The Contemporary World PDF

Leyte Colleges
Tacloban City THE CONTEMPORARY WORLD
Leyte Colleges
Tacloban City
(Gen. Ed. 02)
A. Y. 2020 – 2021
First Semester
Prepared by:
Phoebe M. Nierras
Instructor
Leyte Colleges
The Contemporary World
Course Title: The Contemporary World

No. of Units: 3 Units
Course Description:
This course introduces students to the contemporary world by examining the
multifaceted phenomenon of globalization. Using the various disciplines of the social
sciences, it examines the economic, social, political, technological and other
transformations that have created an increasing awareness of the
interconnectedness of people and places around the globe. To this end, the course
provides an overview of the various debates in global governance, development, and
sustainability. Beyond exposing the student to the world outside the Philippines, it
seeks to inculcate a sense of global citizenship and global ethical responsibility.
Learning Outcomes:
At the end of the course the students should be able to:
A. Competencies
1. Distinguish different interpretations of and approaches to globalization.
2. Describe the emergence of global economic, political, social, and cultural
systems
3. Analyze the various contemporary drives of globalization
4. Understand the issues confronting the nation-state
5. Assess the effects of globalization on different social units and the responses
B. Skills
1. Analyze contemporary news events in the context of globalization
2. Analyze global issues in relation to Filipinos and the Philippines
C. Values
1. Articulate personal positions on various on global issues
2. Identify the ethical implications of global citizenship
Reference:
Prince Kennex R. Aldama: The Contemporary World, first edition 2018
Prepared by:
Phoebe M. Nierras
Instructor
Leyte Colleges
Course Outline:
Chapter 1: Defining Globalization
Globalization
Metaphors of globalization
Natures of globalization
Qualities and characteristics of globalization
Globalization theories
Origins and history of globalization
Chapter 2: The Global Economy

The Global Economy
Historical Process, the Result of Human Innovation and Technological
Progress
International Monetary Systems
The Bretton Woods System
European Monetary Integration
International Trade and Trade Policies
Unilateral Trade Order
Multilateralism: From the GATT to WTO
Developing Countries and International Trade
The Modern World System
Chapter 3: Market Integration

Brief History of Global Market Integration in the 20th Century
World’s Major Free Trade Areas
The Role of International Financial Institutions in The Creation of
Global Economy
The Historical Events for The Global Corporations
Chapter 4: The Global Interstate System

Global Governance in the Twenty-First Century
Effects of Globalization to Governments
Challenges from National/ldentity Movements
Global Social Movements
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Phoebe M. Nierras
Instructor
Leyte Colleges
CHAPTER 1: DEFINING GLOBALIZATION
GLOBALIZATION
Globalization is a term used to describe the changes in societies and the world
economy that are the result of dramatically increased trade and cultural exchange.
In specifically economic contexts, it refers almost exclusively to the effects of trade,
particularly trade liberalization or “free trade”.
It is a common belief that globalization plays a role nor just in international
levels of trade and commerce, but the fact that it has played an important role in
making our lives much more comfortable too. The phones, apparels, gadgets or
accessories that we use in our day-to-day life are available to us through
globalization. Knowingly and unknowingly, we are all under the impact of
globalization, and more importantly it has helped in bringing international peace
and justice to humankind.
GLOBALIZATION can mean:

The formation of a global village – closer contact between different parts of the
world, with increasing possibilities of personal exchange, mutual understanding
and friendship between “world citizens”.
Economic globalization – “free trade” and increasing relations among members of

an industry in different parts of the world (globalization of an industry), with a
corresponding erosion of National Sovereignty in the economic sphere.
SIGNS OF GLOBALIZATION
1. Increase in international trade at a faster rate than the growth in the world
economy.
2. Increase in international flow of capital including foreign direct investment.
3. Greater trans-border data flow, using such technologies such as the internet,
communication satellites and telephones
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4. Greater international cultural exchange, for example through the export of
Hollywood and Bollywood movies.
5. Some argue that even terrorism has undergone globalization. Terrorist now
have attacked places all over the world.
6. Spreading multiculturalism and better individual access to cultural diversity,
with on the other hand, some reduction in diversity through assimilation,
hybridization, Westernization, Americanization or Sinosization of cultures.
7. Erosion of national sovereignty and national borders through international
agreements leading to organizations like the WTO and OPEC.
8. Greater international travel and tourism.
9. Greater immigration, including illegal immigration.
10. Development of global telecommunications infrastructure
11. Development of global financial systems
12. Increase in the share of the world economy controlled by multinational
corporations.
13. Increased role of international organizations such as WTO, WIPO, IMF that
deal with international transactions.
14. Increase in the number of standards applied globally; e.g. copyright laws
METAPHORS OF GLOBALIZATION
Solidity/Solid
One of the things that characterized people, things, information, places, and
much else was their greater solidity. Solidity describes a world in which berries exist
and are erected to prevent the free movement of all sorts of things. It was the nation-
state that was most likely to create these “solid” barriers (example: the Great Wall
of China) and the state itself grew increasingly solid as it resisted change.
Liquids and Gases

Solid materials realities continue exist, but because of a wide range of
technological developments in transportation, communication, the internet, and etc.
they can move across the globe far more readily. Everywhere we turn, more things,
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Leyte Colleges
including ourselves, are becoming increasingly liquefied. Furthermore, as the
process continues, those liquids, as is the case in the natural world tend to turn
into gases of various types.
Karl Marx opened the door to this kind of analysis when he famously argued
that because of the nature of capitalism as an economic system everything solid
melts into air”. That is, many of the solid, material realities that preceded capitalism
were “melted” by it and were transformed into liquids.
Global Economic Flows

Flows – closely related to the idea of liquidity, and integral to it, is another key
concept in thinking about globalization, the idea flows; after all liquid flows easily,
far more easily than solid. Flows: movements of people, things, information, and
places due, in part, to the increasing porosity of global barriers
Types of Flows:
1. Multi-directional flows – globalization is not a one way process as concept
like Westernization and Americanization seem to imply. While sorts of things
do flow out of the West and the United States to every part of the world, many
more flow into the West and the US from everywhere (example: Japanese
automobiles, Chinese t-shirts, I-phones manufactured in China, and etc.)
2. Interconnected Flows – the fact that global flows do not occur in isolation
from one another; many different flows interconnect at a various points and
times. Example the Global Fish industry. That industry is now dominated by
the flows of huge industrial ships are putting any small fishers out of business
and some are using their boats for other kind of flows.
3. Conflicting Flows – transplanetary process not only can complement one
another, but often also conflict with one another.
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Leyte Colleges
NATURES OF GLOBALIZATION
1. Liberalization: IT stands for the freedom of the entrepreneurs to establish any

industry or trade business venture, within their own countries or abroad.
2. Free trade: It stands for free flow of trade relations among all the nations. Each
state grants MFN (Most Favored Nation) status to other states and keeps its
business and trade away from excessive and hard regulatory and protective regimes.
3. Globalization of Economic Activity: Economic activities are be governed both

by the domestic market and also the world market. It stands for the process of
integrating the domestic economy with world economy.
4. Liberalization of Import-Export System: It stands for liberating the import-

export activity and securing a free flow of goods and services across borders.
5. Privatization: Keeping the state away from ownership of means of production

and distribution and letting the free flow of industrial, trade and economic activity
across borders.
6. Increased Collaborations: Encouraging the process of collaborations among the

entrepreneurs with a view to secure rapid modernization, development and
technological advancement.
7. Economic Reforms: Encouraging fiscal and financial reforms with a view to give
strength to free world trade, free enterprise, and market forces.
Advantages of Globalization
Peaceful Relations – Most of the countries have resorted to trade relations with
each other in order to boost their economy. Leaving behind any bitter past
experiences if any.
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Employment – Considered as one of the most crucial advantages, globalization
has led to the generation of numerous employment opportunities. Companies are
moving towards the developing countries to acquire labor force.
Education – A very critical advantage that has aided the population is the spread
of education. With numerous educational institutions around the globe, one can
move out from the home country for better opportunities elsewhere.
Product Quality – The product quality has been enhanced so as to retain the
customers. Today, the customers may compromise with the price range but not
with the quality of the product. Low or poor quality can adversely affect consumer
satisfaction.
Cheaper Prices – Globalization has brought in fierce competition in the markets.
Communication – Every single information is easily accessible from almost every
corner of the world. Circulation of information is no longer a tedious task and
can happen in seconds. The internet has significantly affected the global
economy, thereby providing direct access to information and products.
Transportation – It is considered as the wheel of every business organization,
connectivity to various parts of the world is no longer a serious problem.
GDP Increase – Gross Domestic Product, commonly known as GDP, is the money
value of the final goods and services produced within the domestic territory of
the country during an accounting year.
Free Trade - It is a policy in which a country does not levy taxes, duties,
subsidies or quota on the import/export of goods and services from other
countries. There are countries which have resolved to free in specific regions.
This allows consumers to buy goods and services, comparatively at a lower cost.
Travel and Tourism – Globalization has promoted tourism to great heights.
International trade among different countries also helps in increasing the
number of tourists that visit different places around the world.
External Borrowing – With the help of globalization, there is an opportunity for
corporate, national, and sib-national borrowers to have better access to external
finance, with facilities such as external commercial borrowing and syndicated
loans.
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Leyte Colleges
Disadvantages of Globalization
Health Issues – Globalization has given rise to more health risks and presents
new threats and challenges for epidemics. The dawn if HIV/AIDS. Having its
origin in the wilderness of Africa, the virus has spread like wildfire throughout
the globe in no time. Food items are also transported to various countries, and
this is a matter of concern, especially in case of perishable items.
Loss of Culture – with the large number of people moving into and out of a
country, the culture takes a backseat. People may adapt to the culture of the
resident country. They tend to follow the foreign culture more, forgetting their
own roots. This can give rise to cultural conflicts.
Uneven Wealth Distribution – It is said that the rich are getting richer while the
poor are getting poorer. In the real sense, globalization has not been able to
reduce poverty.
Environment Degradation- The industrial revolution has changed the outlook
of the economy. Industries are using natural resources by means of mining,
drilling, etc. which puts a burden on the environment.
Disparity – Though globalization has opened new avenues like wider markets
and employment, there still exists a disparity in the development pf the
economies. Structural unemployment owes to the disparity created. Developed
countries are moving their factories to foreign countries where labor is cheaply
available.
Conflicts – It has given rise to terrorism and other forms of violence. Such acts
not only cause loss of human life but also huge economic losses.
Cut-throat Competition- Opening the doors of international trade has given
birth to intense competition. This has affected the local markets dramatically.
The local players thereby suffer huge losses as they lack the potential to advertise
or export their products on a large scale. Therefore, the domestic markets shrink.
Globalization cab be:

Cultural globalization – is the transmission of ideas, meanings, and values
around the world in such a way as to extend and intensify social relations. This
process is marked by the common consumption of cultures that have been
diffused by the Internet, popular culture media, and international travel.
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Economic globalization refers to the increasing interdependence of world

economies as a result of growing scale of cross-border trade of commodities and
services, flow of international capital and wide and rapid spread of technologies
(Shangquan, 200)
Industrial Globalization
Every country in the world is moving towards globalization. Specialization may
be referred to as the phenomenon of producing only that product in which the
country has competitive advantage in terms of cost. For example, Singapore
specializes in pharmaceutical while the US specialized in military equipment.
Financial Globalization
It may be defined as the emergence of worldwide financial markets and better
access to external financing for corporate, national and sub-national borrowers.
Some projects in the Philippines were sponsored by foreign investors. They may
be in the form of international organizations or independent investors.
Informational Globalization
This aspect of Globalization has perhaps had the greatest impact on the world
today. Sitting at the end of the world, you have access to the information available
in any other part of the world with just the push of a button. Internet, television,
telephone, fax, etc. are some of the inventions that may be considered as a part
of the informational globalization process where the information flow
dramatically increased between geographically remote areas of the world.
Social globalization.
Refers to the sharing of ideas and information between and through different
countries.
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Ecological globalization.
The effects of globalization in the ecology are still not completely identified,
though some studies suggest that the process of globalization has many
consequences in our ecology.
Globalization and the Politics.

