IC 114- Globalization and Public Administration

Lesson 2- The Structures of Globalization

Week # 4- 6: September 6- 24, 2021

Submit by September 24, 2021

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SANTO TOMAS COLLEGE OF AGRICULTURE, SCIENCES AND TECHNOLOGY
Fdr. Road 4, Tibal-og, Sto. Tomas, 8112
Davao del Norte, Philippines

LEARNING MODULE on GE 3 – CONTEMPORARY WORLD

II- The Structures of Globalization

a. Global Economy
Students are expected to
b. Market Integration
define economic globalization.
c. Role of International Financial Institutions
Shall identify the factors that
d. Membership Composition of IFI
facilitate economic
e. History of Global Market Integration
globalization. Define modern
f. Global Corporations
world systems and appreciate
g. Global Interstate System
global cooperation through
h. Global Governance
understanding the role of UN
i. Effects of Globalization in Governance
and globalized governance.
j. World System
k. World system Theory
l. Internationalism Versus Globalization
m. Contemporary Global Governance
n. The United Nation (UN)
o. Main Function of UN
p. Role of UN Today and in the Future
q. The UN General Assembly
r. Challenges of Global Governance
s. Relevance of the State Amid Globalization

Global Economy
Global economy is also referred to as world economy. This term refers to the
international exchange of goods and services that is expressed in monetary units of
money. It may also mean as the free movement of goods, capital, services,
technology, and information.

In some contexts, "global" or "International" economy is distinguished and

measured separately from national economies while the "world economy" is simply an
aggregate of the separate country's measurements.

World economy is exclusively limited to human economic activity and is typically

judged in monetary terms. Typical examples are illegal drugs and other black market
goods which by any standard are a part of the world economy, but for which these is
by definition no legal market of any kind.

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 Global economy or economic globalization is concerned on the globalization of
production, finance, markets, technology, organizational regimes, institutions,
corporations, and labor. While economic globalization has been expanding since the
emergence of trans-national trade, it has grown at an increased rate due to an increase
in communication and technological advances under the framework of General
Agreement on Tariffs and Trade and World Trade Organization, which made countries
gradually cut down trade barriers and open their current accounts and capital
accounts.

This recent boom has been largely supported by developed economies

integrating with majority world through foreign direct investment and lowering costs of
doing business, the reduction of trade barriers, and in many cases cross border
migration.

Market Integration
When prices among different location or related goods follow the same patterns
over long period of time, market integration exist. Similarly, when groups of prices
often move proportionally to each other and when this relation is very clear among
different markets it is said that the markets are integrated. Hence, it could be
concluded that market integration is an indicator that explains how much different
markets are related to each other.

Role of International Financial Institutions in the Creation of

Global Economy
Let us first define International Financial Institution (IFIS). An international
financial institution chartered by more than one country and therefore are subjects to
international law. Its owners or shareholders are generally national governments,
although other international institutions and other organizations occasionally figure as
shareholders. The most prominent IFIs are creations of multiple nations, although
some bilateral financial institutions (created by two countries) exist and are technically
IFIs. The best known IFIs were established after World War to assist in the
reconstruction of Europe and provide mechanisms for international cooperation in
managing the global financial system.

Today, the world's largest IFI the European Investment Bank, [1] with balance
sheet size of €573 billion in 2016. [2] This compares to the two components of the
World Bank, the IBRD (assets of $358 billion in 2014) [3] and the IDA (assets of $183
billion in 2014). [3] For comparison, the largest commercial banks each have assets
of c.$2,000-3,000 billion. (Source: Website)

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The International Financial Institutions (IFIs) are:
1. International Monetary Fund (IMF)

2. Multilateral Development Banks (MDBs) which include

a. World Bank Group

b. African Development Bank

c. Asian Development Bank

d. Inter-American Development Bank

e. European Bank for Reconstruction and Development

The last four (4) of these each focus on a single world region and thus are often
called Regional Development Banks (RDB).

Global in scope are International Monetary Fund and the World Bank. They are
also specialized agencies in the United Nation system but are governed independently
of it.

Membership Composition of IFIS

1. only sovereign countries are admitted as member-owner

2. broad country membership to include borrowing developing countries and

developed donor countries.

