THE CONTEMPORARY WORLD LISANDRO E. CLAUDIO PATRICIO N. ABINALES Publishin, . 138 C & E Publishing, Inc.lishing, Inc. on City © 2018 by C & E Publishing, Inc., Lisandro Claudio, and Patricio Abinales ALL RIGHTS RESERVED. No Part of this publication be reproduced, stored in a retrieval system, or transmi in any form, or by any means—electronic, mechanic photocopying, recording, or otherwise—without the pr written permission of the publisher. Cataloguing-in-Publication Data iz Claudio, Lisandra E. i318 C53 2018 sai, 182 p.: il cm. Includes bibliography and index. ISBN: 978-97 1-98-0862-6. 1. Globalizat NE nm. 2. World Economics. I. Abinales, __ Patri Book and Cover Design: Lynzel S. NaguitContents An Introductory Note to the Student ix The Relevance of this Course x This Book’ Approach xi Wnit1 The Structures of Globalization 1 \wuson1 Whatis Globalization? 2 Global Experiences 5 Some Description 6 Globalization: A Working Definition 7 Conclusion: Globalization from the Ground Up 9 bublication maj or transmit ic, mechanical ithout the pric jeuson2 The Globalization of World Economics 12 International Trading Systems 13 The Bretton Woods System 16 Neoliberalism and Its Discontents 17 The Global Financial Crisis and the Challenge to Neoliberalism 19 Economic Globalization Today 22 Conclusion 24 ata )E, Claudio and & E Publishing, insson3 A History of Global Politics: Creating an International Order 26 The Attributes of Today's Global System 27 The Interstate System 30 internationalism 31 Conclusion 37 es. L Abinales,LESSON4 = The United Nations and Contempo Unit 3 Movi Global Governance 39 and. Whatis an International Organization? 40 The United Nations 42 itason9 Glob Challenges of the United Nations 45 The “Pe Conclusion 46 It'sthe . Wormer LESSONS A World of Regions 50 The Fer Countries, Regions, and Globalization 51 Popula Non-State Regionalism 53 Conclu Contemporary Challenges to Regionalism 56 Conclusion 58 ienson10 — Glob What i Unit2 A World of Ideas: a Cultures of Globalization 61 The Pr :, - tos Integré lSSON6 The Globalization of Religion 62 a Realities 65 wssonu — Envi Religion for and against Globalization 66 and | Conclusion 69 shen LESSON7 Media and Globalization 72 eal Media and Its Functions 73 Climat The Global Village and Cultural Imperialism 75 Gab Critiques of Cultural imperialism 77 Conch Social Media and the Creation of Cyber Ghettoes 78 Conclusion 81 Conclusion: The LESSONS The Global City 83 Endnotes 135 Why Study Global Cities? 84 Bibliography 1 Defining the Global City 85 Indicators for Globality 86 Index 172 The Challenges of Global Cities 89 About the Auth The Global City and the Poor 91 Conclusion 931tempo! 40 , 62 m 75 Unit 3 LEASON 9 L8SON 10 LESSON 11 Movement and Sustainability 95 Global Demography 96 The*Perils" of Overpopulation 98 It's the Economy, Not the Babies! 101 Women and Reproductive Rights 102 The Feminist Perspective 104 Population Growth and Food Security 105 Conclusion 107 Global Migration 109 What is Migration? 109 Benefits and Detriments for the Sending Countries 112 The Problem of Human Trafficking 114 Integration 115 Environmental Crisis and Sustainable Development 119 The World’s Leading Environmental Problems 120 Man-made Pollution 122 “Catching Up" 125 Climate Change 127 Combating Global Warming 128 Conclusion 130 Conclusion: The Global Filipino 132 Endnotes 135 Bibliography 155 Index 172 About the AuthorsAn Introductory Note to the Student Why do you need to study the world? At first glance, the us a concept, is abstract. After all, your daily experiences onsidered interactions with your country. When you read ihe news, you read about the Philippines. When you engage in an oificial transaction like paying taxes, you deal with the Philippine government, Almost all of your classmates and teachers are Hilipino. However, you only need to step back a little bit to see that the World “out there” is already here. For example, you likely have yelatives who are overseas Filipino workers (OFWs). Every time these relatives visit or send something home, they are bringing part of the world with them. Even if you have not traveled outside the Philippines, you have likely heard stories about foreign \itries from these family members. Some relatives might have told you about the wonders of Rome. Others may have shown you pictures of San Francisco's Golden Gate Bridge. Others may have described the lights and towering buildings of Shinjuku. Needless to say, the media and the internet are also your windows to the contemporary world, You watch American movies and can probably sing at least one K-pop song. Ifa major political event occurs, you don't even need to go to CNN.com to find out nore details; friends are already posting articles on Facebook. Finally, your consumption habits are global, You have dined jn McDonald's, ridden in a Japanese car, maybe owned a Korean mobile phone, and eaten Australian beef. You are already a citizen of the world whether you are aware of it or not. Just by living your life, you automatically think about the contemporary world. This course will be your guide.The Relevance of this Course As the semester progresses, we expect you to realize the relevance of the material gradually. The succeeding lessons will introduce you to the major themes