Economic globalization

A Brief Overview of History

The course of human history is a complex and multifaceted process that has been shaped by a variety
of factors, including innovation, technological progress, and the evolution of social, political, and
economic systems. By examining the ways in which societies have developed and interacted over
time, we can gain a better understanding of the forces that have shaped our world today.
The Economy
As defined, the economy encompasses all activities related to the production, consumption, and
trade of goods and services in a given entity, whether it be a nation or a small town. It refers to the
process or system by which these goods and services are produced, sold, and bought within a
country or region.
International Monetary Fund
The International Monetary Fund (IMF) is a global organization headquartered in Washington, D.C.,
comprised of 189 member countries. Its mission is to foster international monetary cooperation,
promote financial stability, facilitate international trade, and support sustainable economic
growth and employment. As a key player in the international financial system, the IMF works to
reduce poverty and provide resources to countries in need, often in collaboration with the World
Bank.
The Silk Road: An Ancient Network of
International Trade
The Silk Road, also known as the International Trading System (ITS), was a vast network of trade routes
that facilitated commerce between the regions of the ancient world from 130 BCE to 1453 CE. The
routes were established during the Han Dynasty of China and linked the economies of Europe, Africa,
and Asia. Despite its name, the Silk Road was not a single route from east to west, but rather a complex
web of paths that connected traders and merchants across thousands of miles. The Silk Road played a
crucial role in promoting international cooperation and cultural exchange, and its legacy can still
be felt today.
The Silk Road: An International
Trading System
The Silk Road facilitated commerce between the regions of the ancient world

Established during the Han Dynasty of China, it connected the economies of Europe, Africa, and
Asia
It was not a single route from east to west, but rather a complex web of paths that connected
traders and merchants across thousands of miles

The Silk Road played a crucial role in promoting international cooperation and cultural exchange, as it
allowed goods, ideas, and people to travel freely. From West to East, these goods included:

Horses, saddles and riding tack

The grapevine and grapes

Dogs and other animals (both exotic and domestic)

Animal furs and skins

Honey and fruits

Glassware

Woolen blankets, rugs, and carpets

Textiles (such as curtains)
Gold and silver

Camels and slaves

Weapons and armor
The Silk Road: An International
Trading System
The Silk Road was a vast and complex web of trade routes that connected the economies of Europe,
Africa, and Asia. Established during China's Han Dynasty, it played a crucial role in promoting
international cooperation and cultural exchange, allowing goods, ideas, and people to travel freely
across thousands of miles.

From East to West, the goods traded on the Silk Road included:

Silk
Tea

Dyes

Precious stones

China (plates, bowls, cups, vases)

Porcelain
Spices (such as cinnamon and ginger)

Bronze and gold artifacts

Medicine
Perfumes
Ivory

Rice
Paper
Gunpowder
The Galleon Trade: A Thrilling
International Adventure
The Galleon Trade was a daring government monopoly established by the Spanish during their
colonial rule of the Philippines.

This legendary trade route connected the bustling economies of Asia and the Americas, with Manila
as the center of commerce in the East.
When the Spaniards arrived in the Philippines, they were greeted with a world of exotic wonders
and valuable resources.

They quickly established trade with China, Japan, Siam, India, Cambodia, Borneo, and the
Moluccas, but their ambitions didn't stop there.

The Spanish government soon closed the ports of Manila to all other countries except Mexico,
leading to the creation of the Manila-Acapulco Trade, better known as the "Galleon Trade."

Only two galleons braved the treacherous waters of the Pacific in this epic trade: one sailed from
Acapulco to Manila with some 500,000 pesos worth of goods, spending 120 days at sea, while the
other sailed from Manila to Acapulco with some 250,000 pesos worth of goods, spending 90 days
at sea.

The Galleon Trade played a crucial role in promoting international cooperation and cultural
exchange, as it allowed goods, ideas, and people to travel freely across the vast Pacific Ocean.
The Galleon Trade: An International
Trading System
The Galleon Trade was a government monopoly established by the Spanish during their colonial rule of
the Philippines. This trade route connected the economies of Asia and the Americas, with Manila as the
center of commerce in the East.

The Galleon Trade allowed for the exchange of goods, ideas, and people across vast distances,
promoting international cooperation and cultural exchange. It also facilitated the spread of
modern, liberal ideas, eventually inspiring the movement for independence from Spain.

Despite the economic benefits of the Galleon Trade, it had a profound impact on the environment and
resources of the Philippines. However, due to the Spaniards' preoccupation with maximizing profits
from the trade, they had little time to exploit our natural resources any further.
Economic Reforms in the Philippines:
An International Trading System
During the Spanish colonial period, the Philippines was heavily dependent on trade with China and
Mexico. However, Governor-General Jose Basco y Vargas implemented a "general economic plan" to
make the Philippines more self-sufficient.

