure was likewise attributed to the absence of clear division
between m the main executive committee the League Council) and the League Assembly, both of which
could only make recommendation had to be unanimous. Moreover, there was no mechanism existed for
coordinating military or economic action against miscreant states. As a result, these defects led to the
outbreak of WWII The UN structure was intended tom prevent some of the problems encountered by the
League of Nations. It has main six organs (bailey et al, 2011)
 The Security Council – Principally responsible for maintaining international peace and security.
Composed of 15 states including five permanent five members, namely the USA, Britain, France,
Russia (former Soviet Union), and China and ten permanent members. Its decisions are binding
and must only be passed by a majority of nine out of 15 members, as well as each of the five
permanent members, which also were seen as major powers as they hold veto power over
Security Council decisions.
 The General Assembly – regarded as parliament of nations as this is represented by all UN
members. The assembly meet to consider the world’s pressing problems while each has one vote,
Decisions on key issues like international peace and security, UN budget and admission of new
members must acquire the two-third majority vote of the General Assembly. But the decisions
which are reached have only the status of recommendation

 The Secretariat – this carries the administrative and substantive work of the UN as directed by the
General Assembly, the Security Council, and the other organs. It is headed by the Secretary
General, who provides administrative guidance. The Secretariat consists of departments and office
with a total staff pf 40,000 around the world. As primarily bureaucratic, the Secretariat lacks the
political power and the right of initiative.

 The Economic and Social Council (ECOSOC) – under the overall authority of the General
Assembly, the ECOSOC is mandated to coordinate the economic and social work of UN and the
UN family organizations. Is serves as a link between UN and civil society, thus consultations with
non-governmental organizations are maintained.

 The Trusteeship Council – as UN was created, (this provides international supervision for 1 Trust
Territories administered by seven member states and to ensure that adequate steps were followed
to prepare the territories for self-government or independence. In 1994, all Trust Territories had
 attained independence. As works was completed, the Council now consist of 5 permanent
members of Security Council and had amended the role of procedure.
 International Court of Justice – serves as the main judicial organ of UN. It consists of 5 judges
elected jointly by General Assembly and the Secretary Council. The court not only decides dispute
between countries but also provides advisory opinions to other UN organs and Specialized
Agencies upon request.
Furthermore, the UN also includes a range of specialized agencies, funds and programs, including the
International Monetary Fund (IMF) World Bank (WB), and the World Health Organization (WHO), the UN
Educational, Scientific and Cultural Organization (UNESCO) and the UN Children’s Fund (UNICEF)