Through globalization, political issues such as the rights of women and
children are now currently discussed, many laws are now already implemented
regarding the issues on the rights of women and children.
Globalization with technology.

Technology really plays a huge part in the life of every individual. Also through
the advancement of technology we can now already communicate with others
despite the distance that separate us. And through our technology today, the
process of globalization is now taking place much faster.
Geographical
Globalization is moving towards the trend of a borderless world. We can now
explore different countries without having any dangers.
QUALITIES AND CHARACTERISTICS OF GLOBALIZATION
Creation and Multiplication – involves creation of new multiplication of existing

social networks and cultural activities thus, breaking the traditional norms and
practices in the political, economic and cultural realms of most communities.
Expansion and Stretching – globalization is very evident in the expansion and

stretching of social operations and connections, on how the financial markets
and trading operate around the globe like the (WTO) World Trade Organization,
ASEAN Economic Community, World Economic Forum and European Union
brought to the expansion of local economies through opening their economies to
the other parts of the world.
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Leyte Colleges
Consciousness and Awareness - globalization involves the human
consciousness and awareness. People, as the primary actors of globalization are
the front liners are reflected in their experiences. The human consciousness is
critical on how they impact the growing outcomes and markets of globalization.
Their daily actions such as global interdependence provide large-scale
implications to the norms and practices of the borderless world.
GLOBALIZATION THEORIES
Homogeneity – refers to the increasing sameness in the world as cultural inputs,

economic factors, and political orientation of society expand to create common
practices, same economics, and similar form of government. Homogeneity in
culture is often linked cultural imperialism. This means, a given culture
influences other cultures. Example the dominant religion in our country is
Christianity which was brought to us by the Spaniards. In terms of economy,
there is recognition of the spread of neoliberalism, capitalism, and the market
economy in the world. Global economic crises are also products of homogeneity
in economic globalization.
Neoliberalism – it is about making trade between Nations easier. Freer
movements of goods, resources and enterprises to maximize profits and
efficiency.
Capitalism – features private ownership of business and market place
competition. It is the same as a free enterprise system.
Heterogeneity – it pertains to the creation of various cultural practices, new

economies, and political groups because of the interaction of elements from
different societies in the world. It is refers to the differences of hybrids or
combinations of cultures which can be produced through the different
transplanetary processes.
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ORIGINS AND HISTORY OF GLOBALIZATION
Our world population are increasing as population growth and time goes on
human civilization become even more interconnected through a pirate process
called globalization as define acceleration of social exchange, social consciousness,
and social activities that allows all people to interact. It is a dynamic unified world
where borders language, ethnicity, government, etc. do not limit communication
because of the growth of technology it is now easier than ever for us to interact and
grow as a society. Globalization is not a new Phenomena.
The Prehistoric Period

10000 BCE to 3500 BCE during this time prehistoric man spread across the
globe in small groups of hunter-gatherers as seen in the walls of Velasca caves in
France. Prehistoric hunter gatherer groups were preoccupied with hunting, these
groups focused on survival and it was not until the domestication of animals and
the growth of settled farming that the possibility for globalization as we define it
existed as agrarian societies developed and the need for food was no longer the
primary motive. Society began to differentiate a hierarchy and allow for the growth
of different social classes. The patriarchal society of settled groups which still exists
today developed during this times.
The Premodern Period

3500 BCE to 1500 CEE larger civilizations developed which give way to the
current definition of globalization. Large cities with different classes of people began
to crop up again across the ancient Near East and Asia the invention of writing
cuneiform by the Mesopotamians was a major leap in communication technology
writing allowed for recording of details such as financial accounts which made it
possible information to be remembered and transmitted the eventual discovery of
the Rosetta stone with the same passage translated into three ancient languages,
shows that premodern societies communicated in various written forms. The advent
of the wheel was likewise crucial for globalization and allowed goods to be
transported across long distances and carts and architectural technology to improve
this led to the establishment of roads which led to increased trade and
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communication between growing world empires. The premodern period was time for
the development of large civilizations. The empire mean for globalization not only
their communication between different groups of people within the set of the empires
themselves it was a time for foundation of the first global trade routes, utilizing
developing transportation technology like more permanent roads better ships and
animal-drawn carts and wagons. Merchant class begun to grow as population began
to decline merchant ships became a great way to trade as they were faster than
walking.
The Early Modern Period

During this period from 1500 to 1750 was aided by the invention of the
printing press and the improvement of navigation and sailing technologies. The
western world expanded in the contact with the Native American societies fits into
the process of globalization even though the effects were largely negative for the
existing population of new people and new lands. During this time the Dutch India
companies began to establish trading posts throughout the world. This eventually
led to system of imperialism as countries wanted to gain more resources but was
also important to the furtherance of globalization as people and new ideas were
transported around the world along with goods.
The Modern Period

1750 to 1980 was headed off by time known as the Enlightenment. The
Enlightenment was a time where philosophers like Voltaire met up and came up
with ideas such as natural rights, life, liberty and property. The belief in these rights
are the basis of American Revolution beginning in 1776, the American Revolution
was start of many revolutions against monarchies in the formation of new
democracies. America was founded on the capitalistic economic system lead and
molded by treasury secretary Alexander Hamilton. This inspired the French all the
way across the ocean trouble against their monarchy as well. The late 18th and
early 19th century were a time of revolution. The Democracy systems put in place
by New Republic and still carry on today and democracy the peace of globalization
because in theory people could travel to Democratic lands and be accepted
regardless of their ideas. Globalization had a loud trade in production to become
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intertwined with the American economy that when the Great Depression hit in 1929
both these things fell dramatically, it took years and many new systems for the world
to climb out.
The Contemporary Era

Which we are currently in. The Berlin Wall fell heading the era where
capitalism and American governmental and economic systems seemed to become
the model for all developing countries to follow. The recent decades have seen the
rise of intergovernmental organizations, and international trade groups like Asian
and economic systems like the International Monetary Fund.
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CHAPTER 2: THE GLOBAL ECONOMY
The Global Economy

The widening, deepening and speeding up of worldwide interconnectedness in all
aspects of contemporary social life (Held, et al., 1999).
Advances in technology such as mobile phones, Airplanes telephones and the
Internet have made the growth of transport and communication networks possible. Among
other things, this means that people and countries can exchange information and goods
move quickly and in a less complicated way. This process is called globalization. It is the
process by which businesses or other organizations develop international influence or start
operating on an international scale. Globalization represents the global interaction &
integration of international trade, investment, information technology and cultures among
people, companies, and government.
Economic Globalization
Refers to the Increasing integration of economies around the world, particularly
through the movement of goods, services, and capital across borders.
Economic globalization is a spread of trade, transportation, and communication
systems on a global scale in the interest of promoting international commerce. There are
two different economies we should know about economic globalization. These are:
1. Protectionism – is protecting one’s economy from foreign competition by creating
trade barriers.
2. Trade liberalization – is the act of reducing trade barriers to make international
trade easier between countries. These trade barriers are usually tariffs which are
required fees on imports or exports and quota which is the limited quantity of a
particular product that under official controls can be produced, exported, or
imported.
HISTORICAL PROCESS, THE RESULT OF HUMAN INNOVATION AND

TECHNOLOGICAL PROGRESS
In ancient times, traders traveled vast distances to buy rare commodities such as
salt, spices and gold, which they would then sell in their home countries.
Gils and Thompson (2006) - migration. According to Gills and Thompson, globalization
processes have been ongoing ever since Homo sapiens began migrating from the African
continent ultimately to populate the rest of the world. Minimally. They have been ongoing
since the sixteen-century’s connection of the Americas to Afro-Eurasia.
Silk Road - best known example of old- fashioned globalization. The Silk Road was
an ancient network of trade routes, formally established during the Han Dynasty of
China, which connected Asia, Africa, and Europe.
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Adam Smith- magnum opus, an inquiry into the nature and causes of the wealth of nations
(1776). When he wrote this masterpiece, he considered the discovery of America by
Christopher Columbus in 1492 and the discovery of the direct sea route to India by Vasco
de Gama in 1498 as the two greatest achievements in human history which serve as
pathways to network and trade. However, in the course of a couple of decades these
remarkable achievements were overshadowed by technological advances and organization
methods of the British Industrial Revolution.
1800s-industrial revolution – from the early 1800s, following the Napoleonic wars, the
industrial revolution spread to Continental Europe and North America, too. This time period
saw the mechanization of agriculture and textile manufacturing and a revolution in power,
including steam ships and railroads which affected social, cultural and economic
conditions.
The British and the Dutch East India – companies established in 1600 and 1602,
respectively. The economic nationalism of the 17 th and 18th centuries, coupled with
monopolized trade (such as the first multinational corporations, the British and the Dutch
East India Companies, established in 1600 and 1602, respectively) did not favor,
international Economic integration.
Between 1500 and 1800- total number of ships sailing to Asia from major European
countries rose remarkably the total number of ships sailing to Asia from major European
countries rose remarkably between 1500 and 1800 (in numbers: 770 in the 16 th, 3,161 in
the 17th and 6,661 in the 18th century).
World export to world Gross Domestic Product (GDP) – however, world export to world
GDP did not reach more than one to two per cent in that period. Gross domestic product
(GDP) is the monetary value of all the finished goods and services produced within a
country’s borders in a specific time period. GDP is commonly used as an indicator of the
economic health of a country. As well as a gauge of a country’s standard of living.
19h Century – the real break-through came only in the 19th century. The annual average
compound growth rate of world trade saw a dramatic increase of 4.2 percent between 1820
and 1870, and was still relatively high, at 3.4 per cent between 1870 and 1913.
1870 to 1913- golden age of globalization – the relatively short period before World War
I is often referred to as the ‘golden age’ of globalization, since it was characterized by relative
peace, free trade and financial and economic stability.
1913 - Trade equaled to 16-17 % - by 1913. Trade equaled to 16-17 percent of world
income. Due to the transport revolution: Steamships and railroads reduced transaction
costs and strengthened both internal and international Exchange. The phenomenon has
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several interconnected dimensions such as the globalization of trade of goods and services,
the globalization of financial and capital markets, the globalization of technology and
communication, and the globalization of production.
Transnational Corporations (TNCs)

