TOPICS

1. The Global Economy

2. Global Interstate System
3. Contemporary Global Governance

LEARNING OUTCOMES

At the end of the lesson, students should be able to:

1. define economic globalization and identify the actors that

facilitate this process;
2. explain the effects of globalization on governments and
differentiate internationalism from globalism; and
3. identify the functions of the United Nations and the challenges
of global governance in the 21st century.

The succeeding topics are best explored and discussed in view of Held et al.’s
(1999) description that globalization “may be thought of initially as the widening,
deepening and speeding up of worldwide interconnectedness in all aspects of
contemporary social life. In connection to this, for Giddens (1999), these “aspects” can
refer to political, cultural, and economic features (as cited in Beczes, 2014: 900). These
conceptualizations reinforce the view of globalization as a multidimensional process or
phenomenon as discussed in the descriptions Steger (2014) provided above.
For this lecture, the economic and political aspects of globalization will be
explored. The concepts, ideas, and perspectives should provide the students with ideas
on how academics and/or scholars of globalization, economics, political science, and
international studies, among others, confront the complex and multidimensional process
of globalization.

TOPIC 1: THE GLOBAL ECONOMY

ECONOMIC GLOBALIZATION
Economic globalization is defined as,
…a historical process, the result of human innovation and technological progress. It
refers to the increasing integration of economies around the world, particularly
through the movement of goods, services, and capital across borders. The term
sometimes also refers to the movement of people (labor) and knowledge
(technology) across international borders (IMF, 2008 as cited in Benczes, 2014: 900).

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In this definition, it highlights the role played by the historic feats of human innovation
and the progress that materialized through it, especially in the fields of technology and
knowledge. The focus of these definitions, in relation to globalization, is the increasing
integration of economies and markets around the world. In this regard, economic
globalization has several interconnected dimensions:
1. The globalization of trade goods and services.
2. The globalization of financial and capital markets.
3. The globalization of technology and communication.
4. The globalization of production.
In discussing economic globalization, one is shedding light to the drastic economic
changes happening in the world, the increasing regard for the value of trade, the jumps
in world Gross Domestic Product (GDP), the movement of the investments at faster rates,
the role technology play in the realization of cross-border transactions and relations
among others (Claudio & Abinales, 2018: 12-13).
Furthermore, economic globalization is described as (Benczes, 2014: 900):
1. Functional integration between internationally dispersed activities as opposed to
internationalization which is about the extension of economic activities on nation-
states across borders.
2. Economic globalization is rather a qualitative transformation than just a
quantitative change.
In economic globalization, economies and economic actors are integrated through
internationally recognized and practiced economic policies and practices, where most are
created by economic giants of the First World countries. Economic globalization is more
qualitative because it highlights how it has changed the quality of economic relations,
transactions, the value of trade, capital, consumerism, and so forth.
The definition of economic globalization provided by the International Monetary
Fund (IMF) does not hold water if we take note of the nature of globalization as a
“complex, indeterminate set of processes operation very unevenly in both time and
space” (Dicken, 2004 as cited in Benczes, 2014: 900). We note that globalization in itself
is multidimensional, complex, and does not influence or affect nation-states in the same
way which makes it an uneven process as well. With this, a more substantive definition
of economic globalization is required.
The definition provided by IMF (2008) is juxtaposed with the definition provided
by Szentes (2003): “In economic terms globalization is nothing but a process making the
world economy an “organic system” by extending transnational economic processes and
economic relations to more and more countries and by deepening the economic
interdependencies among them” (as cited in Benczes, 2014: 901). Benczes (2014) notes
that this definition claims that only in a global context (i.e. an integrated world economy)
can economic activities and processes can be interpreted.
The role of the nation-state is redefined as a factor and an actor in this arena of
economic activities and processes. In the wake of the global market, nation-states ceased
to exist as primary economic organization units as people consume highly standardized
products and services produced by global corporations (Benczes, 2014: 901). In the height
of the global market system, the national economy has been transformed by globalization
into a global one in that “there will be no national products or technologies, no national
corporations, no national industries” (Reich, 1991 as cited in Benczes, 2014: 901).

GLOBAL ACTORS IN ECONOMIC GLOBALIZATION

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 The process of economic globalization has produced its actors as well. These
economic globalization actors became key players in the global economy and have
touched on local industries of nation-states to create an international, tradable, and not-
context-limited goods and services. Aside from this are economic globalization actors
that try to produce harmony in an ever-growing economic and market integration.

• TRANSNATIONAL CORPORATIONS (TNCs)

- Regarded as another important
economic development that involves
the changing nature of global
production.
- TNCs are believed to be the main
driving force of economic
globalization.
- For realists, TNCs still represent
national interests and have means
through which the rich can exploit the
poor.
- The availability of cheap labor, Transnational Corporations. Image from
https://sayaglobal.weebly.com/uploads/2/6/3/6/26367531/633
resources, and favorable production 6134.jpg?414
conditions in the Third World
enhanced both the mobility and the profitability of TNCs.
- TNCs' ability to ‘outsource’ manufacturing jobs—that is, to cut labor costs by
dispersing economic production processes into many discrete phases carried out
by low-wage workers in the global south—is often cited as one of the hallmarks of
economic globalization.
- Enterprises like Wal-Mart, General Motors, Exxon-Mobil, Mitsubishi, and Siemens
belong to the 200 largest TNCs, which accounts for over half of the world’s
industrial output.

• INTERNATIONAL MONETARY FUND (IMF)

- Founded at the Bretton Woods Conference in July 1944
alongside the International Banks for Reconstruction and
Development (IBRD)—which was responsible for post-
war reconstruction, as two international institutions.
- The mandate of IMF was to promote international
financial cooperation and strengthen international
trade.
- The IMF was expected to provide short-term financial
assistance (loans) to countries. IMF logo. Image from Wikipedia.
- Official organization for securing international
monetary cooperation.
- Help less-developed countries through research and giving monetary advice.