GLOBALIZATION AND THE UN SYSTEM

While globalization is understood as a term that refers to the expansion and intensification of social
relations and consciousness across world-time and world-space (Steger, 2003) which is not only concern
with expansion of economic activities across state borders increasing volume of finance investment, goods,
and service flows; ideas, information, organization and people and cultural exchanges, but also reflects the
rapidly and intensity of the interactions in real time.
From these occurrences, there are opposing views when analyzing the effect of globalization. Some
consider it is equally desirable and an important engine of growth that paved the way for progress and
higher standard pf living while others see it as form of Western dominance and that only big countries have
positive things to say.
Weis and Thakur 2010 raised points for clarifications
 That even in globalization era, people’s movements remain restricted and strictly regulated, more
so the 9/11 attack.
 Economic independence is highly symmetrical industrialized developing countries are either
interdependent in their relations or largely independent in economic relations with one another and
developing countries are highly dependent on industrialized countries.
 Growing divergence, not convergence, in income levels between countries and people, with
widening inequality among and within nations.
 It has unleashed many uncivil society forces like international terrorism, drugs, people and gun
trafficking and illicit money flows (Heine and Thakur, 2011)
Thus, globalization is believed to create both losers and winners and could also entail risk and opportunities
for involving players actors. But according to an International Labor Organization (ILO) blue-ribbon panel
the problems are not caused by globalization but in the deficiencies in its governance. Poverty and
inequality as global concerns are vividly felt and observed in the actual arena since there is no economic
and social institution which can effectively tackle these problems with greater legitimacy, lesser transaction
and compliance costs and higher comfort levels for most countries, than the system of UN do (Weis and
Thakur, 2010)
ROLE OF UN IN GLOBAL POLITICS
Among the operating international organization, UN has more comparative advantage in identifying and
resolving global concerns. And as world organization, it will continue to play four essential roles according
to Weis and Thakur, (2011).
 Managing Knowledge – from a range of issues such as atomic bombing to HIVAIDS and climate
change, and to various kinds of services like regulations of the skies and seas, internet traffic and
nail, all had successfully reached the attention of every state that prompted them eventually to be
involved and acts towards revolution. Before addressing the problems, which directs state to
recognize its existence, it is important to gather first solid information about the nature and causes
of the problems. Though UN system is comprised of members states, accredited NGOs, media
contacts, basic research about these global problems and issues are done in universities or which
should be by a knowledge-based and knowledge-management organization. UN makes use of
convening capacity and mobilizing power to help generate knowledge from outside and ensure its
discussion and dissemination among the governments
 Developing Norms – key actors in international arena are institutions operated by human beings or
social actors, thus, norms or standards of behavior are necessary to the society’s functions and
existence. As data has been collected and knowledge gained that a problem is serious to warrant
attention by the international policy community, new norms are thereby developed. This is turn was
articulated, disseminated and institutionalized.
 Formulating Recommendations – as norms are developed a myriad of possibilities must be
formulated as how key actors i.e., government and IGOs can alter the behaviors. However, by the
21st century, the growth and presence of civil societies has led them to warrant attention as they
became louder and holder in voicing their positions in various issues. Civil societies of NGOs have
been recognized as they were present in signing of the Charter-Article 71 which provides their
participation. However, formulated recommendations and proposals may wither as the next step
would be given to the member states, who shall the responsibility.
 Institutionalizing Ideas – Once the knowledge has been acquired, norms articulated and policies
formulated, and existing institutions can oversee their implementation and monitoring (Weis and
Thakur, 2011). Based on UN’s history, every problem identified has several global institutions
which are working on important solutions. Once created, institutions can facilitate problem solving
despite of non-coercive power. In some cases, when the problem is distinctive, particularly in term
of gravity and scale, from other problems, international community of states would create a new
IGO which focus on addressing such problems. For instance, the Joint UN programs on HIV/AIDS
(UNAIDS), established in 1996 following a resolution of WHO’s World Health Assembly, was
created serving as principal instruments for global action on HIV/AIDS and provide actions to the
epidemic.

UN CHALLENGE AND RESPONSES TO ISSUES

For more than seventy years of operation, UN has been continuously challenging of different controversy
and criticism. Given the ideational role. It is inevitable that expectations do not meet UN’s actual
performance as the principal global governance actor.
While UN was assumed to be active in area such as refuge protection, environment, counter-terrorism,
human rights, disarmament, economic, and social development, UN’s main role that is widely accepted is
that of maintenance of peace and security that is carried out by Security Council, as it’s the main organ.
Thought it has gained successes in peacekeeping (such as in Mozambique and El Salvador) and peace-
building (East Timor,) in mid 1990s, UN failed to prevent the large-scale slaughter in Rwanda and Bosnia
which damaged its reputation (Heywood, 2011). These and other issues continue to challenge UN to take
on a stranger role in maintaining global order.

MARITIME DISPUTE IN WEST PHILIPPINE SEA

Similarly, the growing threat of maritime conflict defies UN’s authority over its member states. The growing
tensions and continued display of coastal power in order to retain control are significant in from the East
China Sea to the Eastern Mediterranean, from the South China Sea to the South Atlantic, Where Philippine
is one of the claimants, the risk is more threatening in the maritime area of South China Sea. The dispute
center on a collection of largely uninhabited island in the East China Sea are the Paracels in the Northwest
know Spratlys in the Southwest and the Maclesfield Bank in the Northwest (known in China as the Xisha,
Nansha, and Zhongsha island, respectively. While Brunei Malaysia and Vietnam, and Philippines claim
some among them particularly those that are near their shorelines (Klare, 2017)
However, when the Tribunal issued 2016 its decision in favor of the Philippines and China has violated the
Philippine Sovereign Rights, China was absent throughout the proceedings and refuse to recognize the
case. The Tribunal ruled that
“.. . . That there was no legal basis for China to claim historic right to resources within the sea areas fulling
within the nine-dash-line. Having found that none of the features claimed by China was capable of
generating an exclusive economic zone, the Tribunal found that it could---without delimiting a boundary—
declare that certain sea areas are within the exclusive economic zone of the Philippines, because these
areas are not overlapped by any possible entitlement of China.
Having found that certain areas are within the exclusive economic zone of the Philippines, the Tribunal
found that China violated the Philippines’ sovereign rights in its exclusive economic zone by (a) interfering
with Philippine fishing and petroleum exploration (b) constructing artificial island and (d) failing to present
Chinese fishermen from fishing in the zone”
China said and that it was the victim in the maritime dispute over the West Philippine Sea and it would
never accept any decision by the UN arbitral tribunal. Moreover, it was reported that China “will never
accept any imposed solution or unilaterally reporting to third-party settlement” (www.
globalnation.inquirer.com)
Non-recognition of China to arbitration’s decision resulted to different reaction from members of the
international community. As more countries an international organization agree with the use of peaceful
means and this must be according the principle of international law, including the UNCLOS, China
continuously ignored. It was reported that China had almost finished transforming the seven reefs claimed
by the Philippines into military bases After issuing its decision, (UN was found silent when it Comes to strict
imposition of its verdict against China. According to Klare (2017), the legal machinery for adjudicating
offshore boundary remains underdeveloped, and because many states are reluctant to cede authority over
those matters, this makes the resolution more difficult.

