GE 3 REVIEWER commodities.
This definition presents us an idea that
UNIT I
Defining Globalization
In this world, advances in technology are vividly
experienced by everyone. For example, the currently used
method in learning for the 21st century involves gadgets,
the Internet, and cellular devices. Different issues and
events across the world can be easily accessed through the
help of information technology. People of this era have
general information about the ideas, culture, and practices
of other nations as if the world is a global mall in which
opinions are available everywhere. As such, these
experiences lead us to the notion that we live in a seemingly
border less world. All of these things are the result of the so-
called Globalization.
According to Al-Rodhan (2006), Globalization is not a
single concept that can be defined and encompassed within
a set time frame, nor is it a process that can be defined
clearly with a beginning and an end. It is because
Globalization involves economic and political integration;
global policies; knowledge transmission, cultural stability;
the reproduction, relations, and discourses of power; it is a
universal process, a concept, a revolution, and "an
establishment of the worldwide market free from
sociopolitical control. The study says that some people
believe that Globalization brought progress, development,
and stability.
According to Larsson (2001), Globalization is the process
of world shrinkage, distances getting shorter, and things
moving closer. It pertains to the increasing ease with which
somebody on one side of the world can interact, to mutual
benefit, with somebody on the other side of the world.
However, others believe that Globalization brought
regression, colonialism, and destabilization. These beliefs
are actually supported by Martin Khor, the president of the
third world network in Malaysia, who stated that
Globalization is a form of colonization. Hence, Globalization
can be defined as narrow and exclusive, or broad and
inclusive.
Defining Globalization as Broad and Inclusive
According to Ohmae (1992), Globalization means the onset
of the borderless world. This definition proposes that
barriers are no longer considered a hindrance because
there are so many ways by which we can access
information and goods from other countries as if we are
living in one place without any boarders.
From the viewpoint of Ray Kiely and Phil Marfleet (1998),
Globalization is a situation wherein societies, cultures,
politics, and economics have, in some sense, come closer
together. This claim supports the idea of Ohmae by which,
as we live in this world, we experience oneness in terms of
culture, policies, and technology.
Besides, Jan Aart Scholte (1999) states that "Globalization
refers to processes whereby social relations acquire
relatively distance less and borderless qualities so that
human lives are increasingly played out in the world as a
single place."
Likewise, Globalization can be viewed as the compression
of time and space (Harvey, 1998). These definitions are
inclined with the view of Globalization as broad and
inclusive. It can be seen that there are common themes
from these definitions, such as the elimination of borders
among different countries and that the definition is somehow
vague and does not clearly define the implication of
Globalization in a particular area.
Defining Globalization as Narrow and Exclusive
According to Robert Cox (1999), Globalization is
characterized by the internationalizing of production, the
new international division of labor, migration from south and
north, and a competitive environment, which increases
processes such as manufacturing of goods and
specific activities are happening under Globalization such
as the acquisition of products of a particular country to other
parts of the world, the categorization of states when it
comes to the division of labor as presented in the world
system theory, the migration of people to other wealthy
nations, and the existence of a free market that allows
competition in an open economy.
From the viewpoint of Bairoch & Kozul-Wright (1996),
Globalization is a process in which the production and
financial structures of countries are becoming interlinked by
an increasing number of cross-border transactions to create
an international division of labor in which national wealth
creation comes, increasingly, to depend on economic
agents in other countries. In this sense, countries from
different parts of the world are actively engaging in
transactions with others about the products, labor,
investment, and policies that are beneficial to each state.
On the other hand, Langhone (2001) explains that
Globalization is the latest stage in a long accumulation of
technological advance, which has given human beings the
ability to conduct their affairs across the world without
reference to nationality, government authority, time of day or
physical environment.
All of these definitions provide a specific description of
Globalization by which it tackles particular areas of human
activity. However, this kind of meaning can be limiting in
terms of application. Thus, defining Globalization through
exclusive and narrow can only be applied with a particular
scope of activity.
METAPHORS OF GLOBALIZATION
1. Solid - it refers to the barriers that may prevent free
movement and it can be natural or man-made. It may also
refer to people, things, information, and places “harden
“over time and therefore have limited mobility.
