GNED 07
3. World Culture Theory - agrees that world
The Contemporary World
TOPIC 1: Introduction
Globalization
• refers to the process by which more
people across large distances become
connected in more and different ways
• process of interaction and integration of
people/citizen, government of other
nations and business corporations through
international trade and relation with the
help of information and communication
technology.
• symbolizes a world in motion providing
people with resources to new ways of
being human in the fast-changing world
Three Main Aspects of Globalization
1. Political – the degree of political
cooperation and the political relationship
of one state to another
2. Economic- the interconnectedness of
economies and trade of product and other
resources.
3. Socio-cultural- transmission and sharing
of values, ideas, culture and information
through media, technology, tourism,
language, religion, cuisines, and
education.
Theories of Globalization
1. World-System Theory – focuses on
looking at a world as a unit rather than
looking at individual country. The
relationship between developed and
underdeveloped country.
Three regions:
• Core Countries
• Semi-Peripheral Countries
• Peripheral Countries
2. World Polity Theory - state remains an
important component of the world society,
but primarily attention goes to the global
cultural and organization environment in
which states are embedded
• There is an influence of norms and
culture and international
organizations/fundamental
principles
culture is indeed new and important and
focuses with the problem of globality
• Globalization compresses the
world into a single entity
Claims of Market Globalism
✓ Globalization is about the liberalization
and global integration of markets
✓ Globalization is inevitable and irreversible;
✓ Nobody is in charge of globalization;
✓ Globalization benefits everyone
✓ Globalization furthers the spread of
democracy in the world
✓ Globalization requires a global war on
terror
TOPIC 2: IFI
International Financial Institutions (IFI)
• are institutions that provide financial
support via grants and loans for economic
and social development activities in
developing countries.
• these include public banks, such as the
world bank, international monetary fund,
and regional development banks.
The following are usually classified as
International Financial Institutions:
1. World Bank (WB)
• the world's largest development
Institution
• offering loans and tailored knowledge
and advice.
• founded in 1944
• International Bank for Reconstruction
and Development – soon called the
World Bank
Five Largest Shareholders:
• France
• Germany
• Japan
• UK
• US
2. International Monetary Fund (IMF)
• Established as part of the Bretton
Woods Agreement in 1945. (189
countries.)
• Foster global monetary cooperation
• Secure financial stability
• Promote high employment
• MISSION: Surveillance, Lending,
Capacity Developmeny
3. European Investment Bank (EUP)
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 4. Islamic Development Bank (IsDB)
5. Asian Development Bank (ADB)
6. European Bank for Reconstruction and
Development (EBRD)
7. CAF-Development Bank of Latin
America (CAF)
8. Inter-American Development Bank
Group (IADB)
9. African Development Bank ( AfDB)
10. Asian Infrastructure Investment Bank
(AIIB)
Market Integration - a state of affairs or a
process involving attempts to combine separate
national economies into larger economic regions
Integration - a means of stimulating trade and
improving divisions of the labor among countries
Forms of Integration:
1. Preferential Agreement – involves lower
trade barriers between those countries
which have signed the agreement; the first
and smallest step on the road to further
integration
2. Free Trade Agreement – reduces
barriers to trade among member countries
to zero, but each member country still has
autonomy in deciding on the external rate
or tariff
3. Customs Union – represents a higher
stage of economic integration than a Free
Trade Area as the member countries
adopt a common external tariff
4. Common Market – goes beyond a
Customs Union in allowing for free
movement of labor and capital within the
Union; to integrate both product and
factors markets of member countries
5. Economic Union – the highest form of
economic integration
European Union
• is a unique economic and political union
between 28 European countries that
together cover much of the continent
• result was the European Economic
Community (EEC)
• created in 1958
• initially increasing economic cooperation
between six countries: Belgium, Germany,
France, Italy, Luxembourg and the
Netherlands
Treaties of European Union: Binding
Agreement
1. Treaty of Lisbon - Signed on 13
December 2007
2. Treaty of Nice - Signed on 26 February
2001
3. Treaty of Amsterdam - Signed on 2
October 1997
4. Treaty of European Union Maastricht
Treaty-Signed on 7 February 1992
5. Single European Act - Signed on 17
February 1986 in Luxembourg and 28
February 1986 in the Hague, Netherlands.
6. Merger Treaty – Brussels Treaty -
Signed on 8 April 1965
7. Treaties of Rome: EEC and EURATOM
treaties - Signed on 25 March 1957
8. Treaty Establishing the European Coal
and Steel Community - Signed on 18
April 1951
Benefits of European Union:
• People no longer need to change money
• It cost much less (or nothing at all) to
make cross-border payments.
• Consumers and businesses can compare
prices more easily.
Currency Union
• also known as monetary union
• involves two or more states sharing the
same currency without them necessarily
having any further integration
Outsourcing – means finding a partner with
which a firm can establish a bilateral relationship
and having the partner undertake relationship-
specific investments
Global Corporations
• A business that operates in two or more
countries
• Also goes by the name “multinational
company”
• Major motive of becoming a global
corporation is to expand revenue
opportunities and to diversity business
risks.