As part of this plan, Basco established the "Economic Society of Friends of the Country," which
incentivized farmers to plant cotton, spices, and sugarcane. He also encouraged miners to
extract gold, silver, tin, and copper, and rewarded investors for scientific discoveries they made.

These reforms had a profound impact on the economy of the Philippines, allowing Filipino farmers
and traders to taste prosperity for the first time. The international trading system established by
Basco helped to promote the exchange of goods and ideas across vast distances, leading to
greater international cooperation and cultural exchange.

Today, the legacy of Basco's reforms can still be felt in the Philippines, as the country continues to be a
major player in the global economy.
The Tobacco Monopoly in the
Philippines: An International Trading
System
The tobacco industry in the Philippines was placed under government control during the
administration of Governor General Basco. In 1781, a tobacco monopoly was implemented in several
provinces, including Cagayan Valley, Ilocos Norte, Ilocos Sur, La Union, Isabela, Abra, Nueva Ecija, and
Marinduque.

As part of the monopoly, each of these provinces planted nothing but tobacco and sold their harvest
only to the government at a pre-designated price, leaving little for the farmers. No other province was
allowed to plant tobacco. The government exported the tobacco to other countries and also
provided it to cigarette factories in Manila.

The tobacco monopoly successfully raised revenues for the colonial government and made
Philippine tobacco famous all over Asia. It helped establish the Philippines as a key player in the
international trading system, promoting exchange of goods and ideas across vast distances and
leading to greater international cooperation and cultural exchange.

For more information on the Spanish colonial period in the Philippines, please see the next slide on the
Secularization of Priests.
The Bretton Woods Agreement and the
International Trading System
The Bretton Woods Agreement, signed in 1944, was a landmark agreement in the history of
international finance and economics. The agreement established a stable and predictable
exchange rate system, which was designed to promote international trade and investment and
encourage greater global economic cooperation. By fixing exchange rates, the agreement
removed some of the uncertainty and risk associated with currency fluctuations, making it easier for
businesses to engage in cross-border trade and investment.

However, the Bretton Woods system began to face challenges in the 1960s, as the US began to run
large balance-of-payments deficits. As a result, the US found it increasingly difficult to maintain
the gold-backed value of the dollar, and other countries began to lose confidence in the system.

In the early 1970s, the Bretton Woods system was abandoned, and most countries moved to a floating
exchange rate system, where currency values are determined by market forces rather than fixed
exchange rates. This marked the end of an era in global finance and economics, and the beginning
of a new era of greater financial volatility and uncertainty.
The Bretton Woods Institutions and
the International Trading System
The Bretton Woods Institutions were established in 1944 at a meeting of 43 countries in Bretton
Woods, New Hampshire, USA. The institutions are the World Bank and the International Monetary Fund
(IMF), which were created to help rebuild the shattered postwar economy and promote international
cooperation.

The original Bretton Woods agreement also included plans for an International Trade Organisation
(ITO), but these lay dormant until the World Trade Organisation (WTO) was created in the early 1990s.
The Bretton Woods Institutions and
the International Trading System
The Bretton Woods Institutions were established in 1944 at a meeting of 43 countries in Bretton
Woods, New Hampshire, USA. The institutions are comprised of the World Bank and the International
Monetary Fund (IMF), which were created in the aftermath of World War II to help rebuild the global
economy and promote international cooperation.

The creation of the Bretton Woods Institutions was based on the ideas of a trio of key experts: US
Treasury Secretary Henry Morganthau, his chief economic advisor Harry Dexter White, and British
economist John Maynard Keynes. They aimed to establish a postwar economic order based on
notions of consensual decision-making and cooperation in the realm of trade and economic relations.

As leaders of the Allied countries, particularly the US and Britain, they believed that a multilateral
framework was needed to overcome the destabilizing effects of the previous global economic
depression and trade battles. The Bretton Woods Institutions continue to play a key role in the
international trading system to this day.
Neoliberalism and Its Discontents:
The Impact on the International
Trading System
Neoliberalism is an economic ideology that advocates for the elimination of the regulatory functions
of the state and promotes the denationalization and privatization of its goods and services. Instead of
the state, it favors using the market to determine distribution and stimulation. Proponents of
neoliberalism argue that the market's invisible hand will take care of the movement of resources,
productivity growth, the renovation of technology, and the reinforcement of comparative
advantages.

