GE 102 – THE CONTEMPORARY WORLD
STRUCTURE OF GLOBALIZATION violation of human rights, as many countries can exploit human labor outsourced from
Topics
a. The Global Economy
b. Market Integration
c. The Global Interstate System
d. Contemporary Global Governance
Learning Outcomes
At the end of the lesson, the student should be able to:
1. Define economic globalization
2. Narrate a short history of global market integration
3. Identify the actors that facilitate the global interstate system
4. Articulate stance on global economic integration
ECONOMIC GLOBALIZATION
Economic globalization refers to the mobility of people, capital, technology, goods
and services internationally. It is also about how integrated countries are in the global
economy. It refers to how interdependent different countries and regions have become across
the world.
In the eighteen hundreds in the world economy generally, people and capital crossed
borders with ease, but not goods. In this century, people do not cross borders easily, but
technologies, capital and goods do.
Economic globalization is a worldwide phenomenon wherein countries’ economic
situations can depend significantly on other countries. Many allied countries would supply
resources to each other that the other countries do not have. These resources can cover
imported products, technology, and even human labor. Many people have observed that this
phenomenon may lead to a “one-world government,” which consists of a centralized
government for all nations.
One popular activity under globalization is international trade, in which products
and services are exchanged between or among nations. Many countries that have abundant
natural resources rely on this trading system to market their unique local products and, in turn,
improve their economic state. International trade has been practiced for centuries, as evidenced
by the Silk Road that connects Asia and Europe for trading purposes. One modern example of
this type of trade is the toy industry, wherein many American-sold toys have the phrase “Made
in China” embossed on their surface.
Depending on a person’s perspective, economic globalization has both advantages
and disadvantages. Advocates assert that the phenomenon increases a country’s productivity
with increased job opportunities and possible higher salaries. This can lead to economic
growth and a higher standard of living. The reliance of countries on each other has also led to
better chances of international peace. It has also paved the way for cultural awareness and
understanding, largely through the help of technology.
On the other side, some people believe that globalization has more disadvantages
than benefits. One negative result is that natural resources are depleted at a faster rate, since
the demand for raw materials has increased among many countries. Another drawback is the
developing countries. Others say that it's a method for more powerful countries to colonize
less developed ones by taking control of the latter’s economic situation. Whether economic
globalization has positive or adverse effects, no one can doubt the phenomenon’s influence
and impact on today’s global development.
PROCESS QUESTIONS
1. How do you experience globalization?
2. Why it is crucial to emphasize that globalization is uneven?
3. Do you think that the Philippines is harmed as other countries transfer their activities
to us through outsourcing?
4. In what ways do international organizations help our country economy?
5. Does the position in rich countries giants in the economic chain treat the status of
less developed countries in the global market?
REFERENCES
Economist (2006, January 12), Genghis the globalizer.
World Economic Forum. (2010). Realizing a new version of Agriculture: A
Roadmap for stakeholder-Retrieved from http://www3. Org/docs/IP/2016
Shangquan, G (2000). Economic globalization as a mobility regime.
Sociology theories
LEARNING ACTIVITY
Global Economic Institution
Directions:
Organize a trip to and familiarization tour of an international economic organization
(Asian Development Bank) or an international company (Honda, Jollibee, etc.). Gather as
much information as you can during the tour.
Accomplish these tasks
a. Research the origins and history of the institution you have chosen;
b. Map the international connections it has created;
c. Identify the major country-leaders of this institution; and
d. Locate the Philippine in this map of interconnections.
Then answer this question: how does this institution influence global economic activity?
How does it affect economics in the Philippines?
MARKET INTEGRATION
 Integration shows the relationship of the firm in a market. The extent of integration
influences the conduct of the firms and consequently their marketing efficiency.
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 The behaviour of a highly integrated market is different from that of a disintegrated TYPES OF MARKET INTEGRATION
market. There are three basic kinds of market integration
 Markets differ in the extent of integration and therefore, there is a variation in their
degree of efficiency. 1. Horizontal integration.
This occurs when a firm or agency gains control of other firms or agencies performing
HISTORY OF MARKET INTEGRATION similar marketing functions at the same level in the marketing sequence
The nineteenth century saw substantial advances in international market integration, In this type of integration, some marketing agencies combine to form a union with a view
and the creation of a truly world economy. Technological advance was critical in this. The to reducing their effective number and the extent of actual competition in the market.
railroad locomotive and the marine steam engine revolutionized world transport from the It is advantageous for the members who join the group.
1830s onwards. Steamships connected the world's ports to each other, and from the ports the
railroads ran inland, creating a new and faster world transport network. Freight rates fell, and EFFECTS OF HORIZONTAL INTEGRATION
goods could be carried across the world to ever more distant markets and still be cheaper in  Buying out a competitor in a time bound way to reduce competition.
those faraway places than the same item produced locally. Linked closely to these changes  Gaining larger share of the market and higher profits.
was the electric telegraph, whose lines often ran along the new railroad networks. Telegraph  Attaining economies of scale.
systems were established in most countries, including the major market of British India, until  Specializing in the trade.