The major players of present-day global economy. The main driving forces of
economic globalization of the last 100 years, accounting for roughly two-thirds of world
export. Transnational Corporations (TNCs) are incorporated or comprising parent
enterprises and their foreign affiliates such as Procter & Gamble and Coca-Cola Company.
A parent enterprise is defined as an enterprise that controls assets of other entities in
countries other than its home country. Usually by owning a certain equity capital stake. A
foreign affiliate is an incorporated or unincorporated enterprise in which an investor, who
is resident in another economy, owns a stake that permits a lasting interest in the
management of that enterprise. Multinational Corporation has an international identity as
belonging to a particular home country where they are headquartered. A transnational
company is borderless, as it does not consider any particular country as its base, home or
headquarters. Transnational Corporation is a type of multinational corporations.
Global commodity chain – an idea that reflects upon the increasing importance of global
buyers in a world of dispersed production. As economic integration is becoming more
intensive, production disintegrates as a result of the outsourcing activity of multinationals
(Feenstra, 1998). This move induced Gereffi (1999) to develop the concept of global
commodity chains. A commodity chain is a process used by firms to gather resources,
transform them into goods or commodities, and finally. Distribute them too consumers. It
is a series of links connecting the many places of production and distribution and resulting
in a commodity that is then exchanged on the world market.
Issues about Globalization – economic globalization fosters universal economic growth and
development but we cannot ignore the fact that it still result into issues affecting the society.
Capitalism – capitalism, also known as the free-enterprise or free-market system, is an

economic and political system in which a country’s trade and Industry are controlled by
private owners for profit, rather than by the state. According to Wallerstein. Capitalism is a
historical social system which created the dramatically diverging historical level of wages in
the economic arena of the world system. Powerful transnational corporations tend to
transfer manufacturing jobs from developed nations to less developed countries through
outsourcing in order to reduce the cost of products because economically disadvantaged
countries have less government regulations and cheaper labor cost. Workers in these
countries work for very little money therefore they often remain poor and sometimes they
do not have sufficient social and health insurance cover. Capitalism is exploitative in nature
which divided society and the rich has more power over the working class opposing threats
to human contractualization applied by these corporations treat employees unfairly in order
to benefit from their work and maximize their profit.
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Income inequality – income inequality is the unequal distribution of household or
individual income across the various participants in an economy. It is often presented as
the percentage of income related to a percentage of the population. Over the past two
decades, income inequality has risen in most regions and countries. The ratio of the richest
region’s GDP per capita to that of the poorest was only 1.1 in 1000, 2 in 1500 and still only
3 in 1820. It widened to 5 in 1871 and stood at 9 at the outbreak of world war in 1950 it
climbed to 15 and peaked at 18 at the turn of the new millennium. Less equal societies
have less stable economies. High levels of income inequality are linked to economic
instability. Financial crisis, debt and inflation.
Environmental problems – globalization has produced ecological problems such as global

warming. Climate change, and the abuse of natural resources. The use of airplanes, ships
and trucks to transport goods over international borders is constantly on the increase.
Manufacturing companies and factories release chemicals into the atmosphere. This causes
more carbon dioxide to be released into the atmosphere which in turn is the main cause of
global warming which is the gradual increase in the overall temperature of the earth's
atmosphere generally attributed to the greenhouse effect caused by increased levels of
carbon dioxide, chlorofluorocarbons, and other pollutants.
INTERNATIONAL MONETARY SYSTEMSS
Regimes – all the implicit and explicit principles, norms, rules, and decision-making
procedures around which actors’ expectations converge (Krasner, 1983)
International monetary system or regime (IMS) – refers to the rules, customs,

instruments, facilities, and organizations for effecting international payments (Salvatore,
2007). In the liberal tradition, IMS facilitates cross-border transactions, especially trade
and investment. However, it also reflects economic power and interests, as money is
inherently political, an integral part of “high politics” of diplomacy (Cohen, 2000)
The Gold Standard

The gold standard functioned as a fixed exchange rate regime, with gold as the only
international reserve. Participating countries determined the gold content of national
currencies (fixed exchange rates). Common adherence to gold convertibility linked the world
together through fixed exchange rates (Bordo and Rockoff, 1996).
The modern-day IMS originated back to the early 19th century. When the UK adopted
gold mono-mentalism in 1821. In 1867, the European nations & the United States,
propagated a deliberate shift to gold at the International Monetary Conference in Paris.
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Gold – believed to guarantee a non-inflationary, stable economic environment, a means for
accelerating international trade (Elnaudi, 2001).
THE BRETTON WOODS SYSTEM

Inter-war period consequences and the wish to return to peace and prosperity
impelled the allied nations to start a new IMS in the framework of the United Nations
Monetary and Financial Conference in Bretton Woods, New Hampshire (Us). In July 1944.
Delegates of 44 countries agreed on adopting the gold-exchange standard. The US dollar
was the only convertible currency of the time, so the United States committed itself to sell
and purchase gold without restrictions at US$35 dollar an ounce. All other participating
but non-convertible currencies were fixed to the US dollar. Delegates also agreed on the
establishment of two international institutions.
Two international institutions:

1. International Banks for Reconstruction and Development (BRD) – responsible for
post-war reconstruction
2. International Monetary Fund (IMF) – promotes international financial cooperation
and buttress international trade. The IMF was expected to safeguard the smooth
functioning of the gold exchange standard by providing shot-term financial
assistance in case of temporary balance of payments difficulties.
The Bretton Woods system did not prevent countries from running large and
persistent deficits (or surpluses) in their balance of payments and were allowed to correct
the official exchange rate in order to eliminate deficits. During the first few years of the new
regime, US managed to maintain a surplus in its balance of payments. As soon as Europe
regained its pre-World War Il economic power, the external position of the United States
turned into a persistent deficit as a natural consequence of becoming an International
reserve currency. Nevertheless, by the mid-1960s. The dollar became excessively overvalued
vis-à-vis major currencies. As a response, foreign countries started to deplete the US gold
reserves. Destabilizing speculations, fed by the huge balance of payments and trade deficit,
along with inflationary pressures, forced the United States to abandon the gold- exchange
standard on 15 August, 1971.
In early 1973, industrialized countries decided to float their currencies and intervene
in financial markets. But managed floating did not perform any better, either that advanced
countries had to interfere on a few occasions in order to avoid calamity.
The 1990s saw the triumph of the Washington consensus. Its programme points
were advocated and disseminated by the major international financial institutions such as
IMF. Several countries, such as Mexico, Brazil or the East Asian tigers, deregulated their
financial sectors and fully liberalized capital transactions. However, reforms were not
supplemented by strengthened monitoring and these currencies were pegged to the US
dollar, which appreciated substantially during the 1990s and caused a financial crisis that
first hit Mexico in 1994 and reached East Asia in 1997-8.
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EUROPEAN MONETARY INTEGRATION
In the post+-World War II era, the United States advocated an economically and
militarily strong
Germany and Western Europe. It activated its post-War reconstruction programme, the
Marshall Plan, in 1948, which was administered by the Organization for European
Economic Cooperation. European Economic Community (EEC) was established and was
the first major step towards an ever-closer union. European six (Germany, France,
Netherlands, Belgium and Luxembourg) aimed at the creation of a common market, where
goods, services, capital and labor moved freely but not in the field of finance or exchange
rate policies. But the collapse of the Bretton Woods system pressured EEC to set up a
regional monetary regime-the European Monetary System (EMS) in 1979. The EMS was a
unique system, since neither the US Dollar, nor gold could play a role in the stabilization
process of exchange rates. Instead, a symmetric adjustable peg arrangement, the European,
Italy, exchange Rate Mechanism, was created (Gros and Thygesen, 1998).
The success of the EMS enabled Jacques Delors, European Commission President,
to establish the new European Economic and Monetary Union (EMU) in the Maastricht
Treaty in 1992. By 1999, the member states of EMU abandoned their currencies and had
it administered by the European Central Bank (ECB). The first ten years of the EMU
succeeded but the global financial and economic crisis of 2008-9 posed dramatic challenges
for the European Union (EU). The ECB cannot bail out individual countries which have lost
their monetary authority. As a response to the crisis, the EU enacted a three-pillar financial
rescue programme in 2010, namely:
1. European Financial Stability Mechanism
2. European Financial Stability Facility
3. The financial assistance of the IMF.
Critics say that EMU would never be able to quality for a well-functioning and stable
monetary zone without a common budget of the size of federal countries such as the United
States (Feldstein, 1997). The future of the EMU depends on the willingness of member states
to agree on more fundamental changes in the governance of the Eurozone
NTERNATIONAL TRADE AND TRADE POLICIESS
Paul Samuelson – gave one proposition that is both valid and non-trivial. He gave David
Ricardo’s comparative advantage theory
Comparative Advantage Theory – is when a country produces a good or service for
a lower opportunity cost than other countries. Opportunity cost measures a trade-
off. A nation with a comparative advantage makes the trade-off worth it. The benefits
of buying their good or service outweigh the disadvantages. The country may not be
the best at producing something. But the good or service has a low opportunity cost
for other countries to import. It became the rationale for free trade agreements he (D.
Ricardo) argued that a country boosts its economic growth the most by focusing on
the industry in which it has the most substantial comparative advantage. Example:
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Europe was able to manufacture cheap cloth. Portugal had the right conditions to
make cheap wine. Ricardo predicted that Europe would stop making wine and
Portugal stop making cloth. He was right. Europe made more money by trading its
cloth for Portugal’s wine, and vice versa. It would have cost England a lot to make all
the wine it needed because it lacked the climate. Portugal didn’t have the
manufacturing ability to make cheap cloth. Therefore, they both benefited by trading
what they produced the most efficiently.
Product Europe Portugal

Clothing 20 hrs/unit 30 hrs/unit
Wine 10 hrs/unit 5 hrs/unit
Europe produces clothes more efficient than Portugal and Portugal produces wines
more efficient than England. In this case, clothes and wine are the absolute advantage of
Europe and Portugal, respectively.
Absolute Advantage Theory – is the ability of country/individual/company/region to

produce a good or service at low cost price per unit than the cost that any other country
produces on the same good or service anything that a country does more efficiently than
other countries
Competitive Advantage Theory – is what a country business, or individual that provides
a better value to consumers than its competitors. There are three strategies companies use
to gain a competitive advantage. First, they could be the low-cost provider. Second, they
could offer a better product or service. Third, they could focus on one type of customer.
Comparative advantage causes Free Trade. Alexander Hamilton and Friedrich List
stated that the Comparative Advantage Theory can hinder the long-term development
prospects of the country producing the lower value added products. Friedrich List developed
the INFANT INDUSTRY ARGUMENT which gave his insights on how the national industry
can protect its own economy. The Infant Industry Argument states that…
Developing countries are justified to put tariffs on imports if they are seeking to develop new
industries and diversity their economy. By the regulation of tariffs, imported goods are taxed
in order to minimize the trade with international countries, especially with developed
nations. This also promotes the development of local products that may contribute to
establish new industries and the progress in the nation’s economy.
Trade patterns should not be considered static. Some people might use trade patterns as a
basis for the day-to-day trading. They should see to it that these are dynamic and has the
capacity to change because of different factors such as the supply, demand, environmental
changes, and etc.
Through temporarily restricting the free flow of goods, a national industry can be established,
thereby fostering long term economic growth and political power.
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Emmanuel (1972) developed the concept of UNEQUAL EXCHANGGE – is a fundamental
and systemic distinguishing characteristic of modern world economy. The social division of
labor contributes to the economic development of the core and hinders development at the
periphery
CORE best in consumers of primary commodities and producers of manufactured articles

PERIPHERY worst of both worlds, as consumers of manufactures and as producers of raw
materials
UNILATERAL TRADE ORDER
In seventeenth- and eighteenth-century Europe International trade was basically a

means to accumulate surplus (gold reserves) in the balance of payments by stimulating
export and restricting import. Monarchs from Portugal to England used gold reserves to:
• Finance wars; and