2. Liquidity - It refers to increasing ease of movement of
people, things, information, and places in the global age.
Characteristics:
I. Liquid is forever ready to change whatever shape it might
take on momentarily and it is in continuous flux. This
scenario can be seen in global finance by which an
economy has never been stable at it changes from time to
time.
II. Liquid is difficult to stop once it is on the move such as
the advances in technology.
III. Liquid tends to melt whatever stands in its path such as
the political and economic
barriers.
3. Flows - It refers to the movement of people, things,
ideas, and culture across the globe due to the advances in
technology, economic and political integration, and
establishment of global policies that lessens and eliminates
the existing borders.
ORIGINS AND HISTORY OF GLOBALIZATION THE FIVE
PERSPECTIVES ON THE ORIGIN OF GLOBALIZATION
1. Hardwired proposes that globalization originated from the
basic motivation of human beings to seek a better life
(Chanda, 2007). History shows that our ancestors travel
from Africa to other places in search of food and security.
2. Cycles: it explains that there is no single point of origin in
globalization but it is a long-term cyclical process wherein
the current global age today is only a modification of the
global age in the past. Thus, it should be noted that the
global age today will be replaced by a new cycle of
globalization in the future.
3. Epochs: if cycles explain a continuous long-term cyclical
process, the epochs explain that there are waves of
globalization that took place in the past and each of them
has its own origin. Epoch is different from the perspective of
the cycle as it argues that the previous epochs are not
returning in the future. The following are the great epoch
according to Therborn (2000).

I. The fourth to the seventh centuries which witnessed the
globalization of religions (e.g. Christianity, Islam).
II. The late fifteenth-century highlighted by European
colonial conquests.
III. The late eighteenth and early nineteenth centuries during
which various Intra - European wars led to globalization.
IV. The mid-nineteenth century to 1918; the heyday of
European imperialism.
V. The post - World War II period.
VI. The post - Cold War period.
3. Events: this perspective is different from cycles and
epochs as it specifies the event that is somehow
responsible for the origin of globalization. Some are
examples of the point of origin from the perspective of
Events:
I. The spread of Christianity after the fall of the Roman
Empire.
II. The Other important Voyages such as the discovery of
America by Christopher’s Columbus in 1942, Vasco Da
Gama rounding the Cape of Good Hope in 1498, and the
circumnavigation of the globe completed in 1522 by one of
Ferdinand Magellan’ s ships (Rosenthal, 2007).
III. European Colonialism
IV. The founding of the modern Internet-based on Arpanet
(which was created in 1969).
V. Broader, more recent Changes: this perspective views
that the origin of globalization has
taken place during the recent changes that happened in the
2nd half of the 20th century.
Scholars have identified three significant changes that
shape the course of humanity towards globalization.
I. The emergence of the United States as the global power
in the years following WW I.
II. The emergence of multinational corporations (MNCs).
III. The demise of the Soviet Union and the end of the Cold
War.
Criticism on the Existing Evidences of Globalization
GLOBALIZATION AS GLOBALONEY
1. Rejectionist: People who are against the utility of
globalization as an incorrect analytical concept.
2. Sceptics: it emphasizes the limited nature of the
globalizing process and that the world is not as integrated
as it is.
3. Modifiers: It disputes the novelty of the process, implying
that the label ‘globalization’ has often been applied in a
historically imprecise manner.
THEORIES OF GLOBALIZATION
1. World System Theory: this theory believes that
capitalism has spread around the world for the last five
centuries from 1500 to the present. In world Capitalism, the
key structure is the three major division of labor of each
country that has created hierarchy.
a. Core: powerful, wealthy, and industrialized countries that
usually control and benefit from the global market. Countries
that are not as rich as the core countries usually
depend on these core countries. These countries own most
of the world’s capital and technology and have great control
over world trade and economic agreements.
b. Peripheral: countries that are dependent on core
countries for capital and have an underdeveloped industry.
They generally provide labor and materials to core
countries.
c. Semi-Peripheral: Countries that share characteristics of
both core and periphery countries. However, they also
exploit peripheral countries just as core exploits the natural
resources of peripheral countries.
