UNIT TITLE: INTRODUCTION TO GLOBALIZATION

TITLE OF THE LESSON: Market Globalism

DURATION: 2 hours

Introduction
In the previous lesson, we were able to see the significant periods that may
have started globalization The role of Western countries in the process was
highlighted. As a result, globalization is often seen as Westernization. But to see
globalization as a mere dominance of Western culture, beliefs and ideas could
create a problem. Globalization is a collection of world ideas, culture and civilization
as a whole.
In this lesson, we will try to differentiate globalization with globalism. The six
core claims of market globalism will be given emphasis. Contemporary global events
will be used to understand the lesson better.

Objectives/Competencies:

At the end of the lesson, students are expected to:

General: Define market globalism.
1. Differentiate globalism from globalization.
2. Enumerate and discuss the six core claims of market globalism.
3. Analyze contemporary news events in the context of globalization.

Lesson Proper/Course Methodology:

You have learned the meaning of globalization in the previous lessons.

However, we have to emphasize that globalization and globalism are two different
concepts. Globalism is the driving force of globalization. It helps us understand the
inter-connections of the countries in the modern world.

What is Market Globalism?

Manfred Steger (2005) introduced the idea of market globalism as a rising

political system. According to him, it reflects the concepts of globalization. It seeks to
endow globalization with free market norms and neoliberal meanings. He used six
core claims to better understand its meaning.

These six core claims play crucial semantic and political roles. With regard to
semantics, Steger argue that these claims absorb and rearrange bits and pieces of
several established ideologies and integrate them with new concepts into a hybrid
meaning structure of genuine novelty. Their political role consists chiefly in
preserving and enhancing asymmetrical power structures that benefit particular
social groups.

The following are market globalism‗s six core claims. Taken from Manfred
Steger‗s Ideologies of Globalization (2005).
Claim No. 1: Globalization is focused on the global integration and
liberalization of markets.

This core claim of market globalism explores to shape global predisposition

without exercising verbal threats and, therefore, represents the essence of soft
power. It activates the neoliberal ideal, that self-regulating market is the basis for a
future global order. The vital functions of the free market is its rationality and
efficiency, as well as its alleged ability to bring about greater social integration and
material progress can only be realized in a liberal society that values and protects
individual freedom. This core claim believes that globalization is about the victory of
markets over governments. Both the proponents and opponents of globalization
agree that the driving force today is markets, where the truth is that the size of
government has been shrinking relative to the economy almost everywhere.

Claim No. 2: Globalization is irreversible and inevitable.

The study of the observation of the influential globalists in the 1990s reveals
their reliance on an economistic narrative of historical inevitability. While disagreeing
with Marxists on the final goal of historical development, globalists nevertheless
share with their ideological opponents a attachment for such terms as ‗irreversible‗,
‗irresistable‗, and ‗inevitable‗ to explain the predicted path of globalization. For
instance, in a speech on the US foreign policy, President Clinton (as cited by Steger
(2005) told his audience: ―Today we must embrace the inexorable logic
of globalization .Globalization is irreversible. Protectionism will only make things
worseǁ
.FrederickW. Smith, CEO of FedEx Corporation, suggests that ‗globalization is
inevitable and it will happen whatever the situation is (Smith, 1999). The global south
neo liberalist faithfully echoed the globalist language of inevitability. For instance, the
Philippines Speaker of the House of Representatives, Manuel Villar, insisted that the
process of globalization is the reality of the modern world (Villar, 1998).

Around the 1990s, the neoliberal depiction of globalization as a natural force,

like the gravity or weather, made it simple for globalists to persuade people that they
would have to transform to the market discipline if they want to prosper and survive.
Therefore, the globalist claim of inevitability neutralized the challenges of anti-
globalist opponents by depoliticizing the public discourse about globalization:
neoliberal policies were above politics, because they simply carried out what was
ordained by nature. This view implied that, instead of acting according to a set of
choices, people merely fulfill world-market laws that demanded the elimination of
government controls.
The irreversible characteristics of globalization can be attributed to
technological innovations. The progressive characteristics of technology seem to
make globalization unstoppable.

Claim No. 3: No one is in charge of globalization.