• Consolidate authority over domestic constituents
The surge with Europe’s industrial revolution and the consequent repeal of the
British Corn Laws in 1846 in particular.
Industrialists triumphed over landowners and farmers, opening the way for further
industrialization in Britain. The so-called Cobden-Chevalier treaty of 1860 allowed the UK
and France to specialize in commodities based on their respective comparative advantages
and to achieve further advances in international trade arrived only industrialization.
Helped to avoid the eruption of an abrupt war between the two countries. Most
Favored Nation (MFN) Principle States that any negotiated reciprocal tariff reductions
between two parties should be extended to all other trading partners without conditions
(Lampe, 2008) Overall average tariffs declined.
World War I, however, was a dramatic blow to Free trade.
Protectionism, in turn, was detrimental to development, peace and stability (Ruggie.
1982). Two rounds of World Economic Conferences in 1927 and 1933 failed to deliver tariff
reductions and exchange rate stabilization because of the unwillingness of the United States
to take the role of the hegemon as a successor of a weakened Great Britain.
US Reciprocal Trade Agreements Act in 1934. Put a stop to any further decline in
international trade allowed the president to determine trade policies and eased the pressure
put on the congress for protection a return to the principle of MFN provided a solid base for
a renewed international trade regime following World War II
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MULTILATERALISM: FROM THE GATT TO WTO
Dollar became the world currency, backed by 2/3 of the world’s gold reserves. United
States is the largest aid donor, wherein, Afghanistan is its top recipient. General
Agreement on Tariffs and Trade (GATT) was the first worldwide multilateral free trade
agreement started June 30, 1948 until January 1, 1995. The purpose of GATT was to
eliminate harmful trade protectionism that had sent global trade down 65% during the
Great Depression. By removing tariffs, GATT boosted international trade. It restored
economic health to the world after the devastation of World War I.
3 PROVISIONS:
1. Each member must confer the most favored nation status to every other member
2. Prohibited restriction on the number of imports and exports
3. Developed countries agreed to eliminate tariffs on imports of developing countries to
boost their economies.
World Trade Organization (WTO) January 1. 1995 -Uruguay Round of GATT. The World
Trade Organization is a global organization made up of 164 member countries that deals
with the rules of trade between nations. Its goal is to ensure that trade flows as smoothly
and predictably as possible.
DEVELOPING COUNTRIES AND INTERNATIONAL TRADE
Developing nations did not participate actively in multilateral trade negotiations for
a relatively long time. Apart from the so called East Asian newly industrializing countries,
which adopted an outward-oriented development strategy. Most of the developing countries
did not manage to integrate into the post-World War II trading system successfully. On the
one hand, they followed an inward-looking. Import-substitution industrialization strategy.
Which did not favor trade openness (Findlay and O’Rourke, 2007)
Advanced economies were also reluctant to open their markets to commodities such
as textile or agriculture products in which developing countries had a natural comparative
advantage.
United Nations Conference on Trade and Development (UNCTAD)

Was established with the joint effort of the developing world. The aim of UNCTAD
was to promote trade and cooperation between the developing and the developed nations.
The change in the behaviour of developing countries arrived with the Uruguay Round.
Originally, the round was meant to be a grand bargain between developed and developing
economies (Ostry, 2002). The former were expected to open their markets, especially to
agricultural and textile products, whereas the latter accepted the new regulation on
intellectual property rights and services. While developing countries have opened up their
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service markets, their export of agricultural products is still blocked by advanced nations.
Agriculture has a share of one-third to a half of the total economic output in most developing
countries. Without the liberalization of agriculture, it is simply impossible for developing
nations to fully integrate into the global economy.
Africa is the potential loser of the Uruguay Round. Khor (1995) views the WTO as the
means by which industrialized countries can gain access to the markets of developing
countries. All in all, the current trade regime and especially its main propagator, the WTO,
is heavily criticized for a striking asymmetry. National boundaries should not matter for
trade flows and capital flows but should be clearly demarcated for technology flows and
labor flows. This asymmetry lies at the heart of inequality in the rules of the game for
globalization” (Nayyar, 2002: 158)
THE MODERN WORLD SYSTEM
Capitalist Agriculture and the origins of the European World Economy in the
Sixteenth Century
The world systems theory, developed by sociologist Immanuel Wallerstein, is an
approach to world history and social change that suggests there is a world economic system
in which some countries benefit while others are exploited. The world systems Theory is
established on a three-level hierarchy consisting of core, periphery, and semi-periphery
areas. This theory emphasizes the social structure of Global inequality.
Core countries are dominant capitalist countries that exploit peripheral countries
for labor and raw materials. They are strong in military power and not dependent on any
one state or country. They serve the interests of the economically powerful. They are focused
on higher skill and capital-intensive production. Core countries are powerful, and this
power allows them to pay lower prices for raw goods and exploit cheap labor, which
constantly reinforces the unequal status between core and peripheral countries.
The first core region was located in northwestern Europe and made up of England,
France, and Holland. Today, the United States is an example of a core country. The U.S.
has large amounts of capital, and its labor forces are relatively well paid. The world-systems
analysis defines semi-Periphery regions as the primary structural elements in the
economy of the world. Currently. All semi-Periphery areas are industrialized, and they
contribute to the manufacture and export of various commodities. The semi-periphery level
plays a significant role when it comes to stabilizing world Systems since it facilitates
interactions and connections between the high-income states to the low-income nations by
introducing a different level in the hierarchy of the world systems. These regions are
essential elements in the global trade system since they alleviate the pressure which the
core regions exert on the periphery areas and vice versa.
Periphery countries lack a strong central government and possesses a disproportionately

small share of the world’s wealth. These areas are less developed than the core and the
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semi-periphery these countries export raw materials to the core countries: are often
dependent on more developed nations for capital and; have underdeveloped industry. These
countries also have low-skill, labor-intensive production, or in other words, cheap labor.
Periphery countries may have an unstable government, inferior technologies, and poor
health and educational systems. At times, the exploitations
World-economy
Is a large geographic zone within which there is a division of labor and hence
significant internal exchange of basic or essential goods as well as flows of capital and labor.
The term world economy refers to all of the economic activity within each country and
between countries economy or global economy is considered as the international exchange
of goods and services that is expressed in monetary units of account (money).
Capitalist system
The system gives priority to the endless accumulation of capital. Endless
accumulation means that people and firms are accumulating capital in order to accumulate
still more capital, a process that is continual and endless. A capitalist economic system is
one characterized by free markets and the absence of government intervention in the
economy.
Economic freedom (individuals are free to set up business and provide goods and
services they want), consumer sovereignty (consumers are free to decide which goods
and services to purchase), limited government interventions (government
intervention are limited to protection of private property and provision of public
goods).
Finance sector (capitalism requires a developed banking and financial system which
can provide loans to companies and banking services to households).
Profit motive (is seen as important for enabling an efficient distribution of resources
and encouraging innovation and responsive markets), market forces (allocation of
goods is based on demand and supply).
Flexible labor markets (easy to hire and fire workers), and free trade (low tariff
barriers to encourage international Trade).
Capitalist world-economy
A collection of many institutions, the combination of which accounts for its
processes, and all of which are intertwined with each other. The basic institutions are the
market, or rather the markets; the firms that compete in the markets the multiple states,
within an Interstate system; the households; the classes; and the status-groups. They are
all institutions that have been created within the framework of capitalist world-economy.
Market. A concrete local structure in which individuals or firms sell and buy goods,
and a virtual institution across space where the same kind of exchange occurs. A
market is a medium that allows buyers and sellers of a specific good or service to
interact in order to facilitate an exchange. This type of market may either be a
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physical marketplace where people come together to exchange goods and services
in person, as in a bazaar or shopping center, or a virtual market wherein buyers
and sellers do not interact. As in an online market. Technically speaking.
Firms- the main actors in the market. A firm is a business organization, such as c
corporation, Limited Liability Company or partnership that sells goods or services to
make a profit. Firms are normally the competitors of other firms operating in the
same virtual market. They are also in conflict with those firms from whom they
purchase inputs and those firms to which they sell their products.
Core-periphery- the degree of profitability of the production processes. The center-

periphery (or core-periphery) model is a spatial metaphor which describes and attempts to
explain the structural relationship between the advanced or metropolitan center and a less
developed periphery, either within a particular country, or (more commonly) as applied to
the relationship between capitalist and developing societies. The center-periphery model
thus suggests that the global economy is characterized by a structured relationship between
economic centers which, by using military, political, and trade power.
SEMI-PERIPHERY - Semi-peripheral states have a mix of core and periphery production,

and are under constant pressure to prevent themselves from slipping into the periphery,
while simultaneously attempting to advance towards the core status (Wallerstein p. 29)
HOUSEHOLD – consists of three to ten persons they pool multiple sources of income to
survive households are quite different from clans or tribes or other quite large and extended
entities. Which often share obligations of mutual security and identity but do not regularly
share income.
5 KINDS OF INCOME:
1. WAGE INCOME – is the payment (usually in money form) by persons outside the
household for work of a member of the household that is performed outside the
household in some production process. Wage income may be occasional or regular.
It may be payment by time employed or by work accomplished (Place work) common
tor adult male aged 14-18 years old to 60-65 years old.
2. SUBSISTENCE ACTIVITY – we usually define this type of work to narrowly. Taking

it to mean only the efforts of rural persons to grow food and produce necessities for
their own consumption without passing through a market, example: When someone
cooks a meal or washes dishes at home. This is subsistence production. When a
homeowner assembles furniture bought from a store, this is subsistence production.
And when a professional uses a computer to send an e-mail which, in an earlier day,
a (paid) secretary would have typed. He or she is engaged in subsistence production.
Common for adult women, children, elders.
3. PETTY COMMODITY – defined as a product produced within the confines of the

household but sold for cash on a wider market. Example: When a small boy sells on
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the street cigarettes or matches one by one to consumers who cannot afford to buy
them in the normal quantity that is packaged, this boy is engaged in petty commodity
production, the production activity being simply the disassembly of the larger
package and its transport to the street market. Common for adult women, children,
elders
4. RENT – rent can be drawn from some major capital investment (offering urban
apartments for rent, or rooms within apartments) or from locational advantage
(collecting a toll on a private bridge) or from capital ownership (clipping coupons on
bonds earning interest on a savings account). What makes it rent is that it is
ownership and not work of any kind that makes possible the income.
5. TRANSFER PAYMENTS – defined as income that comes to an individual by virtue

of a defined obligation of someone else to provide this income or transfer payments
may occur through the efforts of the state (in which case one’s own money may
simply be returning at a different moment in time), or through an insurance scheme
(in which one may in the end benefit or lose), or through redistribution from one
economic class to another.
Two Major Varieties of Household:

1. Proletarian Household. Households where wage-income accounts for 50% or more
of the lifetime income receives the absolute minimum wage
2. Semi-proletarian Household. Households where it accounts for less than the

proletarian household’s dependency on wage-income receives below the absolute
minimum wage
Two Pressures on Semi-Proletarian Household

1. Wage-workers – “proletarianized” because proletarian household are better paid.
2. Pressure on the employers
Classes in a Capitalist System