in the study of the world while providing opportunities for you to connect this knowledge with your experiences as a Filipino student. At the outset, though, why study this course? Why is it required for all students in higher education? First, studying the outside world is a cure to Pparochialism or an outlook that is limited to one’s immediate community. A person who is concerned only with his/her family, village, or even country is parochial. The parochial person is, thus, close-minded. By teaching you about the world, this course aims to stretch the limits of your imagination and outlook. We will share with you unfamiliar ideas and cultures that may spark new interests and concerns. Not everything in this book will excite you, and that is fine. However, we hope that, at the end of the semester, you would have discovered new intellectual interests that you will continue to pursue. We also wish for you to explore the places, peoples, ideas, and cultures that you care about and value. This expansion of one’s ethical horizons, as you will see, is the very core of what it means to be a global citizen, Second, it is important to study the world because it can teach you more about yourself. Knowing about other countries allows you to compare your society with others. The experiences of communities outside the Philippines may provide solutions to many of the country’s current problems. They may also provide warnings about what not to do. Everyone, for example, desires economic growth. Isn’t it beneficial if policymakers know what economic models and policies have worked for other countries and what have not? Philippine national hero Jose Rizal said that anyone who has learned about the world will be haunted by the “ghost of comparisons.” Once you know about other societies, he says, you will not be able to look at your own in the same way: You will start comparing and asking various questions. This drive to compare x will happen even when 3 {hut aucldenly appears. Lastly, you need te Witeracting with it. In 2 Wii to become OFWs. | More and more Filipino af you who plan to we {his course can serve ai whe choose to remail Sompanies operating i jiowth of call centers a \ndustry as a whole. Dt Jaryer trade of goods {iterdependent. Filipin interdependence. You « ge well study it. This Book’s App This book will not the world. Such an app any good world almai countries, Instead, thi jyues, The goal is not hut also to expose you ‘out there,” Centr globalization—the dee 4s, economies, cult this concept further. | studying globalizatio going on in our world As the study of | attention deliberately core courses of the 1lize the ons will Id while ige with gh, why. | higher hialism inity. A or even ninded. tch the ith you sts and | that is | would inue to , ideas, of one’s, means it can intries iences ons to rovide lesires what es and nyone ost of s, you | start npare will huppen even when you least expect it; the urge is like a ghost {hut suddenly appears. Jstly, you need to study the world because you will be Jioracting with it, In 2009, an average of 4,018 Filipinos per day Joli to become OFWs. In 2015, that number increased to 6,092. More and more Filipinos are living and working abroad. For those af you who plan to work in another country after graduation, {iis course can serve as an orientation. Nevertheless, even those who choose to remain in the Philippines must confront the phenomenon of globalization. Many of you will work for foreign sompanies operating in the country, especially because of the growth of call centers and the busines process outsourcing (BPO) Judustry as a whole. Due to the internet, cheaper travel costs, and lianjer trade of goods and services, the world has grown more Wlerdependent. Filipinos are increasingly becoming aware of this Hiterdependence. You cannot avoid globalization so you might at ‘ge well study it. This Book’s Approach This book will not take you on a country-per-country tour of ihe world, Such an approach is impractical and tedious. Moreover, any good world almanac can give you quick overviews of these countries. Instead, this book will focus on themes, problems, and jniues, The goal is not simply to tell you about what is “out there,” jut also to expose you to the ideas that allow you to make sense of tat “out there.” Central to the study of the world is the concept of ylobalization—the deepening global interconnec tedness of places, ideas, economies, cultures, and people. The first lesson will discuss this concept further. However, for now, it is sufficient to say that studying globalization allows one to step back and ask; “What is yoing on in our world today?” As the study of globalization progresses, we will take your attention deliberately away from the Philippines. Most of the core courses of the new general education (GE) curriculum ask xiquestions about yourself in a national context. You study Rizal; examine primary readings in Philippine history; and, in the course Understanding the Self, a section leads you to reflect on national identity. These courses are all necessary; you should reflect about Yourself and your country. This course, however, will challenge you to think beyond your country and ask what it means to be a citizen of the world, Thus, most of the