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LESSON 7:
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.
THE GLOBAL INTERSTATE SYSTEM – is the whole system of
human interactions. The modern world system is structured
politically as an interstate 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. Why countries need to be in a
good economic relationship with each other is evident
due to interdependence.
INSTITUTIONS OF GLOBAL GOVERNANCE:
1. United Nations
2. World Bank
3. International Criminal Court of Justice
4. World Trade Organization
5. NAFTA (The North American Free Trade Agreement)
6. International Monetary Fund
7. World Health Organization
8. NATO (The North Atlantic Treaty Organization)
UNITED NATIONS
The United Nations is an international organization
designed to make the enforcement of international law,
security, and human rights; economic development; and
social progress easier for countries worldwide. The United
Nations includes 193 member countries and two
permanent observer entities that cannot vote.
THE UN CHARTER SETS OUT FOUR PRIMARY PURPOSES:
o Maintaining worldwide peace and security.
o Developing relations among nations.
o Fostering cooperation between countries in order to
solve economic, social, cultural, or humanitarian
international problems.
WORLD BANK
The International Bank for Reconstruction and
Development (IBRD), commonly referred to as the World
Bank, is an international financial institution. The purposes
include assisting the development of its member nations
territories, promoting, and supplementing private foreign
investment, and promoting long-range balanced growth
in international trade.
INTERNATIONAL CRIMINAL COURT OF JUSTICE
The International Criminal Court (ICC) is an
intergovernmental organization and international tribunal
in the Hague, Netherlands. The ICC has jurisdiction to
prosecute individuals for the international crimes of
genocide, crimes against humanity, war crimes, and the
crime of, aggression. The establishment of an international
tribunal to judge political leaders accused of international
crimes such as the Tokyo-Rome-Berlin Axis that started
World War II.
WORLD TRADE ORGANIZATION
The World Trade Organization (WTO) is the only
international organization dealing with the global rules of
trade. Its primary function is to ensure that trade flows as
smoothly, predictably, and freely as possible.
THE WTO HAS SIX KEY OBJECTIVES:
1. to set and enforce rules for international trade.
2. to provide a forum for negotiating and monitoring
further trade liberalization.
3. To resolve trade disputes.
4. to increase the transparency of decision-making
processes.
5. to cooperate with other major international economic
institutions involved in global economic management.
6. to help developing countries benefit fully from the
global trading system.
NAFTA
The North American Free Trade Agreement’s purpose is to
reduce trading costs, increase business investment, and
help North America be more competitive in the global
marketplace. The agreement is between Canada, the
United States, and Mexico.
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INTERNATIONAL MONETARY FUND
The International Monetary Fund (IMF) is an organization of
189 countries, working to foster global monetary
cooperation, secure financial stability, facilitate
international trade, promote high employment and
sustainable economic growth, and reduce poverty
worldwide.
WORLD HEALTH ORGANIZATION
The WHO has multiple leadership priorities that include
providing access to universal health care, preventing
infectious diseases, and researching factors that affect
health. The Organization’s purpose is to direct and
coordinate health for its signatory nations, provide
leadership and determine paths for research.
WHO’S MAIN FUNCTIONS CAN BE SUMMED UP AS
FOLLOWS:
o to act as a directing and coordinating authority on
international health work.
o ensure good and productive technical cooperation.
o promote research.
The objective of WHO is the attainment by all peoples of
the highest possible level of health.
NATO
The North Atlantic Treaty Organization (NATO)’s essential
and enduring purpose is to safeguard the freedom and
security of all its members by political and military means.
Collective defense is at the heart of the Alliance and
creates a spirit of solidarity and cohesion among its
members. NATO is a formal alliance between the territories
of North American and Europe.
Its primary purpose was to defend each other from the
possibility of the communist Soviet Union taking control of
their nation from its inception.
NOTE: These Institutions of global governance (The United
Nations, the International Criminal Court, the World Bank,
World Trade Organization, NAFTA, etc.) tend to have
limited or restricted power to enforce compliance.
The modern question of world governance exists in
globalization and globalizing regimes of power: politically,
economically, and culturally.
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:
While the modern 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, codified, and rational. It is common
to all modern political power regimes and frames the
transition from classical sovereignty to what is described as
the second regime of sovereignty—liberal international
sovereignty.
The term world governance is broadly used to designate
all regulations intended for organization and centralization
of human societies on a global scale. The Forum for a new
World Governance defines world governance simply as
“collective management of the planet.”
Traditionally, the government has been associated with
“governing” or political authority, institutions, and,
ultimately, control. Governance denotes a process
through which institutions coordinate and control
independent social relations and can enforce their
decisions. However, authors like James Rosenau have also
used “governance” to denote the regulation of
interdependent relations in the absence of an
overarching political authority, such as in the international
system. Some now speak of the development of “global
public policy.” It shows that No country operates alone,
just like NO MAN IS AN ISLAND. WE ARE ALL INTERDEPENDENT
IN THIS WORLD.