UNIT III – A WORLD OF REGIONS

LESSON I -GLOBAL DIVIDES THE NORTH AND THE SOUTH
THE GLOBAL DIVIDES

 Filipinos are obviously coffee lovers. Branches of various international coffee shops like Coffee Bean and
Tea Leaf, Starbucks, Figaro UCC Coffee, and Seattle’s Best, are like mushroom found in every metro area
in the Philippines. As Filipinos patronize imported coffee brands, this oftentimes perceived as one of the
effects of globalization. Similarly, when a Filipino experience of globalization as customers. Similarly, when
a Filipino enters in one of these shops is another experience of globalization as customers are not only
Filipinos but different nationalities as well. While this show global interconnectedness and global modernity,
multi- national corporation (MNCs) and transnational corporations (TNCs) operating in countries like in the
Philippines and in other corporation countries are likewise believed to create problems like cheap labor,
exploitation and the like.

 This is why globalization is viewed as a process that presents two sides-good or bad, and positive or
negative. While this book, discusses Globalization as a multidimensional phenomenon, it is imperative to
look into the differing impacts of globalization to the states and explain WHY there is growing division
between rich and poor, developed and Developing. First and Third world, and global North and global
South.
 Previously, the “Third World” was used by those who criticize cold war-era politics. This pertain to the parts
of the world that did not fall into the Capitalist(also called First World) or the communist termed as Second
World During Cold War.” Third Worldism” on the other hand, was linked to being Non-aligned of these
countries but eventually the term was abandoned as the Soviet Bloc or the “Second World” collapsed. The
countries which are less Developed in Africa, Asia and Latin America are also categorized as “third”
because Of the prevailing poverty and economic dependence to First World states (Heywood, 2011).
• With the changing global scenarios, historical event are still relevant for these Terms. But as Third Worldism
and non-alignment (due to collapsed of Soviet Bloc) are no longer practically used, all these points only to a
certain phenomenon: that there is under-development of states/people and lack of representation in global
Political process (Claudio, 2014).
• However, as they could be different effects of world political event like imperialism and Cold war-era, the
term “global South” may still evolve, especially when affected by globalization. In this sense, the important
question may not be what the global south is but for whom and under what condition the global South
becomes relevant. (Levander And Magnolo, 2011 cited by Claudio, 2014) Same is true when one supposes
that the global South is everywhere, but it is also somewhere, and that somewhere, located at the
Intersection of entangled political geographies of dispossession and repression (Sparke,2007) cited by
Claudio, 2014). To make sense global south can be found between the objective realities of the global
inequality and the objective response to these (Claudio, 2014)
 • For instance, when global financial crisis but most of the European countries in 2008, Greece in particular ,
experienced what undeveloped countries in global South have. Citizens were reported to have lost their job
and government out public spending; issues which are common to global South such as prostitution, heroin
addiction and epidemic arises. Thus, the problems of the global South are globalized. These terrible
conditions wonder the British daily news to question “is Greece becoming a third world country” (Moran,
2012 cited by Claudio, 2014).

• Similarly, as US President Donald Trump issued policies that restrict immigrant as anchored on economic
nationalism, implies unemployment (even poverty) also exists in the global North, While metro district like
Makati where MNCs and large corporations operate in a manifestation that spaces of developed countries
are also found in the global South of which the Philippines is classified . In this sense, the spaces of
underdevelopment in developed countries may mirror the qualities of the global South and spaces of the
affluence in the developing world mirror those of the global North.