Classes are persons who are differently located in the economic system with different
levels of income who have differing interests. For example, it is in the interest of workers to
seek an increase in their wages, and it is in the interest of employers to resist these
increases. Individuals who wish to be class-mobile often find that they must withdraw from
the households in which they are located and locate themselves in other households, in
order to achieve such an objective.
Status Groups or Identities
Classes however are not the only groups within which households locate themselves.
They are also members of status-groups or identities.
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• Status-groups one is emphasizing how they are perceived by others, a sort of
objective criterion
• Identities one is emphasizing how they perceive themselves, a sort of
subjective criterion.
Status-groups or identities are ascribed labels, such as races, ethnic groups,
religious communities, and also genders and categories of sexual preferences. Most of these
are often alleged to be anachronistic leftovers of pre-modern times but, in fact, are is very
much a part of modernity. Far from dying out, they are actually growing in importance as
the logic of a capitalist system unfolds further and consumes us more and more intensively.
Homogenization
If we argue that households locate themselves in a class, and all their members share
this location, is this equally true of status-groups or identities? There’s a pressure to be
part of a sing status-group or identity especially this pressure is felt first of all by persons
who are marrying. But the modern world-system and the ignorance on status-group or
identity have led to mixing of original identities and emergence of new persons who are
marrying.
Such a homogenization aids in maintaining the unity of a household as an income-
pooling unit and in overcoming any centrifugal tendencies that might arise because of
internal inequalities in the distribution of consumption and decision making.
Socialization of Household Members

Socialization results in the acceptance of the very real hierarchies that are the
product of the system and internalization of the myths, the rhetoric, and the theorizing of
the system. Households also socialize members into rebellion, withdrawal, and deviance.
This ant-systemic socialization can be useful to the system by offering an outlet for restless
spirits, provided that the overall system is in relative Equilibrium.
Universalism and Racism & Sexism

Universalism means in general the priority to general rules applying equally to all
persons, and therefore the rejection of particularistic preferences in most spheres. For
example, the assigning of persons to positions on the basis of their training and capacities
(a practice otherwise known as meritocracy); on households, marriage should be contracted
for reasons of “love” but not those of wealth or ethnicity or any other general particularism
on state. It means such rules as universal suffrage and equality before the law.
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CHAPTER 3: MARKET INTEGRATION
The social institution that has one of the biggest impacts on society is the
economy. You might think of the economy in terms of number -number of
unemployed, gross domestic product (GDP), or whatever the stock market is doing
today. While we often talk about it in numerical terms, the economy is composed of
people. It is the social institution that organizes all production, consumption, and
trade of goods in the society. There are that organizes all production, consumption,
and trade of goods in the society. There are many ways in which products can be
made, exchanged, and used. Think about capitalism or socialism. These economic
systems – and the economic revolutions that created them –shape the way people
live their lives. Economic systems vary from one society to another. But in any given
economy production typically splits into three sectors. The primary sectors extract
raw materials from natural environments. Workers like farmers or miners fit well in
the primary sector. The secondary sector gains the raw materials and transforms
them into manufactured goods. This means, for example, that someone from the
primary sector extract soil from the earth then someone from secondary sector
refines the petroleum to gasoline.
The Contemporary World Market Integration

Offers services by doing things rather than making things. Thus, economic
system is more complicated or at least, more sophisticated than the way things used
to be for much of human history. This chapter will show the contributions of the
different financial and economic institutions that facilitated the growth of the global
economy. The history of the global market will be discussed by looking at the
different economic revolutions. The growth and dynamics of multinational
corporations that are emerging in today’s world economy will also be examined.
International Financial Institutions

World economies have been brought closer together by globalization. It is
reflected in the phrase “when the American economy sneezes, the rest of the world
catches a cold.” But it is important to remember that it is not only the economy of
the United States but also other economies in the world that have a significant
impact on the global market and finance. For instance, the financial crisis
experienced by Russia and Asia affected the world economy. The strength of a more
powerful economy brings greater effect on other countries. In the same manner,
crises on weaker economies have less effect on other countries. For example,
Argentina’s serious financial crisis in the late 1990s and early 2000s had a
comparatively small impact on the global economy.
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Free Trade
Free Trade wherein international trade (the importation and exportation) left to
its natural course without tariffs and non-tariff trade barriers such as quotas,
embargoes, sanctions or other restrictions.
Tariffs - taxes or duties to be paid on a particular class of imports or
exports
Embargo - a government-instituted prevention of exports to a certain country.
Official ban on trade or other commercial activity. (The United States has imposed
several long-running embargoes on other countries including Cuba, North Korea
and Iran)
Economic sanctions - commercial and financial penalties applied by one or
more countries against a targeted country, group, or individual
Free Trade Areas - a group of countries within which tariffs and non-tariff
trade barriers between the members are generally abolished but with no common
trade policy toward non-members. Both in the sense of geography and
price, is the foundation of these trading agreements. However, tariffs are not
necessarily completely abolished for all products. Free trade areas impose
exclusivity among its members since the world is not entirely a free trade economy
WORLD’S MAJOR FREE TRADE AREAS
1. North American Free Trade Agreement (NAFTA)

• Free trade between the three member nations, Canada, the US and Mexico
• Effective on January 1, 1994 -Although tariffs weren’t fully abolished until
2008
• By 2014 total trilateral merchandise trade exceeded US$1.12 trillion
• Trade with Canada and Mexico supports more than 140,000 small and
medium-size businesses and over 3 million jobs in the US
• Gains in Canada are reportedly even higher, with 4.7 million new
jobs added since 1993.Canada is also the largest exporter of goods to the
US
2. Association of Southeast Asian Nations Free Trade Area (AFTA)
• The original members were Brunei, Indonesia, Malaysia, Philippines,
Singapore and Thailand. Four countries have subsequently joined:
Vietnam, Laos, Myanmar and Cambodia
• The AFTA was signed in January 1992 in Singapore
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• The bloc has largely removed all export and import duties on items
traded between the nations.
• It has also entered into agreements with a number of other
nations, including China, eliminating tariffs on around 90% of imported
goods.
• The AFTA nations had a combined GDP ofUS$2.3 trillion in 2012, and
they're home to600 million people.
3. Southern Common Market (MERCOSUR

• a Latin American single market, its full members are Argentina,
Brazil, Paraguay and Uruguay. Venezuela is a full member but has
been suspended since December 1, 2016.Meanwhile, Bolivia
obtained its full membership on July 7, 2015.
• Established by the treaty of Asuncion in 1991 and Protocol of Ouro
Preto in 1994
• The four have a combined gross domestic product (GDP) of roughly $2.9
trillion
• Latin America’s second-largest trade group, the Pacific Alliance. Which
comprises Chile, Colombia, Mexico and Peru, has combined GDP of
about $1.8 Trillion
4. Common Market of Eastern and Southern Africa (COMESA)

• The member State of COMESA are: Burundi, the Comoros, the
Democratic Republic of Congo. Djibouti, Egypt, Eritrea, Ethiopia,
Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Sudan,
Swaziland, Seychelles, Uganda, Zambia and Zimbabwe.
• Formed in December 1994
• An annual export bill is excess of $80 billion, the organization is a
significant market place, both Africa and globally
• COMESA ultimately aims to remove all barriers to intra-regional trade,
starting with preferential tariffs and working towards a tariff-free
common market and economic union
5. European Union (EU)

• A single market, which is similar to a free trade area in that it has no
tariffs, quotas or taxes on trade.
• 28 member countries of the EU are: Austria, Italy, Belgium, Latvia,
Bulgaria, Lithuania, Croatia, Luxembourg, Cyprus, Malta, Czech
Republic, Netherland, Denmark, Poland, Estonia, Portugal, Finland,
Romania, France, Slovakia, Germany, Slovenia, Greece, Spain,
Hungary, Sweden, Ireland, United Kingdom
• The EU GDP was estimated to be €14.8 trillion or $17.1 trillion
(nominal) in 2016
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• In 1957, the Treaty of Rome established the European Economic

Community (EEC) or Common Market. However, it was not until 1986
that the Single European Act was signed. This treaty formed the basis
of the single market as we know it, as aimed to established the free-flow
of trade across EU borders. By 1993 this process was largely complete.
6. Trans-Pacific Partnership (TPP)

• Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New
Zealand, Peru, Singapore, and Vietnam have just signed the trade pact
formerly known as the Trans-Pacific Partnership
• In the absence of the US, it has been remained the Comprehensive and
Progressive Agreement for Trans-Pacific Partnership (CPTPP)
• Signed February 4, 2016
• The deal covers a market of nearly 500 million people, despite the US
pullout.
7. The Transatlantic Trade and Investment Partnership

• The Transatlantic Trade and Investment Partnership is a deal currently
being negotiated between the EU and the US.
• It would cover 45% of global GDP
• The Center for economic Policy Research has estimated that the deal
would be worth $134 billion a year for the EU and $107 billion for the
US – although opponents have disputed these figures.
Free Trade Issue

In government, free trade is predominately advocated by political parties that
hold right-wing economic positions, while economically left-wing political parties
generally support PROTECTIONISM.
• Protectionism – the theory or practice of shielding a country’s domestic

industries from foreign competition by taxing imports to protect their
domestic industries.
• Economic Nationalism or Economic Patriotism – an ideology that
favors state interventionism in the economy, with policies that
emphasize domestic control of the economy, labor, and capital
formation, even if this requires the imposition of tariffs and other
restrictions on the movement of labor, goods and capital
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BRIEF HISTORY OF GLOABAL MARKET INTEGRATION IN THE 20TH
CENTURY
• The international economic integration achieved during the 19th century was
largely unraveled in the 20th by two world war and the Great Depression.
• World War 1 brought the liberal economic order of the late 19th century to an
abrupt end; 1914 clearly marked a dramatic and discontinuous break in the
past.
• Import shares fell only marginally in Britain during the war. In France, the
import share rose from 20% before the war to 36.7 % during it, again exports
fell sharply.
• Exports ratios rose in neutral economies such as in Sweden, Japan, and
North America, where grain production expanded sharply during the war
years to meet Allied demand.
• The absence of European manufactured exports on world markets stimulated
the expansion of industrial capacity, above all in countries such as India,
Australia, and Latin America.
• The end of war did not imply an end to protection. Different tariff
• The Great Depression was of course a major reason for the adoption of severe
protection, and not just in the periphery
• Beginning in 1932, there were several signs that at least some countries
were trying to moderate, if not reverse, the increase in protectionism
of the previous year or two.
• Post war economic reintegration was supported by several factors,
both technological and political.
THE ROLE OF INTERNATIONAL FINANCIAL INSTITUTIONS IN THE

CREATION OF GLOBAL ECONOMY
International Financial Institutions

International non-profit agencies are one of the major sources of financing
like regional development banks or banks globally. To finance productive
development projects or to promote economic development.
WORLD BANK
- multinational financial institution established at the end of World
War II (1944) to help provide long-term capital for the reconstruction and
development of member countries.
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- it provides much of the planning and financing for economic
development projects involving billions of dollars.
Purpose for the setting up of the Bank