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IMPORTANCE OF GLOBAL INTERSTATE SYSTEM:
The most important feature of the interstate system is that
it is anarchic. Unlike politics within states, relations between
states take place in a Hobbesian state of nature. Since an
anarchic system is one in which all states constantly face
actual or potential threats, their main goal is security.
PURPOSES OF GLOBAL, INTERSTATE SYSTEM:
1. Stimulate economic progress and world trade.
2. Providing a platform to compare policy experiences.
3. Seeking answers to common problems involving
member states.
4. Identify good practices and coordinate domestic and
international policies of its members.
CHALLENGES OF GLOBAL GOVERNANCE IN THE 21ST
CENTURY:
o Climate change
o Poverty
o Violent conflict
o Intolerance
o Extremism present direct threats to the unity and well-
being of the international community
How did President Ferdinand Marcos govern the
Philippines? – It was believed that President Marcos ruled
the country with his absolute and centralized power, or
dictatorship.
DICTATORSHIP – refers to the centralization of power to a
single entity. The leader personifies the entire political
structure as/she rules without limitations. Dictatorship is
historically related to performing related to war. It is
attributed to expediency and logistic efficiency. It ranges
from autocracy to totalitarianism.
MARTIAL LAW – is the imposition of direct military control of
normal civil functions or suspension of civil law by a
government, especially in response to a temporary
emergency where civil forces are overwhelmed or in
occupied territory.
DECLARATION OF MARTIAL LAW
September 23, 1972 – the late President Ferdinand Marcos
appeared on national television to formally announce
that the Philippines was under Martial Law. This began
almost ten years of military rule in the country.
January 17, 1981 – Marcos formally ended Martial Law.
Still, it was not until 1986 when democracy was restored –
after the dictator and his family were forced into exile,
overthrown by a popular uprising that came to be known
as the People Power Revolution.
When Marcos signed Proclamation 1081 on September 21,
1972, he cited the communist threat as justification. His
diary, meanwhile, said the proclamation of Martial Law
became a “necessity”, following the supposed ambush of
then defense Secretary Juan Ponce Enrile. There were
subsequent reports that said the ambush was staged, with
the Official Gazette citing Enrile’s admission in 1986 that it
was faked to justify the imposition of Martial Law.
WHAT HAPPENED UNDER MARTIAL LAW?
Through various general orders, Marcos effectively put the
entire government power under the rule of one man: his
own. He was to lead the nation and direct the operation
of the whole government. He ordered the armed forces to
prevent or suppress any act of rebellion. Curfew hours
were enforced, group assemblies were banned, privately-
owned media facilities were shuttered. Those considered
threats to Marcos – such as prominent politicians and
members of the media – were rounded up and arrested
by members of the military and the notorious Philippine
Constabulary. Some hail the discipline and supposed
order of the New Society, as Marcos called it, and
considered that period as among the “best years” of the
Philippines.
Among the myths: that the Philippines enjoyed a golden
age under the Marcoses. Various reports and historical
accounts debunk this; At the same time, infrastructure
spending indeed increased during that period, it came at
a staggering cost: plunging the Philippines in billions of
dollars in debt. From $8.2 billion in 1977, the country’s debt
ballooned to $24.4 billion in 1982 – or within just five years.
The Marcoses also plundered the country’s coffers, with
various estimates putting the amount at between $5 billion
to $10 billion.
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The Presidential Commission on Good Government, the
body, going after the Marcoses’ ill-gotten wealth, is still
recovering this money; over the past 30 years, at least P170
billion have been recovered.
Aside from the billions in illegally amassed wealth, human
rights abuses were rampant during those days. According
to Amnesty International, about 70,000 people were
imprisoned and 34,000 tortured, while 3,240 were killed
from 1972 to 1981. During this dark chapter of Philippine
history, thousands of people were subject to various forms
of torture. Prisoners were electrocuted, beaten up, and
strangled. They were burned with a flat iron or cigars.
Water was poured down their throats, then forced out by
beating. Women were stripped naked and raped, various
objects forced into their genitals.
Historian Alfred McCoy wrote about Marcos’ elite torture
units, whose specialty was psychological torture and
humiliation aside from physical pain. It has been many
years since then, but the victims have not forgotten –
especially as the Marcoses have neither acknowledged
their crimes nor made reparations for their sins. At
the Supreme Court hearing on the proposed Marcos burial
at the Heroes’ Cemetery, victims were asked to speak
before the Court to recount their horrifying ordeals.
PRESIDENT RODRIGO DUTERTE’S GOVERNANCE OF THE
PHILIPPINES
HIS PROMISE OF REAL CHANGE
May 10, 2016 – Rodrigo Duterte, then seventy-one years
old, was elected President, winning 39 percent of the vote
in a five-way race. Charismatic, blunt, and frequently
profane, Duterte combined a Dirty Harry persona with a
track record as a successful mayor of Davao City,
Mindanao’s largest city.
Within weeks of his inauguration as President of the
Philippines in June 2016, Rodrigo R. Duterte became the
most internationally known Filipino leader since Ferdinand
Marcos, the country’s infamous dictator, and Corazon
Aquino, the iconic housewife-turned-president who
championed the restoration of democracy in 1986. A
great deal of media attention has been paid to Duterte’s
murderous war on drugs as well as to his often crass and
controversial statements. His embrace of China and his
visceral disdain for the United States have garnered
additional attention in foreign policy circles. He is
frequently included in media reports and scholarly articles
on the rise of populism globally.