1854. Beginning with the first transatlantic cable, which was laid by steamship in 1866, these
existing domestic telegraph systems were linked together by marine cables. The resulting ADVANTAGES OF HORIZONTAL INTEGRATION
international information network was crucial in communicating details of prices and price  Lower costs
movements, reducing the cost of making deals and transactions. An infrastructural change of  Higher efficiency
major significance came in 1869 with the opening of the Suez Canal, which linked the  Increased differentiation
Mediterranean Sea by way of Egypt to the Red Sea: now ships sailing from Europe to Asia  Increased market power
could take the new shortcut rather than sail all the way around Africa. Immediately Asia was
 Reduced competition
some 4,000 miles closer to Europe in transport terms, and freight costs fell. Yet the low
 Access to new markets
efficiency of early steamships meant that many bulk cargoes such as rice still were carried to
Europe from Asia by sail around the Cape of Good Hope. Technological change in the shape  Economics of scale
of steel hulls and steel masts made sailing ships larger and more efficient, and they continued  Economics of scope
to be active until the more efficient triple-expansion engine finally drove the sailing ships from  International trade
the oceans during the last quarter of the nineteenth century.
DISADVANTAGES OF THE HORIZONTAL INTEGRATION
RISE OF FREE TRADE  Destroyed value
Physical changes in lowering freight and transaction costs were not the only forces  Legal repercussions
stimulating market integration. It was normal for countries to impose import duties on foreign  Reduced flexibility
goods, seeking to gain an inflow of gold in their foreign trade accounts by selling more to each
of their trading partners than they bought from them. But in 1846 the merchants of 2. Vertical Integration.
Manchester, England, the center of the world's cotton textile industry, struck their famous This occurs when a firm performs more than one activity in the sequence of the
victory for free trade by forcing the British government to abandon tariffs on all imported marketing process.
goods apart from a few luxury items. The tariffs on wheat were the first to go, opening up the  It is a linking together of two or more functions in the marketing process within a
Great Plains of the United States for wheat production to supply Britain. With free trade, no single firm or under a single ownership.
longer did trade relations with a foreign country have to balance or be in surplus; rather, a  This type of integration makes it possible to exercise control over both quality and
deficit in trade with one country could be offset by a surplus in trade with another country, quantity of the product from the beginning of the production process until the
liberalizing world trade in a way never previously seen. Britain moved heavily into deficit on product is ready for the consumer.
trade account, but this was sustained by considerable invisible inflows generated by her  It reduces the number of middle men in the marketing channel.
substantial overseas investments, particularly in the railroad systems of the United States. a. Forward integration. If a firm assumes another function of marketing which is
closer to the consumption function, it is a case of forward integration. Example:
wholesaler assuming the function of retailing
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b. Backward integration. This involves ownership or a combination of sources of
supply. Example: when a processing firm assumes the function of DEGREE OF INTEGRATION
assembling/purchasing the produce from the villages.  Ownership integration -This occurs when all the decisions and assets of a firm are
c. Balanced vertical integration. The third type of vertical integration is a completely assumed by another firm. Example: a processing firm which buys a
combination of the backward and the forward vertical integration. wholesale firm.
 Contract integration -This involves an agreement between two firms on certain
ADVANTAGES OF VERTICAL INTEGRATION decisions, while each firm retains its separate identity. Example: tie up of a dhal mill
 It allows you to invest in assets that are highly specialized with pulse traders for supply of pulse grains.
 It gives you more control over your business.  Measurement of market integration -The measurement or assessment of the extent of
 It offers more cost control. market integration is helpful in the formation of appropriate policies for increasing
 It provides more competitive advantage the efficiency of marketing process. The measurement or assessment of market
 It allows for positive differentiation integration may be attempted at two levels.
 It requires lower costs of transaction a. Integration among firms of a market.
 It ensures a high level of certainty when it comes to quality b. Integration among spatially separated markets.
DISADVANTAGES OF VERTICAL INTEGRATION
 It can have capacity-balancing problems. INTEGRATION AMONG FIRMS OF A MARKET
 It can result in decreased flexibility.  The extent of vertical integration in a market may be assessed by counting the
 It can cause confusion within the business. number of functions performed by each firm in the market.
 It makes things more difficult.  The extent of horizontal integration may be measured by studying the number of
firms performing the same marketing function but operating under one common
 It can bring about more difficulties
management.
 It can create some barriers to market entry.
 The result of a study on the existence of vertical and horizontal integration in the
 It requires a huge amount of money
marketing of wheat in eight main wheat producing districts of Rajasthan revealed
that about half of the marketing firms (50.5%) were integrated vertically because
EFFECTS OF VERTICAL INTEGRATION
they performed two or three functions.
 More profits by taking up additional functions
 Risk reduction through improved market co- ordination INTEGRATION AMONG SPATIALLY SEPARATED MARKETS
 Improvement in bargaining power and the prospects of influencing prices  The extent to which prices in spatially separated markets move together or are
 Lowering costs through achieving operational efficiency related to transport costs reflects the degree of integration.
 A two-way analysis of prices in spatially separated markets may be used to assess
3. Conglomeration. the degree of integration.
A combination of agencies or activities not directly related to each other may, when it a. Price correlations.
operates under a unified management, be termed a conglomeration b. Spatial price differential and Transportation costs.
EFFECTS OF CONGLOMERATION PRICE CORRELATION
 Risk reduction through diversification  The degree of correlation between two prices is taken as an index of the extent to
 Acquisition of financial leverage which the two markets are integrated.