examples and case studies will be about peoples and places outside of the Philippines, Nevertheless, we acknowledge the need to connect the study of globalization to local experiences. For this reason, we will use the boxed text with the label “Localizing the Material” to provide examples that are relatable to the Filipino reader, As for classroom activities, it will be up to your teacher to integrate, conduct, and facilitate them, After each lesson, however, ‘we provide guide questions which you may wish to answer before the class. As you answer these questions either on a notebook or just in your own mind, please do not lose sight of the main question of the course: What does it mean to be a citizen of the world? The course will be challenging. Much of the materials you will find are new and unfamiliar. Despite this, we hope that you will enjoy reading this book and taking this course. This may be one of the few times in your life as a college student when you are explicitly challenged to transcend the borders of your nation, your countrymen, and ultimately, your imagination. ~ Lisandro E, Claudio Patricio N. Abinalestudy Rizal; a the course n national lect about 1 challenge ans to bea ase studies hilippines, \e study of e will use to provide teacher to |, however, wer before notebook the main zen of the crials you > that you is may be n you are ‘ion, your Claudio Abinales The Structures _ of Globalization This unit will introduce you to the various drivers of the globalization process, with specific focus on economics and politics. Although it emphasizes that you experience globalization on an “everyday” level, you must also realize that there are big institutions that create large-scale changes. This unit will first trace the emergence of these institutions historically. It will then move on to explain how they affect the countries and people today. The major learning outcomes of this unit are to: + analyze the various contemporary drivers of globalization; and + describe the emergence of global economic and political systems.how the British reo fies. The British d Whio were the orig W work in the rub help manage the £ fore of a potential (joups were identi © Learning Outcomes Pecording to these cuisines whi Atthe end of this lesson, you should be able to; across the nation’s ] If outdoor food p Malaysia, from nasi Glo interrupte | ashamed at his lac 1s and how it is pre The next day, blocks away from: Malaysian food w this, Latif explaine more and more h Malaysian restaure fot only to these as well, whose ct diverse. Gio finally ha 4 spicy coconut « like most Filipino deference to his f |. agree on a working definition of globalization forthe course: 2. differentiate the competing conceptions of globalization; and 3. narrate a personal experience of globalization A Story: Gio, Latif, and the Laksa When Gio was a second-year international affairs student in a university in Cebu City, he obtained funding to join the school team participating in an international Model UN competition in Sydney, Australia, At the height of the competition, Gio made plenty of new friends and became Particularly close to Latif from the Malaysian team. The two first started ta king when Latif asked Gio where he was from. Upon discovering that the Gio was from the Philippines, Latif lit Up and declared that he was a big fan of Filipino actors Jericho Rosales and Kristine Hermosa. Gio was pleasantly surprised to learn that Latif had seen every episode of the ABS-CBN telenovela Pangako sa ‘Yo ("The Promise”). The show had aired on Malaysian TV a few years back, and its two stars had developed a madest following Ashamed that he did not know as much about Malaysia as enjoying the hot ¢ Latif knew about the Philippines, Gio asked Latif what his country ‘After the me was like. Latif, he discovered, was from @ Muslim university in Kuala ordered “flat whi Lumpur. Gio asked him what he liked best about living in “KL” usually served in and Latif immediately mentioned the food Latif explained that in what flat whites v Kuala Lumpur, one can find Chinese, Indian, and Malay cuisines. both Kuala Lump He told Gio that this assortment of foodways was the result ofWhat is Globalization? | 3 fhow the British reorganized Malaysian society during the colonial jwnes. The British did little to change the way of life of the Malays ‘who were the original residents, but brought in Chinese laborers jo work in the rubber plantations and tin mines, and Indians to jwlp manage the bureaucracy and serve as the initial professional coww of a potential middle class. One of the ways that these ethnic (youps were identified was through their foodways. According to Latif, Malaysia eventually became famous for {hese cuisines which can be found in the various "hawker centers” ‘across the nation’s cities and towns. These food stands are located {» outdoor food parks where locals and tourists taste the best of Malaysia, from nasi lemak to laksa. Gio interrupted Latif and asked, “What is laksa?” He felt more ashamed at his lack of knowledge. “Ahh. ..let me show you what it is and how it is prepared!" replied Latif. The next day, Latif took Gio to a Malaysian restaurant a few blocks away from the university. Gio was surprised to discover that Malaysian food was