KEY CONCERNS AND PRIORITIES
The Duterte government’s top priorities include combating
illegal drugs and crime, promoting rapid infrastructure
development, sustaining economic growth and making it
more inclusive, enhancing peace and development in
Mindanao, and reorienting the Philippines’ foreign
relations. To support these goals, the government has
significantly increased spending on infrastructure, raised
the salaries of government employees, expanded existing
social development programs, revived the stalled peace
process with the Moro National Liberation Front (MNLF)
and the Moro Islamic Liberation Front (MILF), entered into
negotiations with the communist insurgents, and
established a closer relationship with China.
Under President Duterte, progress on the political and
security front has been mixed. This is largely due to the May
2017 occupation of Marawi City, in Lanao del Sur province,
by Islamist extremists affiliated with the self-proclaimed
Islamic State. It took five months of combat operations to
regain control over the extensively damaged city for the
Philippine military. In response to the Marawi crisis, Duterte
imposed island-wide martial law, which remains in effect.
The most significant accomplishment about Mindanao
was the passage of the Bangsamoro Organic Law (BOL) in
July 2018. The BOL translates many of the provisions
included in the 2014 peace agreement between the
Aquino government and the MILF. Under the BOL, a new
political entity, the Bangsamoro Autonomous Region in
Muslim Mindanao, would replace the current Autonomous
Region in Muslim Mindanao. The BOL is an important step
forward, but multiple challenges remain, including possible
objections to its constitutionality, a forthcoming plebiscite
scheduled for late January and early February 2019, and
the actual establishment of the new autonomous entity.
SIMILARITIES OF PRESIDENT RODRIGO DUTERTE’S AND
PRESIDENT FERDINAND MARCOS GOVERNANCE
o They shared the same insatiable drive for power with
the ability to control and destroy democratic
institutions to achieve authoritarianism ultimately.
o The varying methods of attaining their goals differ
because of the different circumstances of their times.
Marcos’s swift and sudden imposition of martial law in
September 1972 caught flat-footed millions of Filipinos.
In one fell swoop, decades of democratic experiment
abruptly ended. All media outlets were closed down;
thousands were arrested and detained; Congress was
padlocked; the Supreme Court was castrated, and
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the long night of oppression descended upon our
land.
o In a democracy, no one is supposed to be penalized
for holding and expressing their political beliefs.
HORIZONTAL DIRECT INVESTMENT – a company establishes
the same type of business operation in a foreign country
as it operates in its home country. A U.S.-based cell phone
provider buying a chain of phone stores in China is an
example.

LESSON 8:
VERTICAL INVESTMENT – a business acquires
WHAT IS A FOREIGN DIRECT INVESTMENT (FDI)? complementary business in another country. For example,
a U.S manufacturer might develop an interest in a foreign
o A foreign direct investment (FDI) is the purchase of an
company that supplies it with the raw materials it needs.
interest in a company by a company or an investor
located outside its borders. Generally, the term is used
to describe a business decision to acquire a
substantial stake in a foreign business or buy it outright CONGLOMERATE TYPE OF FOREIGN DIRECT INVESTMENT – a
to expand its operations to a new region. It is not company invests in a foreign business unrelated to its core
usually used to describe a stock investment in a business. Since the investing company has no prior
foreign company. experience in the foreign company’s area of expertise, this
o Foreign direct investments (FDI) are substantial often takes a joint venture.
investments made by a company into a foreign
concern.
o The investment may involve acquiring a source of EXAMPLES OF FOREIGN DIRECT INVESTMENTS
materials, expanding a company’s footprint, or
developing a global presence. Foreign direct investments may involve mergers,
o As of 2020, the U.S. is second to China in attracting FDI. acquisitions, or retail, services, logistics, or manufacturing
partnerships. They indicate a global strategy for company
growth. They also can run into regulatory concerns. U.S.
company Nvidia has announced its acquisition of ARM, a
HOW FOREIGN DIRECT INVESTMENTS (FDI) WORK U.K.-based chip designer. In August 2020, the U.K’s
competition watchdog had announced an investigation
o Companies considering a foreign direct investment
into whether the $40 billion deal would reduce
generally look only at open economies that offer a
competition in industries reliant on semiconductor chips.
skilled workforce and above-average growth
prospects for the investor. Light government
regulation also tends to be prized. Foreign direct
investment frequently goes beyond capital WHAT IS THE DIFFERENCE BETWEEN FDI AND FPI?
investment. It may include the provision of
FDI FPI
management, technology, and equipment as well.
o Requires a substantial o Is the addition of
o A key feature of foreign direct investment is that it
investment in a international assets to
establishes effective control of the foreign business or
company based in a company's portfolio,
substantial influence over its decision-making. In 2020,
another country. an institutional
foreign direct investment tanked globally due to the
o A more significant investor such as a
COVID-19 pandemic, according to the United Nations
commitment made to pension fund, or an
Conference on Trade and Development. The total
enhance a individual investor.