3. membership in regional development banks include countries around the world as

members (not limited to countries from the region)

4. has its own independent legal and operational states

Main Objectives:
1. IMF provides temporary financial assistance to member countries to help ease
balance of payments adjustments.

2. MDBs provide financing for development to developing countries through:

- long term loans (with maturities of up to 20 years) at interest rates way below
market rates. Funding comes from international capital markets and relend to
borrowing government in developing countries.

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 - very long-term loans (sometimes called credits with maturities of 30 40 years)
at interest rates below market rates. Funding for loans come from direct contributions
by government in the donor countries.

- Grant financing by some MDBs for technical assistance advisory service or

project preparation.

All IFIS are active in supporting programs that are for the global economy in
addition to their primary role of financing and providing technical assistance to
programs at the country level.

History of Global Market Integration in the Twentieth

Century
Labor market integration occurred between 1882 and 1936 in an area of Asia
stretching from South India to Southeastern China and encompassing the three
Southeast Asian countries of Burma, Malaysia and Thailand.

By the late nineteenth century, globalization, of which a principal feature was

the mass migration nineteenth century, globalization, of which a principal feature was
the mass migration of Indians and Chinese to Southeast Asia, gave rise to both an
integrated Asian labor market and a period of real wage convergence. Integration did
not, however, extend beyond Asia to include com industrial countries Asian and core
areas, in contrast to globally integrated commodity markets, showed divergent trends
in unskilled real wages.

By the 1880s steamships had largely replaced sailing vessels for transport
within Asia as well as to Western markets, and shipping fares had begun to fall sharply.

Also, already underway was the mass migration of Indian and Chinese workers,
principally from the labor-abundant areas of Madras in India and the provinces of
Kwangtung (Guangdong) and Fukien (Fujian) in Southeastern China, to land-
abundant but labor-scarce parts of Asia. Chief among the immigrant-receiving
countries were Burma, Malaya and Thailand (Siam) in Southeast Asia. Indian and
Chinese labor inflows to these countries constituted the bulk of two of three main late
nineteenth- and early twentieth-century global migration movements, the other being
European immigration to the New World. Immigration to Southeast Asia was almost
entirely in response to its growing demand for workers which, in turn, derived from
rapidly expanding demand in core industrial countries for Southeast Asian exports.
Studies by Latham and Neal (1983) and by Brandt (1985, 1989) established the
development of an integrated Asian rice market beginning in the latter part of the
nineteenth century.

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Global Corporation
While many use "global" in the same way as international when it comes
describing a business, some analysts make distinctions between how each operates.
On a basic level, a global corporation is one that operates in more than one country.
Particularly in the United States, the term can mean different things to different
contexts, with the characteristics of a global corporation varying accordingly. (Craig
Berman, 2017)

Business analysts and academics, such as the groundbreaking Michael Porter

at Harvard University, defined global businesses more narrowly and distinguish them
from other operations overseas. He defined a global business as one that maintains a
strong headquarters in one country but has investments in multiple foreign locations.
Such investments may involve direct investments in foreign assets, such as
manufacturing facilities or sales offices. The headquarters generally is its home
country, though some moves to more favorable regulatory or taxation locations over
time. Global corporations strive to create economies of scale by selling the same
products in multiple locations and limiting local customization.

In the world of finance and investment, a global corporation is one that has
significant investments and facilities in multiple countries but lacks a dominant
headquarters. Global corporations are governed by the laws of the country where they
are incorporated. A global business connects its talents, resources, and opportunities
across political boundaries. Because a global corporation is more invested in its
overseas locations, it can be more sensitive to local opportunities and more vulnerable
to threats. A company that does business in Africa, for example, might find itself
dealing with the implication from a local Ebola outbreak as well as its commercial
operations.

In contrast, an international company is one that has a headquarters, for

example in the United States, but also does business overseas and might have a large
presence in multiple areas. Such company would be governed by U.S. regulations,
assuming its headquarters remain in U.S., but may also have foreign subsidiaries such
as the Philippines which is governed by local laws.

Global Interstate System

World-systems are defined by the existence of a division of labor. The modern
world-system has a multi-state political structure (the interstate system) and therefore
its division of labor is international division of labor. In the modern world-system, the
division of labor consists of three zones. according to the prevalence of profitable
industries or activities: core, semi periphery, and periphery. Countries tend to fall into
one or another of these interdependent zones core countries, semi-periphery countries
and the periphery countries. Resources are redistributed from the underdeveloped,

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typically raw materials-exporting, poor part of the world (the periphery) to developed,
industrialized core.