readily available in Sydney. Having noticed this, Latif explained to his Filipino friend that, over the years, as yore and more Malaysian students moved to Sydney to study, Malaysian restaurants followed suit. Soon after, they were catering Hot only to these students, but to Australia-born “Sydneysiders” dent in school retition ) made if from fasked is from. fan ‘ if om ‘96 well, whose culinary tastes were becoming more and more we diverse: ode of show Gio finally had his first taste of laksa—a rice noodle soup in 4 spicy coconut curry sauce. He found the flavors intense since, like most Filipinos, he was nat used to spicy food, However, in deference to his friend, he persisted and eventually found himself enjoying the hot dish. ‘After the meal, Gio and Latif went to a nearby café and ordered “flat whites’—an espresso drink similar to latte, which is \sually served in cafés in Australia and New Zealand. Both knew what flat whites were since there were Australian-inspired cafés in both Kuala Lumpur and Cebu. rs had sia as untry Kuala "kor hat in sines ult of OO4 | The Structures of Globalization Laksa: a rich and spicy rice noodle soup The new friends promised to stay in touch after the competition, and added each other on Facebook and Instagram. Over the next two years, they exchanged e-mails and posts, congratulated each other for their achievements, and commented On and liked each other's photos. Latif sent his mother’s recipe to Gio and the latter began cooking Malaysian food in his home. A few years after graduation, Gio moved to Singapore, joining many other overseas Filipino. workers (OFWs) in the city-state. The culture was new to him, but one thing was familiar; the food served in Singapore was no different from the Malaysian food he had discovered through Latif. He would later learn from Singaporean colleagues that the island country was once part of the British colony of Malay and the postwar independent Federation of Malaysia, Singapore, however, separated from the Federation in August 1965 and became a nation-state. Today, they may be two distinct countries in this part of the world, but Singapore and Malaysia still share the same cuisine, After he settled down in his apartment, Gio sought out and found a favorite laksa stall in Newton Hawker Center. He would spend his weekends there with with friends eating laksa and other dishes. One S slong the: toad—he earlier, It v excited, Gi | wying th: moment, away fron Jong hug ducked in ordering < Global Gio at in fact, ba throu ng We bi to illustr: how glol The spre popular «the am. ists, ted 2 to ing ate. the ian om art ent ay, ut What is Globalization? | 5 ‘A hawker center in Singapore One Saturday, while Gio was checking his Facebook feed long the very busy Orchard Road—Singapore's main commercial foad—he noticed that Latif had just posted sornething 5 minutes earlier, It was a picture from Orchard Road. Surprised but also t d, Gio sent Latif a private message. Latif replied immediately | ying that he too had moved to Singapore and was, at that moment, standing in front a department store just 4 few blocks ‘away fram where Gio was. The two friends met up, and after a long hug and quick questions as to what each was up to, they ducked into a café and renewed their international friendship... .by ordering a pair of flat whites, Global Experiences Gio and Latif’s story is fictional but very plausible since it i in fact, based on the real-life experience of one of the authors. It was through such friendships that one was able to appreciate the meaning and impact of globalization. We begin our definition of globalization with this narrative to illustrate how concrete the phenomenon is. The story shows how globalization operates at multiple, intersecting levels. The spread of Filipino TV into Malaysia suggests how fast this popular culture has proliferated and criss-crossed all over Asia.6 | The Structures of Globalization The Model UN activity that Gio and Latif participated in ig an international competition about international politics. Gio’ met Latif (a Malaysian involved in the model UN) in Sydney, a global city that derives its wealth and influence from the global capital that flows through it, Sydney is also a metropolis of families of international immigrants or foreigners working in the industries that also sell their products abroad. After the two had gone back to their home countries, Gio and Latif kept in touch through Facebook, a global social networking site that provides instantaneous communication across countries and continents, They preserved their friendship online and then rekindled this face-to-face in Singapore, another hub for global commerce, with 40 percent of the population being classified as “foreign talents.” What other hints of globalization did you find in the storyt Some Description Our discussion should begin with this intuitive sense that something is happening, and it is not affecting everyone in the same way. Gio's story is a very privileged way of experiencing global flows, but for other people, the shrinking of the world may not be as exciting and edifying. For example, it is very common for young women in developing countries to be recruited in the internet as “mail-order brides” for foreign men living in other