CHAPTER 2- THE

GLOBAL
ECONOMY
Edel Christian B. Palad,LPT
Social Science Instructor
GLOBAL ECONOMY
■ The international spread of capitalism, especially in
recent decades, across national boundaries and with
minimal restrictions by governments. The global
economy has become hotly controversial. Critics
allege that its props, free markets and free trade, take
jobs away from well-paid workers in the wealthy
nations while creating sweatshops in the poor ones. Its
supporters insist that the free movement of capital
 stimulates investment in poor nations and creates jobs
in them. The process is also called globalization.
Lesson 1- What is Economic Globalization
■ 1.The widespread of international movement of groups, capital, services,
technology, and information that increase the interdependence of world
economies.
■ 2.Economic globalization refers to the intensification and expansion of
mutual economic interactions on the world scale. Economically, three
dimensions of globalization—trade, financial, or financial
and globalization of production—draw attention. 
■ 3.The global integration of economies through trade and investment
flows as well as the internationalization of the production of goods and
services. 
Lesson 2- Actors of economic Globalization
Global Actors

■ International Economic and Financial Organizations.

■ International Governmental Organizations (IGOs)
■ Media.
■ Multilateral Development Banks.
■ Nation-States.
■ Non-Governmental Organizations (NGOs)
■ Trans-National Corporations (TNCs)
■ United Nations (UN) System
■ Lesson 3- Definitions of modern system
■ Modern Systems is an independent modernization company that empowers
IT efficiency, agility, and competitive advantage through core application
modernization
■ Globalization refers to the process of integrating
governments, cultures, and financial markets
through international trade into a single world
market. There are benefits and drawbacks to
globalization. Often the countries that fare the
worst are those that depend on natural resource
extraction for their wealth. Many critics fear
globalization gives too much power to
multinational corporations and that political
decisions are influenced by these major financial
players.
Modern world System

■ Immanuel Wallerstein developed World Systems Theory and its three-level hierarchy:
core, periphery, and semi-periphery.
■ Core countries are dominant capitalist countries that exploit peripheral countries for
labor and raw materials.
■ Peripheral countries are dependent on core countries for capital and have
underdeveloped industry.
■ Semi-peripheral countries share characteristics of both core and peripheral countries.
Modern world System
■ peripheral: Peripheral countries are dependent
on core countries for capital and have
underdeveloped industry.
■ core: Describes dominant capitalist countries
which exploit the peripheral countries for labor
and raw materials.
■ semi-peripheral: Countries that share
characteristics of both core and periphery
countries.
■ World Systems Theory, like dependency theory,
suggests that wealthy countries benefit from other
countries and exploit those countries’ citizens. In
contrast to dependency theory, however, this model
recognizes the minimal benefits that are enjoyed by low
status countries in the world system. The theory
originated with sociologist Immanuel Wallerstein, who
suggests that the way a country is integrated into the
capitalist world system determines how economic
development takes place in that country.
■ According to Wallerstein, the world economic system is divided into a
hierarchy of three types of countries: core, semiperipheral, and
peripheral. Core countries (e.g., U.S., Japan, Germany) are dominant,
capitalist countries characterized by high levels of industrialization
and urbanization. Core countries are capital intensive, have high
wages and high technology production patterns and lower amounts of
labor exploitation and coercion. Peripheral countries (e.g., most
African countries and low income countries in South America) are
dependent on core countries for capital and are less industrialized and
urbanized. Peripheral countries are usually agrarian, have low literacy
rates and lack consistent Internet access. Semi-peripheral countries
(e.g., South Korea, Taiwan, Mexico, Brazil, India, Nigeria, South
Africa) are less developed than core nations but more developed than
peripheral nations. They are the buffer between core and peripheral
countries
■ Core countries own most of the world’s capital and technology and
have great control over world trade and economic agreements. They
are also the cultural centers which attract artists and intellectuals.
Peripheral countries generally provide labor and materials to core
countries. Semiperipheral countries exploit peripheral countries, just as
core countries exploit both semiperipheral and peripheral countries.
Core countries extract raw materials with little cost. They can also set
the prices for the agricultural products that peripheral countries export
regardless of market prices, forcing small farmers to abandon their
fields because they can’t afford to pay for labor and fertilizer. The
wealthy in peripheral countries benefit from the labor of poor workers
and from their own economic relations with core country capitalists.
■ 11th Century World System: In the 11th
century, international production and trade was
dominated by the exchange of silk, and thus
countries along the silk route were the
dominant participants in the “world-system. ”
Today, with vast communications and
transportation technology, virtually every
society participates in the world-system as
either a source of raw materials, production, or
consumption.