World-systems, past world-systems, and the modern world-systems, have

temporal features. Cyclical rhythms represent the short-term fluctuation of economy,
while secular trends mean deeper long run tendencies, such as general economic
growth or decline. The term contradiction means a general controversy in the system,
usually concerning some short term vs. long term. trade-offs. For example, the
problem of under consumption, wherein the drive-down of wages increases the profit
for the capitalists on the short-run, but considering the long run, the decreasing of
wages may have a crucially harmful effect by reducing the demand for the product.
The last temporal feature is the crisis: a crisis occurs if a constellation of circumstances
brings about the end of the system.

The world-systems theory stresses that world-systems (and not nation states)
should be the basic unit of social analysis. Thus, we should focus not on individual
states, but on the relations between their groupings (core, semi-periphery, and
periphery).

Global Governance
This term global governance is sometimes referred to as world governance.
Global is a movement towards political cooperation among transnational actors,
negotiating responses to problems that affect more than one state or region.
Institutions of global governance-the United Nations, the International Criminal Court,
the World Bank, etc.-tend to have limited or demarcated power to enforce compliance.
The modern question of world governance exists in the context of globalization and
globalizing regimes of power: politically, economically, and culturally. In response to
the acceleration of worldwide interdependence, both between human societies and
between humankind and the biosphere, the term "global governance" may mean the
process of designating laws, rules, or regulations intended for a global scale.

Global governance is not a singular system. There is no "world government"

but the many different regimes of global governance do have commonalities:

While the contemporary system of global political relations is not integrated, the
relation between the various regimes of global governance is not insignificant, and the
system does have a common dominant organizational form. The dominant mode of
organization today is bureaucratic rational-regularized and codified. It is common to
all modern regimes of political power and frames the transition from classical
sovereignty to what David Held describes as the second regime of sovereignty-liberal
international sovereignty.

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Effects of Globalization Governance
According to the disciplining hypothesis, globalization restrains governments by
inducing increased budgetary pressure. s a consequence, governments may attempt
to curtail the welfare state, which is often seen as a drag on international
competitiveness, by reducing especially their expenditures on transfers and subsidies.
This globalization-induced welfare state retrenchment is potentially mitigated by
citizens' preferences to be compensated for the risks of globalization ("compensation
hypothesis").

World System
World system deals with inter-regional and transnational division of labor, which
divides the world into core countries, semi-periphery countries, and the periphery
countries. Core countries focus on higher skill, capital-intensive production, and the
rest of the world focuses on low-skill, labor-intensive production and extraction of raw
materials. This constantly reinforces the dominance of the core countries.
Nonetheless, the system has dynamic characteristics, in part as a result of revolutions
in transport technology, and individual states can gain or lose their core (semi-
periphery, periphery) status over time. This structure is unified by the division of labor.
It is a world-economy rooted in a capitalist economy. For a time, certain countries
become the world hegemon; during the last few centuries, as the world-system has
extended geographically and intensified economically, this status has passed from the
Netherlands to the United Kingdom and (most recently) to the United States.

World System Theory

This theory is also known as world-systems analysis or would - systems
perspectives. World system theory is a multidisciplinary, macro scale approach to
world history and social change which emphasizes the world-system (and not nation
states) as the primary (but not exclusive) unit of social analysis.

Institutions that govern International Relations.

The following institutions govern international relations; These are:

1. The European Institute for International Law and International Relations

(Brussels)

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 2. ISPI Istituto per gli Studi di Politica Internazionale (Italian Institute for
International Political Studies) Milan, Italy

3. Institute of World Politics (Washington, D.C.)

4. Department of International Studies (Centro Universitario de Ciencias Sociales

y Humanidades) at University of Guadalajara located in Guadalajara, Mexico

5. Department of Latin American Studies (Centro Universitario de Ciencias

Sociales y Humanidades) at University of Guadalajar located in Guadalajara,
Mexico

6. The Royal Institute of International Affairs, (PIIA) Karachi, Pakistan

7. The New Zealand Institute of International Affairs (Wellington, New Zealand)

8. The Australian Institute of International Affairs (Deakin, ACT, Australia)

9. The Canadian Institute of International Affairs (Toronto, ON, Canada)

10. Geneva School of Diplomacy and International Relations (Geneva,

Switzerland)

11. Graduate Institute of International and Development Studies (Geneva,

Switzerland)

12. International Strategic Research Organization (ISRO/USAK)

13. EGMONT - Royal Institute for International Relations (Egmont),

14. Brussels, Belgium • University of Florida International Center (U.S.A)

15. Center for International Affairs Jahangirnagar University, (Savar, Dhaka,

Bangladesh).