- To assist in the reconstruction and development of territories of
members - To promote private foreign investment by means of
guarantees or participation in loans and other investments made by
private investors
- To promote the long-range balanced growth of international trade and the
maintenance of equilibrium in balance of payments
- To conduct its operations with due regard to the effect of international
investment on business conditions in the territories of members
- To assist in bringing about a smooth transition from a wartime to a
peacetime economy
International Bank for Reconstruction and Development (IBRD)
• The IBRD was set up in 1945 along with the IMF to aid in rebuilding
the world economy and it was owned by the governments of
151countries and its capital is subscribed by those governments
• It provides funds to borrowers by borrowing funds in the world capital
markets, from the proceeds of loan repayments as well as retained
earnings
• At its funding, the bank’s major objective was to serve as an
international financing facility to function in reconstruction and
development.
• Lends money to a government for the purpose of developing that
country’s economic infrastructure such as roads and power
generating facilities
• Also, funds are lent only to members of the IMF, usually when private
capital is unavailable at reasonable terms.
• Generally, bank loans are made to cover only import needs in foreign
convertible currencies and must be repaid in those currencies at
long-term rates.
• The government assisted in formulating and implementing an
effective and comprehensive strategy for the development of new
industrial free zones and the expansion of existing ones - Lays special
operational emphasis on environmental and women’s issues.
International Development Association
• The IDA was formed in 1960 as a part of the World Bank Group to
provide financial support to LDCs and has 137 member
countries, although all members of the IBRD are free to join the IDA
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• IDA’s funds come from subscriptions from its developed members

and from the earnings of the IBRD.
• Credit terms usually are extended to 40 to 50years with no interest.
• Repayment begins after a ten-year grace period and can be paid in the
local currency, as long as it is convertible.
• Although the IDA’s resources are separate from the IBRD, it has no
separate staff. Loans are made for similar projects as those carried out
by IBRD, but at easier and more favorable credit terms.
• The present emphasis seems to be on helping the masses of poor people
in the developing countries become more productive and take an active
part in the development process. Greater emphasis is being placed on
improving urban living conditions and increasing productivity of small
industries
International Finance Corporation

- The IFC was established in 1956. There are 133countries that are members of the
IFC and it is legally and financially separate from the IBRD
- Main responsibilities are:
(i) To provide risk capital in the form of equity and long-term loans for
productive private enterprises in association with private investor and
management;
(ii) To encourage the development of local capital markets by
carrying out standby and underwriting arrangements; and
(iii) To stimulate the international flow of capital by providing
financial and technical assistance to privately controlled finance
companies. Loans are made to private firms in the developing member
countries and are usually for a period of seven to twelve years
- The key feature of the IFC is that its loans are made to private enterprises
and its investments are made in conjunction with private business.
In addition to funds contributed by IFC, funds are also contributed
to the same projects by local and foreign investors.
INTERNATIONAL MONETARY FUND

IMF is a cooperative institution that 182countries have voluntarily
joined because they see the advantage of consulting with one another on this
forum to maintain a stable system of buying and selling their currencies
Its policies and activities are guided by its Charter known as the
Articles of Agreement.
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IMF lends money to members having trouble meeting financial obligations
to other members, but only on the condition that they undertake economic reforms
to eliminate these difficulties for their own good and that of the entire
membership.
Contrary to widespread perception, the IMF has no effective authority over
the domestic economic policies of its members
There are several major accomplishments to the credit of the International
Monetary System. For example, it
• sustained a rapidly increasing volume of trade and investment;
• displayed flexibility in adapting to changes in international commerce;
• proved to be efficient (even when there were decreasing percentages
of reserves to trade);
• proved to be hardy (it survived a number of pre-1971 crises,

speculative and otherwise, and the down-and-up swings of several
business cycles);
• allowed for a growing degree or international cooperation;
• established a capacity to accommodate reforms and improvements-
To an extent, the fund served as an international central bank to
help countries during periods of temporary balance of payments
difficulties by protecting their rates of exchange. Because of that,
countries did not need to resort to exchange controls and other barriers
to restrict world trade
Purpose of IMF
To promote international monetary cooperation through a permanent
institution that provides the machinery for consultation and collaboration on
international monetary problems. To facilitate the expansion and balanced growth
of international trade and to contribute, thereby, to the promotion and maintenance
of high levels of employment and real income and to the development of
the productive resources of all members as primary objectives of economic
policy. To promote exchange stability, to maintain orderly exchange
arrangements among members and to avoid competitive exchange depreciation- To
assist in the establishment of a multilateral system of payments in respect of
current transactions between members and in the elimination of foreign
exchange restrictions which hamper the growth of world trade- To give confidence
to members by making the general resources of the Fund temporarily available
to them under adequate safeguards, thus providing them with opportunity to
correct maladjustment in their balance of payments without resorting to
measures destructive to national or international prosperity- In accordance
with the above, to shorten the duration and lessen the degree of disequilibrium
in the international balances of payments of members
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How can IFIs help in Economic Globalization?
- They focus on long-term investment projects, institution-building, and on
social, environmental, and poverty issues- strengthen economic governance-
safeguard the stability and integrity of the international financial system
as a global public good- encouraging true national ownership of reforms by
streamlining the conditions attached to IMF-supported programs.- recognizes
and values the role of civil society organizations- ensuring the stability of
the international financial system- helping individual countries take advantage of
the investment opportunities offered by international capital markets, while
reducing their vulnerability to adverse shocks or changes in investor sentiment.-
Trade liberalization- Reducing debt burdens- Setting the stage for the 2030
development agenda
GLOBAL CORPORATIONS
A corporation is an artificial being created by operation of law, having the
right of succession and the powers, attributes and properties expressly
authorized by law or incident to its existence (Batas Pambansa Blg. 68 The
Corporation Code of The Philippines, Section 2 – Corporation defined). According
to Investopedia, a corporation is a legal entity that is separate and distinct from its
owners. Corporations enjoy most of the rights and responsibilities that an
individual possesses; that is, a corporation has the right to enter into contracts,
loan and borrow money, sue and be sued, hire employees, own assets and
pay taxes. Based on Entrepreneur Asia Pacific Small Business Encyclopedia,
corporation is a form of business operation that declares the business as a
separate, legal entity guided by a group of officers known as the board of directors
The Birth of Corporations
• Earliest forms of Global Corporations (Religious and Mercantile Sectors)

• Roman Catholic Church as the religion of Roman Empire during the
4th Century AD. Its ought monopoly of spiritual power against both
paganism and other religious faiths in those territories that came
under its influence
• Muscovy Company, also called Russia Company, body of English merchants
trading with Russia. The company was formed in 1555by the navigator and
explorer Sebastian Cabot and various London merchants and was granted
monopoly of Anglo-Russian trade. It was the first English joint-stock company
in which the capital remained regularly in use instead of being repaid
after every voyage.
• The British East India Company, founded in1600, and The Dutch East India
Company, founded in 1602, are often called the first multinational
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corporations. Headquartered in England and the Netherlands, respectively,
these firms were set up to trade goods such as cotton and spices over a
large portion of South and Southeast Asia, then called the East Indies. The
Dutch East India Company very quickly became the wealthiest and
largest mercantile organization the world had ever seen; by 1669it had 150
merchant ships, 40 warships, 50,000employees and a private army of
10,000soldiers, and paid dividends of 40 per cent per annum.
• Dutch West-Indische Compagnie byname of West India Company, a Dutch
trading company, founded in 1621 mainly to carry on economic warfare
against Spain and Portugal by striking at their colonies in the West Indies and
South America and on the west coast of Africa. The Dutch West India
Company was much less successful than the Dutch East India Company, its
counterpart in Southeast Asia.
• Industrial Revolution 1700’s. From the introduction of the first viable
Steam Engine by Thomas Newcomer at Dudley Castle coal mine in 1712, the
invention of steam engine was crucial to the industrialization of
modern civilization. For almost 200 years it was the outstanding
source of power for industry and transport systems in the West.
• The Civil War in the United States began in1861, after decades of
simmering tensions between northern and southern states over slavery,
states’ rights and westward expansion. Growing abolitionist sentiment in
the North after the 1830s and northern opposition to slavery’s
extension into the new western territories led many southerners to fear
that the existence of slavery in America—and thus the backbone of their
economy—was in danger.
• World War II (1934-1935) During the war number of major multinational
corporations engaged in the production of strategic materials, such as
oil and synthetic rubber, were accused in congressional hearings and on the
floor of Congress of having conspired with the enemy before the war. In
particular, the oil and petrochemical industries were charged with exchanging
trade secrets in chemicals with the chemical giant I. G. Farben and other
German firms deemed instruments of Nazi policy in return for trade
secrets in oil refining. Civil and criminal actions were even brought
against a number of these companies, the most notable being against Exxon,
which in 1929 had signed an agreement with Farben recognizing its “preferred
position” in chemicals in return for Farben's recognition of Exxon's
"preferred position" in oil and natural gas. The two giantcorporations also
pledged close cooperation in their respective enterprises. Standard
Oil(Exxon) – based in Irving Texas, USA sold their patent of coal
hydrogenation processes to the Germans (I.G. Farben) so that the Germans
could produce fuel from their own coal and the Germans gave them the
patents how to manufacture synthetic rubber.
• By the 1930s, the new Nazi government needed recruited International
Business Machines (IBM) for their revolutionary punched-card system.
Tabulating machines made tracking lines of Jewish descent possible. By the
time the Holocaust began in earnest in1941, the Nazis tattooed
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concentration camp prisoners with identification numbers so that
administrators could track that prisoner’s punch card throughout the
system. IBM’s machines were perfect for this, and for tracking the train
traffic coming into the concentration camps. Indeed, the Nazis soon placed
tabulating machines made by IBM’s German subsidiary, Dehomag, in every
train depot and every concentration camp.
The Contemporary Global Corporation

A global corporation is generally referred to as a multinational corporation
(MNC), transnational corporation (TNC), international company. An enterprise that
engages in activities which add value (manufacturing, extraction, services,
marketing, etc) in more than one country (United Nations Centre On
Transnational Corporations, 1991). MNCs place multiple production facilities in
multiple countries under the control of a single corporate structure (Oatley,
International Political Economy 5th Edition). A multinational corporation (MNC) is
accompany that operates in more than one country. Generally, multinational
corporations consist of separate companies (called subsidiaries) in different
countries, all of which answer to a central office located in the firm’s home
country (Riggs, Everyday Finance: Economics, Personal Money Management, and
Entrepreneurship)
THE HISTORICAL EVENTS FOR THE GLOBAL CORPORATIONS

1973 Oil Crisis The crisis began when the Organization of the Petroleum
Exporting Countries (OPEC), an alliance of oil-producing Arab nations, cut off oil
supplies to the United States in retaliation for U.S. support of Israel (which was at
war with neighboring Arab countries). Predictably, gas prices in the United States
soared, and people had to wait in longlines to get gas for their cars. Many U.S.
citizens believed that the oil industry, which wielded an unusual amount of power
over the countries in which it operated, had engineered this sequence of events to
drive up profits. These suspicions seemed confirmed by the fact that profits for all
of the major oil companies increased sharply in 1974: Exxon’s profits grew 28.6
percent, Gulf’s 33 percent, and Mobil’s 23.3 percent. These profits came at the same
time that the U.S. economy was experiencing its most severe crisis since the Great
Depression of the 1930s.
World Trade Organization (WTO) is an international organization
established on January 1, 1995 under the Marrakesh Agreement after the
Uruguay Round (1986–94) of multilateral trade negotiations. WTO’s role is to
supervise and liberalize world trade. The WTO is the successor to the General
Agreement on Tariffs and Trade (GATT), which was created in 1947 in the
expectation that it would soon be replaced by a specialized agency of the United
Nations (UN) to be called the International Trade Organization (ITO). Although
the ITO never materialized, the GATT proved remarkably successful in
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liberalizing world trade over the next five decades. By the late 1980s there were
calls for a stronger multilateral organization to monitor trade and resolve
trade disputes.
Seattle WTO protests of 1999, in full Seattle World Trade Organization
protests of 1999, also called Battle of Seattle, a series of marches, direct
actions, and protests carried out from November 28 through December 3, 1999,
that disrupted the World Trade Organization(WTO) Ministerial Conference in
Seattle, Washington. Comprising a broad and diffuse coalition of the American
Federation of Labor–Congress of Industrial Organizations(AFL-CIO) and other
labor unions, student groups, nongovernmental organizations(NGOs), media
activists, international farm and industrial workers, anarchists, and others, the
Seattle WTO protests are often viewed as the inauguration of the anti-
globalization movement.
9/11 Attack, on the morning of September 11,2001, 19 terrorists hijacked
four planes at Boston’s Logan airport. They chose planes headed for the
West Coast because they would be loaded with fuel. They planned to cripple the U.S.
economy by destroying three centers of power: Wall Street, the Pentagon, and
the White House. The 9/11 attacks had both immediate and long-term economic
impacts, some of which continue to this day. The attacks caused The Dow
(The Dow Jones Averages are stock market indices that represent the U.S.
economy in three sectors: industry, transportation and utilities) to drop more
than 600 points and the2001 recession to deepen. It also led to the War
on Terror, one of the most prominent government spending programs in U.S.
history
The Difference between 20th Century and Contemporary Multinational