 Empire – building urge.  A higher degree of correlation coefficient indicates a greater degree of integration at
least in terms of the pricing of the product between market centres and vice versa
REASONS FOR MARKET INTEGRATION  The correlation in the price of commodity in any markets is unity under spatial price
 To remove transaction costs integration.
 Foster competition
 Provide better signals for optimal generation and consumption decisions SPATIAL PRICE DIFFERENTIAL AND TRANSPORTATION
 Improve security of supply  Correlation method

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 Ravallion procedure
 Co integration approach
 Parity bound models (PBM)
PROCESS QUESTIONS
1. What are the effects of the information revolution in today’s global market?
2. What are the effects of Multinational Corporation in the Philippine economy?
3. Analyse socialism and capitalism in relation with the Philippine society which of
these economic systems would work in our country?
REFERENCES
Economist,(2006 January 12) Genghis the globalizer.
Chanda, N. (2007). Bound together: How trader, preacher, adventurer and
warriors shaped globalization. New Haven: Yale University.
LEARNING ACTIVITY
Weighing the Market
The global market brought positive and negative effects through time. At this point,
market will be assessed through your own perspective provided that you already had a good
grasp of the different concepts in economic and financial globalization. This activity will help
you understand the benefits and harm of global economic process, structures, and
technologies.
Listed below are the scenarios that have to do with economy. Discuss the major impacts of
these scenarios whether they are positive or negative (for you, for the country, or for the
Filipinos). The “case-by-case” column can be used. Justify your answer.
Scenario Positive Negative Case by Case
Scenario A: Agriculture is the main source of employment in your home province. The
government has recently decided to develop the farmland into real estate and exclusive
subdivisions in order to attract foreign investors to the country.
Scenario B: You decided to purchase a new shirt through an online shop based in London.
Scenario C: The Philippine government is being pressured by current economic crisis to
import rice from Taiwan and other nearest countries in the region.
Scenario D: A multinational corporation decides to close. Unfortunately, your father is one of
its many employees whose work has been terminated. However, he could still be employed if
he were to accept the offer to move to another country.
Scenario E: the global financial crisis has affected the investment funds of your mother that
she can for her retirement.
How did you decided for each scenario? What are the pros and cons that you list down before
you came up with the final judgment.
THE GLOBAL INTERSTATE
The origin of the present-day concept of sovereignty can traced back to the Treaty of
Westphalia, which was asset of agreement signed in 1648 to end the Thirty Years’ War
between the major continental power of Europe. After a brutal religious war between
Catholics and Protestants, the Holy Roman Empire, Spain, France, Sweden, and the Dutch
Republic designed a system that would avert wars in the future by recognizing that the treaty
signer exercise complete control over their domestic affairs and swear not to meddle in each
other’s affair.
The Westphalia system provided stability for the nations of Europe, until it faced its
first major challenge by Napoleon Bonaparte. Bonaparte believed in spreading the principles
of the French Revolution-liberty, equality, and fraternity- to the rest of Europe and thus
challenged the power of kings, nobility, and religion in Europe. The Napoleonic Wars lasted
from 1803-1815 with Napoleon and his armies marching all over much of Europe. In every
country they conquered, the French implemented the Napoleonic Code that forbade birth
privileges, encouraged freedom or religion, and promoted meritocracy in government service.
This system shocked the monarchies and the hereditary elites (dukes, duchesses, etc) of
Europe, and they mustered their armies to push back against the French emperor.
Anglo and Prussian armies finally defeated Napoleon in the Battle of Waterloo in
1815, ending the latter’s mission to spread his liberal code across Europe. To prevent another
war and to keep their systems privilege, the royal powers created a new system that, in effect,
restored the Westphalia system. The Concert of Europe was an alliance of “great powers”-
the United Kingdom, Austria, Russia, and Prussia-that sought to restore the world of
monarchical, hereditary, and religious privileges of the time before the French Revolution and
Napoleonic Wars. More importantly, it was an alliance that sought to restore the sovereignty
of states. Under this Metternich, who was the system (named after the Austrian diplomat,
Klemens von Metternich, who was the system’s main architect), the Concert’s power and
authority lasted from 1815 – 1914, at the dawn of World War I.
Despite the challenge of Napoleon to the Westphalian system and the eventual
collapse of the Concert of Europe after World War I. Present-day interstate system still have
traces of this history. Until now, states are considered sovereign, and Napoleonic attempts to
violently impose system of government in other countries are frowned upon. Moreover, like
the Concert system, “great powers” still hold significant influence grouping in the Un, the
Security Council, has a core of five permanent members, all having veto powers over the
council’s decision-making process.
GLOBAL GOVERNANCE IN THE TWENTY-FIRST
The term world governance is broadly used to designate all regulations intended for
organization and centralization of human societies on a global scale. The Forum for a new
World Governance defines world governance simply as "collective management of the
planet".
Traditionally, government has been associated with "governing," or with political
authority, institutions, and, ultimately, control. Governance denotes a process through which
institutions coordinate and control independent social relations, and that have the ability to
enforce their decisions. However, authors like James Rosenau have also used "governance" to
denote the regulation of interdependent relations in the absence of an overarching political
authority, such as in the international system. Some now speak of the development of "global
public policy".