16. South American Institute for Policy and Strategy (Porto Alegre, Brazil)

Internationalism versus Globalization (Source: Herman E.

Daly, 1999)
Globalization, considered by many to be the inevitable wave of the future, is
frequently confused with internationalization, but is in fact something totally different.
Internationalization refers to the increasing importance of international trade,
international relations, treaties, alliances. etc. International, means between or among
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nations. The basic unit remains the nation, even as relations among nations become
increasingly necessary and important. Globalization refers to global economic
integration of many formerly national economies into one global economy, mainly by
free trade and free capital mobility, but also by easy or uncontrolled migration. It is the
effective erasure of national boundaries for economic purposes. International trade
(governed by comparative advantage) becomes interregional trade (governed by
absolute advantage). What was many, becomes one.

The very word "integration" was derived from "integer", meaning "one,"
"complete," or "whole." Integration is the act of combining into one whole. Since there
can be only one whole, only one unity with reference to which parts are integrated, it
follows that global economic integration logically implies national economic
disintegration. By disintegration it does not mean that the productive plant of each
country is annihilated, but rather that its parts are torn out of their national context (dis-
integrated), to be re-integrated into the new whole, the globalized economy. As the
saying. goes, "to make an omelette you have to break some eggs." The disintegration.
of the national egg is necessary to integrate the global omelette.

In the classical nineteenth-century vision of Smith and Ricardo (2016)the

national community embraced both national labor and national capital, and these
classes cooperated, albeit with conflict, to produce national goods -- largely with
national natural resources. These national goods then competed in international
markets against the goods of other nations, produced by their own national
capital/labor teams using their own resources. This is internationalization as defined
above.

In the globally integrated world of the late twentieth century, however, both
capital and goods are free to move internationally. One little-noticed, but important
consequence of free capital mobility is to totally undercut Ricardo's comparative
advantage argument for free trade in goods, because that argument was explicitly and
essentially premised on capital being immobile between nations. But the conventional
wisdom seems to be that if free trade in goods is beneficial, then free trade in capital
must be even more beneficial! In any case, it doesn't longer makes sense to think of
national teams of labor and capital in the globalized economy. Instead, global
capitalists competing for both laborers and natural resources, as well as markets, in
all countries.

Contemporary Global Governance

Global governance or world governance is a movement towards political
cooperation among transnational actors, aimed at negotiating responses to problems
that affect more than one state or region. Institutions of global governance-the United
Nations, the International Criminal Court, the World Bank, etc. - have limited or
demarcated power to enforce compliance. The modern question of world governance
exists in the context of globalization and globalizing regimes of power: politically,
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economically and culturally. In response to the acceleration of worldwide
interdependence, both between human societies and between humankind and the
biosphere, the term "global governance" may name the process of designating laws,
rules, or regulations intended for a global scale.

Global governance is not a singular system. There is no "world government"

but the many different regimes of global governance do have commonalities.

The United Nations (UN)

The United Nations is an intergovernmental organization
aiming to maintain international peace and security, develop
friendly relations among nations, achieve international
cooperation, and be a center for harmonizing the actions of
nations. It is the world's largest, and most familiar, international
organization .

Main Functions:
1. The main function of UN is to maintain peace and security for all of its member-
states. The UN does mot have its own military but it has peacekeeping force
which are supplied by the member states.

On approval of the UN Security Council, these peacekeepers are often sent to

regions where armed conflict has recently ended to discourage combatants
from resuming fighting. In 1988, the peacekeeping force won a Nobel Peace
Prize for its actions.

