THE GLOBAL ECONOMY

LESSON 2
 INTRODUCTION

This chapter discusses the definition, foundation, and effects of

economic globalization.
While the second section tackles on the development of the key

global monetary regimes that include the gold standard, the

Bretton Woods System, and European Monetary Integration.

The last segment talks about trade rules and relations, which will

focus on the unilateral trade system of the late 19th and early

20th centuries and the multilateral trade agreements of the post-

World War II period (Benczes, 2014).

GLOBALIZATION

According to Held et al. (1999),

globalization may be claimed as the

broadening, deepening, and rapid

global interconnectedness in all

facets (political, technological,

cultural, and economic) of modern-

day social life (Giddens, 1999).

WHAT IS ECONOMIC GLOBALIZATION?

According to the International

Monetary Fund (2008), this

refers to a historical progression,

which is the consequence of

humanity’s modernization and

technological development. It
 THE FOLLOWING ARE THE VARIOUS

INTERRELATED SCOPES OF ECONOMIC

GLOBALIZATION:

(a) the globalization of goods and services in trade;

(b) the globalization of monetary and capital markets;
(c) the globalization of know-how and communication;

and
(d) the globalization of production.
Economic globalization differs from

internalization since the former refers

to functional interconnectedness

between globally isolated activities

while internationalization speaks of

the extension of economic activities

of one country to another (Dicken,

2004).
HYPER GLOBALIST PERSPECTIVE
nation-states are no longer the key economic

institutions in the global market.

Humanity is now consuming extremely standardized

international products and services created by

multinational corporations (Ohmae, 1995).

Humanity is now consuming extremely standardized

international products and services created by

multinational corporations (Ohmae, 1995).

THE NEW ACTORS Non-governmental

organizations (NGOs) or

02
Civil society

organizations (CSOs)

01
United Nations

(UN)
04
Key Factors
MNC's and TNC's
This MNCs or TNCs are the key motivating

powers of economic globalization for the last 100

years, and they account for about 67% of world

exports (Gereffi, 2005).

GLOBAL COMMODITY CHAINS

THERE IS THE

GROWING

SIGNIFICANCE OF

INTERNATIONAL

BUYERS IN A GLOBAL

MARKET OF DISPERSED

PRODUCTION.
(GEREFFI,1999)
IS ECONOMIC GLOBALIZATION

A NEW PHENOMENON?

Gills and Thompson (2006)

assert that the process of

globalization began since Homo

sapiens started moving from the

African continent to the rest of

the globe.
Frank and Gills (1993) argued

that the foundation of

globalization dates back about

5,000 years ago as manifested

by the Silk Road which linked

Asia, Africa and Europe.

When Adam Smith wrote his book

“An Inquiry into the Nature and

Causes of the Wealth of Nations

in 1776
Columbus 1492- America
Vasco De Gama 1498-

maritime route to india

The real global economic break-through

came in the 19th century due to the

transport innovations via the use of

steamships and railroads which

decreased transaction expenses and

boosted both local and global economic

exchanges (Held et al., 1999).

THE GOLDEN AGE OF

GLOBALIZATION

The relatively short period from

1870 to 1913 before World War I

(1914 to 1919)
This period is characterized by the
presence of peace, free trade, and

financial and economic

permanence (O'Rourke &

Williamson, 1999).
THE NEOCLASSICAL SOLOW

GROWTH MODEL
Bairoch (1993) argues that the

industrial revolution and global trade

relations strengthened economic

growth and development among

developed parts of the globe, but the

rest of the world did not achieve such

accomplishments.
STRUCTURALISM

According to the structuralist view,

globalization is taken for granted and

seen as a manifestation of some

deterministic logic. (Marowski, 2010)

Technological Determinism
Economic Determinism
THE INTERNATIONAL

MONETARY SYSTEMS
An international monetary

system or regime (IMS)

denotes the policies, practices,

tools, services, and institutions

for carrying out global

payments (Salvatore, 2007).

Assist international

transaction
Money is essentially

political
THE GOLD STANDARD

The gold standard operated as a fixed exchange

rate system, which made gold as the lone global

reserve.