THE GLOBAL

ECONOMY
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Globalization may have been generally beneficial for the

world economy, but it has had adverse effects on some
economies, including the Philippines. Growth has not been
equal or inclusive. Growth has been much greater in some
countries, so that countries like the Philippines have
suffered a “brain drain” as skilled Filipino workers
migrated to rich nations.
President Duterte, 2017
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HUMAN INNOVATION
TECHNOLOGICAL PROGRESS

ECONOMIC GLOBALIZATION
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ECONOMIC GLOBALIZATION
the increasing economic interdependence of
national economies across the world through a
rapid increase in cross-border movement of goods,
service, technology, and capital
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ECONOMIC GLOBALIZATION
the mobility of people, capital, technology, goods
and services internationally
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ECONOMIC GLOBALIZATION
movement towards the expansion of economic and
social ties between countries through the spread
of corporate institutions and the capitalist
philosophy that leads to the shrinking of the world
in economic terms
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”
ECONOMIC
GLOBALIZATION
is a worldwide phenomenon wherein
countries’ economic situations can
“
depend significantly on other
countries.
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The age of globalization began when all important

populated continents began to exchange products
continuously– both with each other directly or indirectly
via other continents…
Flynn & Giraldez
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GALLEON TRADE, 1571

Manila, Philippines to Acapulco, Mexico
(first time that the Americas were directly connected to Asian trading routes)
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GLOBALIZATION
three distinct phases
» The Age of Exploration
» The Age of Imperialism
» The Modern World
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INTEGRATION OF
ECONOMIES
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THE INTEGRATION OF ECONOMIES

was made possible by:
» technology
» communication networks
» internet access
» growth of economic cooperation
» collapse of ‘communism’
» movement of free trade
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INTEGRATION OF ECONOMIES
the increasing reliance of economies on each other
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INTEGRATION OF ECONOMIES
the opportunity to buy and sell in any country in
the world
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INTEGRATION OF ECONOMIES
the opportunities for land and capital to be located
anywhere in the world
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INTEGRATION OF ECONOMIES
the growth of global markets in finance
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BENEFITS OF TRADE
» increased choice
» greater potential for growth
» increased international economies
» greater employment opportunities
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DISADVANTAGES OF TRADE
» increase in gap between the rich
and the poor
» dominance of global trade by the
rich, northern hemisphere countries
» lack of opportunities for the poor to
be able to have access to markets
» exploitation of workers and growers
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MNCs & TNCs

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MULTINATIONAL COMPANIES (MNC)

» have investment in other countries, but do not
have coordinated product offerings in each
country
» more focused on adapting their products and
service to each individual local market
» mostly consumer goods manufacturers and quick
service restaurants
Unilever. Proctor & Gamble. McDonald’s. 7/11.
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TRANSNATIONAL COMPANIES (TNC)

» much more complex firms

» have invested in foreign operations
» most come from petroleum, IT consulting,
pharmaceutical industries
Shell. Accenture. Glaxo-Smith Klein.
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PROTECTIONISM VS.
TRADE LIBERATION
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PROTECTIONISM
protecting one’s economy from foreign
competition by creating trade barriers
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DOMESTIC PRODUCTS > IMPORTED GOODS

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TARIFF
» tax levied by a government on
imports and exports
(customs duty: money from tariffs)

IMPORT QUOTA
» limits on the number of products
that can be imported to a country
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BANS
» forbid products on import goods
Japan: refusal to allow rice imports to
protect its farming sector
said that rice is “sacred”
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TRADE LIBERATION
also known as “free trade”
act of reducing trade barriers to make
international trade easier between countries
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TARRIFF
IMPORT QUOTA
BANS
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HOW TO MAKE TRADES EASIER?

