THE

GLOBALIZATION
OF WORLD
ECONOMICS
Members:
Froilan, Lloyd Francis M.
Godines, Giana C.
Jabines, Xyla Dimple
Leyson, Leah Mae D.
.

Hortizano, Rogin C. Labaya, Jenine

Inting, Khalysta Roysh C. Lucernas, Ira Marie S.
 TABLE OF CONTENTS
Title:
Page:
Defining Globalization………………………………………………………………………...1
Defining Economic Globalization……………………………………………………………2
Factors that Facilitate Economic Globalization…………………………………………….5
International Trading Systems……………………………………........…..................…..11
The Global Financial Crisis and Challenge to Neoliberalism……………………….....12
Economic Globalization Today………………………………………………………...……14

 Narration of a short history of global market integration in the twentieth century

 Sharing our stances in global economic integration

.
 I. RATIONALE

Globalization has become a fashion concept that explains the changes experienced in the
world and which is accepted as the reason of the transformations. While the concept of
globalization is defined in this sense, the meanings of globalization in different dimensions
have emerged. In this report we will tackle more on how globalization has evolved, what is
it’s relation to the economy, what are the advantages and disadvantages of globalization.

In line with this we will get to know the factors that affects globalization, the International
Trading Systems, The Global Financial Crisis and Challenge to Neoliberalism and the
economy affected by globalization at present.

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 WHAT IS
GLOBALIZATION?
Globalization means the speedup of movements and
 
exchanges (of human beings, goods, and services, capital,
technologies or cultural practices) all over the planet. One of
the effects of globalization is that it promotes and increases
interactions between different regions and populations around
the globe.
• According to WHO, globalization can be defined as ” the
increased interconnectedness and interdependence of
peoples and countries. It is generally understood to include
two inter-related elements: the opening of international
borders to increasingly fast flows of goods, services,
finance, people and ideas; and the changes in institutions
and policies at national and international levels that
facilitate or promote such flows.”
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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.

It reflects the continuing expansion and mutual integration of market

frontiers, and is an irreversible trend for the economic development in the
whole world at the turn of the millennium.

The fast globalization of the world’s economies in recent years is largely

based on the rapid development of science and technologies, has resulted
from the environment in which market economic system has been fast
spreading throughout the world, and has developed on the basis of increasing
cross-border division of labor that has been penetrating down to the level of
production chains within enterprises of different countries.
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 ECONOMIC GLOBALIZATION
ADVANTAGES
Increases economic growth: By increasing the
international exchange of goods, technological
advances, and information, globalization increases
economic development for any country participating
in the global economy. An increase in economic
growth means better living standards, higher
incomes, more wealth in a country, and, often, less
poverty—in short, the overall well-being of a
country.
Makes production more affordable: A global market
allows businesses wider access to production
opportunities and consumers, meaning that there are
more goods available at a wider range of price points.
DISADVANTAGES
Lack of local businesses: The policies permitting
globalization tend to advantage companies that have
the resources and infrastructure to operate their
supply chains or distribution in many different
countries, which can hedge out small local businesses
—for instance, a local New York hamburger joint
may struggle to compete with the prices of a
multinational burger-making corporation.
Unequal economic growth: While globalization tends
to increase economic growth for many countries, the
growth isn’t equal—richer countries often benefit
more than developing countries.
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 ADVANTAGES
Promotes working together. When different countries
come together to engage in trade and investments in a
global financial market, they become interdependent
and often come to rely on one another for certain
goods and services.
Brings opportunities to poorer countries.
Globalization allows companies to move their
production from high-cost locations to lower-cost
locations abroad—this means bringing jobs,
information technology, and other economic
opportunities to countries with fewer resources.
DISADVANTAGES
Increases potential global recessions. When many
nations’ economic systems become interdependent,
the likelihood of a global recession increases
dramatically—because if one country’s economy
starts to struggle, this can set off a chain reaction that
can affect many other countries simultaneously,
causing a worldwide financial crisis.
Exploits cheaper labor markets. Globalization allows
businesses to increase jobs and economic
opportunities in developing countries, where the cost
of labor is often cheaper. However, overall economic
growth in these countries may be slow or stagnant.
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FACTORS THAT FACILITATE ECONOMIC
GLOBALIZATION
1. Historical

The trade routes were made over the

years so that goods from one kingdom
or country moved to another. The well
known silk-route from east to west is an
example of historical factor.

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FACTORS THAT FACILITATE ECONOMIC
GLOBALIZATION

2. Economy

The cost of goods and values to the end

user determine the movement of goods
and value addition. The overall
economics of a particular industry or
trade is an important factor in
globalisation.
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 FACTORS THAT FACILITATE ECONOMIC
GLOBALIZATION

3. Resources and Markets

The natural resources like minerals, coal,

oil, gas, human resources, water, etc.
make an important contribution in
globalisation.