Corporations
The MNCs of the post WW2 period are different from those of earlier
periods in being more focused on manufacturing and services than on
extraction of raw materials and commodities (Dicken, 2015) and more likely to
be financed by a combination of foreign direct investment (FDI) and local capital
rather than international portfolio investments (Gilpin1975). In addition,
contemporary MNCs are the predominant owners of proprietary technology. MNCs
account for at least 50 percent of R&D spending worldwide (Keller 2009; Zeile 2014).
In the United States and elsewhere, most patents are awarded to MNCs
(Florida 2005; OECD 2008). In the last two decades of the twentieth century,
competing MNCs from a growing number of economies have created
geographically dispersed “value chains” to take advantage of lower R&D,
production, and distribution costs made possible by lower barriers to trade
and investment flows (Borrusand Zysman 1997; Ernst and Kim 2002; Gereffi
1996; Gereffi et al 2005; Sturgeon2002; Sturgeon 2007; Sturgeon and
Gereffi2009).
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Activities of Multinational Corporations
• International companies are importers and exporters, typically without

investment outside of their home country;
• Multinational companies have investment in other countries, but do not
have coordinated product offerings in each country. They are more focused
on adapting their products and services to each individual local
market.
• Transnational companies are more complex organizations which have
invested in foreign operations, have a central corporate facility but give
decision-making, research and develop (R&D) and marketing powers to
teach individual foreign market.
Tactics of Multinational Corporations

Foreign Direct Investment occurs when a firm based in once country builds
a new plant or factory or purchases existing one in a second country a national
corporation thus becomes an MNC by making a foreign direct investment. As
consequence, the world's stock of FDI, the total amount of foreign investment in
operation has grown from 692.5 billion dollars in 1980 to 16.2trillion dollars in
2008 (United Nations Conference on Trade and Development2009,251) 2,300
percent increase in less than 30years.
Types of FDI1.
1. Horizontal Integration - occurs when firms creates multiple production of
facilities each of which produces the same good or goods. Firms integrate
horizontally when a cost advantage is gained by placing a number of plants
under common administrative control. Intangible asset can be based on
patented process or design. These assets are difficult to sell to other firms
at a price that accurately reflect their true value that's why firms
horizontally integrate.
2. Vertical integration – refers to instances in which firms internalize their
transaction for intermediate goods. An intermediate good is an output of
one production process that serves as an input into another production
process. Specific asset is an investment that is dedicated to a particular
long-term economic relationship. By internalizing transactions involving
specific assets, therefore, vertical integration enables welfare-improving
investments
Contributions of Multinational Corporations

The possible benefits of a multinational investing ina country may include:
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• Improving the balance of payments - inward investment will usually help

a country's balance of payments situation. The investment itself will be a
direct flow of capital into the country and the investment is also likely to
result in import substitution and export promotion. Export promotion
comes due to the multinational using their production facility as a basis
for exporting, while import substitution means that products
previously imported may now be bought domestically.
• Providing employment - FDI will usually result in employment
benefits for the host country as most employees will be locally
recruited. These benefits may be relatively greater given that
governments will usually try to attract firms to areas where there is
relatively high unemployment or a good labor supply.
• Source of tax revenue - profits of multinationals will be subject to
local taxes in most cases, which will provide a valuable source of
revenue for the domestic government.
• Technology transfer - multinationals will bring with them technology and
production methods that are probably new to the host country and a lot
can therefore be learnt from these techniques. Workers will be
trained to use the new technology and production techniques and domestic
firms will see the benefits of the new technology. This process is known
as technology transfer.
• Increasing choice - if the multinational manufactures for domestic
markets as well as for export, then the local population will gain form a
wider choice of goods and services and at a price possibly lower than
imported substitutes.
• National reputation - the presence of one multinational may improve
the reputation of the host country and other large corporations may follow
suite and locate as well.
Issues of Multinational Corporations

1. Environmental impact - multinationals will want to produce in ways
that are as efficient and as cheap as possible and this may not always be the
best environmental practice. They will often lobby governments hard to
try to ensure that they can benefit from regulations being as lax as possible
and given their economic importance to the host country, this lobbying
will often be quite effective. Uncertainty - multinational firms are
increasingly 'footloose'. This means that they can move and change at
very short notice and often will. This creates uncertainty for the host country.
2. Increased competition - the impact the local industries can be severe,
because the presence of newly arrived multinationals increases the
competition in the economy and because multinationals should be able to
produce at a lower cost.
3. Influence and political pressure - multinational investment can be very
important to a country and this will often give them disproportionate
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influence over government and other organizations in the host country.
Given their economic importance, governments will often agree to changes
that may not be beneficial for the long-term welfare of their people
4. Transfer pricing - multinationals will always aim to reduce their
tax liability to a minimum. One way of doing this is through transfer
pricing. The aim of this is to reduce their tax liability in countries
with high tax rates and increase them in the countries with low tax rates.
They can do this by transferring components and part-finished goods
between their operations in different countries at differing prices. Where
the tax liability is high, they transfer the goods at a relatively high price to
make the costs appear higher. This is then recouped in the lower tax country
by transferring the goods at a relatively lower price. This will reduce
their overall tax bill.
5. Low-skilled employment - the jobs created in the local environment may be
low-skilled with the multinational employing expatriate workers for the more
senior and skilled roles.
6. Health and safety - multinationals have been accused of cutting corners
on health and safety in countries where regulation and laws are not as
rigorous.
7. Export of Profits - large multinational are likely to repatriate profits back
to their 'home country', leaving little financial benefits for the host country.
8. Cultural and social impact - large numbers of foreign businesses can dilute
local customs and traditional cultures. For example, the sociologist
George Ritzier coined the term McDonaldization to describe the process by
which more and more sectors of American society as well as of the rest of
the world take on the characteristics of a fast-food restaurant, such as
increasing standardization and the movement away from traditional
business approaches.
Corporations in the Philippines

1. Universal Canning Incorporated- one of the largest and most dynamic
marine industrial conglomerates in the Philippines
Family’s brand, master sardines, Atami brand, Mikado-Vertical
Integration
2. Universal Robina Corporation- engaged in a wide range of food-
related businesses, including the manufacture and distribution of
branded consumer foods - built three strong regional brands over
the years; “Jack ‘n Jill” for snack foods, “C2” for ready to drink tea, and
“Great Taste” for coffee
3. Jollibee – largest fast-food chain in the Philippines, operating a
nationwide network of over 750stores. Jollibee Foods Corporation’s
(“JFC” or the “Company”) core business is the development, operation
and franchising of its quick-service restaurant brands
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Trivia, Videos and Other Information 2017 World Economic Forum World’s 10
Biggest Corporations
1. Apple
2. Alphabet
3. Microsoft
4. Berkshire Hathaway
5. Exxon Mobile
6. Amazon
7. Facebook
8. Johnson and Johnson
9. General Electric
10. China Mobile
The World’s Largest Public Companies (Forbes Global 2000, 2018)

1. ICBC (Industrial and Commercial Bank of China)
2. China Construction Bank
3. JPMorgan Chase
4. Berkshire Hathaway
5. Agricultural Bank of China
6. Bank of America
7. Wells Fargo
8. Apple
9. Bank of China
10. Ping an Insurance Group
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CHAPTER 4: THE GLOBAL INTERSTATE SYSTEM
Introduction
The state has traditionally been the subject of most interest to scholars of
global Politics because it is viewed as the institution that creates warfare and sets
economic Policies for a country.” Furthermore, the state is a political unit that has
authority over its own affairs. In other words, its borders are recognized by other
countries. It is assumed that whoever is in-charge of those borders has the right to
determine exactly what is going to happen in their country. The Treaty of Westphalia
of 1648 established the notion of the nation-state and the idea of state sovereignty.
Today, the globalization of politics created an atmosphere where the ideas of the
nation-state, state sovereignty, government control, and state policies are
challenged from all sides.
With globalization, some scholars suggest a decrease in the power of the state
and that other actors are becoming more powerful. These actors include
multinational corporations and global civil society organizations, like the Red Cross,
that cross national boundaries.
Global Governance in the Twenty-First Century
There is a series of specific factors behind the emergence of global governance.

The first on the list must be the declining power of nation-states. If states themselves
were highly contingent and in flux (Cerny, 2007, p. 854), it would open the
possibility of the emergence of some form of global governance to fill the void.
A second factor is the vast flows of all sorts of things that run into and often
right through the borders of nation-states. This could involve the flow of digital
information of all sorts through the Internet. It is difficult, if not impossible, for a
nation-state to stop such flow in any case, it is likely that such action would be
political and bring much negative reaction to the nation-state involved in such an
effort. For example: china’s periodic efforts to interfere with the internet have
brought great condemnation both internally and externally.
Then, there is mass migration of people and their entry, often illegally, into
various nation-state. If state is unable to control this flow, then there is a need for
some sort of global governance to deal with the problem. The flow of criminal
elements, as well as their products (drugs, laundered money those bought and sold
in sex trafficking, etc.), is a strong factor in the call for global governance (Sznaider
2006). In this cases and others, there is need for some degree of order, some sort of
effective authority, and at least some potential for the improvement of human life.
These are but the few of the thing that can be delivered by some forms of global
governance.
Then, there are global problems that single nation-state cannot hope tackle
on their own. One is the global financial crisis and panic that sweep the world
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periodically. Which nation are often unable to deal with their own (Strange, 1996).
Indeed, some nations (e. S, the nations of Southeast Asia) have often been, and are
being victimized by such crises. Unable to help themselves, such nations are indeed
of assistance from some type of global governance.
Nation-state had struggled to deal with problems like this through various
interstate system (e.g., alliances such as NATO), but the more reason trend is toward
the development of more truly global structures and method of dealing with various
sorts and issues and problems.
Effects of Globalization to Governments