2. Other functions of UN:

The UN aims to protect human rights and provide humanitarian assistance

when needed. In 1948, the General Assembly adopted the Universal
Declaration of Human Rights as a standard for its human rights operations. The
UN currently provides technical assistance in elections, helps to improve
judicial structures and draft constitutions, trains human rights officials, and
provides food, drinking water, shelter, and other humanitarian services to
peoples displaced by famine, war, and natural disaster.

The UN plays an integral part in social and economic development through its
UN Development Program. This is the largest source of technical grant assistance in
the world. In addition, the World Health Organization, UNAIDS, The Global Fund to
Fight AIDS, Tuberculosis, and Malaria, the UN Population Fund, and the World Bank
Group to name a few play an essential role in this aspect of the UN as well. The UN
also annually publishes the Human Development Index to rank countries in terms of
poverty, literacy, education, and life expectancy:

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 • to investigate any dispute or situation which might lead to international friction;
• to recommend methods of adjusting such disputes or the terms of settlement;
• to formulate plans for the establishment of a system to regulate armaments;
• to determine the existence of a threat to the peace or act of aggression and to
recommend what action should be taken;
• to call on members to apply economic sanctions and other measures not
involving the use of force to prevent or stop aggression;
• to take military action against an aggressor:
• to recommend the admission of new members;
• to recommend to the General Assembly the appointment of the Secretary-
General and, together with the Assembly, to elect the Judges of International
Court of Justice.

Role of UN Today and the Future

For the future, the UN has established what it calls its Millennium Development
Goals. Most of its member states and various international organizations have all
agreed to achieve these goals relating to reducing poverty, child mortality, fighting
diseases and epidemics, and developing a global partnership in terms of international
development by 2015.

Some member states have achieved a number of the agreement's goals while
others have reached none. However, the UN has been successful over the years and
only the future can tell how the true realization of these goals. will play he out.

The above functions are embodied in the UN charter.

(Source: https://www.thoughtco.com/the-united-nations-p2-1435441)

The UN General Assembly

The UN General Assembly was established in 1945 under the UN Charter, The
General Assembly occupies a central position as the chief deliberative, policymaking
and representative organ of the United Nations it provides a unique forum for
multilateral discussion of the full spectrum of international issues covered by the
Charter.

It also plays a significant role in the process of standard-setting and the

codification of international law. The Assembly meets in regular session intensively
from September to December each year, and thereafter as required.

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Functions and Powers of the UN General Assembly
According to the Charter of the United Nations, the General Assembly may:

• Consider and make recommendations on the general principles of cooperation

for maintaining international peace and security, including disarmament;
• Discuss any question relating to international peace and security and, except
where a dispute or situation is currently being discussed by the Security
Council, make recommendations on it;
• Discuss, with the same exception, and make recommendations on any question
within the scope of the Charter or affecting the powers and functions of any
organ of the United Nations;
• Initiate studies and make recommendations to promote international political
cooperation, the development and codification of international law, the
realization of human rights and fundamental freedoms, and international
collaboration in the economic, social, humanitarian, cultural, educational and
health fields;
• Make recommendations for the peaceful settlement of any situation that might
impair friendly relations among nations;
• Receive and consider reports from the Security Council and other United
Nations organs;
• Consider and approve the United Nations budget and establish the financial
assessments of member states;
• Elect the non-permanent members of the Security Council and the members of
other United Nations councils and organs and, on the recommendation of the
Security Council, appoints the Secretary-General.

Membership in the United Nations

Today (2018), almost every fully recognized independent states are member states
in the UN. As outlined in the UN Charter, to become a member of the UN a state must
accept peace and all obligations outlined in the Charter and willing to carry out any
action to satisfy those obligations. The final decision on admission to the UN is carried
out by the General Assembly after recommendation by the Security Council.

Challenges of Global Government in the 21st Century

On June 13, 2016, The Hague Institute welcomed Irina Bokova, Director
General of UNESCO to speak on "Challenges of Global Governance in the 21st
Century" as part of the ongoing Distinguished Speaker Series at its Institute.

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 In her remarks, Bokova noted that while new technologies have created new
pathways to prosperity, trade and inter-cultural dialogue, the increasing fragmentation
of the international community is a cause for concern. Climate change, poverty, violent
conflict, intolerance and extremism present direct threats to the unity and well-being
of the international community. Bokova emphasized that we must learn, at the heart
of our cities and communities, to live together. The Hague Institute's recent report on
the role of cities in conflict prevention is a good example of how to develop innovative
and sustainable practices to foster communal harmony.

