Learning Activity Presentation

Instructions: 
 Go to your room and do an inventory of everything you have in your possession. You will
find out that the most essential among the "things"in your room are footwear, clothes,
computers (if any), cell phones, television (if possible), and maybe a radio. If you are a
student, you may also notice books, newspapers, news magazines, not to mention school
supplies and equipment
 Organize your inventory into two types: first, "things“ that are made in the Philippines and
second, those that are of foreign brands. List the countries of origin of your foreign-brand
items. Do the same thing for the kitchen and the living room. These should include
appliances.
 In class, compare your list with those of your classmates to determine which countries make
the most household and personal needs you and your families have. Make a similar list for
Philippine-made stuff. In the process, discuss why certain products are made in the
Philippines while others are produced abroad.
The Globalization of
World Economics
Reflection

What do you think is the impact of COVID-

19 to world economy?
Edpuzzel Video on the Effects of COVID-19 to
World Economy

August31, 2020@11:59AM – Deadline of

Submission
Submission is individual; the presentation on
Tuesday, September 1, 2020 will be by group.
Quiz No. 2 is available until tomorrow, August 30,
2020@11:59PM
The Globalization of World Economics

What is Economic Globalization?

What is Economic Globalization?
Economic globalization is an Irreversible Trend

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.
Economic Globalization - the United Nations
www.un.org › policy › cdp › cdp_background_papers
Economic Globalization

 International Monetary Fund (IMF) regards it as a historical process representing

the result of human innovation and technological progress.
 It is characterized by the increasing integration of economies around the world
through the movement of goods, services, and capital across borders.
 There is a drastic economic change that is occurring throughout the world.
 IMF – the value of trade (goods and service) increased as percentage of world
GDP.
Economic Globalization
Example:
World’s GDP in 1980 is 42.1%. In 2007, 62.1%
What does it mean?

1. There is an increase in trading system.

2. It means investments are moving all over the world at faster speeds.

 United Nations Conference on Trade and Development (UNCTAD)

- Foreign investments increased
- 57 Billion US Dollars in 1982. In 2015, the number increased to 1.76
Trillion Dollars
Economic Globalization

 There is also an increased in speed and frequency of

trading. At present, supercomputers execute millions of
stock purchases and sales between different cities in a
matter of seconds through a process called high frequency
trading.
Historical Background of Economic
Globalization

How did economic globalization start?

Historical Background of Economic
Globalization

To trace the historical background of

economic globalization would start with the
earliest known international trading system.
International Trading System

The oldest known international trade route was the Silk Road – a network of
pathways in the ancient world that spanned from China to Middle East and
Europe".
The most profitable products traded through this network was Silk.
Traders used the Silk Road regularly from 130 BCE when the Chinese Han dynasty
opened trade to the West until  153 BCE when the Ottoman Empire closed it.
International Trading System

Was the international route, Silk

Road, truly global?
Why? Why not?
International Trading System
 No. It had no ocean routes that could reach the American continent.

When did full economic globalization begin?

International Trading System

Galleon Trade

Historians Dennis Flynn and Arturo Giraldez claimed that the "age of
globalization began when all important populated continents began to exchange
products continuously - both with each other directly and indirectly via other
continents and in values sufficient to generate crucial impact on all trading
partners"
International Trading System
1571 – Galleon was established. It connected Manila, Philippines and
Acapulco, Mexico. That was the first time that the Americans were
directly connected to Asian trading routes.

Galleon Trade is considered as the first trading system that connects

Asian countries to America in general and the Philippines and Mexico
in particular.  
The Galleon trade was part of the age of mercantilism.
International Trading System

16th-18th Century

Period of Mercantilism – a system of global trade with multiple restrictions.

Countries in Europe with one another to sell more goods as a means to boost
their country’s income called monetary reserves.

To defend their products, regimes (mainly monarchies) imposed high tariffs,
forbade colonies to trade with other nations, restricted trade routes, and
subsidized exports.
International Trading System
19th Century

 1867 – an open trade system emerged.

 United States and United Kingdom adopted the gold standard at international monetary conference in Paris.

 Gold Trade - The United Kingdom, United states and other European
nations adopted the gold standard as a common basis for currency
prices and fixed exchange-rate system -all based on the value of
gold.
 The goal was to create a common system that would allow for more efficient trade and prevent the isolationism of the

mercantilist era.