$859 billion global investment compares with $1.5
company's growth. o It is a form of portfolio
trillion the previous year.
diversification
achieved by
purchasing the stocks
TYPES OF FOREIGN DIRECT INVESTMENT or bonds of a foreign
o Horizontal company.
o Vertical
o Conglomerate

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NOTE: Both FPI and FDI are generally welcome, particularly
in emerging nations. Notably, FDI involves a greater
responsibility to meet the country's regulations that host
the company receiving the investment.
WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF
FOREIGN DIRECT INVESTMENT (FDI)
ADVANTAGES:
o Can foster and maintain economic growth, both in
the recipient country and in land investing,
o Developing countries have encouraged FDI to
finance the construction of new infrastructure and the
creation of jobs for their local workers.
o On the other hand, multinational companies benefit
from FDI to expand their footprints into international
markets.
DISADVANTAGE:
o Involves the regulation and oversight of multiple
governments, leading to a higher level of political risk.
LESSON 9:
TECHNOLOGICAL INNOVATION – is the process where an
organization (or a group of people working outside a
structured organization) embarks on a journey where the
importance of technology as a source of Innovation has
been identified as a critical success factor for increased
market competitiveness.
TECHNOLOGY – is applying scientific knowledge for
practical purposes or the branch of knowledge
concerned with applied sciences.
INNOVATION – is evolutionary and is a response to an
unsolved problem and unexploited opportunity. It is the
effort to create purposeful, focused change in an
enterprise’s economic or social potential.
CREATIVITY AND INNOVATION
CREATIVITY – involves the use of imagination or original
ideas to create something. It is the idea phase. In other
words, creativity is the idea phase, and Innovation is the
action phase.
INNOVATION – is the act of introducing something new.
The word “new” relates to creativity, and the term “act of
introducing” refers to Innovation.
INVENTION AND INNOVATION
INVENTION
o Invention is the creation of a new product or service
or process.
o Invention may have economic or non-economic
motives.
o An invention is based on a new idea that is turned into
some conceptual model that demonstrates the
feasibility.
INNOVATION
o Innovation introduces new products, or services or
processes into the marketplace.
o Innovation always has economic reasons. Invention
precedes Innovation follows invention.
o Innovation is concerned with developing and
implementing new systems, products, or services and
is typically based on an invention.
TECHNOLOGICAL INNOVATION EXAMPLES:
o wind turbines
o photovoltaic cells
o concentrated solar power
o geothermal energy
o ocean wave power
o and many other emerging innovations.
EXAMPLES OF INNOVATIVE TECHNOLOGY DESIGNS:
o SA950 3D monitor by Samsung
o Wireless Charging Technology from Ecoupled.
o TROMM Styler Clothes Steamer
o U-Socket AC and USB Power Outlet.
o Touch Mouse by Microsoft.
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o Lady Gaga’s Polaroid Camera Glasses.
o Nomad iPad Paint Brush Stylus.
o Robot Scooba 230 Floor Washer.
CHANGES DUE TO TECHNOLOGICAL INNOVATION:
1. TRANSPORTATION – transportation has become faster,
like individuals can move rapidly starting with one
place and then the next. In the past, people could not
travel as rapidly as today because of not having
enough modern transportation. This technology allows
vehicles to communicate, via wireless radio signals,
driving information such as speed, lane departure,
and environment information to other cars on the
highway.
2. COMMUNICATION – technology has changed the
way people communicate in the modern workplace.
Communication among the employees,
management to subordinates, or management to
management has become fast, instantaneous, more
deliberate, collaborative, and unified. The most
significant impact of technology on communication is
the spread of the Internet and the possibility of sending
emails and chatting.
3. EDUCATION – technological changes in the
educational industry have created new ways to teach
and to learn. Technological changes allow teachers
to access information on a global scale via the
Internet to enhance their lessons.
4. JOB CREATIONS – technology also created a host of
new positions that never before existed. Think about it:
computing specialists, social media managers, digital
marketers, energy engineers, software and app
developers, drone operators, YouTube content
creators.
5. HEALTH CARE – the Most Significant Medical
Innovations of the Past 20 Years. Vaccines and
Immunization to prevent outbreaks. Electronic Health
Records (EHRs) It is hard to believe in such a modern
era, but fewer than 18 percent of medical providers
used electronic health records a mere decade ago.
HIV Combined Drug Therapy. Minimally Invasive
Surgery. Needle-Free Injection Technology.
6. RELATIONSHIPS – technology is often introduced into a
social system with the stated intention of making life
easier for people. As it becomes more pervasive in
everyday life, the assessment of technology's
presence in relationships and its impact on how
humans interact with one another, especially long-
distance relationships, is becoming very popular,
giving way to intermarriages between races.
7. CRIME DETECTION – as technology is used to commit
more sophisticated crimes, law enforcement officers
and those in the legal system increasingly use tech
tools to combat corruption. The criminal justice
industry must use cutting-edge software, tracking
systems, and more to keep the public safe and
protect human life.
