Global Divides,

Economic
Globalization and
Regionalization
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Presentation
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Highlights
General Discussion Flow Global Economic Order in the Early Years
Emergence of the New Global Economic Order
International Trade and Globalization
International Finance and Globalization
International Monetary Systems
International Economic Institutions
Global Economic Instability
Global Divides
Regionalization NEXT
ECONOMIC
GLOBALI
ZATION
Economic Dimension of Globalization
· intensification and stretching of economic interrelations
across the globe
· Gigantic flows of capital and technology have
stimulated trade in goods and services
· new linkages among national economies
· Huge transnational corporations, powerful international
economic institutions, large regional trading systems

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The increasing integration of
economies around the world
through interrelated and
interconnected trade,
production of goods, and flow
of capital

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Global Economic Order in the Early Years
value of each country's currency - pegged to a fixed
gold value of the US dollar
prescribed limits, individual nations - free to control
the permeability of their borders
set their own political and economic agendas

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Global Economic Order in the Early Years
First wave took place from 1860 to 1914
gradual emergence of a new international economic
order - economic conference held towards the end of
World War II
expand international trade, agreed to establish binding
rules on international economic activities
create a more stable money exchange system

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Global Economic Order in the Early Years

Bretton Woods also set the institutional foundations - three

new international economic organizations:
Ø The International Monetary Fund
Ø The International Bank for Reconstruction and
Development (later known as World Bank)
Ø General Agreement on Tariff and Trade

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The Objective to foster global cooperation
and the facilities of trade, promoting

International
economic growth, and stabilizing the
exchange rate for its current member
states

Monetary
Fund
 o A family of five international

The organizations that provide loans to

developing countries

International
o Tasked with the reduction of poverty
and the promotion of trade and
investment

Bank for
Reconstruction
and
Development
(later known as World Bank)
 o An agreement between many
countries that established rules and
guidelines governing world trading

General o Objective was to remove the barriers

that prevented free trade

Agreement on
Tariff and
Trade
Global Economic Order in the Early Years

Bretton Woods regime contributed - 'golden age of

controlled capitalism'
state control over international capital movements: full
employment and the expansion of the welfare state
By the early 1970s, Bretton Woods system collapsed

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The time when the volume of the trade and
investment between countries in both
continents dramatically rise. This economic
robustness and the frenetic pace at which
the U.S was growing attracted millions of
people to try their luck in North America

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Emergence of the New Global
Economic Order
Second wave happened after WW II
Political forces in the global North suffered a series of
spectacular election defeats
conservative political parties who advocated a 'neoliberal'
approach to economic and social policy.
in the decades following World War II, political parties in
Europe and the United States rejected those laissez-faire
ideas

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Emergence of the New Global
Economic Order
Second wave happened after WW II
Political forces in the global North suffered a series of
spectacular election defeats
conservative political parties who advocated a 'neoliberal'
approach to economic and social policy.
in the decades following World War II, political parties in
Europe and the United States rejected those laissez-faire
ideas

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Emergence of the New Global
Economic Order
instead embraced a rather extensive version of state
interventionism by economist John Maynard Keynes
British Prime Minister Margaret Thatcher and US
President Ronald Reagan led the neoliberal
revolution against Keynesianism by 1980s
received further legitimation with the 1989-91
collapse of communism in the Soviet Union and
Eastern Europe.

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Emergence of the New Global
Economic Order

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Emergence of the New Global
Economic Order

developments related to economic globalization:

Ø internationalization of trade and finance
Ø the increasing power of transnational
corporations
Ø the enhanced role of international economic
institutions

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During this period, an agreement between
the world’s political and economic powers
created a system operated by institutions
and rules that made trading, the use of
currency, and the transfer of capital
possible

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International Trade and
Globalization
Economic Globalization with the controversial issue
of free trade
With the release of the production process from the
limitations set by geography and location,
corporations and companies also began to assume a
global character.
The collapse of the Soviet Union and communism
led many countries to shift to a capitalist system.