Adil Najam, a scholar on the subject at the Pardee School of Global Studies, Boston
University has defined global governance simply as "the management of global processes in
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the absence of global government." According to Thomas G. Weiss, director of the Ralph
Bunche Institute for International Studies at the Graduate Center (CUNY) and editor (2000–
05) of the journal Global Governance: A Review of Multilateralism and International
Organizations, "'Global governance'—which can be good, bad, or indifferent—refers to
concrete cooperative problem-solving arrangements, many of which increasingly involve not
only the United Nations of states but also 'other UNs,' namely international secretariats and
other non-state actors." In other words, global governance refers to the way in which global
affairs are managed.
States are more likely to formally include civil society organizations (CSOs) in order
to avoid a potential legitimacy advantage of their counterparts and to enhance domestic
legitimacy if the following two conditions apply: first if they are more central to the global
governance network; and second, if other states formally include CSOs as well. Thus, while
government choices concerning whether to involve formally CSOs in global climate policy are
obviously driven to a considerable degree by domestic factors, the authors concentrate on
international network effects.
The definition is flexible in scope, applying to general subjects such as global
security and order or to specific documents and agreements such as the World Health
Organization's Code on the Marketing of Breast Milk Substitutes. The definition applies
whether the participation is bilateral (e.g. an agreement to regulate usage of a river flowing in
two countries), function-specific (e.g. a commodity agreement), regional (e.g. the Treaty of
Tlatelolco), or global (e.g. the Non-Proliferation Treaty). These "cooperative problem-solving
arrangements" may be formal, taking the shape of laws or formally constituted institutions for
a variety of actors (such as state authorities, intergovernmental organizations (IGOs), non-
governmental organizations (NGOs), private sector entities, other civil society actors, and
individuals) to manage collective affairs. They may also be informal (as in the case of
practices or guidelines) or ad hoc entities (as in the case of coalitions).
However, a single organization may take the nominal lead on an issue, for example
the World Trade Organization (WTO) in world trade affairs. Therefore, global governance is
thought to be an international process of consensus-forming which generates guidelines and
agreements that affect national governments and international corporations. Examples of such
consensus would include WTO policies on health issues.
The WTO is needed when establishing a regulatory guide in decision-making, the
Global Administrative Law is active in going hand-in-hand with WTO. They promote global
principles when involving accountability, transparency, and legitimacy when making decisions
involving more than one country or state. This is necessary to prevent future disputes between
states.
In short, global governance may be defined as "the complex of formal and informal
institutions, mechanisms, relationships, and processes between and among states, markets,
citizens and organizations, both inter- and non-governmental, through which collective
interests on the global plane are articulated, Duties, obligations and privileges are established,
and differences are mediated through educated professionals."
Titus Alexander, author of Unravelling Global Apartheid, an Overview of World
Politics, has described the current institutions of global governance as a system of global
apartheid, with numerous parallels with minority rule in the formal and informal structures of
South Africa before 1991.
THE EFFECTS OF GLOBALIZATION ON STATES AND GOVERNMENTS
State is commonly defined as a nation or territory considered as an organized
political community under one government. Government is the governing body of a state,
nation, or community. A government is thus the political administration of a state or country.
A state is the geographic unit that has a distinct constitution, fiscal system, and is sovereign
(that is, self-governing and independent from other states as recognized by them). It is in a
state where a government can exercise its powers.
One of the debatable issues relevant to the outcomes of globalization is the effect
that it has had on governments or state entities. What are the ways in which the government
leaders, and the state as a whole, have been fashioned by globalization economically and
politically?
As of late, the question has been how globalization affects governments, as regards
their overall behavior, and more definitely, whether globalization limits state sovereignty. For
instance, with the upswing of globalization, some say that governments are far less able to
govern their own politics without considering the outside world. In the present day, it becomes
difficult to be economically isolated. As a result, some believe that today, “government
matters less and less in a global economy. Nation-states are simply other actors on the global
stage rather than its directors” (Osland, 2003: 142), and that “aggressive global production
systems and capital markets now occupy the ‘commanding heights’ of global development,
forcing governments on the defensive and pressuring them to deregulate, downsize, and
privatize many of the social management functions they assumed during the past century”
(Yergin & Stanislaw, 2000).
Joyce S. Osland (PhD) of San Jose State University College of Global Leadership
and Innovation enumerates some of the pros and cons of globalization related to governments.
The positives include the following (2003):
 Increased economic development benefits some governments.
 Increased jobs and expanded infrastructure benefit some countries.
 Transfer of modern management techniques into business sector
 Greater interdependence among trading and investment partners may deter war.
 Proliferation of nongovernmental organizations (NGOs) to counter- balance
decreased governmental power
On the other hand, the negative effects of globalization on governments include these (2003):
 Power of multinational enterprises (MNEs) increased at the expense of government
power, sovereignty, and ability to regulate business.
 MNEs externalize some of their costs to countries.
 Competition for factories and foreign direct investment (FDI) result in too many
concessions to MNEs by some governments.
 Some MNEs influence local government policy and threaten to leave if their
demands are not met.
 MNEs pay fewer taxes to governments and incorporate where the tax rate is lowest,
depriving their own country of revenue.
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 Governments are pressured to reduce tax rates and decrease social benefits that may
affect stability.