Bokova also observed that the alarming number of individuals displaced by

conflict, which reached a record high in 2015, continues to put pressure on countries
across the globe. Migration to Europe has put core values to the test, while the
capacities of receiving states in the Middle East, like Lebanon and Jordan, are being
pushed to the limit. Attacks on cultural rights and cultural heritage, particularly in Syria,
Iraq and Mali, threaten inter-cultural tolerance.

Bokova suggested three points to address these challenges. First, openness of

mind and out-of-the-box thinking is crucial. New ideas must be transformed into norms.
Bokova highlighted the historic changes brought about by the idea of human rights
and human dignity. In this, the United Nations must take a leading role. UNESCO, as
a facilitator of inter-cultural dialogue and proponent of education, can also effect
change. Its efforts to teach people about the history of the Holocaust, as well as
programs promoting internet literacy, help to instill common values in youth and create
environments that are conducive to respectful dialogue.

Secondly, the international community must build resilient societies. By fighting

exclusion and fostering inclusion, societies become stronger. Key to this resilience is
the role of women being the weakest aspect of the international community's work. To
facilitate meaningful change, the international community must improve the standing
and participation of women in all sectors. Presently, only 60% of countries have
achieved gender parity in primary education, and only 38% in secondary education.
Education for the refugees must be prioritized, in order to avoid a "lost generation" of
youth.

Third, Bokova urged new thinking about peacebuilding. The world urgently
needs legitimate and effective peace efforts, before, during and after conflicts.
Preventive measures are key and must involve the soft power embodied by
UNESCO's educational and inter-cultural programs.

In the same topic, Paul Collier (2018), an economist has addressed the plight
of the poorest of the world's poor (those living or less than $7.25 a day according to
him), in his award-winning book, "The Bottom Billion." In his talk, Collier argues "a
billion people have been stuck living in economies and have been stagnant for 40
years, and hence diverging from the rest of mankind." He says that we can and should
help alleviate their suffering through an alliance of compassion and enlightened self-
interest; compassion because we are looking at a human tragedy, and enlightened
self-interest because the combination of economic divergence and global social
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integration "will build a nightmare for our children." Collier argues that this is doable
because we've done it before, and he points to U.S. efforts in the late 1940s and
1950s to rebuild Western Europe to prevent it from falling into the Soviet bloc.

There were four components of post-war US. assistance: aid, trade, security,
and governments. First, there was the 1948 Marshall Plan-a massive injection of
foreign aid. Second, the United States reversed its pre war protectionist trade policies,
opening up its markets to Western Europe and institutionalizing trade liberalization.
Third, the United States reversed its security policy, shifting from pre-war isolation to
a massive military presence in Western Europe and other parts of the world. Fourth,
the United States tore up its "Eleventh Commandment-national sovereignty-and
pursued an aggressive internationalist policy, becoming instrumental in the founding
of the United Nations (UN), the Organization for Economic Cooperation and
Development (OECD), and the International Monetary Fund (IMF), and, according to
Collier, also encouraging the creation of the European Community.

Having laid out the ch enge and the historical precedent, Collier focused on the
role of current-day governments and "mutual systems of support for governments"-
specifically on "one idea in how we could do something to strengthen governance."
This one idea is based on the opportunity and the "genuine basis of optimism" created
by commodity booms; "commodity booms are pumping unprecedented amounts of
money into many, though not all, of the countries of the bottom billion."

Collier pointed to high commodity prices (the global recession had yet to hit
when he gave this talk), and new discoveries of oil and other commodities in sub
Saharan Africa, a trend that has continued since 2008. He also pointed to his own
research on the relationship between higher commodity export prices and the growth
of commodity-exporting countries that shows how short-term, commodity driven
increases in Gross Domestic Product (GDP) are followed by economic crashes. The
cause is not economic, but it is political. It is about what Collier called it the "level of
governance." If you have "good enough governance," you don't have a resource
boom. GDP goes up in the short term and in the long term. But for countries "below a
threshold of governance," countries "with bad governance historically," it's boom and
bust or, in Collier's words "hunky dory" and "humpy dumpty."