THIRD WORLD VERSUS GLOBAL SOUTH

•To locate what are the states in global South, Grovogui (2011, cited by Claudio, 2014), contends that

 The global South is not a directional designation or a point due to South from a fixed north. It is a symbol
designation meant to capture the semblance of cohesion that emerged when former colonial entities in
political projects of decolonization and moved toward the realization of a postcolonial international order.

 Thus, Grovogui suggest that the states in the international system of governance are those that have
common experience i.e. colonization. In the early phase of Globalization in 19th century, anti-colonial ideas
reached former colonial territories which eventually had been enlightened and developed the nation of
solidarity. Such solidarities were believed to be the foundation of contemporary concept of global south
(Claudio, 2014).

 After WWII, more countries are decolonized particularly when UN was created in 1945 when over 80 ex-
colonies achieved interdependence (UN, 2011). This reconstructed the world politics which was
aforementioned terms as the first(capitalist). Second (communist) and Third (non-aligned) world engaged.
The vision of non-aligned countries and its solidarity was significantly observed when Asian and African
countries in Bandung, Indonesia, or what was eventually referred as the Bandung Conference in 1995. This
assembly of 29 participants according to Buzdugan and Payne, (2016) is one of the defiance to many forms
of colonialism both imperial and communist (Espiritu, 2006, cited by Claudio, 2014).

THE NORTH-SOUTH DIVIDE

 Previously interstate inequalities often pointed in the geographical area where the state if located, But more
than this criterion of categorization is the degree of economic and political power which countries possess
and are evidently observable in the interstate politics. The figure below identifies the characteristics of the
global North as differentiated from the global South.
• Another way of classifying states as either developed or underdeveloped is by the concept of human
development that was first used by UN in 1993. Human Development is a standard of human well-being that
takes account of people‘s ability to develop their potential and lead fulfilled and creative lives in accordance
with their needs and interest (Heywood, 2011). UN Development report rank countries according to human
development indicators (HDI) which include life expectancy and health profile education and literacy, fuel,
sanitation, shelter: food, jobs, crime, personal distress, careers/jobs and political participation.

• The table on the next page shows that the countries in bottom ten are located in sub-Saharan Africa and
ranked in the category of the human development. In 2010 UN Development report in sub-Saharan African
states are where life expectancy, malnourished population, access to clean water and improved sanitation
are very low or poor.

• While geographical structures show location of states which are characterized by poverty and Affluence, the
concept of “North-South divide must have been reinforced by certain indicators which are associated with
globalization. The idea was derived from Brandt Report, entitled North-South: A Program for Survival (1980
 and Common Crisis: North-South Cooperative for World Recovery (1983), which was conducted by
Independent Commission on International Development Issues. This was chaired by Willy Brandt, the former
Chancellor of Germany. The report suggests that instead of concentrating on geographical split, the terms
are essentially conceptual and theoretical although it is prone to assume that in the global North’ is where
industrial development is to be concentrated while in global South (except Australia) is where poverty and
disadvantages exists. The concept points out that structural inequalities between high investment while
geographical structures show location of states which are characterized by poverty and affluence, the
concept of “North-South “must have been reinforced by certain indicators which are associated with
globalization.

• However, such classical image of TNCs was altered at the start of the 21 st century where TNCs from
developing countries have reported to how become Increasingly important (UNCTAD, World Investment
Report 2006 and 2009). According to the report, the top ten TNCs in 23007 were from 16 developing
countries China, Hongkong, Taiwan, India, Malaysia, Singapore, Korea, Philippines, Thailand, Brazil,
Mexico, Venezuela, S. Africa, Kuwait, Qatar, and Turkey. Furthermore, most of the developing country
TNCs, though small, are found to become major players in particular industries like the cars, electronics,
steel and container shipping.

• Therefore, these evolving conditions, and structures in interstate politics suggest that we must not limit the
conception of global South and global North in their conventional characterization but could be
representative of an emerging form.

MAJOR LENSES OF GLOBAL RELATIONS

• In order to make sense of north-south divide idea, we have to understand the Theories, values and
assumption through which global relations have been Interpreted. How do theories see the world? What are
the major lenses on Global relations?

REALISM

 Perhaps the criticized perspective yet most dominant and influential realist can be traced from Niccolo
Michiavelli and Thomas Hobbes. Realist vision is Pessimistic, i.e. international system is uneven, highly
conflictual and marked by power struggle which based from how the human nature is being characterized
Selfishness and greed. States, as key global actors, prioritizes self-interest and Survival. Being so, the
degree of peace is believed to be relative and temporal And can be disrupted anytime. Thus, in interpreting
the concept of north-south divide, realist postulate that the states in the global North and intersecting with
the countries in the global South in order to promote their very own interest.