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International Trade and
Globalization
Economic globalization was always associated with the
controversial issues of free trade
With the release of the production process from the limitations
set by geography and location, corporations and companies
also began to assume a global character.
The collapse of the Soviet Union and communism led many
countries to shift to a capitalist system

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International Trade and
Globalization
Capitalism was supported by global policies, agreements,
frameworks, and institutions
As a result, the barriers and policies that prevented foreign
manufacturing firms from operating in least developed
countries were relaxed and removed

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Multinational and Transnational
Corporations

Multinational corporations (MNCs) and

Transnational corporations (TNCs) are the flag
bearers of transnational production - corporations
that own and operate subsidiary in one country or
more

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Multinational
Corporation
owns and operates factories and
production and services facilities in more
than one country. It produces and sells
its products abroad. It also refers to
multinational ownership and
management. Not based on the need of
the local markets

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Multinational Corporation
Advantages
Economies of scale – greater
efficiency and lower prices
More research and development,
leading to improved products
Create jobs and wealth around the
world
Success a reflection they meet
consumer preferences
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Disadvantages
Scope for tax avoidance and lost
tax revenue
Monopoly power leads to higher
prices for consumers
Monopsony power in setting lower
wages
Often have had negative impact on
environment
Cultural homogenization as local
firms struggle to compete
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Transnational
Corporation
corporation that is involved with the
international production of goods or
services, foreign investments, or income
and asset managements in more than
one country. Services are based on the
local needs

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Transnational Corporation
Advantages
Creation of jobs
Stable income and more reliable
than farming
Investment in infrastructure – helps
locals as well as the TNC
Help to exploit natural resources
A better developed economic base
for the country
Improved education and skills
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Disadvantages
Fewer workers employed, considering the scale
of investment
Poorer working conditions in some cases
Damage to the environment by ignoring local
laws
Little reinvestment in the local area
Factories are often footloose and jobs insecure.
If labor costs increase, the company may move
elsewhere
Natural resources being over-exploited
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Two Economies

Protectionism Trade liberalization

policy of protecting domestic industries: removal or reduction of restrictions or
tariffs, subsidies, import quotes, or barriers on the free exchange of goods
other restrictions or handicaps placed between nations. These barriers include
on the imports of foreign competitors. tariffs and nontariff barriers.

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Ways on
making
trade easier
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Free trade

agreement of free trade between countries to lessen the barriers on importing and
exporting. A government does not discriminate or interfere with exports and imports NEXT
by applying tariffs, quotas, and subsidies.
Trade Blocs

intergovernmental agreement where barriers to trade are reduced or eliminated

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among the participating
Outsourcing

the business practice of hiring a party outside a company to perform services and
create goods. A practice usually undertaken by companies as a cost-cutting NEXT
measure.
Two Services
BPO – business process KPO – knowledge
outsourcing process outsourcing

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Kinds of outsourcing
Offshoring
the practice of outsourcing
operations overseas, usually by
companies from industrialized
countries to less- developed
countries, with the intention of
reducing the cost of doing business.
Nearshoring
outsourcing to a nearby countries,
preferably a neighboring one or
that’s at least in the same continent.
This helps to travel and hold face-
to-face meetings more frequently, at
a lower cost
Onshoring
basically outsourcing to another city
in your country. By using this
approach, companies don’t face the
risks associated with offshoring like
cultural differences or foreign taxing
policies, moreover, they invest their
country’s economy
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Kinds of outsourcing

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THE
INTERNATIONAL
MONETARY
SYSTEM (IMS)
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The international monetary system refers
to the operating system of the financial
environment, which consists of financial
institutions, multinational corporations, and
investors (Kumar, 2014).

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Short Historical Overview

GOLD STANDARD (1875-1914)

INTERWAR PERIOD (1914-1945)
BRETTON WOODS (1950-1971)
ATTEMPTS TO REDUCE INSTABILITY (1973-)

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CHARACTERISTICS AND DESIGN
Central element of the IMS involves the design of
exchange rates in which countries are set. Exchange-
rate system is created to facilitate and promote
international trade and finance. In an historical
perspective there has been three major exchange rates
regimes; fixed, floating, and managed exchange rates.

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CHARACTERISTICS AND DESIGN
As explained by Dr. Jiawen Yang (n/d), the three (3) major exchange rates
are as follows:
Fixed-exchange-rate system: the gold standard or the Bretton Woods
system, in which countries set and defend a given structure of exchange
rates
Floating exchange rate: flexible exchange rates, in which a country's
foreign exchange rate is determined by market forces of supply and
demand
Managed exchange rates: in which government interventions and market
forces interact to determine the level of exchange rates.

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THE
INTERNATIONAL
ECONOMIC
INSTITUTIONS
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These institutions are responsible for
creating policies and standards for
international trade and finance. Policies in
which are created by those in part of such
institutions. A common ground helps a
smooth flow of international trade and
imposed tariffs in each participating
country.

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WTO (WORLD TRADE ORGANIZATION)

The main objective of WTO is

to help the global
organizations to conduct their
businesses.

