Lesson 7:

Actors of
Economic
GLOBALIZATION
 Actors of Economic Globalization
Transnational
International Economic and Corporations (TNCs) /
Financial Institutions Multinational Corporations
(MNCs)

World Bank

International Monetary Fund

(IMF)

World Trade Organization

(WTO)
 International Economic and Financial Institutions

◈ In July 1944, 44 countries assembled the Bretton Woods

Conference, and countersigned a framework for the
international economic cooperation after WW II.

◈ Two international economic organizations resulted from the

Bretton Woods Conference—the International Monetary Fund
(IMF) and International Bank for Reconstruction and
Development (IBRD) or what is known today as the
World Bank.
◈ It is the world’s largest development institution.
◈ It was founded in 1944; the International Bank for Reconstruction and
Development- soon called the World Bank- has expanded to closely
associated group of five development institutions.
◈ Originally its loans helped rebuild countries devastated by World War
II. In time, the focus shifted from reconstruction to development, with
a heavy emphasis on infrastructure such as dams, electrical grids,
irrigation system and roads.
 Goals of the World Bank
End extreme poverty - by decreasing the percentage of people living
with less than $1.90 a day to no more than 3 percent by 2030.

Promote shared prosperity - by improving the income of the

bottom 40 percent of the population in each country
 Organizations of the World Bank
IBRD IDA IFC MIGA ICSID

• it lends to • it provides • is the largest ∙ was created • is responsible

governments interest-free global in 1988 to for the
of middle- loans — development provide loan settlement by
income and called credits institution guarantees conciliation
creditworthy — and grants focused on and or arbitration
low-income to helping the insurance to of
countries. governments private foreign investment
of the sector. investors disputes
poorest against loss between
countries. caused by foreign
non- investors and
commercial their host
risks in developing
developing countries.
countries.
World Bank's Top Borrowers ( as of April, 2022)
International Monetary Fund (IMF)
◈ The International Monetary Fund (IMF) was the other
institution established as a result of the Bretton Woods
Conference in 1944.
◈ The IMF's primary purpose is to promote global
monetary cooperation and international financial
stability.
◈ Itis also regarded as the “guardians of good conduct” in
the area of balance of payments.
Core Functions of the IMF

Surveillance

Lending

Capacity Development
 IMF's Source of fund
◈ The IMF's primary source of fund is from the quotas paid by
its member states.
◈ The size of each quota is determined by how much each
government can pay according to the size of its economy.
◈ Hence, the quota of states reflects their relative position in
the global economy and determines the voting power of
states in IMF decisions.
◈ Multilateral and bilateral borrowing are the secondary and
tertiary line of defense in case quotas would not be
sufficient.
Countries with largest IMF quotas
World Trade Organization (WTO)
 WTO's Mission
◈ WTO's Mission: To manage the rules of international
trade and ensure the fair and equitable treatment of all
members through negotiations and trade dispute
settlements (WTO, 2020).

◈ "The WTO was born out of negotiations; everything

the WTO does is the result of negotiations"
 Functions of WTO
◈ • To implement trade agreements
◈ • To provide forum for trade negotiations
◈ • To handle trade disputes
◈ • To monitor national trade policies
◈ • To provide technical assistance and training for developing
countries
◈ • To cooperate with other international organizations
 Principles of Trading System under
WTO
1. without discrimination —member countries must not discriminate
against any of their trading partners (giving them equally “most-
favoured-nation” or MFN status); and it should not discriminate
between its own and foreign products, services or nationals (giving
them “national treatment”);
• 'Most-favoured-nation or MFN' treatment - it means
non-discrimination and to treat everyone equally, where every member
treats their trading partner as the most-favoured.
• National treatment - this means imported and
locally-produced goods should be treated equally.
2. Free — trimming down of trade barriers to promote trades among
countries through negotiation.
 Principles of Trading System under
WTO
3. predictable — this is through binding and transparency.
4. more competitive — this discourages “unfair” practices such as
dumping (exporting at a low price to increase market share) and
export subsidies.
5. more beneficial for less developed countries — the WTO system
is said to be more beneficial for less developed countries by giving
them more time to adjust,
greater flexibility, and special privileges.
The Transnational Corporations
(TNCs)
◈A 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"
(Biersteker 1978).
◈ TNCs are formal business organizations that have
spatially dispersed operations in at least two countries.
◈ Did you know that some of
the TNCs are so rich and
have so many employees
that already resemble small
countries? For example, the
sales of both Microsoft and
Nike are larger than the
GDP of all but a few nations
in the world including part
of African nations.
Top 10 Largest Companies by Market Capitalization*

Rank Company Country Sector ($ Bil.)

1 Microsoft U.S. Technology 1,058
2 Apple U.S. Technology 959
3 Amazon U.S. Consumer 959
Services
4 Alphabet U.S. Technology 839
5 Facebook U.S. Technology 550
6 Berkshire Hathaway U.S. Financial 496

7 Tencent China Technology 436

8 Alibaba China Consumer 431
Services
9 Visa U.S. Financial 389
10 JPMorgan Chase U.S. Financial 366

*As of August 1, 2019. Source: Global Finance Magazine (2019)

https://www.gfmag.com/global-data/economic-data/largest-companies
THANK YOU FOR LISTENING!
:)