2. World Polity Theory: It was developed as an analytical
frame for interpreting global relations, structures, and
practices. Invoking an image of the world as a system of
interrelated interdependent units. It views the world system
as a social system with a cultural framework called world
polity, which encompasses and influences the actors, such
as nations, international organizations, and individuals
under it.
3. World Culture Theory: It is a label for a particular
interpretation of globalization that focuses on the way in
which participants in the process become conscious of and
give meaning to living in the world as a single place.
Impact of Globalization
1. HOMOGEINITY- It means an increasing sameness as
information and ideas flow across boundaries.
a. Cultural Imperialism: it is the growing international
influence of a particular culture.
I. Cultural: the role played by the American culture or the
Americanization, the spread of Christianity.
II. Economic: Spread of the market economy throughout
the world.
III. Political: Worldwide spread of models of the nation-state
or the single model of governance around the world. Often
times, this is called as Mcworld.
b. Media Imperialism: It is a subcategory under the broader
umbrella of cultural imperialism. From the traditional point of
view, the western media and its technologies dominate
countries belonging to less developed nations.
c. Mcdonaldization: It is the process wherein the principle
of one of the dominant fast-food restaurants in the United
States of America is employed and used in almost different
societies across the world. Its principle usually revolves
around Efficiency, Predictability, and Technological
Advancement in production and marketing.
d. Globalization: It is the desires and ambitions of different
entities such as organizations, corporations, and other
nations to influence others and impose their power
throughout the world. Their major goals include expanding
their power and seeing that their profits grow across
different parts of the world.
2. HETEROGENEITY: It is associated with the creation of
local inputs leading to a variety of cultural hybrids. In other
words, the predominance of locals would make a difference
on a global scale. Thus, local is associated with
heterogeneity and the dominance of global is
related to homogenous.
a. Globalization: it is the integration of global and local
cultural inputs to create a blend resulting in a variety of
cultural hybrids. It emphasizes diversity, hybridity, and
independence.
DYNAMICS OF GLOBAL AND LOCAL CULTURE
THREE PERSPECTIVES IN GLOBAL CULTURAL FLOW
1. Cultural Differentialism: It states that cultural
differences are immutable and there is a likelihood that
other culture which is significantly different from one culture
may clash if they get to interact.
2. Cultural Hybridization: It refers to a politics of
integration without the need to give up cultural identity”
(Pieterse, 2003, p. 56).
3. Cultural Convergence: it supports the idea of global
cultural homogeneity. It is the process of increasing
sameness by adopting global culture, ideas, and practices.
UNIT II
GLOBAL ECONOMY
Local products of the Philippines such as Marikina Shoes,
Datu Puti Vinegar, Philippine Dried Fish, and other products
are usually available not only here in the Philippines but
also in other countries such as in America and Canada.
However, the question arises as to how is this possible? If
one wonders how it happens, you should also be curious
about how your countrymen can wear branded shoes and
other garments such as Nike, Louis Vuitton, and Uniqlo. The
accumulation, importation, and exportation of goods and
commodities from one country to other countries and vice-
versa is best explained by the economic globalization.
Economic Globalization refers to the increasing
interdependence of world economies as a result of the
growing scale of cross-border trade of commodities and
services, flow of international capital and wide and rapid
spread of technologies (Shangquan, 2000).
The given example above was only a part of economic
globalization as the scope of economic globalization is not
only limited in goods as it also involves, capital, labor,
migration and anything that is related to goods and services.
From the viewpoint of the International Monetary Fund,
Economic Globalization is a historical process that was the
outcome of human evolution from traditional and primitive
technology to the present technological advancement. It
refers to the increasing integration of economies around the
world, mainly through the movement of goods, services, and
capital across borders.
The term sometimes also applies to the change of people
(labor) and knowledge (technology) across international
borders (Staff, I. M. F., 2008). From these explanations, it
makes sense that advancements in technology allow foreign
transactions to make the acquisition of imported goods
possible.
Interconnected Dimensions of Economic Globalization
1. Goods and Services: Goods are tangible objects that
satisfy people's wants. Services are actions, such as
haircuts and car repair, which also satisfy people's wants.
2. Capital: It is the total assets a company needs to stay
solvent. A company’s capital assets are significant because
organizations use capital assets to create wealth
3. Communication and Technology: Advances in
Communication and technology has allowed the integration
of economies worldwide through increases in trade,
investment flows, and technology transfer.