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FREE TRADE
trading of goods and services between two or more
countries without tariffs or taxes
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TRADE BLOCS
agreement between governments to reduce or
eliminate trade barriers
OUTSOURCING: subcontract work; to buy labor or parts from a source outside a
company or business rather than using the company’s own staff or plant
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INSTITUTIONS OF
GLOBALIZATION
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INSTITUTION OF GLOBALIZATION
After the WWII, world leaders sought to create a global
economic system that would ensure a longer-lasting
global peace (Bretton Woods System, 1944)
» World Bank
» International Monetary Fund
» World Trade Organization
global financial institutions that would promote economic
interdependence an prosperity
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WORLD BANK
International Bank for Reconstruction and Development (IBRD)

to bridge the economic divide between poor and rich countries by

turning rich country resources into poor country growth
(long term: to achieve sustainable poverty reduction)
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WORLD BANK
is not a ‘bank’ but an international organization that helps
emerging market countries reduce poverty

all of its 189 member-countries share ownership

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WORLD BANK
the most significant contributing countries are France, Germany,
Japan, the United Kingdom, and United States
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SIX AREAS OF FOCUS

» overcome poverty by spurring growth,
especially in Africa
» help reconstruct countries emerging from
war, the biggest cause of extreme poverty
» provide a customized solution to help
middle income countries remain our of
poverty
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SIX AREAS OF FOCUS

» spur governments to prevent climate
change; helps controlling communicable
diseases (HIV, malaria); manage financial
crises and promote free trade
» work with Arab League on: improvement of
education, infrastructure building, and
microloans for small businesses
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SIX AREAS OF FOCUS

» share its expertise with developing
countries; publicize its knowledge via
reports and its interactive online database
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WORLD TRADE ORGANIZATION

the only global organization dealing with the rules of trade between
nations; its goal is to ensure that trade flows as smoothly,
predictably, and freely as possible
(164 members)
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FUNCTIONS OF WTO
» administers WTO trade agreements
» forum for trade negotiations
» handling trade disputes
» monitoring national trade policies
» technical assistance and training for developing
countries
» cooperation with other international
organizations
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BENEFITS & DRAWBACKS

» solves trade disputes between countries in a
peaceful way
⋄ only focuses on developed nations

» lowers the cost of goods and services for

developed nations
⋄ to achieve low cost, labor rights and
environmental concerns are ignored
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BENEFITS & DRAWBACKS

» promotes economic growth in developed nations
⋄ favors the rich nations and powerful
transnational corporations
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INTERNATIONAL MONETARY FUND

an organization of 189 countries, working to foster global monetary
cooperation, secure financial stability, facilitate international trade,
promote high employment and sustainable economic growth, and
reduce poverty around the world
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FUNCTIONS OF IMF
» ensure stability of the international monetary
system– the system of exchange rates and
international payments that enable countries to
transact with each other
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FUNCTIONS OF IMF
» keep track of the global economy and the
economies of member countries
» lend to countries with balance of payments
difficulties
» give practical help to members
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SUSTAINABILITY
the degree to which the Earth can provide resources for human needs

SUSTAINABLE DEVELOPMENT
specifically developing the world in a way where the needs of the present
generation is met while preserving resources for future generations
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ECONOMIC GLOBALIZATION
remains an uneven process, with some countries, corporations, and
individuals benefitting a lot more than others
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faced with these blatantly protectionist measures from

powerful countries and blocs, poorer countries can do
very little to make economic globalization more just
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the beneficiaries of global commerce have been mainly

transnational corporations and not governments– and like any other
business, these TNCs are concerned more with profits than with
assisting the social programs of the government hosting them
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RACE TO THE BOTTOM

countries’ lowering their labor standards, including the protection
of workers’ interests, to lure in foreign investors seeking high profit
margins at the lowest cost possible
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NOT THE ENTIRE THING

international economic integration is a central tenet of
globalization– but, as a reminder, economics is just one
window into the phenomenon of globalization

nevertheless, much of globalization is anchored on changes in the economy

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DEBATE:
The global free trade has done
more harm than good.