However, critics of neoliberalism argue that once the state is reduced and weakened, the national
economy's capacity to withstand external economic pressures is diminished. This is because only the
state can have sufficient control over resources and regulatory mechanisms to soften the blow. To
attenuate the negative social consequences of the model, neoliberals have designed specific
instruments and escape valves, such as the negotiation of conflict (firm or flexible, according to the
case), the growth of the informal economy, and programs of social assistance, which are more
propagandistic than adequate.
The Global Financial Crisis and the
Challenge to Neoliberalism in the
International Trading System
The global financial crisis of 2007-2008 was one of the most severe economic downturns in modern
history. The crisis was characterized by a series of events that began with a rapid increase in housing
prices during 2000-2005, followed by a leveling off and eventual decline in prices. This led to an
increase in default and foreclosure rates beginning in the second half of 2006, which was exacerbated
by the Federal Reserve's manipulation of interest rates during 2002-2006.

The crisis culminated in the collapse of several central investment banks in 2008, and was followed by
a collapse of stock prices later that year. The crisis raised serious questions about the viability of the
neoliberal economic model, which emphasizes the importance of free markets and minimal
government intervention. Critics argue that the crisis was due in part to the deregulation of financial
markets and the failure of neoliberal policies to address growing inequality and economic instability.

The crisis was triggered by a rapid increase in housing prices during 2000-2005, followed by a
leveling off and eventual decline in prices.

This led to an increase in default and foreclosure rates beginning in the second half of 2006, which
was exacerbated by the Federal Reserve's manipulation of interest rates during 2002-2006.
The crisis culminated in the collapse of several central investment banks in 2008.

This was followed by a collapse of stock prices later that year.

The Impact of Economic Globalization
on the International Trading System
Today
Economic globalization refers to the increasing interdependence of world economies due to the
growing scale of cross-border trade of commodities and services, the flow of international capital,
and the wide and rapid spread of technologies. It reflects the continuing expansion and mutual
integration of market frontiers and is an irreversible trend for the economic development of the whole
world at the turn of the millennium.
The Impact of Economic Globalization
on the International Trading System
Today
Economic globalization is driven by the increasing significance of information in all types of productive
activities and the marketization of the world economy. It is an irreversible trend for the economic
development of the whole world at the turn of the millennium, largely based on the rapid development
of science and technology. This rapid globalization has resulted from the environment in which the
market economic system has been spreading throughout the world and has developed on the basis of
increasing cross-border division of labor that has been penetrating down to the level of production
chains within enterprises of different countries.
The Impact of Economic Globalization
on the International Trading System
Today
Economic globalization is a complex phenomenon that has significant implications for national
economies and the international trading system. At its core, it refers to the increasing
interdependence of economies around the world, driven by a range of economic, social, and
technological factors. This interdependence has important implications for the way that nations
interact with one another in the global economy, and has led to the development of a range of
international institutions and agreements that seek to manage the risks and opportunities presented
by globalization.

Understanding the attributes of the global system is essential to developing effective foreign policies
that can help nations maximize the benefits of globalization while minimizing its risks. National
attributes play an important role in shaping foreign policy, with factors such as natural resources, size,
geography, and demography all influencing a state's power and ability to project its interests on the
global stage. By considering these factors, policymakers can develop foreign policies that are better
tailored to their nation's unique needs and interests.
The Impact of Economic Globalization
on the International Trading System
Today
In today's interconnected world, economic globalization has become an increasingly important
phenomenon that has significant implications for national economies and the international trading
system. At its core, economic globalization refers to the growing interdependence of economies
around the world, driven by a range of economic, social, and technological factors.

As countries seek to navigate this complex global landscape, it is critical to identify key factors that
can contribute to success. Some of these factors include: the ability to negotiate effectively, the
willingness to engage in conflict when necessary, the ability to recognize the importance of other
essential actors in the system, the ability to resist coalitions or actors that seek to dominate the
system, and the ability to constrain actors who subscribe to supranational organizational principles.

By understanding and leveraging these factors, countries can better position themselves to compete
and succeed in today's global economy.
Internationalism and Its Role in the
Global Political Economy
Internationalism is a political principle that advocates greater political or economic cooperation
among states and nations. It is an important concept that is associated with a range of other political
movements and ideologies, and can also be considered a doctrine, belief system, or movement in
itself.

At its core, internationalism seeks to promote greater collaboration and cooperation among nations,
with the goal of fostering greater stability and prosperity in the global political economy. This can take
many forms, including the creation of international organizations, the negotiation of international
treaties and agreements, and the promotion of free trade and open markets.

By fostering greater international cooperation, internationalism can help to mitigate some of the most
pressing challenges facing the world today, including climate change, economic inequality, and
political instability. Through sustained efforts to promote internationalism, we can work towards a
more peaceful and prosperous global community.
The Benefits and Challenges of Free
Trade in the Global Economy
Free trade is a critical component of the global economy, enabling countries to engage in the
exchange of goods and services across borders. At its core, free trade is based on the principle of
comparative advantage, which suggests that countries should specialize in the production of goods
and services where they have a relative advantage, and then trade with other countries to acquire the
goods and services they need.

