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Con World-Reviewer - Reviewer

The Contemporary World (Polytechnic University of the Philippines)

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GLOBAL ECONOMY
MARKET INTEGRATION
Economy
- System according to which the money, industry (goods, Integration
services, etc.), and trade of a country or region are organized. - Relationship of the firm in a market.
World Economy or Global Economy Market Integration
- International exchange of goods and services that is expressed - A process which refers to the expansion of firms by
in monetary units of account (money). consolidating additional marketing functions and activities
Globalization under a single management.
- The process by which countries’ economies become  Horizontal Integration
increasingly interwoven and affected by each other. - a firm or agency gains control of other firms or agencies
International Financial Institutions (IFI’s) performing similar marketing functions (e.g. Disney,
- These organizations give loans to governments for large-scale Pixar)
projects that IFIs believe will boost economic growth. Advantage Disadvantage
World Bank (International Bank for Reconstruction and Economies of Scale Provoking Monopoly
Development) Economies of Scope Time Management
- The World Bank provides loans and development International Trade Weak Adaptability
assistance to middle-income and lower income countries with
a stated aim of reducing poverty.  Vertical Integration
- 5-year grace period and must be repaid over a period of 15-20 - A firm performs more than one activity in the sequence
years. of the marketing process.
- Funds through international capital markets. - Linking together of two or more functions in the
 International Finance Corporation (IFC) marketing process under a single ownership.
- An arm of the World Bank Group that assists with - E.g. Meat Industry, Apple Company
private sector investments. - Types:
International Monetary Fund (IMF) o Forward Integration
- The IMF is an international organization of 183 member o Balanced Integration
countries to promote international monetary cooperation and o Balanced Vertical Integration
exchange stability; to foster economic growth and high Advantages Disadvantages
employment; and to provide short-term financial assistance to More control of the Very-high Expense
countries to help ease balance of payments adjustments. business
World Trade Organization
High certainty of the Reduction of Flexibility
- Monitors international
quality’s product
agreements on trade, investment, government procurement,
Positive Differentiation Loss of Focus
intellectual property and the like.
 Top 10 Economist Countries in the World
 Conglomeration
1. United States
- Combination of agencies or activities not directly
2. China
related to each other (e.g. Unilever, SMC)
3. Japan
- Effects: Risk reduction through Diversification,
4. Germany
Acquisition of financial leverage, Empire- building urge
5. United Kingdom
 Degree of Integration:
6. India
a. Ownership integration
7. France
- All the decisions and assets of a firm are
8. Brazil
completely assumed by another firm.
9. Italy
b. Contract Integration
10.Canada
- An agreement between two firms on certain
The Philippine Economy
decisions which each firm retains its separate
 34th largest economy by nominal GDP
identity.
 13th largest economy in Asia
 3rd largest economy in the ASEAN
Integration among spatially separated markets
 6th richest in Southeast Asia by GDP
- Extent to which prices in spatially separated markets move
 Projected to be the 5th largest in Asia and 16th biggest in the
together.
world by 2050
 Price correlations
Factors affecting Economic Growth
- Degree of correlation between two prices
 Natural Resources
 Spatial price differential and Transportation costs
 Physical Capital or Infrastructure
- Correlation Method
 Population or Labor
- Ravallion Procedure
 Human Capital
- Co Integration Approach
 Technology
- Parity Bound Models
 Law