❑ Economies of scope
- means you can take advantage of
different skill sets and market advantages.
❑ Economies of scale
- means when you use more equipment in
production or buy supplies and resale products in
larger quantities, you can get better costs per
unit.
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TOPIC 3: Global Interstate System
State - an independent, sovereign government
exercising control over a certain spatially defined
and bounded area, whose borders are usually
clearly defined and internationally recognized by
other states.
Nation - a group of people who see themselves
as a cohesive and coherent unit based on shared
cultural or historical criteria; socially constructed
units, not given by nature
Nation-State – the idea of a homogenous nation
governed by its own sovereign state—where each
state contains one nation; this idea is almost
never achieved
Four Elements/Criteria of Statehood
1. People – body of people
2. Territory – defined space
3. Sovereignty – power to make and
enforce law
4. Government – organization
Therefore, Statehood is a body of people, living
in a define space, with the power to make and
enforce law and with an organization to do this.
Global Relation/Divides
• Richer countries are almost all located in
the northern hemisphere, with the
exception of Australia and New Zealand.
• Poorer countries mostly located in tropical
regions and in the southern hemisphere.
Asian Integration
The Association of South East Asian
Nation (ASEAN) is a regional intergovernmental
organization comprising ten Southeast Asian
countries that promotes intergovernmental
cooperation and facilitates economic, political,
security, military, educational, and sociocultural
integration amongst its members and other Asian
states
Principles of ASEAN Economic Community
- Originally built as a political alliance to limit
the spread of communism in Southeast
Asian
The Five Core Principles of ASEAN single
market and production base:
1. Free flow of goods
2. Free flow of service
3. Free flow of investment
4. Free flow of capital
5. Free flow of skilled labor
The Four Pillars of the ASEAN Economic
Community (AEC)
1. Single Market & Production Base
• the region as a whole must become a
single market and production
2. Competitive Economic Region
• the region must emphasize on the
competitiveness of its product
3. Equitable Economic Development
• to receive the benefits of the AEC, the
people and business of ASEAN must
be engaged into the integration
process of the AEC
4. ASEAN’s integration into the globalized
economy
• ASEAN must not be isolated but an
integrated part of the global economy.
TOPIC 4: Economic System
Economic System
• Also called as economy
• is the way a nation makes economic
choices about how the nation will use its
resources to produce and distribute
goods and services.
• a means by which societies or
governments organize and distribute
available resources, services, and goods
across a geographic region or country.
• regulates factors of production, including
capital, labor, physical resources, and
entrepreneurs
Resources
• also called factors of production
• all things used in producing goods and
services
Four Categories of Resources:
1. Land – refers to everything on Earth that
is in its natural state, or Earth's natural
resources
2. Labor – refers to all the people who work
in the economy.
3. Capital – includes money needed to start
and operate a business
4. Entrepreneurship – refers to the skills of
people who are willing to risk their time
and money to run a business
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Types of Economic Systems 3. Communism
1. Pure Market Economy • Have a totalitarian form of government
• NO government involvement in economic • government runs everything and makes all
decisions. Private firms account for all decisions
production. • there is no unemployment in communist
• Difficulty enforcing property rights - no countries
laws • The government decides the type of
2. Pure Command Economy schooling people will receive and also tells
• All resources are government-owned them where to live.
• Consumers get low priority. • aims to diminish the two classes of society
• E.g., North Korea, Cuba, Turkmenistan, – the working class and the capitalist class
Myanmar, Laos, Libya, and Iran – so that the capitalist class will no longer
3. Traditional Economy profit off of the working class.
• Economy is shaped largely by custom or • COMMUNIST COUNTRIES: China, Cuba,
religion. Laos, North Korea, Vietnam
• E.g., India
4. Mixed Economy Economies in Transition
• Most economies in the world today are Many countries are in transition from
mixed either communism or socialism to capitalism.
• Classification is based on how much
government intervention there is Privatization
• Individuals are able to set up business to • a common aspect of transition from a
make a profit but the government command economy to free enterprise
regulates taxes system
• Private sectors + Government • means state-owned industries are sold to
private individuals and companies.
Government Philosophies
1. Capitalism
• features private ownership of businesses
and marketplace competition.
• same as a free enterprise system
• political system most frequently associated
with capitalism is democracy.
• an ideology where the means of
production is controlled by private
business.
• means that individual citizens run the
economy without government interfering in
production or pricing.
• value is based on supply and demand and
the relationship between producers and
consumers.
• TEN Capitalist Countries: Hongkong,
Singapore, New Zealand, Switzerland,
Australia, Ireland, Estonia, UK, Canada,
UAE
2. Socialism
• Main goal is to keep prices low for all
people and to provide employment for
many.
• government runs key industries, generally
in telecommunications, mining,
transportation, and banking
• Socialist countries tend to have more
social services.

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