Global Economy
Global Interstate System
Global Governance
Market Integration
ECONOMY
Complicated system of interrelated
production, consumption, and exchange
Activities that ultimately determines how
resources are allocated among all the
participants. The production,
consumption, and distribution of goods
and services combine to fulfill the needs
of those living and operating within the
economy.
- concept that affects everyone
- complex system of production,
consumption, and exchange
THE GLOBAL ECONOMY
• The increasing integration of economies
around the world, particularly through the
movement of goods, services, and capital
across borders.
• Also refers to the movement of people
(labor) and knowledge (technology) across
international borders.
Production
Distribution
Consumption of goods and services
Best indicator of a good economy
-it is translated through the standards of
living
Capitalism
- an economic and political system
in which a country's trade and
industry are controlled by private
owners for profit (Oxford).
Ex. Chinese people are more focused on
owning their own business (to be an
employer).
- less intervention from the
government
COMMUNISM – 100% government
control
TWO THEORIES
Economic Globalization Theory
Modern World Systems Theory
ECONOMIC GLOBALIZATION THEORY
 In a globalized economy, countries
specialize in the products and
services they have a competitive
advantage in. If all countries are
specializing in what they do best,
production should be more
efficient worldwide, prices should
be lower, economic growth
widespread and all countries
should benefit – in theory.
 The country would be prosperous
 • advantage to consumers - increased
Ex. Selling products out of our own variety of goods, access to products of
raw materials (bananas, coconuts) different countries, lower prices for
instead of exporting them. consumers

NEGATIVE EFFECTS:
MODERN WORLD-SYSTEM THEORY • made the rich richer while making the
poor poorer
• The world in which we are now living is
the modern world-system. • able to take advantage of tax variations
• A world-system is a multicultural • downfall of smaller or local businesses
territorial division of labor in which the
• domestic jobs are susceptible to moving
production and exchange of basic goods
overseas
and raw materials is necessary for the
everyday life of its inhabitants. • unfair working conditions - low
This division of labor refers to the forces wages, security of tenure, social
and relations of production of the world
benefits and protection
economy as a whole.
• threat of corporations that offer
• Core: capital-intensive (finished
product) the alternative between lower
• Semi-peripheral: buffer zone (declining pay or losing jobs
core)
• lack of concern for environment,
• Periphery: labor-intensive (services and
mismanagement of natural
raw material)
resources, and ecological
damage
POSITIVE EFFECTS:
• free trade - reduce barriers such as
tariffs, value added taxes, subsidies Globalization and democracy should go
hand in hand. It should be pure business
• promotes global economic growth -
with no colonialist designs.
creates jobs, new industries, makes
companies more competitive
• increases in the company’s tax revenues
• sharing technology with developing
nations will help them progress
• different parts of a product may be
made in different regions of the world