4. Market Exchange: it is an economic system in which
goods and services are produced, distributed, and
exchanged by the forces of price, supply, and demand.
ECONOMIES ASSOCIATED WITH ECONOMIC
GLOBALIZATION
PROTECTIONISM: Protectionism refers to government
policies that restrict international trade by imposing tariffs,
quotas, product standards, and subsidies.
Reason for the implementation of strict policies:
a. Its goal is to improve the domestic economy by forcing its
citizen either direct or indirect to
purchase local products instead of imported products.
b. For safety and quality concerns of both imported and
exported products
Primary Policy Tools
a. Tariffs: These are charges to importing countries in the
form of either money or goods that will serve as a payment
for allowing its international products to be sold in the local
market. It is usually documented in the custom of a
particular government. These Import tariffs are the reasons
for the increase of international product prices. It also raises
revenues of the government and protects domestic products
from foreign competition due to the price hike of imported
goods.
b. Import Quotas: This is a kind of tariffs that lessen the
number of products that can be imported for a certain period
of time. The implementation of import quotas helps the
government protects its domestic businesses by allowing its
local businesses to cover the shortfall of certain products.
Thus, it helps the local market to increase its production that
will lead to the increase of numbers of goods that can be
sold in the market.
c. Product Standards: This is a kind of barrier that imposes
strict standards in imported products which may make it
difficult for different importing countries to bring their goods
in the local market. Thus, the restriction of a particular
product can lead to a higher volume of product production
domestically.
c. Government Subsidies: This is a strategy of the
national government by which incentives and cash
payments are distributed to domestic businesses to
encourage them to expand their market globally by
increasing international export. Thus, the government may
strengthen its local market.
Advantages of Protectionism:
a. Taxes imposed on exporter countries may increase
government revenues.
b. Strict and rigid policies may protect domestic product
c. Encourages the exportation of national products which
may expand their products globally.
Disadvantages of protectionism:
a. Protectionism policies often time support other countries
to make their own protection policy as well. Hence, it inhibits
the exportation of each other products that may result in
less profit.
TRADE LIBERALIZATION: It is the process of removing or
reducing the barriers or restrictions in the exchange for
goods between and among nations. With the reduction of
barriers such as tariffs and import quotas in the process of
exchanging goods and services, it significantly reduces the
cost of goods sold by the importing countries Thereby,
allowing an increase of exchange between and among
countries. Thus, the proponents of trade liberalization
believe that reduction of barriers ultimately lessen consumer
costs while increasing efficiency, and fostering the growth of
the economy.
Advantages of Trade Liberalization
a. As it promotes free trade between and among countries,
the cost of importing nations in bringing their goods to other
countries is most likely to be lessened. This event may likely
result in lower consumer prices due to lower fees of
importing nation and an increase in competition among local
and international businesses.
b. Promotes efficient use and allocation of world resources
c. Increases Capital Flow
d. Allows developing countries access to the heavily
protected markets of the developed world thus helping
promote development.
e. It encourages specialization among countries by
maximizing their capabilities whether to manufacture goods
or provide services. This scenario is related to the concept
of comparative advantage wherein one specializes in which
they can gain the most profitable.
f. It can lead to a higher efficiency of producers.
g. It can attract foreign investment
Disadvantages of Trade Liberalization
a. It can affect local businesses and their domestic product.
b. The possible risk may be experienced if the products or
raw materials coming from other
countries have a lower environmental standard.
c. Developing nations may be threatened to back out in the
global market as they are forced to compete in the same
market with other nations possessing stronger economies.
d. Countries with lower educational standards may struggle
to adapt to a changing economic environment.
e. It can exploit the natural resources due to the competition
and shallow environmental policies in a country.
f. It can lead to structured unemployment whereby countries
and companies who cannot compete with others may lose
gain and have less profit that may result in layoff.
Consumer, Worker, Companies and Countries who
have BENEFITED from the Trade Liberalization
1. Consumer: they get products at lowest and cheapest
price
2. Worker: Low wage worker earned more
3. Countries: they are able to gain out of the trade for the
cheaper price and sell it to a higher price
4. Corporation who earned more profit either due to
increase in sale and low labor cost for manufacturing
its good.