This core claim emphasizes the leaderless idea of globalization. Market

globalism‗s deterministic language offered its proponents in the 1990s yet another
rhetorical advantage. If the market natural laws have indeed predetermined a
neoliberal course, then globalization does not reflect the arbitrary agenda of a
particular social class or group. In other words, the one in charge with globalization
are the market and technology, and not the people.
Here are two examples. Robert Hormats in 1998, the vice chairman of
Goldman Sachs International, emphasized that the true beauty of globalization lies
on the concept that no one is in control of it, not individuals, institutions, or even
government. Meanwhile, Thomas Friedman in 2000, alleged that the basic truth
about globalization is that no one is responsible or in charge of it. People like to
believe that there is someone controlling it, but the truth is no one. After 9/11, it
became increasingly difficult for market globalists to maintain the position that
‗nobody is in charge of globalization‗. Yet number of corporate leaders still reflexively
referred to the ‗leaderless market‗, neoconservatives close to the Bush
administration lectured market globalists that global security and a global liberal
order depend on the United States that ―indispensable nationǁ wielding its
power‗ (Kagan, 2002).

Claim No. 4: Globalization benefits everyone (. . . in the long run)

This claim rest at the very center of market globalism because it provides an
affirmative answer to the crucial normative question of whether globalization
represents a ‗good‗ or a ‗bad‗ phenomenon. Market globalists in the 1990s
frequently connected their arguments in favor of the integration of global markets to
the alleged benefits resulting from the liberalization and expansion of world trade. At
the 1996 G- 7 Summit in France, for instance, the heads of states of the 7 major
industrialized countries issued a joint communique´ that contains the following
passage: today‗s economic progress and growth bounced because of globalization.
The process of globalization supplies great window of opportunities for all countries
in the future. Its positive aspects including opening of international trade and
expansion of investments, give populous regions with more opportunities, specifically
in improving their standard of living, technological innovation, increase in skills that
are needed in work, and rapid dissemination of information. These attributes of
globalization led in the expansion of prosperity and wealth in the world. Hereby, we
are assured that globalization is the hope of the future (Economic Communique´,
1996).

In addition, globalists often seek to cementum their de-contestation of

globalization as benefits for everyone by coopting the powerful language of science
which claims to separate fact from fiction in a neutral fashion, that is, solely on the
basis of hard evidence.

Claim No. 5: Globalization Furthers the Spread of Democracy in the World

This claim is anchored in the neoliberal assertion that freedom, free markets,
free trade and democracy are synonymous terms. Affirmed as common sense
throughout the 1990s, the compatibility of these concepts often went unchallenged in
the public discourse. Francis Fukuyama, for example, asserted that there existed a
clear connection between a country's successful democracy and economic
development. While capital development and globalization did not automatically
produce democracies, ‗the level of economic development resulting from
globalization is contributory to the creation of complex civil societies with powerful
middle class, where they facilitate democracy (Fukuyama, n.d.).
This idea of securing freedom through an American-led drive for political and
economic ‗democratization‗ around the globe, thus connecting the military
objectives of the War on Terror to the neoliberal agenda of liberalizing markets has
emerged as the centerpiece of imperial globalism.

Claim No. 6: Globalization requires a war on terror.