countries, After being promised a good life once married to a kind husband in a rich city, they end up becoming sexual and domestic Servants in foreign lands. Some were even sold off by their “husbands” to gangs which run prostitute tings in these cities, Like Gio, they too have experienced the shrinking of the world, albeit negatively. Governments that decide to welcome the foreign investments on the belief that they provide jobs and capital for the country offer public lands as factory or industrial sites, In the process, poor people living in these lands, also called “urban Poor communities,” are being evicted by the government. The irony is that these people forcibly removed fr hy foreign compar and then told tha fyom their reloca’ (ninimum-wage w Because differ Of ways, it is des globalization goo discussion begins complex phenome an uneven process Globalizatio Most accoun jyrocess, When a *lobalization,” i markets to a wic trade. When act of the 1990s, the facilitated and p Hrade Organizat Globalizatio who eriticize ur organizations. I economic globs political activist broader terms. consider multi an interdisciplit general educati this one ‘The best s by Manfred Ste and intensificein is . Gio rey, a lis of n the » had ouch vides ents. this with that cing may non the ther ind stic heir ike beit nts: try por cS,” ple What is Globalization? | 7 forcibly removed from their “slums” are also the labor force sought by foreign companies. They had to be kicked out of their homes, and then told that they could take an hour or two of bus travel from their relocated communities back to the “old home” for minimum-wage work. Because different people encounter globalization in a variety of ways, it is deemed useful to ask simple questions lik globalization good or bad? Is it beneficial or detrimental?” The discussion begins with two premises. First, globalization is a complex phenomenon that occurs at multiple levels. Second, it is an uneven process that affects people differently. Globalization: A Working Definition Most accounts view globalization as primarily an economic process. When a newspaper reports that nationalists are resisting “globalization,” it usually refers to the integration of the national markets to a wider global market signified by the increased free trade. When activists refer to the “anti-globalization” movement of the 1990s, they mean resisting the trade deals among countries facilitated and promoted by global organizations like the World Trade Organization. Globalization scholars do not necessarily disagree with people who criticize unfair international trade deals or global economic organizations. In fact, many are sympathetic to the critique of economic globalization. Academics differ from journalists and political activists, however, because they see globalization in much broader terms. They view the process through various lenses that consider multiple theories and perspectives. Academics call this an interdisciplinary approach, and it is this approach used by the general education (GE) courses that you will be taking alongside this one. The best scholarly description of globalization is provided by Manfred Steger who described the process as “the expansion and intensification of social relations and consciousness across8 | The Structures of Globalization world-time and across world-space.”! Expansion refers to “both the creation of new social networks and the multiplication of existing connections that cut across traditional political, economic, cultural, and geographic boundaries.”? These various connections occur at different levels. Social media, for example, establish new global connections between people, while international groups of non-governmental organizations (NGOs) are networks that connect a more specific group—social workers and activists— from different corners of the globe. In the story, Gio was able to join a Model UN competition because his university was part of an international network. Intensification refers to the expansion, stretching, and acceleration of these networks.? Not only are global connections multiplying, but they are also becoming more closely-knit and expanding their reach. For example, there has always been a strong financial market connecting London and New York. With the advent of electronic trading, however, the volume of that trade increases exponentially, since traders can now trade more at higher speeds. The connection is thus accelerating, Apart from this acceleration, however, as the world becomes more fina ncially integrated, the intensified trading network between London and New York may expand and stretch to cover more and more cities, After China committed itself to the global economy in the 1980s, for example, Shanghai steadily returned to its old role as a major trading post. It is not only in financial matters that you can find these connections. In 2012, when the monsoon rains flooded much of Bangkok, the Honda plant making some of the critical car parts temporarily ceased production. This had a strong negative effect on Honda-USA which relied heavily on the parts being imported from Thailand. Not only was it unable to reach the sales targets it laid out, but the ability of the service centers nationwide to assist Honda owners