TYPES OF INNOVATION:
1. INCREMENTAL INNOVATION: These are small but
important improvements to a product, process, or
service. Such innovations are associated with
enhanced customer satisfaction. Example: Change in
car engine technology will not change any other
features
2. ARCHITECTURAL INNOVATION: These innovations take
existing technologies and link new technologies in
novel ways; they are built not on new technological
breakthroughs but on integrating competencies, i.e.,
product structure change with no important effect on
component subsystems. Example: Change of shape
of a car with no change in engine. Honda's smaller
motorcycles.
3. RADICAL INNOVATION: These innovations are
revolutionary. Railroads, electricity, computers, and
the Internet can be termed as breakthrough
innovations. Radical innovations are also known as
breakthrough innovations and discontinuous
innovations.
RAILROADS – changed the way in which goods and
people were transported. Electricity changed the way
people lived and used equipment.
COMPUTERS – changed how organizations worked.
INTERNET – transformed how people communicate,
acquire knowledge, and do business.
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LESSON 10:
RISKS OF GLOBALIZATION
Globalization has offered the world significant advantages
for economic gains and comfortable living. But in the long
run, it has the other side of the balance. The bad side of
Globalization is all about the new risks and uncertainties
brought about by the high degree of integration of
domestic and local markets, intensification of competition,
high degree of imitation, price and profit swings, and
business and product destruction, the most prevalent risks
are: equity distribution, national sovereignty and
interdependence.
THE ADVANTAGES OF GLOBALIZATION:
o Building up the economic and social structures of
struggling countries and economies through free
trade.
o Creation of a world-power and less and less
compartmentalized power sectors
o Learning about and sharing new and exciting cultures
with one another.
o The opportunity and desire for prosperous nations to
help countries struggling with severe issues like
unemployment, disease, and natural disasters.
o A more significant opportunity for travel and it
increases free trade between nations.
THE DISADVANTAGES OF GLOBALIZATION:
o The oppression of weaker and poorer economies by
more robust ones; 'the rich get richer; the poor get
poorer.
o The danger of job loss, with specific industries and
sectors sending jobs to countries where workers are
willing to do the same amount of work or more for
smaller wages.
o Multinational corporations often get away with poor,
unsafe, unethical, or exploitative working conditions
due to variations in laws and regulations from one
country to another.
o Multinational corporations can exploit tax haven
nations, sending large portions of revenue offshore to
avoid taxation.
HOW EQUITY DIFFERS FROM EQUALITY?
EQUALITY – generally refers to equal opportunity and the
same levels of support for all segments of society.
EQUITY – goes a step further and refers to offering varying
levels of support depending upon the need to achieve
greater fairness of outcomes.
EFFECTS OF HUMAN INTERDEPENDENCE AND
GLOBALIZATION:
o ECONOMICS – competition is a positive effect.
Domestic companies compete with foreign firms,
often raising their standards. Foreign businesses often
bring innovations and new approaches, trying to
capture the consumer.
o EMPLOYMENT – jobs are generated in new areas but
are sometimes lost elsewhere. Imagine you own a
company with 100 workers and decide to relocate to
Thailand, where labor costs are lower.
UNEMPLOYMENT AND UNDEREMPLOYMENT DIFFERENCES:
UNEMPLOYMENT – refers to the state of being without a job,
actively seeking employment, and available to work. It is
a measure of the number of people in the labor force who
are willing and able to work but are currently unemployed.
UNDEREMPLOYMENT – refers to a situation where individuals
are working in jobs that are below their skill level, part-time
when they desire full-time employment, or in jobs that do
not fully utilize their qualifications and abilities.
Underemployed individuals are considered to be
employed, but they are not working to their full potential
or earning a sufficient income.
LESSON 11:
WHAT IS AN ECONOMIC SYSTEM?
o An economic system, or economic order, is a system
of production, resource allocation, and distribution of
goods and services within a society or a given
geographic area. It includes the combination of the
various institutions, agencies, entities, decision-making
processes, and consumption patterns that comprise a
given community's economic structure.
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o A means by which governments organize and
distribute available resources, services, and goods
across a geographic region or country.
FOUR MAIN TYPES OF ECONOMIC SYSTEMS
1. The Traditional Economic System
2. The Command Economic System
3. The Market Economic System
4. The Mixed Economic System
THE TRADITIONAL ECONOMIC SYSTEM
o The most basic of all the economic types and in
practice since ancient times, the traditional financial
system involves very little division of labor (in other
words, individuals specializing in producing specific
goods) and very little in the way of economic
governance.
o The traditional economic system is based on goods,
services, and work, all of which follow certain
established trends. It relies a lot on people, and there
is very little division of labor or specialization.
CHARACTERISTICS OF A TRADITIONAL ECONOMY:
1. Traditional economies are often based on one or a
few types of agriculture, hunting, fishing, and
gathering.
2. Barter and trade are often used in place of money.
3. There is rarely a surplus produced.
4. Often, people in a traditional economy live in families
or tribes.
