Lesson 3.
Global Economy International Governmental Organizations
Economic Globalization
- it refers to the increasing integration of
economies around the world, particularly
through the movement of goods ,services,and
capital across borders.
- is a historical process that is result of human
innovation and technological progress.
*Economic globalization is the economic mixing
and interdependence of economies across the
world through an escalation of cross-cultural
movement of goods,services,technologies and
wealth (Joshi,2009)
The phenomenon can thus have several
interconnected dimensions, such as
 the globalization of trade of goods and
services;
 the globalization of financial and capital
markets;
 the globalization of technology and
communication, and
 the globalization of production.
In economic terms, globalization is nothing but
a process of making the world economy an
organic system
International Economic and Financial
Organization
- provide the structure and funding for many
unilateral and multilateral development
projects.
Their activities promote sustainable private
and public sector development primarily by:
 financing private sector projects located in
the developing world;
 helping private companies in the
developing world mobilize financing in
international financial markets;
 providing advice and technical assistance
to businesses and governments.
Example: International Monetary Fund (IMF)
and World Bank
(IGOs)
 IGOs have international membership,
scope and presence.
 Their primary members consist of
sovereign states.
 These organizations bring member states
together to cooperate on a particular
theme or issues that have global impacts
and implications such as human rights,
trade, development, poverty, gender or
migration. Example: World Trade
Organization (WTO)
Media
- As the world becomes ever more complex and
interconnected, access to information must play
an increasingly central role in every problem
facing development specialists.
- At the individual level, access to information
allows people to make informed choices-to
decide how to vote, to educate themselves on
critical health issues, to get the market data
they need to sell their products, and ultimately
to participate in the global community.
Media Examples:
 African Media Development Initiative
 Global Forum for Media Development
 UNESCO Media Development
 ALJAZEERA
 CNN
 BBC
 TV PATROL
 24 ORAS
Multilateral Development Banks
-Are international financial institutions owned
by countries.
-In addition to the World Bank Group, there are
four regional multilateral development banks:
 the Inter-American Development Bank,
 the African Development Bank,
 the Asian Development Bank, and
 the European Bank for Reconstruction and
Development.
Inter-American Development Bank(IDB)
Nation-states
- refer to a certain form of state that derives its
political legitimacy from serving as a sovereign
entity for a nation within its sovereign territorial
space.
- A nation-state is a nation (a tightly-knit group
of people which share a common culture) which
has the same borders as a State.
- When a nation of people have a State or
country of their own, it is called a nation-state.
Places like France, Egypt, Germany, and Japan
are excellent examples of nation-states. There
are some States which have two nations, such
as Canada and Belgium. Even with its
multicultural society, the United States is also
referred to as a nation-state because of the
shared American "culture."
State
- in layman's term, state refer to a country and
its government,
A State (note the capital "S") is a self-governing
political entity.
i.e., the government of the Philippines A state
has four elements:
 Population– community of persons
 Territory - the space that's under state's
sovereignty
 Government - a body that crafts various
rule that people (society) follow
 Sovereignty - refers to internal and
external authority of a state
Nation
- On the other hand, the nation according to
Benedict Anderson is an imagined community.
- It is a community of people formed on the
basis of a combination of shared features such
as language, history, ethnicity, culture and/or
society. A nation is thus the collective identity
of a group of people understood as defined by
those features.
- Nations are culturally homogeneous groups of
people, larger than a single tribe or
community.
Non-governmental organization (NGO)
- (NGO) refers to a legally constituted
organization created with no participation or
representation of any government.
- In many jurisdictions these types of
organization are defined as "civil society
organizations.“
Example: Philippine Red Cross, Philippine
Animal Welfare Society, and Child Hope Asia
Transnational corporation (TNC)
- is any enterprise that undertakes foreign direct
investment, owns or controls income gathering
assets in more than one country, produces
goods or services outside its country of origin,
or engages in international production
Example: Nestle, Cadbury, Unilever, and BP-
Amoco
Role of International Financial Institutions in
the creation of Global Economy
WORLD BANK GROUP
- emphasized its two goals. "to end extreme
poverty and promote shared prosperity in a
sustainable way.
The World Bank is a component of the World
Bank Group of the following entities;
 International Bank for Reconstruction and
Development (IBRD)
 International Development Association
(IDA)
 International Finance Corporation (IFC)
 Multilateral Investment Guarantee Agency
(MIGA)
 International Center for Settlement of
Investment Disputes (ICSID)
International Bank for Reconstruction and
Development (IBRD)
- a global development cooperative owned by
189 member countries that provides loans,
guarantees risk management products, and
advisory services to middle income and credit
worthy low income countries
International Development Association (IDA)
-that "aims to reduce poverty by providing loans
(called credits) and grants for programs that
boost economic growth, reduce inequalities,
and improve people's living conditions" to
complement IBRD by lending money on
concessional terms, credits with zero or very
low interest charge payable for 25 to 40 years,
with a 5 to 10 year grace period.
International Finance Corporation (IFC),
- which is the largest global development
institution focused exclusively on the private
sector in developing countries.
Multilateral Investment Guarantee Agency
(MIGA)
- that promotes foreign direct investment (FDI)
into developing countries
International Center for Settlement of
Investment Disputes (ICSID)
- the world's major arena, devoted to
international investment dispute settlement.
- Essentially, WB- especially the IBRD and the
IDA lends money to developing countries for
projects that will help them alleviate poverty
and achieve sustainable development.
INTERNATIONAL MONETARY FUND
-Its primary purpose is to ensure the stability of
the international monetary system.
-The system of exchange of rates and
international payments that enables countries
(and their citizens) to transact with each other.
laborers, and as market for their surplus
products.
- Hence, the economies of core
regions/countries - seemingly grow at the
expense of peripheral regions/countries.
-The latter are seemingly made permanently
dependent on the core regions/countries as
they fail to or are hindered from using their
natural resources for industrialization and -
achieving capability in production and
innovation that requires higher levels of labor
and professional skills.

MODERN WORLD SYSTEM

Immanuel Wallerstein, 1930-2019

- He was an American sociologist and economic
historian.
- He is perhaps best known for his development
of the general approach in sociology which led
to the emergence of his world-systems
approach

World System Theory model

- In his book, Wallerstein explains that the
"world - economy...is a large geographic zone
within which there is a division labor and hence
significant internal exchange of basic or
essential goods as well as flows of capital and
capital labor.
- What unifies the structure most is the division
of labor which is constituted within it." Every
"world" or "large unit" of countries - Wallerstein
points out - is composed of a core and a
periphery.

- Core regions/countries typically treat their

peripheries as source of raw materials and