Chapter 2

Structures of Globalization: The Global Economy

References:

Burges, Sean. Economic integration. https://www.britannica.com

Regional Economic Integration

https://opentext.wsu.edu/cpim/chapter/2-4-regional-economic-integration/

INTENDED LEARNING OUTCOMES:

 Identify the actors that facilitate economic globalization (CLO2);
 Articulate a stance on global economic integration (CLO2)

I. PREPARATION
 Describe your spending habit or behaviour.
 What, how and where do you shop?

II. PRESENTATION

A. Economic Globalization
Economic globalization refers to the increasing interdependence of world
economies as a result of the growing scale of cross-border trade of commodities and
services, flow of international capital and wide and rapid spread of technologies.

B. Drivers of Economic Globalization

 Advancement of Science and Technologies
Reduced cost in transportation and communication makes it possible to
organize and coordinate global production which makes the concept of national
boundaries and distance for certain economic activities meaningless

 Multinational Corporations (MNCs)

Multinational Corporations (MNCs) are globally organizing production and
allocating resources according to the principle of profit maximization. Their global
 expansions are reshaping macroeconomic mechanisms of the operation of the world
economies.

 Financial sector
A section of the economy which is made up of firms and institutions that
provide financial services to commercial and retail customers. The sector is
comprised of many different industries including banks, investment companies,
insurance companies, and real estate firms. It advances loans for businesses so they
can expand, grants mortgages to homeowners, and issues insurance policies to
protect people, companies, and their assets. (https://www.investopedia.com)

C. Economic Integration
It is a process in which two or more states in a broadly defined geographic
area reduce a range of trade barriers to advance or protect a set of economic goals.
(https://www.britannica.com)
D. Types of Regional Economic Integration
(https://opentext.wsu.edu/)
Free trade area. This is the most basic form of economic cooperation. Member
countries remove all barriers to trade between themselves but are free to independently
determine trade policies with nonmember nations. An example is the North American
Free Trade Agreement (NAFTA).

Customs union. This type provides for economic cooperation as in a free-trade

zone. Barriers to trade are removed between member countries. The primary difference
from the free trade area is that members agree to treat trade with nonmember
countries in a similar manner.

Common market. This type allows for the creation of economically integrated
markets between member countries. Trade barriers are removed, as are any restrictions
on the movement of labor and capital between member countries. Like customs unions,
there is a common trade policy for trade with nonmember nations. The primary
advantage to workers is that they no longer need a visa or work permit to work in
another member country of a common market. An example is the Common Market for
Eastern and Southern Africa (COMESA).2
 Economic union. This type is created when countries enter into an economic
agreement to remove barriers to trade and adopt common economic policies. An
example is the European Union (EU).

E. Reasons of Economic Integration

 Reactive regionalism
 Peace and security
 Efficiency
 Externalization
 Political factor

III. PRACTICE (Graded)

DA Bulletin No. 1 on Rice: Understanding the Rice Tariffication Law (RTL) or RA 11203
https://www.da.gov.ph/understanding-the-rice-tariffication-law-rtl-or-ra-11203-and-its-
ramifications/
Give your comment or reaction on DA Bulletin no. 1.

PERFORMANCE (Graded)
Debate: The students will debate the motion “That global free trade has done
more harm than good.