LIBERALISM CONSTRUCTIVISM

 Liberals and constructivist have almost the same assumption. However, liberals are opposites of realism
because of a more optimistic vision in international system. They offer that the principle of balance and
harmony is found in all forms of social intersections. As reflected in Immanuel Kant’s belief, universal and
perpetual peace is possible because states are capable of cooperation and value mutual respect. Liberals
 assume that through trade and economic interdependence, division and war are less likely to happen . On
the other hand, constructivist also convey cooperation, trust and peace among international actors.
However, these goals are possible only if these are based on existing norms and conduct which are
institutionalized. Hence, institutions play a vital role in promoting peace in international system.

CRITICAL PERSPECTIVE MARXISM AND POST MODERNISM

 Critical approaches to global relations have been increasingly considerably since the late 1980s. These
approaches are critical in the sense that they oppose in their different ways, the dominant forces and
interests in modern global relations.

MARXISM

 Regarded as the principle alternative to mainstream perspective of realism and Liberalism. Marxism offers a
distinctive approach highlighting the structure of economic power rather that patterns of conflict and
cooperation . It suggest inequalities in global system. As state in global South engage in trading with the
parts of global North, this would only results to unequal benefits between the players because generally, the
capitalist or industrialized countries in global North tend to dominate and exploit the global South. This is
true for Marxism since the playing fields or the economic structure is inherently uneven further complicated
by the impact of globalization.

POST MODERNISM

 Post modernist debunks the ideas of hierarchy, dogmas of existing structure in global relations.
Represented by the writings of Michel Foucault, postmodernism is believed to be based on the belief that
truth is always contested and plural. Hence, emphasis was given that all ideas and concepts are expressed
in language which itself is caught in complex relations of power. The use of language is referred as ideas of
discourse power—human interactions which can disclose or illustrate power relations (Heywood, 2011).

CONCLUSION

 As globalization prevails increase intensification of global problems are also directed. But these are not only
evident among the geographical parts of South but as well as in the North. Hence, this validates that the
ills/poverty of the Global South are continuously globalized.

 But some countries in the global South had struggle and eventually achieved affluence or development. In
this way, the global North may draw inspiration from the South experiences. Similarly, the global South
countries which were ex-colonies, may serve as models of resistance for the world. For instance, India’s
non-violence revolution headed by Mahatma Gandhi and the Philippines’ war against Spanish colonizers
and the bloodless of dictatorship in 1986 may serve as such.

 However, among global problems, global warming continues to challenge both North-South states. Between
the two global South has been more vocal a decisive on addressing the threat of climate change through
government initiatives collective movements. This and other prevailing global problems significantly demand
for those state people from the North to support alternatives, initiative and collective actions from the global
South. A network of solidarity is a must.
  The global South is therefore a metaphor and symbol—a term which does not only pertains to the specific
geographic ideas but also reflects a developing concept of interactionism which is expected to anchor from
the moral potent of universal Human equality (Claudio, 2014).

LESSON II – ASIAN REGIONALISM

WHAT IS REGIONALIZATION
The term regionalization can be explained from different perspective and fields, however, in this study we
will discuss regionalization in the context of economy and politics. In economics – regionalization or
sometimes termed as localization – is a strategy in economics which focuses on a particular region or area
– it employs differentiation based on region. For example, a product may have different marketing
strategies in terms of packaging and advertising depending on the region it will be promoted. Globalization
is a strategy that refers to the use of the same business strategies by multinational companies in all the
markets they operate in. Globalization exceeds regional boundaries; products are being promoted without
region-specific focus. For example, the company offers the same product without any form of
differentiation. Twitter is a good example – has the same look feels and functionalities regardless of
whether one is accessing it in Africa or Europe or Asia. However, the trending section of the site’s page is
region sensitive and display only content that is trending in the particular region a use is accessing it from.
Regionalization can also be seen in a broader sense as a political and economic tool for cooperation and
integration. It could also mean a way of recognizing our own identity. In Asia particularly in the Southeast
Asia, there are a lot of similarities of the countries within the region from culture to their history.