also suffered. As a result, the Japanese car company’s global profits also fell! The final attribute of this definition relates to the way people Perceive time and space. Steger notes that “globalization processes do not occur mer involve the subjec words, people beg place and distance mouse-click away. and get a reply ins their distance as le also exposed one t this greater sense: Steger posits differentiated wit represents the mi intensification of belief among pc economic marke freedom and den forwarded in mec realize why it is p: For now, wh journalists critic not, criticizing s criticisms are we “globalization” a cannot simply be been integrated, Conclusion: the Ground All this talk Indeed, it may t because it is so | therefore, found a whole. Insteac instead of just orWhat is Globalization? | 9 do not occur merely at an objective, material level but they also involve the subjective plane of human consciousness.”* In other words, people begin to feel that the world has become a smaller place and distance has collapsed from thousands of miles to just a mouse-click away, One can now e-mail a friend in another country and get a reply instantaneously, and as a result, begins to perceive their distance as less consequential. Cable TV and the internet has also exposed one to news from across the globe, so now; he/she has this greater sense of what is happening in other places. Steger posits that his definition of globalization must be differentiated with an ideology he calls globalism. If globalization represents the many processes that allow for the expansion and intensification of global connections, globalism is a widespread belief among powerful people that the global integration of economic markets is beneficial for everyone, since it spreads freedom and democracy across the world.* It is a common belief forwarded in media and policy circles, In the next lesson, you will realize why it is problematic. For now, what is crucial to note is that when activists and journalists criticize “globalization,” they are, more often than not, criticizing some manifestations of globalism, Often, these criticisms are warranted, Nevertheless, it is crucial to insist that “globalization” as a process refers to a larger phenomenon that cannot simply be reduced to the ways in which global markets have been integrated. Conclusion: Globalization from the Ground Up All this talk of large, intersecting processes may be confusing. Indeed, it may be hard to assess globalization or comment on it because it is so diffuse and almost fleeting. Some scholars have, therefore, found it simpler to avoid talking about globalization as whole. Instead, they want to discuss “multiple globalizations,” instead of just one process.0 | The Structures of Globalization For anthropologist Arjun Appadurai, different kinds of globalization occur on multiple and intersecting dimensions of integration that he calls “scapes.” An “ethnoscape,” for example, refers to the global movement of people, while a “mediascape” is about the flow of culture. A “technoscape” refers to the circulation of mechanical goods and software; a “financescape” denotes the global circulation of money; and an “ideoscape” is the realm where political ideas move around, Although they intersect, these various scapes have differing logics. They are thus distinct windows into the broader phenomenon of globalization, Appadurai’s argument is simple: there are multiple globalizations. Hence, even if one does not agree that globalization can be divided into the five “scapes,” it is hard to deny Appadurai’s central thrust of viewing globalization through various lenses. Depending on what is being globalized, a different dynamic (or dynamics) may emerge, So while it is important to ask “What is globalization?” itis likewise important to ask “What is/are being globalized?” Depending on what is being globalized, the vista and conclusions change, The structure of the lessons that follow will reflect this multidimensional understanding of globalization, Each of the lessons will focus on a Particular kind of globalization, Every one of them will be about different networks and connections that are expanding and intensify ing in the contemporary world. Treat each lesson not as an end in itself but as window to the broader phenomenon of globalization, Go to your in your possessi the “things” in| cell phones, tele student, you mi not to mention : Organize y are made in the brands. List the Do the sam should include ; In class, c« to determine 1 personal needs for Philippine- products are m abroad.s of Is of iple, eis tion otes alm ect, inct ple ion ai’s nic rat ng nd is he re What is Globalization? | 11 ?) Guide Questions 1. How have you experienced globalization? 2. Whyisit crucial to emphasize that globalization is uneven? 