Economic Globalization

● The world economy or global economy is the economy of all humans of the world, referring to the
global economic system, which includes all economic activities which are conducted both within and
between nations, including production, consumption, economic management, work in general, exchange of
financial values and trade of goods and services.

● In general, economic globalization broadly refers to the increasing integration of national economies around the
world, particularly through trade and financial flows. Economic globalization involves trade in goods and
services, capital flows and trade in assets (e.g., currency, stocks), the transfer of technology and ideas, and
international flows of labor or migration.

The actors that facilitate economic globalization are:

 International Economic and Financial Organizations

 Non-Governmental Organizations

 International Governmental Organizations

 Trans-National Corporations (TNCs)

International Economic and Financial Organizations

- are international banks composed of sovereign member states that use public money from the Member States
to provide technical and financial support for developing countries.

Examples of International Economic and Financial Organizations:

International Monetary Fund (IMF)

The International Monetary Fund (IMF) is an international organization that promotes global economic growth and
financial stability, encourages international trade, and reduces poverty.

One of the IMF's most important functions is to make loans to countries that are experiencing economic distress to
prevent or mitigate financial crises

They are global organization, Today, its membership embraces 190 countries, with staff drawn from 150 nations.

World Trade Organization

The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade
between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world's trading nations
and ratified in their parliaments

1
It is a forum for governments to negotiate trade agreements. It is a place for them to settle trade disputes. It operates a
system of trade rules. Essentially, the WTO is a place where member governments try to sort out the trade problems
they face with each other.

World Bank

The World Bank is an international financial institution that provides loans and grants to the governments of low- and
middle-income countries for the purpose of pursuing capital projects

Its role is to reduce poverty by lending money to the governments of its poorer members to improve their economies
and to improve the standard of living of their people. The Bank is also one of the world's largest research centers in
development.

NGO (Non-Governmental Organization)

A non-governmental organization (NGO) is a group that functions independently of any government. It is usually non-
profit. NGOs, sometimes called civil society organizations, are established on community, national, and international
levels to serve a social or political goal such as a humanitarian cause or the protection of the environment.

For example, NGOs might focus on activities in areas involving health or health emergencies, education, infrastructure,
advocacy of minority rights, support of the poor, and the reduction of crime

Examples of Non-Governmental Organizations:

Child Hope Philippines

Childhope Philippines Foundation, Inc. or Childhope Philippines is a non-government organization or NGO for children in
the Philippines.

This organization working to promote the welfare of street children in the Philippines.

Philippine National Red Cross

The Philippine National Red Cross provides emergency assistance in times of disaster and calamity, provides first aid
services, blood transfusions, health programs, psychosocial support to vulnerable children and communities, as well as
educational activities that promotes international humanitarian law.

International Governmental Organization

The term intergovernmental organization (IGO) refers to an entity created by treaty, involving two or more nations, to
work in good faith, on issues of common interest.

The main purposes of IGOs were to create a mechanism for the world’s inhabitants to work more successfully together
in the areas of peace and security, and also to deal with economic and social questions.
2
Examples of International Governmental Organizations:

United Nations

The United Nations is an intergovernmental organization whose stated purposes are to maintain international peace and
security, develop friendly relations among nations, achieve international cooperation, and serve as a centre for
harmonizing the actions of nations.

The International Labor Organization

The International Labor Organization (ILO) is devoted to promoting social justice and internationally recognized human
and labour rights, pursuing its founding mission that labour peace is essential to prosperity.

United Nations Human Rights Council

The United Nations Human Rights Council is a United Nations body whose mission is to promote and protect human
rights around the world.

Trans-National Corporations (TNCs)

● A transnational corporation is an enterprise that is involved with the international production of goods or
services, foreign investments, or income and asset management in more than one country

● Transnational corporations (TNCs) are businesses that have a global reach. They are companies that operate in
more than one country.

Examples of transnational companies:

3
 ● The world economy or global economy is the economy of all humans of the world, referring to the
global economic system, which includes all economic activities which are conducted both within and
between nations, including production, consumption, economic management, work in general and
trade of goods and services.

● Economic globalization – when country exchange information and ideas that involves cooperation and does
creates money or does creates wealth on a specific country and does interact through the supply and demand
chain therefore, it happens already what we called “Economic Globalization”.

What is the meaning of modern world-system?

According to Immanuel Wallerstein’s there are three basic hierarchies of countries: core, periphery and semi-periphery.

• Core Nations - The United States, Canada, most of Western Europe, Japan, Australia and New Zealand are
examples of present core countries that have the most power in the world economic system. Core countries
tend to have both strong state machinery and a developed national culture.

• Semi-Periphery Nations - (e.g., South Korea, Taiwan, Mexico, Brazil, India, Nigeria, South Africa) are less
developed than core nations but more developed than peripheral nations.

• Periphery Nations – Pakistan, Philippines, Saudi Arabia, Sri Lanka and Thailand.

What is Economic Integration?

Economic integration involves agreements between countries that usually include the elimination of trade barriers and
aligning monetary and fiscal policies, leading to a more inter-connected global economy.

● Levels of Economic Integration

Free trade areas

The most basic type of economic integration is a simple free-trade area. In this form, attention is focused almost
exclusively on a reduction of the tariffs and quotas that restrict trade. Emphasis is placed almost entirely on increasing
the exchange of goods.

Customs unions

A customs union is an agreement between two or more neighboring countries to remove trade barriers, reduce or
abolish customs duty, and eliminate quotas. Such unions were defined by the General Agreement on Tariffs and Trade
(GATT) and are the third stage of economic integration

4
Common markets

A common market is a formal agreement where a group is formed amongst several countries that adopt a common
external tariff. In a common market, countries also allow free trade and free movement of labor and capital among the
members of the group.