ADVANTAGES OF A TRADITIONAL ECONOMIC SYSTEM:
o KEEPS THE TRADITIONS AND CUSTOMS ALIVE: In
traditional countries, people preserve skills and art
within respective communities, tribes, and families.
o NO WASTAGE OF GOODS: Since the goods are
produced only to meet the requirements of the
community, tribe, or family, there is no surplus.
o HAVE SCOPE FOR EVOLUTION: This economic structure
has the potential to adapt—imbibing traits of different
economic structures. In fact, all modern economic
systems have evolved out of the traditional system.
o ENVIRONMENTALLY FRIENDLY: Due to the limited use of
technology, the conventional methods of conducting
economic activities are less harmful to nature and the
environment.
o SKILLED AND TALENTED PEOPLE: Natives make a living
out of skills acquired from family and community. Over
centuries, these communities have become highly
skilled in a particular niche.
o ROLE CLARITY AND SATISFACTION: Individuals who run
family trades are successors—they inherit both
responsibilities and skills. They are introduced into the
business from a very young age. Also, they are satisfied
with whatever they do and earn from it.
o SAFE FROM GLOBAL PROBLEMS: Self-sustained
economies often remain disconnected from the
outside world—they can avoid various infectious
diseases spread globally.
DISADVANTAGES OF TRADITIONAL ECONOMY:
o STARVATION: People may starve from food shortage if
there is a lack of agricultural, hunting, or fishing
produce.
o RISK OF EXPLOITATION: Extinction of Natural Resources:
Economies that are highly dependent on natural
reserves for food, shelter, and clothing fail to develop
alternative sources. They risk natural resources
becoming scarce.
o LIMITED GROWTH OPPORTUNITIES: These economies
focus on preserving tradition and customs—
development of new production and distribution
methods take a back seat. Economic progress is
stagnant.
o POOR MEDICAL AMENITIES: Due to limited exposure to
the outside world, conventional economies lack
modern medical facilities. As a result, infant mortality
rates are high, and average life expectancy is very
low.
o NO GLOBAL INTERACTION: By being disconnected
from other economies, traditional countries miss out on
trade relations, exchange of culture, and the
development of new techniques.
o TECHNOLOGICALLY BACKWARD: Traditional countries
rely heavily on old-school production. They miss out on
new techniques that can increase production, leisure
time, and cost-efficiency.
THE COMMAND ECONOMIC SYSTEM:
o A more advanced economic system compared to
the traditional financial system, the command
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economic system involves planning from a centralized
point, either a local government or indeed the
national government, as under communist rule.
o In a command system, there is a dominant centralized
authority – usually the government – that controls a
significant portion of the economic structure.
o Also known as a planned system, the command
economic system is common in communist societies
since production decisions are the preserve of the
government.
EXAMPLES OF COUTIES WHO PRACTICE COMMAND
ECONOMY:
o North Korea
o Libya
o Russia
o Iran
COMMAND ECONOMY CHARACTERISTICS:
1. Government is in control of the pricing of goods and
services by central economic planning.
2. The government owns all the factors and means of
production.
3. The government makes all decisions for finances in the
country, may even assign people jobs.
4. Social equality is the essential feature of a command
economy. No one is rich or poor.
Advantages: Low levels of inequality and unemployment,
and the common good replacing profit as the primary
incentive of production.
Disadvantages: include lack of competition and lack of
efficiency.
THE MARKET ECONOMIC SYSTEM
o A market economy is a system where the laws of
supply and demand direct goods and services.
(1) Supply includes natural resources, capital, and
labor. (2) Demand includes purchases by consumers,
businesses, and the government. Businesses sell their
wares at the highest price consumers will pay.
o Market economic systems are based on the concept
of free markets. In other words, there is very little
government interference. The government exercises
little control over resources, and it does not interfere
with important segments of the economy. Instead,
regulation comes from the people and the
relationship between supply and demand.
o A market economy has freedom of choice and free
enterprise.
o A market economy is driven by the motive of self-
interest.
MARKET ECONOMIES:
o United States
o England
o Japan
THE MIXED ECONOMIC SYSTEM
o A mixed economy is an economic system combining
private and public enterprises.
o A mixed economic system protects personal property
and allows a level of economic freedom in the use of
capital, but also allows for governments to interfere in
economic activities to achieve social aims.
o Mixed systems combine the characteristics of the
market and command economic systems. For this
reason, mixed systems are also known as dual systems.
Sometimes the term is used to describe a market
system under strict regulatory control.
o A mixed economic system is a system that combines
aspects of both capitalism and socialism.
o Countries like England, France, and India.
LESSON 12:
SUSTAINABLE WORLD – is the outcome of the different
development strategies and program implementation
that will keep the world in existence over a long time.
SUSTAINABILITY – is living to minimize humans’ negative
impact on the earth and the animals and plants we share
it with. Making sustainable choices is a means to preserve
the world and tackle climate change for future
generations to come. It is about meeting our present
needs without compromising the ability of future
generations to meet their own needs.
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WHAT IS SUSTAINABLE DEVELOPMENT?
o Sustainable development is referred to as the idea
that human beings should sustain by meeting their
basic needs, while also making sure that the future
generations are able to meet their basic needs.
o Sustainable development continuously seeks to
achieve social and economic progress in ways which
will not exhaust the Earth's finite natural resources.