Consumer, Worker, Companies and Countries who DID
NOT BENEFIT from the Trade Liberalization
1. Consumer: they get products that are cheap yet have the
least and lowest quality
2. Worker: Low wage workers work in hazardous
environment.
3. Countries: they did not gain as much as the countries
who have bought their raw materials for a cheaper price.
4. Corporation who lose out to foreign competition.
Main Actors of Economic Globalization
 Multinational Companies
 Consumer
 State
 Laborers
 Regulatory Institutions
WORLD SYSTEM THEORY
For Wallerstein, "a world-system is a social system that has
boundaries, structures, member groups, rules of
legitimation, and coherence. Its life is made up of the
conflicting forces which hold it together by tension and tear
it apart as each group seeks eternally to remold it to its
advantage. A world-system is what Wallerstein terms a
"world economy", integrated through the market rather than
a political center, in which two or more regions are
interdependent concerning necessities like food, fuel, and
protection, and two or more polities compete for domination
without the emergence of one single center forever. World-
system theory is, in many ways, an adaptation of the
dependency theory.
Wallerstein draws heavily from the dependency theory, a
neo-Marxist explanation of development processes, famous
in the developing world. Dependency theory focuses on
understanding the "periphery" by looking at core-periphery
relations, and it has flourished in peripheral regions like
Latin America. Wallerstein proposes different categories,
core, semi-periphery, and periphery into which all regions of
the world can be placed. Of the three, two are of the
uttermost importance: core and periphery. These are
geographically and culturally different, focusing on labor-
intensive (Periphery), and the other on capital-intensive
production (Core). The core-periphery relationship is
structural. Semi-peripheral states act as a buffer zone
between core and periphery and have a mix of the kinds of
activities and institutions that exist on them.
CORE
 Wealthy Nations
 Strong and Powerful
 Technological Advance
 Benefited the most
 Exporter and Producer of Goods
SEMI-PERIPHERY
 Served as buffers
 Retained limited access to international banking and
the production of high cost high quality manufactured
goods.
 More technological advanced than peripheral but less
technological advanced than core countries
PERIPHERAL
 They lacked strong central governments or were
controlled by other states
 They exported raw materials to the core
 They relied on coercive labor practices
 Least industrialized
ECONOMIC INTEGRATION
El-Agraa (1998) defines the term economic integration as
the discriminatory removal of all trade impediments between
at least two participating countries and the establishment of
certain elements of coordination and cooperation between
them. In other words, Economic integration is an
arrangement among nations that typically includes the
reduction or elimination of trade barriers and the
coordination of monetary and fiscal policies. Economic
integration aims to reduce costs for both consumers and
producers and to increase trade between the countries
involved in the agreement.
Levels of Economic Integration
● Preferential Trading Area. Allow member countries to
have access to some of their products. Tariffs are not
eliminated but it is lessened as compared to non-
participating countries
● Free Trade. It aimed to reduce the tariff significantly
between or among partnered countries. In regards to
external countries which are not part of their agreement,
each of them has its own decision making in regards to the
tariff they will impose on those external countries. The
general goal of free trade agreements is to develop
economies of scale and comparative advantages, which
promotes economic efficiency.
● Custom Union. It almost the same with free trade
agreement as it aims to reduce and abolish the tariff but it
differs from free trade as the member country has common
external tariffs among member countries, implying that the
same tariffs are applied to third countries; a common trade
regime is achieved.
● Common Market. It is an integration by which member
countries are able to move their capital and services within
their organization. This leads to the expansion of scale
economies and the maximization of comparative
advantages. However, each national market has its own
regulations such as product standards.
● Economic Union: This kind of economic integration is
usually called as a single market for several reasons. First
and foremost, tariffs are eliminated within the member
countries by which they are able to exercise free trade
between and among countries. Likewise, workers from a
member country of this organization can migrate and work
to another member country. At this level, some policies
related to economic and political aspects are also integrated
such as the existence of a common currency to be used by
each member country like the Euro of European Union.