Economic unions

An economic union is an agreement between two or more nations to allow goods, services, money and workers to move
over borders freely. The countries may also coordinate social and financial policies to support this common market.

Political union.

A political union has been defined as 'a joining of two or more nations or other political entities under one government;
an alliance between states, a federal union'

What is International Financial Institutions?

● IFIs are institutions that provide financial support and professional advice. For economic and social development
activities in developing countries.

Explain the role of International Financial Institutions in the creation of a Global Economy

They play a major role in the social and economic development of countries with emerging economies. This
includes advising, funding, and assisting on development projects to: reduce global poverty and improve living.

Market integration occurs when prices among different locations or related goods follow similar patterns over a long
period of time. Groups of goods often move proportionally to each other and when this relation is very clear among
different markets it is said that the markets are integrated.

What is the main point of Market Integration?

● Market integration means that goods, services and production factors can be circulated freely across different
regions and thus prices of goods and capital are equalize

History of global market integration in the twentieth century

Global market integration is the result of establishing of global economy that involved the homogenization of trade and
commerce. The global market integration in 20th century started when big America corporations began to emerge after
the Second World War with the rise of new conglomerates such as Continental Bank, Sheraton Hotels & Resorts, Toyota,
and Nissan. International trade and exchange of goods and services were already practiced in this century. Countries
were able to extend their reach beyond borders and patterns of trade and technology because of developments in
shipping and navigation.

● The attributes of global corporations are: very high assets and turnover, network of branches, control, continued
growth, sophisticated technology, right skills, forceful marketing and advertising, and good quality products.

5
Global Interstate System

● It is the whole system of human interactions. The modern world-system is structured politically as an interstate
system a system of competing and allying states. Political Scientists commonly call this the international system,
and it is the main focus of the field of International Relations.

Global Corporation

● A global corporation, also known as a global company, is coined from the base term 'global', which means all
around the world. It makes sense to assume that a global company is a company that does business all over the
world.

● A large company that operates in many different countries.

Attributes of Global Corporations:

● A Global Corporation is a business unit with headquarters in many other countries with a decentralized decision-
making system. The global business participation system is used because it has faded and the market boundaries
between one country and other countries have disappeared (globalization).

● Usually, Global companies have the characteristics of exporting distribution, having production units outside the
country of origin and making alliances with foreign companies. Global Company (Global company) is a company
that exists / operates in several countries in the world. A company that operates in several countries can be
called a multinational company, but can't be called a global company.

Attributes of Global Corporations:

● Have a wider marketing area. Using the basic marketing strategy and marketing management functions that are
more complex.

● Using global standardization for the products produced.

● Focus on global consumer satisfaction.

● Forming affiliates abroad, global vision and strategy has a tendency to choose certain types of business activities,
generally manufacturing and placing affiliates in developed countries.

What is Contemporary Global Governance?

● Global governance encompasses activities that transcend national boundaries at the international,
transnational, and regional levels and is based on rights and rules that are enforced through a combination of
economic and moral incentives.

● How important is contemporary global governance?

● Good global governance can serve as a beacon that helps us negotiate these rapids of contemporary human
interaction. The Institute makes policy recommendations to overcome global governance challenges by
improving the efficiency, effectiveness, and legitimacy of collective actions undertaken by relevant stakeholders

6
Effects of Globalization to Governments

● Globalization has had a significant impact on governments around the world. Some of the key effects include:

● Increased economic interdependence: Globalization has led to increased economic interdependence between
countries. This means that governments are more likely to be affected by economic developments in other
countries. For example, if a country's main export market experiences a recession, this could lead to job losses
and economic hardship in the exporting country.

● Increased pressure to liberalize trade: Globalization has put pressure on governments to liberalize trade. This
means that governments are more likely to remove barriers to trade, such as tariffs and quotas. This can lead to
increased competition for domestic businesses, but it can also lead to lower prices for consumers.

● Increased pressure to protect intellectual property: Globalization has also put pressure on governments to
protect intellectual property. This means that governments are more likely to enforce laws that protect
copyrights, trademarks, and patents. This can help to ensure that businesses can recoup their investments in
research and development

● Increased challenges to national sovereignty: Globalization has also led to increased challenges to national
sovereignty. This means that governments are less able to control their own economies and societies.

Effects of Globalization to Governments

● It is a group of people who have the ultimate authority to act on behalf of a state. Each state has its right to self-
determination, and that other country should not intervene in the affairs of that state unless there are
extraordinary reasons to do so.

● Globalization, thus, has powerful economic, political, cultural and social implications for sovereignty.
Globalization has led to a decline in the power of national governments to direct and influence their economies
(especially with regard to macroeconomic management); and to determine their political structures.

● The positive effects of globalization include economic advancement and the reduction in poverty, creation of
jobs, greater access to technology, cultural diversity and tolerance, emergence of new social movements and
greater transparency.

Internationalism vs. Globalism

Internationalism

● the ideal or practice of cooperation and understanding between nations. the state or quality of being
international.

Globalism

● the belief that events in one country affect those in all other countries, and that economic and foreign policy
should benefit the world as a whole instead of individual countries.

Difference between Globalism and Internationalism

● difference between Internationalism and Globalism , is that Internationalism is political , economic and cultural
cooperation between nations , while Globalism is an ideology based on the belief that people , goods and
information ought to be able to cross national borders unfettered.

7
8