 This compelled countries to back their currencies with fixed gold reserves.
International Trading System
 Many countries abandon the gold standard system when countries depleted their gold reserves
to fund their armies during World War 1.
 The global economic crisis called the Great Depression started in 1920 up to 1930 was
considered the worst and longest recession ever experienced by the Western world. Economist
blamed the gold standard system as the caused of depression since it limited the amount of
circulating money and therefore reduced demand and consumption.
 The US recovered from economic crisis when it abandoned gold standard system according to
Economist historian Barry Eichengreen.

20th Century
The world economy operates based on what are called fiat currencies – currencies that are not
backed by precious metals and whose value is determined by their cost relative to other countries.
International Trading System

Fiat currencies – a system in 20th century

that "allows governments to freely and
actively manage their economies by
increasing or decreasing the amount of
money in circulation as they see fit.
The Bretton Woods System
 The Bretton Woods system was inaugurated in 1944 during the United Nations
Monetary and Financial Conference.
 The Bretton Woods System was "largely influenced by  the ideas of British
Economist John Maynard Keynes who assumed three things:

1) Economic crisis occurs when a country does not have enough money, but
when money is not being spent and, thereby, not moving.
2) If the economies slow down then government should infuse money to
reinvigorate the market.
3) As prices of commodities increased, companies would earn more, and
would have more money to hire workers .
The Bretton Woods System
2 Financial Institutions created by delegates of Bretton Woods Conference:

1. International Bank for Reconstruction and Development IBRD or World Bank) – responsible
for funding postwar reconstruction projects.

2. International Monetary Fund (IMF) – the global lender of last resort to prevent individual
countries from spiraling into credit crises.
To this day, both institutions remain key players in economic globalization
Shortly after Bretton Woods, General Agreement on Tariffs and Trade (GATT) was created in
1947. The main purpose was to reduce tariffs and other hindrances to free trade.
Neoliberalism and Its Discontents
 Keynesianism is an economic theory that assumed three things 1) Economic crisis occur when a
country does not have enough money, but when money is not being spent and, thereby, not
moving 2) If the economies slow down then government should infuse money to reinvigorate the
market 3) Proponent argued that as prices increased, companies would earn more, and would
have more money to hire workers.
 In early 1970s, the “oil embargo” by OAPEC and the crashed of the stock markets affected the
Western economies.
 The result was phenomenon that Keynesian economic predicted a phenomenon called
stagflation in which a decline in economic growth and employment (stagnation) takes place
alongside a sharp increase in prices (inflation).
Neoliberalism and Its Discontents
 Neoliberalism emerged as a new form of economic thinking. The policies forwarded came to be
called Washington Consensus
 Economists Friedrich Hayek and Milton Friedman challenged the Keynesian theory and argued that
government intervention in economies distort the proper functioning of the market.
 The Washington consensus advocates for minimal government spending to reduce government
debt. They also called for the privatization of government-controlled services like water, power,
communications and transport, believing that the free market can produce the best result.
 The appeal of Neoliberalism was in its simplicity. Its advocates like US President Ronald Reagan
and British Prime Minister Margaret Thatcher justified reduction of government spending by
comparing national economies to households.
The Global Financial Crisis and the Challenge to Neoliberalism
 Neo-liberalism came under significant strain during the global financial crisis 2007-2008 when the
world experienced the greatest economic downturn since the great depression. The crisis can be
traced back to the 1980s when the United State systematically removed various banking and
investment restrictions.
 Financial experts wrongly assumed that even if many of the borrowers were individuals and
families who would struggle to pay, a majority would not default.
 The crisis spread beyond the United States since many investors were foreign governments,
corporations and individuals. The loss of their money spread like wildfire back to their countries.
 The challenges are countries like Spain and Greece are heavily indebted (almost like Third World
countries). (1) Learn from Greece has been forced by Germany to and the IMF to cut back their
social and public spending.
 The reduction in government spending has showed down growth and ensured high levels of
unemployment.
 In Europe, the continuing economic crisis has sparked a political upheaval.
Economic Globalization Today
 The world has become too integrated. Whatever one's opinion about the Washington Consensus
is, it is undeniable that some form of international trade remains essential for countries to develop
in the contemporary world...
 Export, not just the local selling of goods and services, make national economies grow at present.
In the past, those that benefited the most from free trade were the advanced nations that were
producing and selling industrial and agricultural products...
 In the recent decades, partly as a result of these increased export, economic globalization has
ushered in an unprecedented spike in global growth rates...
 Economic globalization remains an uneven process, with some countries, corporations and
individual benefiting a lot more that others". (Claudio et al. 2018)
 The beneficiaries of global commerce have been mainly transnational corporations (TNCs) and
not government.