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FACTORS THAT FACILITATE ECONOMIC
GLOBALIZATION
4. Production Issues

Utilisation of built up capacities of production,

sluggishness in domestic market and over
production makes a manufacturing company
look outward and go global. The development
of overseas markets and manufacturing plants
in autos, four wheelers and two wheelers is a
classical example.

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 FACTORS THAT FACILITATE ECONOMIC
GLOBALIZATION
4. Political

The political issues of a country make

globalisation channeled as per political bosses.
The regional trade understandings or
agreements determine the scope of
globalization. Trading in European Union and
special agreement in the erstwhile Soviet block
and SAARC are examples.

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 FACTORS THAT FACILITATE ECONOMIC
GLOBALIZATION

4. Industrial Organization

The technological development in the areas of

production, product mix and firms are helping
organisations to expand their operations. The
hiring of services and procurement of sub-
assemblies and components have a strong
influence in the globalisation process.

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INTERNATIONAL TRADING SYSTEMS
 Global trade, also known as international trade, is simply the import and export of goods
and services across international boundaries.
 Goods and services that enter into a country for sale are called imports. Goods and services
that leave a country for sale in another country are called exports. For example, a country
may import wheat because it doesn't have much arable land, but export oil because it has
oil in abundance.
 A fundamental concept underlying global trade is the concept of comparative advantage,
developed by David Ricardo in the 19th century. In a nutshell, the doctrine of comparative
advantage states that a country can produce some goods or services more cheaply than
other countries. In technical terms, the country is able to produce a specific good or service
at a lower opportunity cost than others.
 An opportunity cost is the benefit one gives up in making an economic choice. The classic
example is guns and butter - domestic investment over defense spending. The more guns
you produce, the less funds are available to invest in public schools and infrastructure, for
example. The more you invest in the domestic economy, the less you can spend on defense.
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 THE GLOBAL FINANCIAL CRISIS AND
CHALLENGE TO NEOLIBERALISM
The new right promoted a fundamentalist view of markets that came to be referred to as
economic rationalism in Australia and, more widely, as neoliberalism. It advocated the
replacement of government functions and services with those provided by private profit-seeking
firms operating in the market (privatization); deregulation of labour and financial markets;
deregulation of business activities; free trade; and smaller government through reduced taxes,
spending and regulation.
The new right argued that competition and unrestrained selfishness was of benefit to the whole
society in capitalist societies. It asserted that as a nation gets wealthier the wealth will ‘trickle
down’ to the poor because it is invested and spent thereby creating jobs and prosperity. In fact
the global financial crisis has shown that financial markets provide opportunities for investment
that provide relatively few extra jobs and that feed an ephemeral prosperity that can be wiped
out in days. Neoliberal theories were embraced by big business because they provided a
legitimation for their pursuit of self-interest and avenues for business expansion.

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As neoliberal policies were implemented around the world disparities in wealth and income increased and
poverty increased, contradicting neoliberal theories that by increasing the wealth at the top everyone would
be better off. In Australia economic rationalism – adopted by the Hawke/Keating governments in the 1980s
and continued by the Howard government in the 1990s – resulted in efforts to reduce government deficits,
reduced taxation for high income earners, deregulation of financial institutions, floating of the dollar,
reduction in tariffs and import restrictions, privatisation, and business deregulation. These reforms –
termed ‘restructuring’ – were supposed to enhance economic efficiency, productivity and industrial
competitiveness. In this Era, the gap between rich and poor has increased.

The response of governments around the world has been aimed at stimulating their economies. In Australia
although Kevin Rudd has argued for more international financial regulation his economic policies continue
to be largely based on faith in markets. While the Rudd government stimulus packages include some
proposed infrastructure investment they rely too heavily on providing consumers with spending money in
the vain hope that the market will ensure that people spend it in ways that will stimulate the economy. 13
 ECONOMIC GLOBALIZATION TODAY

The global financial crisis will take decades to resolve. The solutions proposed
by certain nationalist and leftist groups of closing national economies to world
trade, however, will no longer work. The world has become too integrated, thus
it is undeniable that some form of international trade remains essential for
countries to develop in the contemporary world.

International economic integration is a central tenet of globalization- it is

anchored on changes in the economy. Global Culture which is facilitated by
trade.

Governments should continue to devise ways if cushioning the most damaging

effects of economics globalization, while ensuring than its benefits succeeds for
everyone.

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 HISTORY OF GLOBAL MARKET
INTEGRATION IN THE TWENTIETH
CENTURY

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THOUGHTS ON ECONOMIC
INTEGRATION
Members:

 Froilan, Lloyd Francis M.

 Godines, Giana C.
 Hortizano, Rogin C.
 Inting, Khalysta Roysh C.
 Jabines, Xyla Dimple
 Leyson, Leah Mae D.
 Labaya, Jenine
 Lucernas, Ira Marie S.
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