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GLOBAL INTERSTATE SYSTEM - Principle of cooperation among nations, for the promotion
of their common good
Globalization Globalism
- Worldwide movement towards economic, financial, trade, and - Group of ideologies advocating globalization
communications integration.
State
CONTEMPORARY GLOBAL GOVERNANCE
 Permanent population
(Having one government at modern times)
 Defined territory
 Government
Pieces of Global Governance
 Capacity to enter into relations with other states
 International Law
Interstate System
- Rules that control or affect the rights of nations in their
- Connecting or existing between two or more states system for
relations with each other.
international relations.
 International Norm of Soft Laws
- System of competing and allying states.
- Standards of behaviors.
Effects of Globalization on Governments
 International Organizations (IGOs)
Benefits Harm
- Global mandates, generally funded by contributions from
positive outlook on the net increases risk of failure for national governments. (e.g. ASEAN, WHO)
effects of globalization on smaller companies that  Non-Governmental Organization
economic growth cannot compete globally - Non-profit, citizen-based group that functions
lower increases in Overuse and abuse of independently of government. (ex. Doctors Without
government outlays and natural resources Borders, Red Cross)
taxes  International Regimes
lower levels of corruption - Encompassing rules, norms and principles as well as the
Institutions Governing International Relations practices of actors that show both how their acceptance
 United Nations converge and their acceptance of and compliance with
- Franklin Roosevelt on January 1, 1942 rules. (ex. IAEA, Kyoto Protocol)
- October 24, 1945 with 50 countries as first members  Global Conference
- 193 Member States - A meeting of people who "confer" about global topics. (ex.
- Guided by the purpose of maintaining international peace, The Summit of 1990, Rio Earth Summit of 1992)
friendly relations and international co-operations, and the  Ad hoc Agreements
principle of equality - Signifies a solution designed for a specific problem or task,
Specialized Agencies of the United Nations non-generalizable, and not intended to be able to be
 International Labor Organization adapted to other purposes. (ex. G7, G8)
- Deals with labor issues.  Private Governance
 Food and Agriculture Organization of the United - Third party groups that make rules and/or standards which
Nations have a binding effect on the "quality of life and
- Defeat hunger and rural poverty opportunities of the larger public."
 Organization for Economic Cooperation and Techniques
Development • Agenda-setting
- Stimulates economic progress and world trade - Describes the ongoing process by which various groups
 UN Regional Commissions attempt to transfer their interests to be the interests of
- Group of officials in different countries that instruct, public policymakers.
debate, and is in-charge in making certain laws and rights • Policymaking
to develop the economy and society (e.g., human rights, - Act of creating laws or setting standards for a government
science and technology) or business.
Selected Institutions Associated with World Trade • Implementation and Enforcement
 World Bank - Process of ensuring compliance with laws, regulations,
- Provides loans rules, standards, or social norms.
 World Trade Organization • Evaluation, Monitoring and Adjudication
- Regulates international trade - Formal judgment on a disputed matter.
Other Specialized International Institutions Advantages Disadvantages
 International Telecommunication Union
 No Lasting Wars  Loss of culture and
- Connects all the world’s people
 Combined Technologies individual identities
 International Maritime Organization
 Accelerated Space Program  Lack of keeping corruption
- safety and security of shipping and the prevention of
 Standardized in check
marine pollution
environmental laws  Increased rebellious groups
 International Civil Aviation Organization
 Standardized judicial laws  General fear/distrust of a
- planning and development of international air transport.
 Open travel/migration one world government
Internationalism GLOBAL DIVISION

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 Debt
Divided in two blocks:  Trade
 Global North (richer and developed region)
 Global South (poorer and less developed region) History of Global Division
 The origin of dividing countries into the North-South Divide
North South arose during the Cold War of the mid-20th century.
United States Africa  In the west, the United States and its allies were labelled as
Canada South America First World countries. This division left out many countries
Western Europe Developing countries in which were poorer than the First World and Second World
Australia Asia countries. The poor countries were eventually labelled as Third
New Zealand Armenia World countries.
Japan Austria  During the cold war, the primary global division was between
South Korea Georgia east and west, and predicated upon security and power
Hong Kong balance.
Macau  After the cold war, many see primary global division as being
Singapore between north and south and predicated upon economic
inequality
 This categorization was later abandoned after the Second
World countries joined the First World countries. New criteria
Global North Global South
was established to categorize countries which was named the
“developed countries” or the “less developed countries”
North-South Divide where First World countries were known
“first world”
as the North while Third World countries as the South.
1/4 of total population and 3/4 of the total population and
controls 80% of the total controls only 1/5 of the total
How does Global Division affect us?
income earned income earned
 distribution of income around the world
Home to 4 of the 5 permanent Many in the global south faces
 economic competition
members of the UN security poverty, war, tyranny, and
 standard of living
councils lacks well-developed domestic
 migration
market economies based on
 segregation and discrimination among nations
entrepreneurship and private
enterprise
Millennium Development Goals
enough shelter, food, security relatively low GDP high
 Eradicate Extreme Poverty and Hunger
population
 Achieve Universal Primary Education
appropriate infrastructure lack of trade and aid  Promote Gender Equality and Empower Women
stable macroeconomic abundance of debt  Reduce Child Mortality
framework  Improve Maternal Health
well-functioning public and lacks appropriate technology  Combat HIV/AIDS, Malaria, and other diseases
private institution  Ensure environmental Sustainability
no political stability  Global Partnership and Development

Factors affecting the Global Division

 Economical (Industry Vs. Agriculture)
- stable macroeconomic framework and GDP
- well-functioning public and private institutions and
technology
 Social (Life In The Cities)
- enough shelter, food, security, peace and appropriate
infrastructure
- population and birth/death rates
- organization of education and religion
- access to improved sanitation
 Political
- trade and external threats
- debt and political stability
 Environmental
 Historical

Why Did Global Division Occur?

 Colonialism
 Immigration

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