3. What is the difference between globalization and globalism? q Learning Activity: © How Globalized is Your Home? Go to your room and do an inventory of everything you have in your possession. You will find out that the most essential among the “things” in your room are footwear, clothes, computers (if any), cell phones, television (if possible), and maybe a radio. If you are a student, you may also notice books, newspapers, news magazines, not to mention school supplies and equipment. Organize your inventory into two types: first, “things” that are made in the Philippines and second, those that are of foreign brands. List the countries of origin of your foreign-brand items. Do the same thing for the kitchen and the living room. These should include appliances. In class, compare your lists with those of your classmates to determine which countries make the most household and personal needs you and your families have. Make a similar list for Philippine-made stuff. In the process, discuss why certain products are made in the Philippines while others are produced abroad.@ Learning Outcomes At the end of this lesson, you should be able to: 1. define econamie globalization; 2. identify the actors that faclitate econornic globalization; 3. _ narrate a short history of global market integration in the twentieth century; and 4. “articulate your stance on global economic integration, The International Monetary Fund (IMF) regards “economic globalization” as a historical process representing the result of human innovation and technological progress. It is characterized by the increasing integration of economies around the world through the movement of goods, services, and capital across borders. These changes are the products of people, organizations, institutions, and technologies.” As with all other processes of globalization, there is a qualitative and subjective element to this definition. How does one define “increasing integration"? When is it considered that trade has increased? Is there a particular threshold? Even while the IMF and ordinary people grapple with the difficulty of arriving at precise definitions of globalization, they usually agree that a drastic economic change is occurring throughout the world. According to the IMF, the value of trade (goods and services) as a percentage of world GDP increased from 42.1 percent in 1980 to 62.1 percent in 2007 Increased trade also means that investments are moving all over the world at faster speeds. According to the United Nations Conference on ‘Trade and Developm: investments flowing : By 2015, that number dramatic increase in { It has happened not e1 Apart from the also note the increa: days, supercomputer and sales between di a process called high- and traded are chang or music indicates ¢ “book” can be digita and a music “album” purchase and downlo This lesson aim: about. It will also as who benefits from it: International 1 International tra international trade pathways in the anci now the Middle Eas! one of the most pro was silk, which was | the Middle East as: used the Silk Road Han dynasty opene Ottoman Empire clo However, while truly “global” becau American continenThe Globalization of World Economics | 13 ‘Trade and Development (UNCTAD), the amount of foreign direct investments flowing across the world was US$ 57 billion in 1982. By 2015, that number was $1.76 trillion? These figures represent a dramatic increase in global trade in the span of just a few decades. It has happened not even after one human lifespan! Apart from the sheer magnitude of commerce, we should also note the increased speed and frequency of trading. These days, supercomputers can execute millions of stock purchases and sales between different cities in a matter of seconds through a process called high-frequency trading, Even the items being sold and traded are changing drastically. Ten years ago, buying books or music indicates acquiring physical items. Today, however, a “book” can be digitally downloaded to be read with an e-reader, and a music “album” refers to the 15 songs on mp3 format you can purchase and download from iTunes. This lesson aims to trace how economic globalization came about, It will also assess this globalization system, and examine who benefits from it and who is left out. International Trading Systems International trading systems are not new. The oldest known international trade route was the Silk Road—a network of pathways in the ancient world that spanned from China to what is now the Middle East and to Europe. It was called as such because one of the most profitable products traded through this network was silk, which was highly prized especially in the area that is now the Middle East as well as in the West (today’s Europe). Traders used the Silk Road regularly from 130 BCE when the Chinese Han dynasty opened trade to the West until 1453 BCE when the Ottoman Empire closed it. However, while the Silk Road was international, it was not truly “global” because it had no ocean routes that could reach the American continent. So when did full economic globalization‘| The Structures of Globalization begin? According to historians Dennis O. Flynn and Arturo Giraldez, the age of globalization began when “all important Populated continents began to exchange products continuously— both with each other directly and indirectly via other continents— and in values sufficient to generate crucial impacts on all trading partners.”" Flynn and Giraldez trace this back to 1571 with the establishment of the galleon trade that connected Manila in the Philippines and Acapulco in Mexico." This was the first time that the Americas were directly connected to Asian trading routes, For Filipinos, it is crucial to note that economic globalization