● Political Union. It is a form of integration wherein
member countries abide by the rules presented by a
common government in which the member country’s
sovereignty is reduced significantly. This integration can be
found within the nation-state, such as federations where
there are a central government and regions (provinces,
states, etc.) having a level of autonomy.
UNIT III
HISTORY OF GLOBAL MARKET INTEGRATION
Roman Period and Early Voyages
The history of economic globalization can be traced back to
the early years of the Roman Empire, as evidenced by their
extensive transportation network and the existence of
everyday language, the legal system, and currency. Years
went by, and during the early 15th century, the different
voyages of Vasco Da Gama, Columbus, Magellan, and
others have proved that technological advances have made
it possible to sail over the other continents and to facilitate
intercontinental trade.
Different global powers that exist during those times, such
as Spain, Portugal, Britain, and Italy, have controlled
international trade, which further their territory and
sovereignty. Thus, from this point onwards, the Expansion
of international trade was evident, and the growth of
economic globalization was vividly experienced by different
countries.
Napoleonic Wars in 1815 and the Beginning of World
War 1
During this time, the international trade expanded
significantly as did cross-border flows of financial capital
and labor. Technological advancement in this year can be
seen from the replacement of the sail and railroads by the
steam power. The opening of the Suez Canal has helped to
reduce travel times between Europe and Asia. Trade
expanded the variety of available goods, both in Europe and
elsewhere. As the trade monopolies of earlier times were
replaced by intense competition, prices converged globally
for a wide range of commodities, including spices, wheat,
cotton, pig iron, and jute (Findlay and O'Rourke, 2002).
In general, the Government's policies were favorable to the
openness of trade, capital mobility, and migration. During
this time, Economic structure followed the core-periphery
pattern by which the core countries were the center of
trading, while periphery countries with abundant natural
resources provide the raw materials and labor for the core
countries.
Two World Wars (I & II) and the Great Depression; Post
World Wars and Post Great Depression
The heightened economic integration achieved during the
early 19th century was ruined by the two world wars and the
great depression. The major powers of those times, the
United States, Western Europe, and Japan, have
undertaken the task of rebuilding the economic system,
including Infrastructure, International Trade, and Monetary
policies.
The Bretton Wood System
This agreement was enacted during the post-world wars. It
is the United States of America who was at that time owned
the two-third of world’s Gold had led this conference in July
1944 with delegates from 44 countries at Bretton Woods,
New Hampshire. Hence, the name Bretton Woods
Agreement.
The goal of this agreement was to create an efficient
foreign exchange system, prevent competitive devaluations
of currencies, and promote international economic growth.
As mentioned earlier, the scenario has led the delegates of
this conference to establish the fixed exchange rate with the
U.S. dollar to be pegged to the value of Gold. Moreover, all
other currencies in the system were then pegged to the U.S.
dollar's value. During those times, the exchange rate
applied at the time set the price of Gold at $35 an ounce. As
mentioned earlier, the scenario has led the delegates of this
conference to establish the fixed exchange rate with the
U.S. dollar to be pegged to the value of Gold. Moreover, all
other
currencies in the system were then pegged to the U.S.
dollar's value.
The International Monetary Fund (IMF) and the World
Bank
These two institutions were established as part of the
Bretton woods agreement in 1945. Both of these two
institutions were created to address specific concerns in
regard to the economic crisis that the world has
experienced.
International Monetary Fund (IMF): this Institution was
created to oversee the world’s monetary system’s stability.
The IMF was compromised of 189 member countries that
cooperate and collaborate towards the goal of fostering
global monetary cooperation, establishing financial stability,
maintaining international trade, and promoting growth in the
economy.
World Bank: this Institution was established to provide
financial assistance and strategic advice to nations
profoundly affected by the previous world wars. The two
main goals of the world bank are to end extreme poverty
and increase overall prosperity. It supplies qualifying
governments with low-interest loans, zero-interest credits,
and grants to support the development of individual
economies. In reality, the World Bank has four other
branches/organizations that have specific goals to which
realization of that particular Goal may help the world bank
attain its main goal:
a. International Bank for reconstruction and development
that provides debt financing to government that is
considered middle income.
b. International Development Association (IDA) which
gives interest-free loans to the government of low-income
countries.
c. International Finance Corporations focuses on private
sectors and developing countries with investment financing
and financial advisory services.
d. Multilateral Investment Guarantee Agency that
promotes investment in developing countries
e. International Centre for Settlement of Investment
disputes is an institution that provides arbitration on
international investment disputes.