• WORLD TRADE ORGANIZATION (WTO)

- WTO was launched on January 1, 1995, and
has become an official forum for trade
negotiations. WTO logo. Image from Wikipedia.
- It is a formally constituted organization with
legal personality.

• WORLD BANK

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 - Two mandates of the institution: end extreme poverty and promote shared
prosperity.
- Offers financial and technical assistance to developing The World Bank logo. Image from
countries. Wikipedia.
• WTO, IMF, and WORLD BANK
- 3 institutions that underwrite the basic rules
and regulations of economic, monetary, and
trade relations between countries.
- Many developing countries have loosened
their trade rules because of the influence and
pressure of these institutions.
IMF-WB-WTO. Image from imf.org

SUPPLEMENTARY MATERIALS
On economic globalization and global economic actors:
• Globalization- trade and transnational corporations | Society and Culture | MCAT |
Khan Academy (https://www.youtube.com/watch?v=GmomzubjO1I)
• How the IMF Monitors the Global Economy
(https://www.youtube.com/watch?v=IlzBFLsToGk)
• What's the difference between the IMF and the World Bank? | CNBC Explains
(https://www.youtube.com/watch?v=lN3qrFA4jXc)
• Covid-19: why the economy could fare worse than you think | The Economist
(https://www.youtube.com/watch?v=f9v6givfTEA)

SOME HISTORICAL NOTES

TIME EVENT
130 BCE – 1453 BCE Silk Road, the oldest known international trading route
from China to the Middle East to Europe.
1571 Establishment of the galleon trade which connected
Manila to Mexico; made the connection between the
Americas and the trading routes possible.
1867 A more open trade system was established when nations
like the United Kingdom, the United States, and other
European countries adopted the gold standard.
World War I (1914 – To support the war efforts, the countries depleted their
1918) gold reserves, forced them to abandon the gold standards.
European countries adopted floating currencies.
1920s – 1930s The Great Depression happened—the worst and longest
recession ever experienced by the Western world.
Early 20th century The world economy operates based on fiat currencies—
currencies that are not backed by precious metals and
whose value is determined by their cost relative to other
currencies. This system allows governments to freely and
actively manage their economies by increasing or
decreasing the amount of money in circulation as they see
fit.
1944 Bretton Woods Conference gave birth to International
Banks for Reconstruction and Development (IBDR), World
Bank, and International Monetary Fund (IMF).
1957 Establishment of the European Economic Community
(EEC).

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 1964 The United Nations Conference on Trade and
Development (UNCTAD) was established with the joint
effort of the developing world.
1986 – 1994 Multilateral trade negotiations were carried out under the
Uruguay Round.
1995 The Uruguay Round gave birth to a ‘real’ international
trade institution, the World Trade Organization (WTO).

Some historical notes related to the development of economic globalization in the contemporary world (Steger, 2014;
Benczes, 2014; Claudio & Abinales, 2018).

The process of globalization, in general, is multidimensional and uneven. In terms

of economic globalization, the global economy is characterized by increasing linkage of
national economies—that forms the global economy through market integration,
financial flows, and investments by multinational firms (Steger, 2014: 6). In another
perspective offered by the world-systems analysis forwards the idea that “capitalism
under globalization reinforces the structural patterns of unequal change” (Wallerstein,
1983 as cited in Benczes, 2014: 903).
Developed countries and developing countries are tied in a rather ironic
dependency. There is a presence of asymmetry between and among national and
international economic systems which lies at the heart of inequality in economic
globalization. The challenge is how to make the system more just, how the actors can
create and amend policies that close the gap of economic inequalities at the global level.
A large part of globalization processes is anchored on economic changes after all.

SUPPLEMENTARY MATERIALS
On the detriments of economic globalization:
• Globalization and Trade and Poverty: Crash Course Economics #16
(https://www.youtube.com/watch?v=9MpVjxxpExM)
• What global trade deals are really about (hint: it's not trade) | Haley Edwards |
TEDxMidAtlantic (https://www.youtube.com/watch?v=-v3uqD1hWGE)

TASK/ACTIVITY

GLOBAL ECONOMIC INSTITUTIONS (RESEARCH):

This activity is geared towards familiarizing oneself to an international
economic organization (e.g. Asian Development Bank) or an
international company (e.g. Honda, McDonald’s, etc.)
TASK/ACTIVITY
Research on the following: (a) the origins and history of the institution
RUBRICS:
you have chosen; (b) map the international connections it has created;
Format: 15%
(c) identify the major country-leaders of this institution; (d) locate the
Citation and ethical
Philippines in this map of interconnections.
integrity: 20%
Then answer this question: How does this institution influence global Integration,
economic activity? How does it affect economics in the Philippines? organization, and
elaboration of data,
Discuss your points clearly. Don’t forget to cite your sources, use APA information, and
citation style. The worksheet is on the next page. You can use another points: 50%
sheet of paper if the space will not suffice. Writing technicalities
Do not copy-paste from the internet. You can read references (like (narrative,
articles and researches) but make sure to write in your own words. grammar): 15%

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TCW WORKSHEET NO. 2 – GLOBAL ECONOMIC INSTITUTIONS (RESEARCH)
International Economic Organization or Transnational Company (add a short description):

(a) the origins and history of the institution you have chosen:

(b) map the international connections it has created:

(c) identify the major country-leaders of this institution:

(d) locate the Philippines in this map of interconnections:

How does this institution influence global economic activity? How does it affect economics in the Philippines?

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