HISTORY OF REGIONALIZATION IN SOUTHEAST ASIA

After the Great War, regional leaders around the world look for a new structure on how they will manage
their shared interest, threats and opportunities. Marginalized economies that had been excluded from the
world market, were increasingly seeing renewed opportunities in the collaboration with neighboring
countries. Different actors (like non-state actors and ideological groups) also progressively entered the
vacuum that was left in global governance, Hettne as cited by Akkerman (2007), New regionalism is a
process of construction and deconstruction by different players and changes according to the global
processes-firms are established in particular region that can be collectively react to global pressure,
tensions and challenges. The ASEAN (Association of Southeast Asian Nation) is a perfect example of
successful regional cooperation that responds to external pressure and common challenges.
On October August 1967, five leaders of Southeast Asian counties- the Foreign Minister of Indonesia,
Malaysia, the Philippines, Singapore and Thailand – met together in the Department of foreign affairs
building in Bangkok, Thailand and signed document. By virtue of that document, the Association of
Southeast Asian Nations (ASEAN) was born.
The five Foreign Ministers who signed it – Adam Malik Indonesia. Narciso R. Ramos of the Philippines, Tun
Abdul Razak of Malaysia, S. Rajaratman of Singapore, and Thanat Khoman of Thailand- would later be
hailed. As the Founding Father of probably the most successful intergovernmental organization in the
developing world today. And the document that they would be known as the ASEAN Declaration. The goal
of ASEAN is more of cooperation in terms of economic, social, cultural, technical, educational and other
fields. Also, it is a promotion of regional peace and stability through abiding respect for justice and the role
of law and adherence to the principles of the UN Charter. It was stipulated that the association will be open
for participation by all states in the Southeast Asian region, subscribing to its aims, principles and purposes.
It proclaims ASEAN as representing the collective will of the nations of Southeast Asia to bind themselves
together in friendship and cooperation and, through joint efforts and sacrifices, secure for their peoples and
for posterity the blessings of peace freedom and prosperity ASEAN.com)
From the article of Akkerman (2007) she stated that the main reason for the ASEAN cooperation is
primarily from the outside – the US feared that communism will spread out all over the region – to prevent
this it sponsors the creation the association for stability purposes. After the Cold War, ASEAN started to
expand its own path- it developed cooperation with Lao PDR, Vietnam, Cambodia and Myanmar and
adopting the ASEAN Free Trade Area to attract Foreign Direct Investment.

THE MARITIME
The crisis that hit Asian region in 1997-1998, made ASEAN realize the importance of cooperation, among
members and non-members. One of the results of the crisis is the creation of Asian monetary policy despite
of being allied with IMF – that Asia is imposing their own financial framework for future crisis and that
countries will no longer depend on US assistance. Furthermore, ASEAN created bilateral agreements with
China, Japan, and South Korea (ASEAN + 3), a framework that besides financial issues also include
deeper economic cooperation. Other primary regional organization are Asia-Pacific Economic Co-operation
(APEC) and the Shanghai Cooperation Organization (SCO). There are global forces that meet in the
region. US, the European Union, China, and Russia. US has encouraged economic cooperation in APEC,
for it had no role in the ASEAN. Since ASEAN is a member of APEC and has implemented its open
regionalism rhetoric, based on sovereignty non-interference and consensus in order to retain a certain
degree of independence within the organization (Akkerman, 2007).
The SCO is a forum between Chia, Russia and the Central Asian (oil rich) countries. The initiative is being
closely watched and ASEAN has been trying to create a dialogue with the SCO, aware of the importance of
its involvement in this cooperation. After the 9/11 bombing, regionalism had increased once more in the
region. The US encouraged war against terrorism forcing the member (APEC) to take action towards their
Muslim terrorist population. ASEAN, not willing to arouse extreme responses on its population, acts with
caution. In this situation, ASEAN will have to assess its position that will not jeopardize the access to the
US market, but neither grants a US influence in the association’s affairs. The war against is not fully backed
by all countries, besides the reactions of US during the Asian financial crisis had caused a lot of resentment
and the unilateral world order that is advocated by the US is a much-contented form in Asia, as in the most
other parts of the worlds (Akkerman, 2007).
The success of ASEAN (as of the moment), be another proof that there is an increase regionalism in the
Southeast Asian region. According to Prime Minister Lee Kuan Yew, a wider regionalism, under auspices of
ASEAN is “an idea that would not go away”. Probably, it is still early to predict the consequences of
regionalism, and Asian role in it, but the China- ASEAN Free Trade Area is a sign for increased integration.
And despite China challenges the region and the world, more likely it will benefit from the growth of
ASEAN.
Many regions are challenged since ASEAN is referred to as a Third World Regional cooperation with
countries so diverse with each other and yet it is successful. It amazing that despite of diversity in many
aspect countries in Southeast and East Asia come together with just one slogan “Unity in diversity”.