THE SUSTAINABLE DEVELOPMENT GOALS (SDGS)
o Known as Global Goals – are a collection of 17
interlinked objectives designed to serve as a "shared
blueprint for peace and prosperity for people and the
planet now and into the future. “ (mission statement)
o TYPE OF PROJECT: non-profit
o LOCATION: Global
o FOUNDER: United Nations General Assembly
o ESTABLISHED: 2015
HERE ARE SOME TOP AREAS YOU WILL WANT TO
FAMILIARIZE YOURSELF WITH:
1. CLIMATE CHANGE - contributes to global warming.
Summers get so hot, and it kills people of heatstroke.
With this, planting trees and vegetables lessens the
heat.
2. ENERGY CONSUMPTION - curve our energy
consumption and find better ways to create energy
(solar, wind, water, etc.). Air conditioners should be
used moderately and wisely.
3. SUSTAINABLE SOURCING - sourcing local and buy local
helps the farmers to plant and grow more.
4. WASTE PRODUCTION MUST BE KEPT TO A MINIMAL
ENVIRONMENTAL FOOTPRINT - focus on recycling
versus constant trips to a local landfill. Reduce
consumption, reuse products, and recycle things.
3 LEVELS OF DECADES OF ACTION (S.D.G’S):
1. GLOBAL ACTION – to secure greater leadership, more
resources, and smarter solutions for the Sustainable
Development Goals.
2. LOCAL ACTION – embedding the needed transitions in
the policies, budgets, institutions and regulatory
frameworks of governments, cities, and local
authorities.
3. PEOPLE ACTION – including youth, civil society, the
media, the private sector, unions, academia, and
other stakeholders, to generate an unstoppable
movement pushing for the required transformations.
WAYS TO ACHIEVE SUSTAINABLE DEVELOPMENT:
1. TECHNOLOGICAL DEVELOPMENT – is the creation or
enhancement of systems of infrastructure with an
expectation of an increase in the efficiency that
people can use their time to convert resources into the
means to meet their wants and needs, such that it will
increase the quality of life of a community and,
2. HUMAN DEVELOPMENT – is the identification and
removal of the obstructions – within the self, family, or
community that prevent people from being able to
meet their needs, and by so doing, increase the
freedoms, choices, and capabilities of the population.
ADVANTAGES: can be achieved in the long run.
DISADVANTAGES: are in concise terms – one must pay for
the investment in whatever before the returns start coming
in. It may take years for the investment to have paid itself
off in full.
GREEN LIVING TIPS:
o Reduce energy consumption.
o Purchase reusable water bottles.
o Save water.
o Make your cleaning supplies with non-toxic items.
o Buy reused items.
o Recycle as much as possible.
o Donate used items.
LESSON 13:
FOOD SECURITY – as defined by the United Nations’
Committee on World Food Security; means that all people,
at all times, have physical, social, and economic access
to sufficient, safe, and nutritious food that meets their food
preferences and dietary needs for an active and healthy
life. Household food security exists when all members, at all
times, have access to enough food for an active, healthy
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life. Individuals who are food secure do not live in hunger
or fear of starvation.
IMPORTANCE OF GLOBAL FOOD SECURITY:
1. Food insecurity – often rooted in poverty.
2. Poverty decreases the ability of countries to develop
their agricultural markets and economies.
3. Access to quality, nutritious food is fundamental to
human existence.
4. Increased global security and stability. Improved
health and healthcare.
WHY IS FOOD SECURITY A GLOBAL ISSUE?
People need to have sufficient incomes and resources to
obtain food. But with proper nutrition, sanitation, and
hygiene, many diseases-especially those caused by food
and waterborne contaminants are less likely to occur.
Food security is an issue both globally and at home in the
United States. The 199 World Summit on Food Security
declared that "food should not be used as an instrument
for political and economic pressure".
FOUR PILLARS OF FOOD SECURITY
1. Food Availability
2. Food Access
3. Food Utilization
4. Food Stability
4 PILLARS OF FOOD SECURITY:
1. FOOD AVAILABILITY – relates to the supply of food
through production, distribution, and exchange.
a. Production – how much and what types of food
are available through production and storage
locally. Goats are an essential part of global food
security because they are relatively low-
maintenance and easy to raise and farm.
b. Distribution – how food is made available
(physically moved), in what form, when, and to
whom. It also involves storing, processing,
transporting, packaging, and marketing foods.
c. Exchange – how much available food can be
obtained through exchange mechanisms such as
barter, trade, purchase, or loans.
2. FOOD ACCESS – -refers to the affordability and
allocation of food and the preferences of individuals
and households.
FOOD ACCESS CAN BE:
o DIRECT ACCESS – producing your food and
o ECONOMIC ACCESS – buying your food from suppliers.
ACCESS CAN BE AFFECTED BY:
o AFFORDABILITY – is the ability of individuals,
households, or communities to afford the price of food
or land for producing food relative to their incomes.
o ALLOCATION – the economic, social, and political
mechanisms governing when, where, and how food
can be accessed by consumers and on what terms.