It argues that while globalization studies have focused substantially on the

marketization of life, including the realms of politics and culture, the current ‗war on
terror‗ phase has directed focus in theory and practice back to traditional state-
centered security concerns and critical investigation of state–citizen relations,
notably in the context of multicultural societies. (Youngs and Widdows, 2009)
Two representative samples of how this new claim has been circulating in the
public discourse are Thomas Barnett‗s ‗The Pentagon‗s New Map‗, published in
the March 2003 issue of Esquire magazine, and Robert Kaplan‗s ‗Supremacy by
Stealth‗ featured in the July 2003 issue of The Atlantic Monthly. Both publications
reach a mass readership and its authors are respected professionals in their fields.
Since then, he has been giving his briefings regularly at the Pentagon, in the
intelligence community, and to high-ranking officers from branches of the military. In
his much- debated Esquire article, which he later expanded into a best-selling book,
Barnett argues that the Iraq War tag the moment when Washington occupy the real
ownership of strategic security in the age of globalization. He split up the globe down
into three distinct regions. The first is characterized by globalization thick with
network connectivity, financial transactions, liberal media flows, collective security,
rising standards of living, transparency, and more deaths by suicide than by murder.
The countries that have these characteristics are America, New Zealand, Australia,
and Europe. He calls these regions the 'Functioning Core', or 'Core'. The breeding
ground of ‗global terrorists', is called the 'Non-Integrating Gap', or 'Gap'. These are
Thailand, Malaysia, the Philippines, Pakistan, Indonesia, Mexico, Greece, South
Africa, Turkey,
Morocco, and Brazil. For Barnett, the significance of September 11 is that the
attacks forced the United States and its allies to make a long-term military
commitment to deal with the entire Gap as a strategic threat environment. In other
words, in order for globalization to spread, there must be a War on Terror. Its three
main objectives are: (1) to increase the capabilities of the Core's immune system in
responding to situations like the September 11 attack; (2) to strengthen the Core
from exports like drugs, diseases, terror, etc.; (3) to shrink the gap. The third point is
particularly important, because the real battlegrounds in the global war on terrorism
are still over there.
UNIT TITLE: THE STRUCTURES OF GLOBALIZATION
TITLE OF THE LESSON: The Global Economy
DURATION: 2 hours

Introduction

This lesson will primarily discuss the concept of economic globalization, how
does it form, the elements that facilitate its formation and examine who benefits from
it and who is left out.

Objectives / Competencies
At the end of the lesson, the students are expected to:
1. To define economic globalization.
2. To explain the attributes of economic globalization.
3. To articulate a stance on global economic integration.

What is Economic Globalization?

Economic globalization according to International Monetary Fund or IMF

(2008) is a historical process demonstrating the result of technological progress and
human innovation. It is distinguished by the increasing integration of economies
around the world through the movement of goods, services, and capital across
borders. These changes are all products of people, organizations, institutions, and
technologies. But this definition of IMF according to Benczes (2014) is not
substantive as it only reflects quantitative change than qualitative transformation.
Economic globalization is not only about extending and increasing economic
activities (e.g production, trade etc.) but more of creating a functional integration
among the said activities across borders.
Stiglitz (2008) believes that ''the great hope of economic globalization is that
it will help to raise the living standards all over the world by the opportunity to give
the poor countries access to foreign markets in order to sell their products; by inviting
foreign investments, in order to facilitate the emergence of new products at lower
prices; open borders that allow easy movement of people all over the world, in order
to train, to work, to build new businesses'', the author also believes that ''the
economy has led to globalization, especially by reducing communications and
transport costs, but the policy was the one that defined this process''

Elements of Economic Globalization

According to Stiglitz (2003), the growth in cross-border economic activities

takes five principal forms: (1) international trade; (2) foreign direct investment; (3)
capital market flows; (4) migration (movement of labor); and (5) diffusion of
technology