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WTO (WORLD TRADE ORGANIZATION)

The main objectives of WTO are as follows:

a. Raising the standard of living of people, promoting full employment, expanding
production and trade, and utilizing the world’s resources optimally
b. Ensuring that developing and less developed countries have better share of
growth in the world trade
c. Introducing sustainable development in which balanced growth of trade and
environment goes together

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WTO (WORLD TRADE ORGANIZATION)

The main functions of WTO are as follows:

a. Setting the framework for trade policies
b. Reviewing the trade policies of different countries
c. Providing technical cooperation to less developed and developing countries
d. Setting a forum for addressing trade-related disputes among different countries
e. Reducing the barriers to international trade
f. Facilitating the implementation, administration, and operation of agreements

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WTO (WORLD TRADE ORGANIZATION)

The main functions of WTO are as follows:

g. Setting a negotiation forum for multilateral trade agreements
h. Cooperating with the international institutions, such as IMF and World Bank for
making global economic policies
i. Ensuring the transparency of trade policies
j. Conducting economic research and analysis

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IMF (INTERNATIONAL MONETARY FUND)

It works to secure financial stability,

develop global monetary
cooperation, facilitate international
trade, and reduce poverty and
maintain sustainable economic
growth around the world.
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IMF (INTERNATIONAL MONETARY FUND)

The objectives of IMF are as follows:

a. Helping in increasing employment and real income of people
b. Solving the international monetary problems that distort the economic
development of different nations
c. Maintaining stability in the international exchange rates
d. Strengthening the economic integrity of the nations

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UNCTAD (United Nations Conference on
Trade and Development)

is the principal organ of the United

Nations General Assembly. It
provides a forum where the
developing countries can discuss
the problems related to economic
development.
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UNCTAD (United Nations Conference on
Trade and Development)
The main objectives of UNCTAD are as follows:
a. Eliminating trade barriers that act as constraints for developing countries
b. Promoting international trade for speeding up the economic development
c. Formulating principles and policies related to international trade
d. Negotiating the multinational trade agreements
e. Providing technical assistance to developing countries specially low developed
countries

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GLOBAL ECONOMIC INSTABILITY’

WHAT: global instability can be described as high inflation, low

economic growth due to domestic or international problems, or
other crises that a country faces that greatly affects the
economy and the livelihood of the people.

WHY: Economic instability is caused by unprecedented changes

that disturbs the balance in the flow of trade.

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GLOBAL ECONOMIC INSTABILITY’
HOW: Economic instability can be cause by the following:
Changing commodity prices (especially oil, e.g. 1974 oil price
shock)
Changing interest rates (rise in interest rates around 2005-
07)
Change in confidence levels (e.g. worries after 9/11)
Stock market crashes (e.g. 1929 Stock market crash)
Black swan events (e.g. major natural disaster, coronavirus
outbreak 2020)

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GLOBAL
DIVIDES
Global
Divides The first model used was the four world
model. They were classified according to
the socio-economic and political
categorization of countries and called the
First, Second, and Third World.

During and after the cold war, the

categorization was condensed into two
the North, composed of all First World
and most Second World countries, and
the South, the third world countries,

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The Three World Model
model of geopolitics first arose in the mid-20th century
as a way of mapping the various players in the Cold
War
credit it to the French demographer Alfred Sauvy, who coined the term “Third World” in
a 1952 article entitled “Three Worlds, One Planet.”

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The Three World Model
First World
Refers to the so called developed,
capitalist, industrial countries
roughly, a bloc of countries aligns
with the united states after world
war II, with more or less common
political and economic interests
Second World
Refers to the former communist-
socialist, industrial states (formerly
the eastern bloc, the territory and
sphere of influence of the union of
soviet socialist republic)
Third World
- refer to countries that were neither
capitalist nor socialist.
- Former colonies of European
countries
- Nowadays, the term Third World is
more often replaced by the terms
Least Developed Countries (UN) or
Low-Income Countries (World
Bank.)
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The Three World Model

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Over thirty years ago a commission chaired
by Willy Brandt, former Chancellor of the
Federal Republic of Germany, published a
report entitled North-South: A Programme
for Survival (1980).