The problem is one of political structure. Many developing countries have only
the basics of democracy. They have electoral competitions that determine how
politicians acquire power, but they lack the checks and balances that restrain the use
of that power by those in political office. In commodity-rich developing countries,
elected and appointed officials can negotiate resource extraction rights deals in secret
that benefit them and foreign companies but not their countries.

Collier asked: "How can we help improve governance and introduce checks
and balances?" He suggested the voluntary introduction of the Extractive Industries
Transparency Initiative, part of which involves the so called "verified auctions." This is
open and transparent auctions that reveal the market value of (in this instance)

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resource extraction rights, identify the winning bid, and publicize the revenues that
accrue to the government, the country, and its people.

Of course, it's not so easy, he said. The odds are stacked against the reformers
in these commodity-rich, governance-poor countries. Here Collier exhorts people,
rather plaintively, to become informed citizens because "unless we have an informed
society, what politicians do, especially in relation to Africa and other nations, is
gestures: things that looks good but don't work" and this author agrees with Collier.

Relevance of the State Amidst Globalization

Some questions are asked: Are States still relevant in a phenomenon of
globalization? How important is the State in the contemporary era of globalization?

To Ali Wayne (April 27, 2009) an economist-writer scholar, theses questions

had been discussed for a long time.

John Herz argued in 1957 that the state would become irrelevant because of
its inability to defend against nuclear attack. Johan Galtung predicted ten years later
that it would disappear as individuals began to develop identities at levels below and
beyond that of the state.

The Economist countered in 1995 that the state "may have more durability than
people realize, because it is still the sole possessor of what is needed to be that basic
unit."

Where such discussion was once largely confined to political economists, the
emergence of globalization as the principal paradigm for examining geopolitics has
made it a theme of mainstream discourse.

For the period spanning 1990-1999, for example, Google Scholars return
77,500 items that contain the word "globalization." For the period spanning 2000-2009,
it returns more than three times as many results.

A rough dichotomy has emerged amidst this surge of interest. There are those
who see the world as "flat," "borderless" and "weightless," to cite but a few of the
familiar formulations. They argue that the state is irrelevant because it cannot keep
pace with economic forces. Then there are the critics who assert that the state is
relevant because it can influence the direction that those forces take.

The problem with this debate until this time (2018) is that both camps get the
causation wrong.

The source of a state's legitimacy is not how effectively it can handle

globalization, but rather, how effectively it can provide public goods vis à-vis other
actors given that globalization is occurring. There are certainly cases where non-state

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actors have undertaken that responsibility in the face of government incompetence
witness Hizbollah in Lebanon and Islamic charities in many East African countries.

Those cases, however, are exceptions. Until and unless some other category
of actors can perform that service better on a macro scale - whether powerful
foundations, innovative start-ups, or international economic institutions - the state will
remain the fundamental building block.

Few, of course, would dispute that it is more difficult for the state to determine
its own economic course today than it was 20 or 30 years earlier. The proliferation of
sophisticated financial instruments has created what some call a "shadow world" -
shadowy in that it operates outside of the purview of those actors that are charged
with shaping economic policy.

The value of derivatives transactions far exceeds that of global output by a

factor of seven according to one estimate. Such transactions can, and increasingly do,
cause tremendous market instability.

In an April 2008 report, the International Monetary Fund (IMF) noted that, "The
highest likelihood of a single default and the likely number of defaults in the event of a
single default in the group- a measure of contagion risk within the global banking
system have both risen significantly [between 2007 and 2008]."

Today's financial crisis does little to inspire confidence in the state's ability. It
has resulted in the destruction of over $50 trillion in wealth - equal to 71% of last year's
world output.

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LESSON 1 ACTIVITIES:
I- Definition- Define the following terms based on the lesson discussed in this
learning module. (2 pts. Each)

1. Economic Globalization-

2. Modern World System-

3. Economic Integration –

4. Global Economic Integration-

5. Global Interstate System -

II- Illustration: Provide your thoughts and reaction to this Editorial Cartooning
on International Monetary Fund

III- Discussions: Answer and Expound the following questions.

1.) What do you think is the importance of United Nation? (10 pts.)

2.) If given a chance to be heard in the UN Council, what Global Issue and
solution to that global issue would you discuss and propose? (10 pts.)

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