Figure 1: Elements of Economic Globalization

1. International trade: International trade is the economic transactions made

between countries. Every day, a network of planes, trucks, and ships moves huge
quantities of goods around the world. Your TV might come from China (TCL), your T-
shirt from Bangladesh (H & M) and your lunch from South Korea
(Samgyeopsal). Trade transactions include both goods (tangible products) and
services (intangible commodities). The production chains of goods and services is
getting more and more complex and global (Ospina, 2018). It allows products to be
sourced, assembled, packaged, and sold in different areas of the world. The
materials for your TV or shirt or the marinade for the pork you had for lunch might
have been produced in one country, processed in another country, assembled in a
third country, and packaged somewhere else, all before getting to your local store or
even to your table. How does this make sense? Why can‗t countries just make their
own TV, shirt, or food and provide more jobs and business domestically?
Before the 19th century, most European countries tried to do prioritize self-
sufficiency in a system called mercantilism. The Mercantilism aimed to minimize
imports and maximize exports while increasing the supply of gold in the country.
Mercantilism formed barriers to international trade, where countries aimed to
produce everything on their own. In the late 18thcentury, the so-called classical
economists, led by David Ricardo, contested these long-held beliefs by campaigning
the idea that societies should trade with one another to be more successful because
of comparative advantage. It follows the idea that countries should only export the
goods that they are able to produce more efficiently than others and import the
goods that other countries are able to produce more efficiently than them. Thus,
when countries focus on making things they‗re reasonably good at and import the
rest that they can‗t do efficiently, everyone benefits. This process is known as
specialization, so that countries don‗t have to spend time and resources producing
cloth or wine, for example, there‗s more room for them to innovate and develop
entirely new products.
Today, we measure countries‗ economies on productivity—their ability to
utilize their limited resources for maximum value. This measure is known as gross
domestic product, which totals the sum of all the final goods and services a country
produces in a year. Countries‗ human, technological, and financial resources
determine what they can produce efficiently and productively. The Costa Rica excels
in exporting pineapples and coffee, while Germany exports millions of computers
and cars. With the acceptance of new ideas, international trade took off. At the same
time, advances in technology and travel made markets much more accessible.
Massive container ships, cargo planes, and cheaper, faster communication
connected the world‗s producers with millions of new customers.
The remarkable growth in trade has been recorded for the last two centuries
and completely transforming the global economy. Today about 1/4 of total global
production is exported. Considering this transformative process is important because
trade has generated gains, but it has also had important distributional consequences
(Ospina et. al, 2018). Its link on household welfare, jobs and wages has also to be
considered. For example, the impact of Chinese imports on the jobs in the United
States. In the study of Dorn and Hanson (2013): found that rising exposure
increased unemployment, lowered labor force participation, and reduced wages are
the effects of Chinese competition in the country‗s local labor market. In addition to
that, claims for unemployment and healthcare benefits also increased in more trade-
exposed labor markets.
Protectionism vs. Free Trade

Figure 2: Protectionism vs. Free Trade

2. Foreign Direct Investment (FDI): According to Organization for Economic

Cooperation and Development (OECD), FDI is a category of cross-border investment
in which an investor resident in one economy establishes a lasting interest in and a
significant degree of influence over an enterprise resident in another economy. A
possession of 10 percent or more of the voting power in an enterprise in one
economy by an investor in another economy is evidence of such a relationship.
FDI is a key element in international economic integration because it creates stable
and long-term connections between economies. It is also an important network for
the transfer of technology between countries, stimulates international trade through
access to foreign markets, and serves as an important vehicle for economic
development.
Foreign direct investments increase and helped to develop economies during
the last decade. Areas such as agriculture, education, infrastructure, health, etc.,
give the country, where the investment is made, the desired standard of living and
also a strong economic recovery. In global economic level, Foreign Direct
Investment is leaning mainly towards developed countries, but developing countries
also have great interest in this type of investments due to foreign capital inflows,
innovative experience, knowledge and access to markets.
United Nations Conference on Trade and Development (UNCTAD) reports
concluded that FDI have become an important engine of economic growth because it
grew faster than gross domestic product (GDP) and international trade and
international corporate sales exceeded by far global exports (UNCTAD, 2006).
Examples of foreign direct investments include mergers, acquisitions, retail,
services, logistics, and manufacturing, among others. In 2017, for example, U.S.-
based Apple announced a $507.1 million investment to boost its research and
development work in China, Apple's third-largest market after the Americas and
Europe. The announced investment relayed CEO Tim Cook's bullishness toward the
Chinese market despite a 12% year-over-year decline in Apple's Greater China
revenue in the quarter preceding the announcement.
China's economy has been fueled by a remarkable increase of FDI targeting
the country‗s high-tech manufacturing and services, which according to China's
Ministry of Commerce (2017), grew 11.1% and 20.4% year over year, respectively,
in the first half of 2017. Meanwhile, relaxed FDI regulations in India now allow 100%
foreign direct investment in single-brand retail even without government approval
(Government of India Ministry of Commerce and Industry, 2018). The regulatory
decision reportedly facilitates Apple's desire to open a physical store in the Indian
market. Thus far, the firm's iPhones have only been available through third-party
physical and online retailers.