For example, food may be unequally allocated
according to age and gender within households.
o PREFERENCE – social, religious, and cultural norms and
values that influence consumer demand for certain
types of food (e.g., religious prohibitions or the desire
to follow a specific dietary pattern such as
vegetarianism, weight management sets aside a
specific group of foodstuffs)
3. FOOD UTILIZATION – -People must have access to a
sufficient quantity and diversity of foods to meet their
nutritional needs and must also eat and properly
metabolize such food.
UTILIZATION CAN BE AFFECTED BY:
o NUTRITIONAL VALUE: the nutritional value provided by
the foods that are consumed, as measured in calories,
vitamins, protein, and various micronutrients (e.g. iron,
iodine, vitamin A). Education about nutrition and food
preparation can affect food utilization and improve
this pillar of food security.
o HEALTH STATUS: Access to healthcare is another
determinant of food utilization since the health of
individuals controls how the food is metabolized. For
example, intestinal parasites can take nutrients from
the body and decrease food utilization. Sanitation
can also reduce the occurrence and spread of
diseases that can affect food utilization.
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o FOOD SAFETY: Food safety affects food utilization and
can be affected by the food preparation, processing,
and cooking in the community and household.
o PREPARATION AND CONSUMPTION: Sanitation and
hygiene are essential in food preparation.
4. FOOD STABILITY – refers to the ability to obtain
adequate food over time. Food may be available and
accessible to all people at all times. Access,
Availability, and utilization should be stable over time.
“All people at all times” is integral to the definition of
food security and is the key to achieving national or
global food security objectives.
FOOD STABILITY IS AFFECTED BY:
o THE CONCEPT OF STABILITY – can therefore refer to
both the availability and access dimensions of food
security. People should not risk losing access to food
due to sudden shocks (e.g., economic, or climatic
crisis) or cyclical events such as seasonal food
insecurity.
o BUFFER STOCK – A buffer stock is a system or scheme
which buys and stores stocks at times of good harvests
to prevent prices falling below a target range (or price
level) and releases stocks during bad harvests to avoid
prices rising above a target range (or price level).
o PUBLIC DISTRIBUTION SYSTEM – is a government-
sponsored chain of shops entrusted with distributing
basic food and non-food commodities to the needy
sections of the society at very low prices.
Advantages are: (1) It has helped in stabilizing food
prices and making food available to consumers at
affordable prices. (2) It has helped in avoiding hunger
and famine by supplying food from surplus regions of
the country to deficient regions are the two important
components of food security system in a state.
HOW CAN FOOD SECURITY BE ASSESSED?
The state of food security varies over a range of scales,
ranging from the individual to global. Even where food
security is present at a particular individual or household
level, it may not be so regional. Conversely, while a nation
or region may be generally considered food secure,
certain (groups of), individuals may still suffer from food
insecurity.
FOOD INSECURITY – food insecurity, on the other hand, is
defined by the United States Department of Agriculture
(USDA) as a situation of "limited or uncertain availability of
nutritionally adequate and safe foods or limited or
uncertain ability to acquire acceptable foods in socially
acceptable ways."
THEIR FREQUENCY OR DURATION CAN ALSO DISTINGUISH
TYPES OF FOOD INSECURITY:
1. CHRONIC FOOD INSECURITY – a long-term and
persistent condition of food insecurity.
2. TRANSITORY FOOD INSECURITY – a short-term and
temporary condition of food insecurity. A population
suffers from transitory food insecurity when there is a
sudden drop in the ability to produce or access
sufficient food for a healthy nutritional status (e.g.,
after a period of drought or as a result of conflict).
3. SEASONAL FOOD INSECURITY – condition of food
insecurity that reoccurs predictably, following the
cyclical pattern of seasons.
EFFECTS OF FOOD INSECURITY:
1. Famine and hunger are both rooted in food insecurity.
Chronic food insecurity translates into a high degree
of vulnerability to famine and hunger; ensuring food
security presupposes elimination of that vulnerability.
2. Stunting and chronic nutritional deficiencies among
children with symptoms of low calorie and low protein
intake results to decreasing body size (stunted
growth). This process starts in utero if the mother is
malnourished and continues through approximately
the third year of life. It leads to higher infant and child
mortality, but at rates far lower than during famines.
Once stunting has occurred, improved nutritional
intake after about two years is unable to reverse the
damage.
3. Premature failure of vital organs during adulthood. For
example, a 50-year-old individual might die of heart
failure because his/her heart suffered structural
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defects during early development; Stunted individuals

suffer a higher rate of disease and illness than those
who have not undergone stunting.
4. Severe malnutrition in early childhood often leads to
defects in cognitive development. It, therefore,
creates disparity among children who did not
experience severe malnutrition and those who share
it.
5. Depression, anxiety, and sleep disorders - A recent
comprehensive systematic review showed that over
50 studies have shown that food insecurity is strongly
associated with a higher risk of depression, anxiety,
and sleep disorders. For depression and anxiety, food-
insecure individuals have almost a threefold risk
increase compared to food-secure individuals.

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