INTERNATIONALISM
Internationalism in American foreign policy has had different meanings for nearly
every generation of citizens and diplomats. It has been associated with all forms of external
contact with the world, the relationships becoming more extensive and political with the
passage of time. As a foreign policy, it has usually been viewed as the antithesis of
isolationism, and in that sense it has involved political commitments or "entanglements"
through multinational treaties as well as membership in international organizations. In a
broader context, it has also encompassed official and unofficial non-political activities—
economic, social, cultural, and scientific—usually evidenced through affiliation with
specialized international societies or agencies. Some internationalists have thought in terms of
a universal community, a broad brotherhood of people with common concerns, needs, and
aspirations that exists as a reality beyond the confines of nation-states. In recent times,
internationalism has taken on a new meaning under a doctrine of responsibility, with the
United States assuming the burden of "policeman of the world," both unilaterally and
multilaterally.
THE EARLY YEARS
Long before isolationism became an established policy in the nineteenth century,
citizens of the American colonies recognized that they could not live apart from the rest of the
world. They existed within an imperial system that involved them in numerous crises and four
world wars (Queen Anne's War, King William's War, King George's War, and the French and
Indian War), mostly related to trade and territories. Early Americans understood that
international law applied to them as they redefined their relationships toward their neighbors
and their mother country. William Penn reflected the cosmopolitan atmosphere when he
drafted his Essay Towards the Present and Future Peace of Europe (1693), in which he called
for a congress of states to promote stability. Evidence of a broad perspective also appeared in a
colonial union, the New England Confederation of 1643, and in the suggestion for joint action
embodied in the Albany Plan of 1754. Joseph Galloway's proposal for an Anglo-American
council in 1774 also expressed a cosmopolitan outlook. Such experiences, as well as an
awareness of the Iroquois League of the Five Nations, may explain why revolutionary leaders
like Benjamin Franklin and Thomas Paine spoke favorably of an international organization.
Certainly, the Articles of Confederation and the Constitution of 1789 revealed a general
awareness that sovereign states could combine to promote their interests.
Events during and after the Revolution related to the treaty of alliance with France,
as well as difficulties arising over the neutrality policy pursued during the French
revolutionary wars and the Napoleonic wars, encouraged another perspective. A desire for
separateness and unilateral freedom of action merged with national pride and a sense of
continental safety to foster the policy of isolation. Although the United States maintained
diplomatic relations and economic contacts abroad, it sought to restrict these as narrowly as
possible in order to retain its independence. The Department of State continually rejected
proposals for joint cooperation, a policy made explicit in the Monroe Doctrine's emphasis on
unilateral action. Not until 1863 did an American delegate attend an international conference.
Even so, Secretary of State William H. Seward reflected prevailing views by refusing to sign
an 1864 multilateral treaty related to the Red Cross. The United States did not subscribe to
such a convention until 1882. Thereafter, cooperation on economic and social matters seemed
acceptable, but political issues, especially those involving Europe, were generally avoided
until the end of the century.
THE BEGINNINGS OF ORGANIZED INTERNATIONALISM
Although most citizens accepted the principle of isolationism, scattered voices
throughout the nineteenth century called for a more cooperative stance toward the world. As
early as the 1830s the American Peace Society, under the direction of William Ladd,
sponsored essay contests concerning international organization, and in 1840 Ladd utilized
many of the ideas in drafting his well-known Essay on a Congress of Nations. His proposal for
both a political body and a judicial agency gained considerable public notice through petition
and educational campaigns during the ensuing years. After Ladd's death in 1841, Elihu Burritt,
a reformer known as "The Learned Blacksmith," presented the congress of nations program to
European pacifists with such regularity that they referred to it as the "American idea."
The Civil War in America (1861–1865) and conflicts in Europe (1854–1856, 1870–
1871) undermined the peace movement, but a developing interest in the law of nations kept
alive the concept of global cooperation during the last third of the century. Several societies
emerged to promote the codification of international rules of behavior and to encourage the
settlement of disputes through arbitration by a third party. These were not new ideas, but
leading citizens in many nations around the turn of the twentieth century seized upon the
arbitration concept to guarantee a warless world.
This activity contributed substantially to the evolution of thought concerning an
international organization. As countries signed arbitration accords, men—and a few women—
began to think beyond such limited agreements. Agencies would be needed to implement the
treaties; laws would have to be codified. As John Westlake, an English law professor,
observed, "When we assert that there is such a thing as International Law, we assert that there
is a society of States; when we recognize that there is a society of States, we recognize that
there is International Law."
The arbitration settlement in 1871–1872 of the Alabama Claims, an Anglo-
American dispute over damages caused by Confederate cruisers, led to the signing of many
other arbitration agreements during the next four decades. Most were disputes involving
monetary and boundary claims and questions arising under treaty clauses; this discouraged
pacifists, who hoped to see accords calling for all controversies to be arbitrated. They rallied to
promote their goal, gaining public endorsement in the 1890s. The Lake Mohonk (New York)
Conference on International Arbitration, which began in 1895 and met annually through 1916,
united American civic, business, religious, and educational leaders in a quest to institutionalize
arbitration. Proponents recognized that the Senate would not subscribe to unlimited
agreements, so they agreed that matters involving national honor and vital interests be
exempted. Their support resulted in the Olney-Pauncefote Treaty with Great Britain in 1897,
which called for the arbitration of monetary and territorial differences. As expected, the Senate
exempted disputes affecting national interest and honor, and then insisted that the Senate have
authority to exempt from arbitration any dispute submitted for settlement. Even these
safeguards did not satisfy the extreme isolationists. After adding yet other reservations, the
Senate refused to ratify the treaty.