3.
look at the amount of cross-border capital flows (Stiglitz, 2003). The term 'capital
flows' refers to the movement of capital (money for investment) from one country to
another as a consequence of investment flows. In this case, the money being
referred to is not the money that flows between countries to purchase each other‗s
goods and services, but rather referring to the money flowing into and out across the
the world such as stock and bond, as well as factors such as real estate and cross-
border mergers and acquisitions.
Cross-border capital flows according to Rajan (2019) are neither an
unmitigated blessing nor an undoubted curse. Meaning, if it is used wisely, they can
be beneficial to recipient countries by making up deficiencies in the availability of
long-term risk capital and reducing gaps in local corporate governance. They can
also be beneficial to sending countries, offering investment opportunities for savings
generated by aging populations.

4. Migration (movement of labor): Migration is the movement of people from one

country to another. In economics, it is in consonant to the movement of labor.
Whether it is physicians or nurse who emigrate from Philippines to Great
Britain or seasonal farm workers emigrating from Mexico to the United States, labor
is increasingly mobile. For sending countries, the short-term economic advantage of
emigration (moving abroad) is located in remittances. Remittances are funds that
emigrants earn abroad and send back to their home countries, mainly in order to
support families left behind. According to the World Bank, remittances totaled $689
billion worldwide in 2018, with $529 billion of that money flowing into developing
nations (World Bank, 2019). Magnifying it locally, Philippines is also on the map of
those countries with higher remittances. According to World Bank‗s Report, in 2018,
Philippines ranked fourth among the top remittance-receiving countries in the world
with a total of $33.8 billion.

Figure 3: The World‗s Top Remittance Recipients

Migration, apart from the remittance contribution, can also benefit developing
economies when migrants who acquired education and knowledge abroad return
home to establish new enterprises. Unfortunately, migration can also hurt the
economy in the process in which a country loses its most educated and talented
workers to other countries. The flight of this human capital is essential for countries‗
economic growth.

5. Diffusion of technology: Technology plays a vital role in expediting the process

of globalization. It is considered as a major facilitator and a driving force in the
globalization processes. Technological improvement has allowed companies to
rapidly globalize their products. Global food chains are able to produce and
standardized their products across globe through wider and fine connectivity
facilitated by technology. The development of containerized ships and air freight is
considered to be a key technological advancement in trade and commerce. Similarly,
the introduction of universal bar code has increased the movement and flow of
goods worldwide. The creation of personal computers and internet formed electronic
business (E-Business) and electronic commerce (E-Commerce), which are used as
a validation of recent techno-globalism. Financial sector is also benefitted from
technology through electronic banking or the online banking. Electronic transfer of
funds is regarded to be the first operating form of global electronic financial system.
 Technological globalization is speeded significantly by technological
diffusion, defined as the spread of technology among countries. There has been
rapid advancement in the spread of technology to semi-peripheral and peripheral
nations for the past two decades, and World Bank in 2008 reported the benefits and
challenges of technological diffusion. In general, the report found that technological
growth and economic growth rates were linked, and that increase in technological
progress helps improve the situations of the poor. The report recognizes that the low-
tech products found in rural areas such as corn that can benefit from new
technological innovations, while, technologies like mobile banking can help those
whose rural existence consists of low-tech market transaction. Furthermore,
technological advances like in mobile phones can lead to competition lowering the
prices and parallel developments in related areas such as mobile banking and
information sharing.
The contemporary era of globalization is now experiencing ‗internet
economies‗ due to advancement in technology. Internet growth is a key factor for
developing interpersonal relationship across the globe. It is one of the necessary
components for social globalization, and it would not be complete without the
invention of internet.
Innovations in telecommunications, information technology, and computing
have lowered communication costs and facilitated the cross-border flow of ideas,
including technical knowledge as well as more fundamental concepts such as
democracy and free markets (Stiglitz, 2003).

Figure 4: The Accelerating Speed of World Trade

Due to technological progress, costs of transportation and of communication

decreased strongly during the last decades. Without these reductions of costs,
phenomena such as outsourcing, long-distance trade and global value chains would
not be possible.
Conclusion: The formation of economic globalization would not be possible
without the elements of trade, flows of capital, foreign direct investment, migration or
the movement of labor, and technology. They attributed rapid transformation to the
world economy. They have created difficult challenges, and countries will continue to
struggle to increase growth and productivity, while reducing inequality and creating
jobs and more opportunities. However, drawbacks will always be part of the picture.
Turning back the clock to restore the old frameworks is impossible. The challenge is
to build new ones that work.