Rizal Technological University integration has been accompanied by political

College of Education fragmentation, and the number of countries has

GE03: The Contemporary World risen to a record high of more than 190. At the
TH: 9:00-12:00nn same time, there has been a proliferation of
Module 2 international treaties and institutions aimed
especially at fostering economic integration,
Objectives: such as the World Trade Organization and the
At the end of the lesson, the students European Union. These trends are illustrated
are able to: graphically in Figure 1, which shows the
*Give insight on the process of historical evolution of the number of sovereign
globalization, its characteristics as well as states in the world, average exports as a share
causes and effects on world economy; of GDP and the number of members of the
*Build knowledge of students in the “General Agreement on Tariffs and Trade”
nature of world financial markets; and (GATT)/WTO.1 The sharp reversal in the link
*Enumerate the structures of between economic and political integration
globalization. presents an open puzzle and an obstacle for
accounts of political geography based on
The Structures of Globalization economic efficiency.

Some words need to familiarize:

Introduction
 Market System - an economic system in
Since the Industrial Revolution, the cost
which economic decisions and the
of distance has been falling dramatically thanks
pricing of goods and services are guided
to a stream of major technological innovations,
solely by the aggregate interactions of a
like the railroad, the steamship, the telegraph,
country's individual citizens and
the jet engine, containerization and most
businesses.
recently the internet. Such technological
 Consumer - a person who purchases
progress has fundamentally transformed
goods and services for personal use.
worldwide economic geography and fuelled a
 Producer - a person, company, or
continuous expansion in the size of markets. In
country that makes, grows, or supplies
1820, international trade was very modest:
goods or commodities for sale.
about 2% of world output. Over the following
century, international trade grew more than  Industries - economic activity
four-fold to 8%. This Örst wave of globalization concerned with the processing of raw
was cut short in the interwar period, which saw materials and manufacture of goods in
international trade decline to about 5%. After factories.
World War II, a second wave of globalization  Manufacturer - a person or company
started and still continues today. By 2010, that makes goods for sale
international trade had reached unprecedented
levels, surpassing 20% of world output. These
two ages of globalization, however, saw political
geography evolve in opposite directions. In the
nineteenth century, economic and political
integration proceeded together. Sovereign
states grew larger and fewer, from 125 in 1820
to merely 54 at the eve of the Great War.
Conversely, in the postwar era economic