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These developments had a lasting impact upon American internationalist thought.
First, arbitration accords encouraged the exploration of cooperative methods of resolving
disputes and breached barriers that had kept statesmen from previously examining such
subjects. Second, these experiences warned internationalists that they must be cautious about
proposals for a union of nations. It was quite clear by the time that the United States fought
Spain in 1898 that Washington would not assume obligations that would weaken its
sovereignty or jeopardize interests deemed vital to its welfare. Finally, the advances in
arbitration influenced discussions at the first genuine international assembly of nations, the
Hague Conference of 1899.
PROCESS QUESTIONS
Direction: Answer the following questions. Discuss briefly.
1. Examine the interaction between the nation-state and international organizations.
Which has the greatest impact on government?
2. Do civil society and INGO’s strengthen or undermine the role of the governments in
international relations? Why or why not?
3. Are the civil society and other organizations truly separated from the government’s
actions and policies? In what ways can the state maintain its sovereignty amid
government?
REFERENCES
Cox, R. (1994). Multilateralism and the democratization of world order. In
the globalization of world politics: an introduction to international relations
(1999). New York: Oxford University press.
Mann, M. (2007). Has globalization ended the rise and the rise of the
Nation-state? Review of International Political Economy 4, (3),
LEARNING ACTIVITY
Imaginary Interview
Further research/read on Giuseppe Mazzini, Woodrow Wilson, Karl Max, or
Vladimir Lenin. Conduct imaginary interview with one of them. In this interview, have your
selected figure answer the following questions:
1. What do you think of nationalism?
2. What is necessary for the development of an international order?
3. What do you think of the League of Nations?
4. What is the role of revolution in internationalism?
THE CONTEMPORARY GLOBAL GOVERNANCE
GLOBAL GOVERNANCE
Is understood as “…the way in which global affairs are managed. As there is no
global government, global governance typically involves a range of actors including states, as
well as regional and international organizations. However, a single organization may
nominally be given the lead role on an issue, for example the World Trade Organization in
world trade affairs. Thus global governance is thought to be an international process of
consensus-forming which generates guidelines and agreements that affect national
governments and international corporations. Examples of such consensus would include WHO
policies on health issues” (WHO, 2015).
GLOBAL INTERSTATE
World politics today has four key attributes. First, there are countries or states that
are independent and govern themselves. Second, these countries interact with each through
diplomacy. Third, there are international organizations, like the United Nations (UN), that
facilitate these interactions, fourth, beyond simply facilitating meetings between states,
international organizations also take on lives of their own. The UN, for example, apart from
being a meeting ground for presidents and other heads of state, also has task-specific like the
world Health Organization (WHO) and the international Labor Organization (ILO).
What are the origins of this system? A good start is by unpacking what one means
he/she says a “country”, or what academics also call the nation-state. This concept is not as
simple as it seems. The nation-state is a relatively modern phenomenon in human history, and
people did not always organize themselves as countries. At different parts in the history of
humanity, people in various regions of the world have identified exclusively with units as
small as their village or their tribe, and at other times, they see themselves as members of
larger political categories like “Christendom” (the entire Christian world).
The nation –state is composed of two non-interchangeable terms. Not all states are
nations and not all nations are states. The nation of Scotland, for example, has its own flag and
national culture, but still belongs to a state called the United Kingdom. Closer to home, many
commentators believe that the Bangsamoro is a separate nation existing within the Philippines
nut, through their elites, recognizes the authority of the Philippine state. Meanwhile, if there
are states with multiple nations, there are also single nations with multiple states. The nation of
Kore is divided into North and South Korea, whereas the “Chinese nation” may refer to both
the People Republic of China) the mainland) and Taiwan.
INTERNATIONAL ORGANIZATION
An international organization (intergovernmental organization) is an organization
established by a treaty or other instrument governed by international law and possessing its
own international legal personality, such as the United Nations, the World Health
Organization and NATO. International organizations are composed of primarily Member
states, but may also include other entities, such as other international organizations.
Additionally, entities (including states) may hold observer status.
 The first and oldest intergovernmental organization - being established employing a
treaty, and creating a permanent secretariat - is the International Telecommunication
Union (founded in 1865). The first general international organization—addressing a
variety of issues—was the League of Nations. The United Nations followed this
model after World War II.
 The role of international organizations is helping to set the international agenda,
mediating political bargaining, providing a place for political initiatives and acting
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as catalysts for the coalition- formation. They facilitate cooperation and coordination
among member nations.
 International organizations typically have member states from the whole world,
however in some cases organizations have geographic limitations, such as the
European Union, African Union and NATO. The United Nations also has regional
organizations, such as UNECE and UNECA.
 The oldest regional organization is the Central Commission for Navigation on the
Rhine, created in 1815 by the Congress of Vienna.
 The United Nations organizes its work into agencies, such as United Nations Relief
Works Agency, which are generally considered as international organizations in
their own right.