The General Agreement on Tariffs and Trade (GATT)
The agreement was signed into law on January 1, 1948
with 23 countries after the world war to monitor world trade
that may lead to economic recovery. Its main objective was
to eliminate barriers in international trade by either reducing
or removing tariffs and quotas. As time passed by, the
agreement was replaced by the world trade organization in
1995.
World Trade Organization
The World Trade Organization is a global organization
made up of 164 member countries that deals with the
rules of trade between nations. It was born out of the
General Agreement on Tariffs and Trade (GATT), which
was established in 1947. Most of the time, the WTO resolve
trade disputes between and among its member countries.
Its goal is to ensure that trade flows as smoothly and
predictably as possible.
MARKET INTEGRATION
Market integration is a term used to identify a phenomenon
in which markets of goods and services that are related to
one another is experiencing similar patterns of increase
or decrease in terms of the prices of those products. The
term can also refer to circumstances in which the prices of
related goods and services sold in a defined geographical
location also begin to move in some sort of similar pattern to
one another.
Types of Market Integration
Negative Integration: this implies eliminating barriers that
restrict the movement of goods, services, and factors of
production. Also, the Government plays a minor role in
policy making regarding manufacturing, distribution, and
flow of goods
Positive Integration: The Government may adjust
domestic policies and institutions through the creation of
supranational arrangements. Likewise, It is often identified
with positive values like social protection and the correction
of market failures.
Degree of Economic Integration (Levels of Economic
integration)
a. Preferential Agreement is considered to be the first
stage to which it lessens tariffs and quotas between
member countries who have signed the agreement. It allows
member countries to have access to some of their products.
Tariffs are not eliminated but it is lessened as compared to
non-participating countries.
b. Free Trade Area is considered to be the second stage of
economic integration for which it reduces barriers to trade
among member countries to zero, but each member country
has its own decision when it comes to the external rate of
tariff to non-member countries.
c. Custom Union is almost similar to the free trade area but
it differs from the former economic integration as Custom
Union has a common external rate of tariff to non-member
countries.
d. Common Market is second to the highest degree of
economic integration by which labor and capital are
included in the trade. It is to integrate both product and
factor markets of member countries.
e. Economic Union is considered to be the final step in
complete integration by which the member countries have
common policies that involve common currency among
member nations, fiscal and political policies.
International Financial Institution
International Financial Institutions were founded by groups
of countries to promote public and private investment to
foster economic and social development in developing and
transitioning countries. These Institution are the World
Bank, International Monetary Fund, World Trade
Organization. As mentioned beforehand, these institutions
are established to alleviate and help the economy of each
member country. These institutions can help the economy
of the country to obtain stability by supporting economic
development through financial assistance and advisory
assistance in the implementation of large-scale
infrastructure projects in emerging markets.
INTERNATIONAL/REGIONAL ORGANIZATION AND
ALLIANCES
Organization for Economic Co-operation and
Development (OECD)
(OECD) is an international organization that works to build
better policies for better lives. Their goal is to shape policies
that foster prosperity, equality, opportunity and well-being
for all. Together with governments, policymakers and
citizens, they work on establishing evidence-based
international standards and finding solutions to a range of
social, economic and environmental challenges. From
improving economic performance and creating jobs to
fostering strong education and fighting international tax
evasion, they provide a unique forum and knowledge hub
for data and analysis, exchange of experiences, best-
practice sharing, and advice on public policies and
international standard-setting.
The Organization of Petroleum Exporting Countries
(OPEC)
The Organization of the Petroleum Exporting Countries
(OPEC) is a permanent, intergovernmental Organization,
created at the Baghdad Conference on September 10–
14, 1960, by Iran, Iraq, Kuwait, Saudi Arabia and
Venezuela. It was established to monitor and stabilize the
price of OIL that is both beneficial and fair with the
stakeholders such as the producer and consumer.