One of the key aspects of state sovereignty is the government. It is group of
people who have the ultimate authority to act on behalf of the state, each state has
its own right to self-determination and that other country should not intervene in
the affairs of that state unless there are extra extraordinary reasons to do so. Other
countries must recognize sovereignty or the right to govern one’s own territorial
boarders. Each state is autonomous unto itself and responsible within each own
system of government to those who are govern. The decisions, the conflict, and the
resolution of that conflict are done truly institutions of government established and
codified in that particular state, whether or not through elections. Elections,
especially in democratic society, provide the leadership of the state. In addition, the
policies develop and implemented in the interest of the people of a state by a specific
government. A civil society within a state can also act as a counterweight as a
supplement to government. Civil society includes the private economy, educational
institutions, churches, hospitals, fraternal organizations and other non-profit
organizations.
Traditional Challenges
External intervention can generally be described as invasion by other
countries. For example, when Saddam Husain was the ruler of Iraq 1990, he decided
he was going to take over the oil’s fields of Kuwait. He invaded Kuwait and took it
over. As a result, he was dislodged by an international coalition lead by the United
States.
These days, we can see external intervention in other forms. Russia's external
intervention into the affairs of Ukraine, a sovereign state in the post-Soviet era, is
another instance of intervention in the autonomy of the state. Russia intervenes in
the affairs of people in Crimea who want to become part of Russia again even though
they are part of Ukraine. Crimea declared its independence from Ukraine and re-
affiliated with Russia. This is a case of how there might be a national identity within
a country that is assisted by a neighboring country. Ukraine argues to have
autonomy to determine the case for Crimea. As a result, there is current conflict
between Ukraine, not recognizing Crimea's sovereignty, and Russia, not recognizing
Ukraine's sovereignty over Crimea. Internal political challenges can also happen.
For example, after the Arab Spring in Egypt, a new constitution was created, and a
government was elected. That government was more fundamentalist and rejected
Prepared by:
Phoebe M. Nierras
Instructor
Leyte Colleges
the notion of a plural society that included religious diversity. The military staged a
coup that deposed the government in order to restore stability, other examples
include the Taliban's efforts to control the government of Afghanistan. In Syria, the
original rebellion against Assad came from the country's own internal dissenters
who wanted to replace the government even though they were also Syrian nationals.
There are also regional organizations challenging state autonomy. The United
Nations intervened in Sudan because of the several years of civil war. More recently
in Europe, specifically in Greece, it also interfered in the Greek debt crisis.
Challenges from National/Identity Movements

The next challenges are part of a national identity or movement. It is
important to know that a nation has cultural identity that people attached to, while
a state is a definite entity due to its specific boundaries. However, different people
with different identities can live in different states. For example, the Kurds reside in
several different countries including Iraq, Iran, and Turkey. The Catalans live
primarily in Spain, but we can also find some of them in France. Scottish
nationalism is another example that challenges the traditional notions of state
sovereignty. In 2014, Great Britain had a vote in Scotland to decide whether
Scotland was going to become its own autonomous state apart from Great Britain.
They voted against it, but Scotland has a significant degree of autonomy now as
compared to more than two decades years ago. Global movements, such as the Al-
Qaeda and ISIS, are another example of national or identity movements. In this
case, they are structured around the fundamentalist version of Islam.
Global Economics
The third major source of challenge comes from global economics. Global
economy demands the states to conform to the rules of free-market capitalism.
Government austerity comes from developments of organizations that cooperate
cross countries, such as NATO and regional agreements, such as NAFTA, the
European Union (EU), and the Association of Southeast Asian Nations (ASEAN).
Neoliberal economics or neoliberal capitalism started in the 1980s. It focuses on free
trade and dismantling trade barriers. It made sure that governments did not impose
restrictive regulations on corporate presence, as well as on the free flow of capital
and jobs. Free trade was the ideal or the normative belief, that is, the best economy
is one where there is tree trade everywhere. Laws and standards that would interfere
with the flow of capital in a country, including environmental regulations, were
deemed to discourage economic growth. Neoliberal economics requires a state to
cooperate in the global market through the free flow of capital, the privatization of
services, and fiscal Austenitic or constraint. In tum, the government’s role is
diminished as it relates to the market.
Neoliberal economics is seen as a threat, in general, because a state cannot
protect its own economic Interest as a sovereign state. A specific example to expand
global economic influence is the use of ME and the World Bank forcing government
Prepared by:
Phoebe M. Nierras
Instructor
Leyte Colleges
reforms in poorer country. Furthermore, the regional economic development efforts
focused on expanding free trade and market liberalization. Businesses from
developed countries put their factories and pay people to build factories and produce
goods in developing countries worldwide. These corporations will sell the products
in developing countries. This exacerbates rising inequality in the world. Greece is
one example that explains how neoliberal economics can threaten the sovereignty
of a state. It began in 1981 when Greece joined the EU. As a larger alliance, the EU
broke down all kinds of barriers among its member states, including Greece, like
passports, visas, and license plates. It allowed people to travel across European
borders and encouraged economic cooperation and collaboration of member states.
Twenty years later, Greece adopted the euro as s own currency and got rid of the
drachma. The government of Greece borrowed money for infrastructure
improvements, largely linked to their hosting of the 2004 0lympics. This put Greece
in a large debt. In 2007 and 2008, the worldwide financial crisis made Greece’s
economy to collapse.
Aside from high debt that burdened the government, Greece had several of its
employees struggling with pensions. Tax revenues were lower, and as a result, they
could not pay their debts back. In 2009, their credit rating dropped which made it
harder for them to pay back their debt. This led to a series of austerity packages in
Greece which meant that there was less government spending. IMF bailed them out
from the crisis in exchange for more austerity. In conclusion, economic crises can
force government to subscribe to the terms and conditions of the global financial
market and of other nations that can help them regain economic stability.
Global Social Movements

Finally, we have global social movements. Most of the time, they are not seen
as a threat but they definitely challenge state sovereignty. Social movements are
movements of people that are spontaneous or that emerge through enormous
grassroots organization. These social movements are transnational movements
which means they occur across countries and across borders. Therefore, states have
less control over them. For example, human rights movements create a public
sentiment, value, and agenda. The idea is that there are certain rights that states
cannot neglect or generally, what we call human rights. For a country decides that
they are going to have a particular policy and if that policy violates the international
standard of human rights, there is a challenge to the ability of states to fully
implement it. An example is the United States position on the death penalty. There
is an international consensus, with a few well as women’s autonomy. Rights of
personal autonomy are another example and this includes issues on homosexuality,
same-sex marriage, and gender equality.
There is also an increased role in international organizations like the United
Nations and the international Criminal Court in Hague, the role of non-
governmental organizations like Doctors without borders or Amnesty International,
and the role of global media. The Relevance of the State amid Globalization de state
Prepared by:
Phoebe M. Nierras
Instructor
Leyte Colleges
is a distinctive political community with its own set of rules and practices and that
is more or separate from other communities. It has four elements people, territory,
government, and sovereignty. The first element of a state is a permanent population.
This population does not refer to a nomadic people that move from one place to
another in an indefinite time. This permanent presence in one location is
strengthened by the second element of a state, a defined territory. A territory has
clear boundaries. A territory is effectively controlled by the third element,
government. The government regulates relations among its own people and with
other states. This means that the state is a formally constituted sovereign political
structure encompassing people, territory, and its institutions on the one hand, and
maintaining its autonomy from other states on the other hand.
Prepared by:
Phoebe M. Nierras
Instructor
Leyte Colleges
CONCLUSION
Globalization helps us in various ways such as it INCREASES
COMPETITIONS between the markets having them to improve the quality of
products that they are selling. It also provides new jobs and it INCREASES THE
EMPLOYMENT RATE. Moreover, it also SPREADS THE KNOWLEDGE OF NEW
INVENTIONS and it helps in the SPREAD OF EDUCATION too. Without
globalization we will not be able to be in our current states nowadays. However,
despite these positive effects, we still cannot deny the facts that there will always
be a negative impact of globalization.
One of the negative impacts of globalization is the ENVIRONMENTAL
DEGRADATION where in the environment is being ruined because the amount
of raw materials needed to run industries and factories is taking toil on the
natural reserves of the planet earth.
Also, there is growing GAP BETWEEN THE RICH AND THE POOR because the
rich are getting richer while the poor are struggling for square meal and they are
getting poorer and poorer every day. Furthermore, it is also the reason why there
is a RISE IN HEALTH RISKS because globalization bought people from various
countries together which makes it easier to transport viruses from one country
to the other. It is needed that a globalization is a blessing and a curse at some
point.
Globalization will always be there and it will never stop. It is only up to us
how we will handle and take it. Let us be flexible and open minded to the things
that are coming to us but let us not forget to be cautious because not everything
we think are good is always good, because at the end of the day there will always
be an effect that we will never forget, ALWAYS REMEMBER THAT
GLOBALIZATION IS FULL OF OPPORTUNITIES AND THREATS.
Prepared by:
Phoebe M. Nierras
Instructor

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Leyte Colleges

Tacloban City THE CONTEMPORARY WORLD

(Gen. Ed. 02)

The Contemporary World

Course Title: The Contemporary World

Chapter 2: The Global Economy

Chapter 3: Market Integration

Chapter 4: The Global Interstate System

CHAPTER 1: DEFINING GLOBALIZATION

GLOBALIZATION can mean:

Economic globalization – “free trade” and increasing relations among members of

Liquids and Gases

Global Economic Flows

1. Liberalization: IT stands for the freedom of the entrepreneurs to establish any

3. Globalization of Economic Activity: Economic activities are be governed both

4. Liberalization of Import-Export System: It stands for liberating the import-

5. Privatization: Keeping the state away from ownership of means of production

6. Increased Collaborations: Encouraging the process of collaborations among the

Globalization cab be:

Economic globalization refers to the increasing interdependence of world

Globalization and the Politics.

Globalization with technology.

QUALITIES AND CHARACTERISTICS OF GLOBALIZATION

Creation and Multiplication – involves creation of new multiplication of existing

Expansion and Stretching – globalization is very evident in the expansion and

Homogeneity – refers to the increasing sameness in the world as cultural inputs,

Heterogeneity – it pertains to the creation of various cultural practices, new

The Prehistoric Period

The Premodern Period

The Early Modern Period

The Modern Period

The Contemporary Era

CHAPTER 2: THE GLOBAL ECONOMY

The Global Economy

HISTORICAL PROCESS, THE RESULT OF HUMAN INNOVATION AND

Transnational Corporations (TNCs)

Capitalism – capitalism, also known as the free-enterprise or free-market system, is an

Environmental problems – globalization has produced ecological problems such as global

INTERNATIONAL MONETARY SYSTEMSS

International monetary system or regime (IMS) – refers to the rules, customs,

The Gold Standard

THE BRETTON WOODS SYSTEM

Two international institutions:

NTERNATIONAL TRADE AND TRADE POLICIESS

Product Europe Portugal

Absolute Advantage Theory – is the ability of country/individual/company/region to

CORE best in consumers of primary commodities and producers of manufactured articles

UNILATERAL TRADE ORDER

In seventeenth- and eighteenth-century Europe International trade was basically a

• Finance wars; and

DEVELOPING COUNTRIES AND INTERNATIONAL TRADE

United Nations Conference on Trade and Development (UNCTAD)

THE MODERN WORLD SYSTEM

Periphery countries lack a strong central government and possesses a disproportionately

Core-periphery- the degree of profitability of the production processes. The center-

SEMI-PERIPHERY - Semi-peripheral states have a mix of core and periphery production,

2. SUBSISTENCE ACTIVITY – we usually define this type of work to narrowly. Taking

3. PETTY COMMODITY – defined as a product produced within the confines of the

5. TRANSFER PAYMENTS – defined as income that comes to an individual by virtue

Two Major Varieties of Household:

2. Semi-proletarian Household. Households where it accounts for less than the

Two Pressures on Semi-Proletarian Household

2. Pressure on the employers