 Additionally, the United Nations has specialized agencies which are organizations
within the United Nations System, that have their member states (often nearly
identical to the UN Member States) and are governed independently by them,
examples include International Organizations that predate the UN, such the
International Telecommunication Union, and the Universal Postal Union, as well as
organizations that were created after the UN such as the World Health Organization
(which was made up of regional organizations such as PAHO that predated the UN).
 International Organizations are sometimes referred to as Intergovernmental
Organizations (IGOs), to clarify the distinction from International nongovernmental
organizations (INGOs), which are non-governmental organizations (NGOs) that
operate internationally. These include international a non-profit organization such as
the World Organization of the Scout Movement, International Committee of the Red
Cross, Médecins Sans Frontières, and the World Economic Forum.
UNITED NATIONS
The United Nations (UN) is an intergovernmental organization that aims to maintain
international peace and security, develop friendly relations among nations, achieve
international cooperation, and be a centre for harmonizing the actions of nations. It is the
largest, most familiar, most internationally represented and most powerful intergovernmental
organization in the world. The UN is headquartered on international territory in New York
City, with its other main offices in Geneva, Nairobi, Vienna and The Hague.
The UN was established after World War II with the aim of preventing future wars,
succeeding the ineffective League of Nations. On 25 April 1945, 50 governments met in San
Francisco for a conference and started drafting the UN Charter, which was adopted on 25 June
1945 and took effect on 24 October 1945, when the UN began operations. Pursuant to the
Charter, the organization's objectives include maintaining international peace and security,
protecting human rights, delivering humanitarian aid, promoting sustainable development, and
upholding international law. At its founding, the UN had 51 member states; this number grew
to 193 in 2011, representing almost all of the world's sovereign states.
The organization's mission to preserve world peace was complicated in its early
decades by the Cold War between the United States and Soviet Union and their respective
allies. Its missions have consisted primarily of unarmed military observers and lightly armed
troops with primarily monitoring, reporting and confidence-building roles. UN membership
grew significantly following widespread decolonization beginning in the 1960s. Since then, 80
former colonies have gained independence, including 11 trust territories that had been
monitored by the Trusteeship Council. By the 1970s, the UN's budget for economic and social
development programmes far outstripped its spending on peacekeeping. After the end of the
Cold War, the UN shifted and expanded its field operations, undertaking a wide variety of
complex tasks.
The UN has six principal organs: the General Assembly; the Security Council; the
Economic and Social Council (ECOSOC); the Trusteeship Council; the International Court of
Justice; and the UN Secretariat. The UN System includes a multitude of specialized agencies,
such as the World Bank Group, the World Health Organization, the World Food Programme,
UNESCO, and UNICEF. Additionally, non-governmental organizations may be granted
consultative status with ECOSOC and other agencies to participate in the UN's work. The
UN's chief administrative officer is the Secretary-General, currently Portuguese politician and
diplomat António Guterres, who began his five year-term on 1 January 2017. The organization
is financed by assessed and voluntary contributions from its member states.
The UN, its officers, and its agencies have won many Nobel Peace Prizes, though
other evaluations of its effectiveness have been mixed. Some commentators believe the
organization to be an important force for peace and human development, while others have
called it ineffective, biased, or corrupt.
GUIDE QUESTIONS
Direction: Answer the Questions briefly in a sheet of paper.
1. What of the Westphalian system can still be felt at this and age? In what sense has
the world gone beyond the Wesphalian system?
2. Do you think international erodes the sovereignty?
3. Why the global governance multi-faced?
4. How do international organizations take on “lives of their own”?
5. What challenges faced by the United Nations in maintaining global security?
REFERENCES
Cox, R. (1994). Multilateralism and the democratization of world order. In
the globalization of world politics: an introduction to international relations
(1999). New York: Oxford University press.
Mann, M. (2007). Has globalization ended the rise and the rise of the
nation-state? Review of International Political Economy 4,(3),
LEARNING ACTIVITY
The United Nation Peacekeeper:
Re- enacting their Roles, Responsibilities and Challenges
Research in Google what the United Nations peacekeeper are, the countries that send
these peacekeeper, where they have been involved in the last 50 years. After familiarizing
yourself with the UN’s peacekeeping function, you will be ready to deal with a crisis. Read the
scenario below.
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Countries A and B have been at war against each other for 50 years over a big of A. Limit the number of transactions you do that involve long term
land that is located in their borders. The land consists of rainforest, suitable farmlands, and commitments that would reduce the risks to some extent
rich mineral resources. It is also suspected to have oil reserves underground. B. Increase the number of transactions you do that involve long term
The community that lives in this area is composed of people who have never been commitments that would reduce the risks to some extent
clear about their national loyalties, for the simple reason that they do not recognize these C. Use financial contracts that would hedge some of the risks with floating
boarders. They have been living in the area long before countries A and B had national exchange rates
territories. They, therefore, would like to be left alone, to “go” back and forth” between the D. Use fixed exchange rates that would hedge some of the risks with floating
two boarders. exchange rates
Countries A and B, however, want to exploit the resources of this borderland. They 5. The overwhelming majority of trades in 2007 were the exchange of Euro's.
stated supporting leaders in this community, secretly at first, but later on with open economic A. True
assistance. This association created tensions within community that soon worsened into open B. False
factional rivalries between its leaders. 6. What is the main difference(s) between microeconomics and macroeconomics?