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GLOBAL
NORTH &
SOUTH
Global North
This refers to the developed societies of Europe and
North America, which are characterized by
democracy, wealth, technological advancement,
political stability, aging population, dominance of
trade and politics (Odeh, 2010)

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Global North
United States, Canada, Western Europe, Outermost
Regions of the European Union
Developed parts of Asia, Australia, and New Zealand
Home to all the members of the G8 (Canada,
France, Germany, Italy, Japan, United States,
Russia, United Kingdom) and to four of the five
members of UN Security Council (China, France,
Russia, United Kingdom, United States)

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Global North
developed economies
account for over 90% of the manufacturing in the
street in the world
one-quarter of the total global population
80% of total income earned around the world.
around 95% of the population in countries in the
global north have enough basic needs and have
access to a functioning education system.

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Global South
The term is a metaphor for “interstate inequality” and
a product of western imagination (Claudio, 2014)
This refers to countries that are not as politically and
economically sound as the Global North
Counterparts (Odeh, 2010)
Africa Latin America
Developing Asia, Including Middle East

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Global South
developing economies
relatively low GDP and high population
1/5 of the globally earned income
over three quarters of the global population
According to the UN Economic And Social Council
Council (2020, 46 countries currently comprise the
least developed countries (LDCs of the Global South.

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North and South Gap

Colonialism Trade
Most of the global south were once The Global North is more industrial
colonies of the north therefore have while the South is agricultural
impact on their life

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North and South Gap

Debt Unfair Labor Practices

The global south has a large debt to the The people of the Global south work for
north for aid less at more hours

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North and South Gap

War/Conflict Superficial Democracy

After the WWII all direct wars happened Most of the governments in the global
in the global south and still occurs there south are corrupt
to this day

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North and South Gap

Research and Development

The South does not benefit from development
in their nation because it is not implemented

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North and South Gap

War/Conflict Superficial Democracy

After the WWII all direct wars happened Most of the governments in the global
in the global south and still occurs there south are corrupt
to this day

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North and South Gap

Colonialism Trade
Most of the global south were once The Global North is more industrial
colonies of the north therefore have while the South is agricultural
impact on their life

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Regionalization

It is the process of dividing an area into smaller

segments called regions.
Example:
• Division of nation into states or provinces
• Business also use regionalization as management tool

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Regionalization process

Regionalization process is how geographers identify the

parameters of regions within a greater area of space. For
it to be useful, regionalization must break areas into
practical units. Therefore, the regionalization process
isn't about creating regions as much as it is about
identifying regions that already exist.

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Regionalization

It is the process of dividing an area into smaller

segments called regions.
Example:
• Division of nation into states or provinces
• Business also use regionalization as management tool

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While regionalization can occur based around any topic of study, most
of these regions fall into one of a 3 broad categories of regions

Formal region Vernacular region

It is also called a uniform region or a
homogeneous region because it has
specific characteristics that are fairly
uniform throughout the region.
it is a cultural region that people
understand to be a product of their
society, but they still believe in its
importance. It's somehow tied to their
local identities, and can be based
around a number of cultural factors.

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While regionalization can occur based around any topic of study, most
of these regions fall into one of a 3 broad categories of regions

Functional region
Functional region is also called a nodal
region because it is defined by a social
or economic function that occurs
between a node or focal point and the
surrounding areas.

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Difference of Globalization to Regionalization

Nature
Globalization promotes integration of economies across state
borders all around the world but, Regionalization is precisely the
opposite because it's dividing an area into smaller segments.

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Difference of Globalization to Regionalization

Market
Globalization allows many corporations to trade on international
level so it allows free market but in Regionalized system,
monopolies are more likely to develop.

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Difference of Globalization to Regionalization

Cultural and Societal relations

Globalization acceleration to multiculturalism by free and
inexpensive movement of people while, Regionalization does not
support this.

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Difference of Globalization to Regionalization

Aid
Globalized international community is also more willing to come to
the aid of a country stricken by a natural disaster but, a
Regionalized system does not get involved in the affairs of other
areas.

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Difference of Globalization to Regionalization

Technological advances
Globalization has driven great advances in technology but,
advanced technology is rarely available in one country or region.

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Regionalization is primarily on the function of social and economic
development and does not pose a threat to national intergrity and it
can also contribute to achieving goals such as:

More democracy
Balanced development at the national development
The creation of a regional level of government an
administrative link between central and local authorities
Creating conditions for spatial planning and economic
development
Directing urbanization

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Regionalization is primarily on the function of social and economic
development and does not pose a threat to national intergrity and it
can also contribute to achieving goals such as:

Redistribution of gross national income

Establishing a balance between the agricultural and
industrial production
Establishing a systemic institutional balance
Affirmation of regional specificity
Preserving the traditional and cultural values of the region
Achieving greater competition between the region
More transparency and accountability

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THANK YOU :D

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