While free trade has many benefits, including increased economic growth and efficiency, it also
presents significant challenges, particularly for less developed countries. These challenges can
include increased competition from foreign producers, job displacement, and reduced economic
self-sufficiency.

Understanding the benefits and challenges of free trade is critical for policymakers and business
leaders alike, as they work to navigate the complexities of the global economy and drive sustainable
economic growth in the years ahead.
The Importance of International Trade
in the Global Economy
International trade is a critical component of the global economy, allowing countries to engage in the
exchange of goods and services across borders. At its core, international trade is based on the
principle of comparative advantage, which suggests that countries should specialize in the production
of goods and services where they have a relative advantage, and then trade with other countries to
acquire the goods and services they need.

The international trading system is a complex web of agreements, policies, and regulations designed
to facilitate trade between countries and ensure a level playing field for all participants. While
international trade has many benefits, including increased economic growth and efficiency, it also
presents significant challenges, particularly for less developed countries. These challenges can
include increased competition from foreign producers, job displacement, and reduced economic
self-sufficiency.

Understanding the importance of international trade is critical for policymakers and business leaders
alike, as they work to navigate the complexities of the global economy and drive sustainable
economic growth in the years ahead.
The Importance of International Trade
International trade is the exchange of goods and services between countries. It plays a vital role in the
global economy, allowing countries to specialize in producing goods and services where they have a
comparative advantage and trade with other countries to acquire the goods and services they need.

The international trading system is a complex web of agreements, policies, and regulations designed
to facilitate trade between countries and ensure a level playing field for all participants. Understanding
the nuances of international trade, including the differences between imports and exports, is critical
for policymakers and business leaders alike as they navigate the complexities of the global
marketplace.
Cosmopolitanism and the
International Trading System
Cosmopolitanism is a philosophical and sociopolitical concept that emphasizes the importance of a
shared morality and ethical code across all human ethnic groups. This stands in contrast to
communitarianism, patriotism, and nationalism, which prioritize the interests of individual communities.

The international trading system is a complex web of agreements, policies, and regulations that govern
the exchange of goods and services between countries. Understanding the role of cosmopolitanism
in this system is critical for policymakers and business leaders alike as they work to navigate the
complexities of the global marketplace.
The Role of Cosmopolitanism in the
International Trading System
Cosmopolitanism is a philosophical and sociopolitical concept that emphasizes the importance of
shared principles of morality and ethics across all human ethnic groups. Its implications for the
international trading system are far-reaching, as it necessitates a holistic approach to global social
justice and institutions that promote interdependence and cooperation.

Within the framework of cosmopolitanism, there are two primary streams of thought: ethical
cosmopolitanism and political cosmopolitanism. Ethical cosmopolitanism prioritizes global social
justice and the development of a shared ethical code, while political cosmopolitanism focuses on
building institutional structures and political frameworks that facilitate cross-border cooperation.
Cosmopolitanism's Role in the
International Trading System
The concept of cosmopolitanism emphasizes the importance of shared ethical principles and values
across different ethnic groups. Within the context of the international trading system,
cosmopolitanism has important implications for promoting social justice and equity.

There are two primary streams of cosmopolitanism: ethical and political. Ethical cosmopolitanism
prioritizes the development of a shared ethical code to promote global social justice. Political
cosmopolitanism, on the other hand, emphasizes the importance of creating institutional structures
and political frameworks that facilitate cross-border cooperation and democratic governance.

In particular, political cosmopolitanism highlights the need for more democratic forms of governance
at all levels, from local to global. While it is not always explicit about the value or purpose of
democracy, this stream of thought has much to say about the structures necessary for creating a more
just and equitable world.
The Relationship Between Income
Inequality and Economic Instability
Adam Smith, widely regarded as the father of modern economics, once noted that "the oppression of
the poor must establish the monopoly of the rich." A key implication of this observation is that
societies with high levels of income inequality are often unstable and prone to economic collapse.

Indeed, research has consistently shown that countries with the highest levels of income inequality are
also those that are most likely to experience economic crises and social unrest. This is because
excessive greed and a focus on short-term profits can lead to a lack of investment in long-term
growth and stability, as well as a breakdown in social trust and cooperation.

It is therefore crucial that policymakers and business leaders take steps to address income inequality
and promote greater economic stability and prosperity for all members of society. This can include
measures such as progressive taxation, investment in education and job training, and the
establishment of social safety nets to help those in need.