The factional rivalry started over how assistance was to be shared, and then moved 7. Please define 2 economic indicators.
to competition over elected positions. The rivalry took a turn for the worse when countries A 8. GATT stands for ______________.
and B. Began supplying their allies with arms and military training, especially after both A. General Agreement on Tariffs and
realized the security problems this borderland can cause. B. General Agreement on Tariffs and Trade
It did not take before conflict between the two factions came out in the open. This C. General Arithmetic on Tariffs and Trade
“mini-war” spread and seriously affected the community, dividing families and pitting friends D. General Agreement on Terrible Trades
and relatives against each other. 9. All of the following are skills sets economists predict will be most valuable in the
Eventually, exhausted by the war (countries A and B began to realize how much future global economy except?
resources they wasted in this war), the protagonists agreed to a temporary truce. They also A. Sales
asked the help of the United Nation in terms of bringing in a peacekeeping. force to stand B. Investment
between the two sides, and negotiate how to turn the truce into a lasting peace C. Bureaucratic
D. Service
TEST YOURSLEF E. Computer
Directions. Answer the Following questions by choosing the correct letter and discuss briefly 10. Please give an example of the law of supply and demand.
the number that needs explanation. 11. __________ is the problem of infinite human needs and wants, in a world of finite
1. Most trading on exchange rate markets is related to ___________ and resources.
____________. 12. Many countries in the late 1940s realized that the reductions in world trade in
A. International exchange and management of the risks of possible future changes wartime and during the Depression had hurt their economies
in exchange rates. A. True
B. International investments and management of the opportunities available with B. False
possible future changes in exchange rates. 13. An example of a change that significantly reduced the cost of transportation of
C. Domestic investments and management of the risks of possible future changes goods is_______________.
in exchange rates. A. Health Regulations
D. International investments and management of the risks of possible future B. Guns
changes in exchange rates. C. Barriers to trade
2. The 3 Factors are New Global ___________, National ___________ to D. Containerization
Globalization, and Changes in _________.1.2.3. 14. The countries of the world could not and did not want to drop the trade barriers of
3. A high inflation rate means that your currency buys less. the 1930’s that pushed countries apart such as heavy tariffs.
A. True A. True
B. False B. False
4. There are two main ways to deal with floating exchange rate risks. What are they? 15. All of the following are examples of the effects of globalization except
(Select two) A. A department store put's items on lay away
B. A McDonald's open up in India

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C. An American fashion designer uses cultural ideas from Chinese pop to C. GDP = consumption + government investment + government spending +
make clothes D. GDP = consumption + gross investment + government spending +
D. It is less costly to ship goods from China than to make them in Europe (exports − imports)
16. The US and other major currencies of the world use _______ exchange rates. 24. Why do nations trade?
A. Fixed 25. What is the law of supply and demand?
B. Soft-Pegged 26. Discuss the three key dimensions of neoliberal economic dimensions of
C. Self- Regulated globalization: privatization, liberalization, and deregulation. What are they and what
D. Floating is one example of each of them? Do these measures appeal to you? Why or why not?
17. A strong currency means you can _____________. 27. What forces combined first to create Europe’s rapid rise to global power in the
A. Buy less imports so imports decrease but the foreign currency that 1500s and then undermined European dominance in the twentieth century? What
exporters earn is worth more so exports tend to rise. intellectual contradictions existed within European imperialism that challenged it as
B. Buy more imports so imports rise but the foreign currency that exporters a political force?
earn is worthless so exports tend to fall. 28. The UN has sent peace-keeping troops to nations in which they are not allowed to
C. Buy less imports so imports fall but the foreign currency that exporters use force. This is an example of both the power and the weakness of the United
earn is worthless so exports tend to fall. Nations. In what ways is the United Nations a useful organization to resolve global
D. Buy more imports so imports rise but the foreign currency that exporters issues? Identify three ways in which its charter has limited its effectiveness.
earn is worth more so exports tend to rise. 29. Two trends of political globalization have been the evolution of human rights as a
18. A common issue with China in the first decade of the 21st century is that china has concept and the spread of democratization. What has been the context in which these
fixed its exchange rate at a fairly low level which is helping its exports but also ideals have gained power? Do you think that these ideologies will continue to
leading to humungous and unsustainable large trade surpluses. expand into the future? Why or why not?
A. True 30. Which of the following can create ethical dilemmas between corporate managers
B. False and stockholders?
19. You can always keep the foreign exchange value of your currency rising as long as A. Auditors
you are willing to keep accumulating foreign exchange reserves. B. Board of directors
A. True C. Agency relationship
B. False D. Venture Capitalist
20. What is an economy?
A. The factors of production, exchange, distribution, and consumption of
goods and services of a country or other area.
B. The factors of production, exchange, distribution, and consumption in a
country or other area.
C. The realized social system of production, exchange, distribution, and
consumption of goods and services of a country or other area.
D. The realized political system of production, exchange, distribution, and
consumption of goods and services of a country or other area.
21. GDP is defined as the total market value of all final goods and services produced
within the country in a given period of time (usually a calendar year).
A. True
B. False
22. Economists typically use “purchasing power parity” (PPP) exchange rates, which
seek to measure the same __________________.
23. GDP =
A. GDP = corporate spending+ government investment + government
spending + (exports − imports)
B. GDP = consumption + gross investment + government spending

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