The Contemporary World: The Structure Of Globalization Page 1 of 5


The Global Economy
“Globalization refers to increases in the degree
of integration between national economies.”
That integration includes financial
markets and government policies as well as
international trade of resources, goods and
services. Consumers benefit through
globalization by getting different and/or
cheaper products. Some domestic businesses
are hurt because they cannot compete with
cheaper imported goods and domestic jobs are
lost. Other domestic businesses, which import
goods for sale, may gain. At the same time, jobs
are being created in foreign countries. There is
a long history of trade in natural resources and
capital resources. For example, the advent of
computers and the Internet have made it
possible for businesses in one country to hire
labor which remains in another country. This
practice, called outsourcing, allows businesses
in the United States to hire cheaper workers in
other countries to do accounting and
engineering.
According to Benscez (2014) the
phenomenon does have several interconnected
dimensions are:
1. The Globlaliztion of trade of goods
and service
2. The Globalization of financial and
capital markets
3. The Globalization of technology and
communication
4. The Globalization of production
The main advantage of previous
definition is that although it does not deny
relevance of the ‘international’, ‘regional’, or
‘national’ levels, it refuses the assumption that
the nation is the only unit of analysis and that
current trends in the world economy are simply
the redesign of the external relations of
interacting nations. Instead, it claims the
The Contemporary World: The Structure Of Globalization
economic activities and processes can be
interpreted only in a global context, i.e. in an
integrated world economy
The structure of the Global
Economy
• Zakaria, “The Rise of the Rest” -
Fareed Zakaria associates “the rise of the rest”
(which is the name of the introductory chapter
of his book) with six basic trends that he
describes: ... By “the third power
shift,” Zakaria means the ability of other
countries from various world regions to equal
or overtake the US as global leaders.
• Marber, “Globalization & Its Contents” –
Marber wrote this book to describe the
globalization and what is happening when the
world are being globalized.
• Friedman, “It’s a Flat World, after All”
-  In his book
The World Is Flat, Friedman recounts a journey
to Bangalore, India, when he realized
globalization has changed core economic
concepts. In his opinion, that flattening is a
product of the convergence of the personal
computer with fiber optic microcable with the
rise of work flow software.
• Ghemawat, “Why the World Isn’t Flat” -
A summary of Pankaj Ghemawat's argument is
that proponents of globalization use scant
statistics to draw exaggerated conclusions.
• Mahbubani. “The Case Against the West” -
KISHORE MAHBUBANI is Dean of the Lee Kuan
Yew School of Public Policy at the National
University of Singapore. This essay is adapted
from his latest book, The New Asian
Hemisphere: The Irresistible Shift of Global
Power to the East (Public Affairs, 2008). There is
a fundamental flaw in theWest's strategic
thinking.
Page 2 of 5
• Skinner, “A World Enslaved” - There are now
more slaves on the planet than at any time in
human history. True abolition will elude us until
we admit the massive scope of the problem,
attack it in all its forms, and empower slaves to
help free themselves.
What is included in the “global economy”
• Those who organize & sustain it – States &
governments – International organizations &
associations
• Those who play a role in it – Capitalists &
investors – Int’l financial institutions (IFIs) –
Production managers – Consumers – Labor
• Those marginal but connected to it – The
global poor, small farmers – Grey & black
marketeers
• Transborder flows of goods, information,
money, people & other things
There have been/are several “goals” in
constructing this economic system;
• National enrichment by – Facilitating trade &
jobs – Maintaining stability – Pursuing comp
advantage – Shaping political economy
• Relative global peace by – Fostering
integration – Fostering dependencies – Happy
consumer-citizens
• There are contradictions in all of this
Market Integration
Markets are important determinants of food
availability and food access. The extent to which
markets make food available and keep prices
stable depends on whether markets are
integrated with each other. Integrated markets
can be defined as markets in which prices for
comparable goods do not behave
independently. If markets are well integrated, it
can be assumed that market forces are working
properly, meaning that price changes in one
The Contemporary World: The Structure Of Globalization
location are consistently related to price
changes in other locations and market agents
are able to interact between different markets.
If markets are integrated, food will flow from
surplus to deficit areas - and imports will flow
from port and border areas into the hinterland.
High prices in deficit areas provide the incentive
to traders to bring food from surplus to deficit
areas, making food available. As a result of
these flows, prices should decline in deficit
areas, making food more accessible to
households.
Mohr (2017) states that financial and
industrial globalization is increasing
substantially and is creating new opportunities
for both industrial and developing countries.
The largest impact has been on developing
countries, who are now able to attract foreign
investors and foreign capital. This has both
positive and negative effects for those
countries.
EFFECTS OF FINANCIAL AND INDUSTRIAL
GLOBALIZATION:
 Increased Standard of Living.
Economic globalization gives
governments of developing nations
access to foreign lending. When this
funds are used in infrastructure
including roads, health care, education,
and social services the standard of living
in the country increases. If the money is
used only selectively, however, not all
citizens will participate in benefits.
 Access to New Markets.
Globalization leads to freer trade
between countries. This is one of its
largest benefits to developing nations.
Home-grown industries see trade
barriers fall and have access to a much
wider international market. The growth
this generates allows companies to
develop new technologies and produce
new product and technologies.
Page 3 of 5
  Widening Disparity in Incomes.
While an influx of foreign companies
and foreign capital creates a reduction
in overall unemployment and poverty,
it can also increase the wage gap
between those educated and those
who are not. Over the longer term
education levels will rise as the financial
health of developing country rise, but in
short term, some of the poor will
become poorer. Not everyone will
participate in an elevation of living
standards.
 Decreased Employment.
The influx of foreign companies into
developing countries increases
employment in many sectors, especially
for skilled workers. However
improvements in technology come with
the new businesses and that technology
spreads to domestic companies.
Automation in the manufacturing and
agricultural sectors lessens the need for
unskilled labor and unemployment rises
in those sectors.
Types of Markets
At the macro level, resource markets
are found. These markets are raw material
market, labour market and money markets.
Markets can be 14 classified into various types
depending on the nature of purchasing and
consumption, geographical coverage,
magnitude of selling, or time period.
 Markets on the basis of Purchasing
and Consumption
This is classification on the basis of the
type of user and the nature of product
purchased. Products can be defined as either
for industry or for consumer products
depending on buyers' intentions. The main
The Contemporary World: The Structure Of Globalization
distinction between two types of products is
their intended use.
 Markets on the basis of Products in
Trade
These are basic goods markets,
intermediary goods market and consumer
goods market. Goods such as steel, cement,
chemicals are very basic for industrial and
infrastructural development, these are called
basic goods. Markets for machines, machine
tools, equipment, spare parts constitute the
intermediary good markets. Consumer products
can be classified according to how much effort
is normally expended to by them.
 Markets on the basis of magnitude of
selling
Wholesale and retail markets vary in
the quantum of goods sold. Wholesale markets
are lesser in number but sell in large quantities
whereas the goods sold by retailers or other
intermediaries are large in number. They
usually sell to end consumers who buy lesser
quantities.
 Markets on the basis of geographical
areas coverage
Markets can be classifies on the basis of
geographical coverage are local markets (in a
city or town), regional markets (in a state or a
few states), national markets (in a country), or
international markets (across the countries).
 Markets on the basis of time period
Markets can be short term markets
(money markets), weekly markets (a village
bazaar) and a long term seasonal markets
(markets for agricultural produce).
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References:

https://www.nber.org/papers/w22046.pdf

https://people.ucsc.edu/~rlipsch/migrated/Fold
er%20for%20Shawn/Lectures/Structure%20of
%20the%20global%20economy.pdf

https://www.richmondfed.org/~/media/richmo
ndfedorg/publications/education/concepts_pos
ters/pdf/2010_globaleconomy.pdf

http://shodhganga.inflibnet.ac.in/bitstream/10
603/141940/10/10_chapter%202.pdf

Prepared by:
Aggasid, Bryan
Batingan, Michael
Borja, Majer
Cano, Jayson
Cinco, Kimberly
Zaldivar, Rafael

Checked by:

Niño Pacia Maliban

Subject Instructor

The Contemporary World: The Structure Of Globalization Page 5 of 5