Association of South East Nations (ASEAN)
The Association of Southeast Asian Nations (ASEAN) was
formed in 1967 by Indonesia, Malaysia, the Philippines,
Singapore, and Thailand to promote political and economic
cooperation and regional stability. The Economic, Political-
Security, and Socio-Cultural Community are the three
pillars of ASEAN Community. The annual meeting is
usually held to promote the economic, social and cultural
development of the region to protect the stability of its
politics and economy against rivalry with enormous power.
For some reason, it is also held to serve as a forum for the
resolution of intra-regional differences.
Asia Pacific Economic Cooperation (APEC)
The Asia Pacific Economic Cooperation (APEC) was
established in 1989. Currently, the APEC has a twenty-one
member over the four continents. APEC Member
Economies works together to sustain economic growth
through a commitment to open trade, investment and
economic reform. The economic growth is usually
accomplished through the reduction of barriers such as
tariffs and import quotas. Its Goal is to ensure the
sustainability of growth and development of the region for
the good of its people. Likewise, the reduction of barriers
among member economies is in consistent with the
principles of GATT, where applicable, and without
detrimental effect to its member country.
European Union
The European Union adheres to the economic and political
union where its member countries have a single currency,
Euro. Through its harmonization of its political and
economic policy, the European Union was able to deliver
peace, prosperity, and stability for more than fifty years by
which it increases the standards of living of its people. The
EU remains focused on making its governing institutions
more transparent and democratic. Decisions are taken as
openly as possible and as close as possible to the citizen.
The European Union is the largest trade block in the
world. The European Union is one of the largest
exporters of goods and services and considered to be the
biggest import market for over a hundred countries.
North American Free Trade Agreement (NAFTA)
This organization was formed in 1994 by the Canada,
Mexico and America for the reason of elimination of barriers
when it comes to trade and investment. The agricultural
sector, production and manufacturing sector, investment,
and other services are some of the economic sectors
wherein tariffs are eliminated. This organization has also
given importance to the protection of intellectual property
rights, environments, and rights of workers or laborers.
Small businesses were among those that were expected to
benefit the most from the lowering of trade barriers since it
would make doing business in Mexico and Canada less
expensive and would reduce the red tape needed to import
or export goods.
GLOBAL CORPORATIONS
A global corporation, also known as a global company, is
coined from the base term ‘global’, which means all around
the world. It is a company that operates beyond its local
boundary. Thus, most of the global companies works in
more than one country and has some foreign investment.
Global corporations are deemed to be one of the major
players in economic integration as their goods and
commodities allow other countries to engage in foreign
trading and exchange. Their existence has significant
influenced to the consumer behavior such as changes of
lifestyles, spending pattern, practices and traditions. The
nature of Global Corporations usually varies depending on
the classification to where it can be categorized. However,
most of the global corporations as stated above has foreign
investment and operating beyond the borders. They conduct
activities outside their origin countries such as
manufacturing, distribution, research and development,
marketing, and selling of products. In some ways, the
Global Corporation can influence local and global laws in
regard with trade and exchange. Lastly, most well-known
global corporations have strong brand recognition.
Types of Global Corporations
International Companies: this company operates primarily
in a single country but has some exposure to foreign
markets. These are basically importers and exporters.
The most common type of American international business
is one that purchases products or raw materials from
international markets. Best Buy is an example of this type
of business. The company operates in the United States
and employs mostly American citizens, but it sells a large
amount of imported goods yet they don’t have foreign
investments.
Multinational Companies: this Company operates in more
than one country and receive substantial income from
these foreign operations qualify as multinational in nature.
Multinational companies, while usually controlled by
management based in a single country, cater to markets in
individual countries. It invests directly in foreign nations, but
this is usually limited to a few areas. Products are
customized to local preferences, rather than homogenized,
limiting the ability to create economies of scale.
Transnational Companies: transnational companies are
the very largest multinational businesses with separate
divisions that operate with a significant independence in
their assigned markets. A transnational company invests
directly in dozens of countries and has a global
headquarters that distributes decision-making capabilities to
its various local operations.
Global Companies: This kind of company would usually
operate on a worldwide scale, but it would not be tied
legally to any nation. They have an investment in many
countries but maintain a strong headquarters in one country.
They typically market their products and services to each
individual global market.