began on the country’s shores. The galleon trade was part of the age of mercantilism. From the 16th century to the 18th century, countries, primarily in Europe, competed with one another to sell more goods as a means to boost their country’s income (called monetary reserves later on). To defend their products from competitors who sold goods more cheaply, these regimes (mainly monarchies) imposed high tariffs, forbade colonies to trade with other nations, restricted trade routes, and subsidized its exports. Mercantilism was thus also a system of global trade with multiple restrictions, A more open trade system emerged in 1867 when, following the lead of the United Kingdom, the United States and other European nations adopted the gold standard at an international monetary conference in Paris. Broadly, its goal was to create a common system that would allow for more efficient trade and Prevent the isolationism of the mercantilist era. The countries thus established a common basis for currency prices and a fixed exchange rate system—all based on the value of gold. Despite facilitating simpler trade, the gold standard was still a very restrictive system, as it compelled countries to back their currencies with fixed gold reserves. During World War I, when countries depleted their gold reserves to fund their armies, many were forced to abandon the gold standard. Since European countries had low gold reserves, they adopted floating currencies that were no longer redeemable in gold. le gold standard, though Returning to the global economi during the 1920s an government coffers. recession ever exper argued that it was limited the amount demand and const money that was equ increase the money Economic hi recovery of the Unit the gold standard, # spend on reviving t other major industr Though more i until as late as the standard of the ea operates based on | are not backed by | by their cost rela governments to fr increasing or decr they see fit.turo tant ly — ts— ding the the that For 1on om Hin ans on). ore ffs, ade ing her nal ea ind ies ced vas ck pf es, ies The Globalization of World Economics | 15 eo oven to be a very restrictive form of ce common, bi globalizing tr. standard, thoug] Returning to a pure standard became more difficult as the global economic crisis called the Great Depression started during the 1920s and extended up to the 1930s, further emptying government coffers. This depression was the worst and longest recession ever experienced by the Western world. Some economists argued that it was largely caused by the gold standard, since it limited the amount of circulating money and, therefore, reduced demand and consumption. If governments could only spend money that was equivalent to gold, its capacity to print money and increase the money supply was severely curtailed. Economic historian Barry Eichengreen argues that the recovery of the United States really began when, having abandoned the gold standard, the US government was able to free up money to spend on reviving the economy.” At the height of World War Il, other major industrialized countries followed suit. Though more indirect versions of the gold standard were used until as late as the 1970s, the world never returned to the gold standard of the early 20th century. Today, the world economy operates based on what are called 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 ee fit. they18 | the Structures of Globalization affected the Western economies that were reliant on oil.” To make matters worse, the stock markets crashed in 1973- 1974 after the United States stopped linking the dollar to gold, effectively ending the Bretton Woods system." The result was a phenomenon that Keynesian economics could not have predicted—a phenomenon called stagflation, in which a decline in economic growth and employment (stagnation) takes place alongside a sharp increase in prices (inflation), Around this time, a new form of economic thinking was beginning to challenge the Keynesian orthodoxy. Economists such as Friedrich Hayek and Milton Friedman argued that the governments’ practice of pouring money into their economies had caused inflation by increasing demand for goods without necessarily increasing supply. More profoundly, they argued that government intervention in economies distort the proper functioning of the market. Economists like Friedman used the economic turmoil to challenge the consensus around Keynes's ideas. What emerged was a new form of economic thinking that critics labeled neoliberalism, From the 1980s onward, neoliberalism became the codified strategy of the United States Treasury Department, the World Bank, the IMF, and eventually the World Trade Organization (WTO)—a new organization founded in 1995 to continue the tariff reduction under the GATT. The policies they forwarded came to be called the Washington Consensus, The Washington Consensus dominated global economic policies from the 1980s until the early 2000s. Its advocates pushed for minimal government spending to reduce government debt. They also called for the privatization of government-controlled services like water, power, communications, and ‘transport, believing that the free market can produce the best results, Finally, they pressured governments, particularly in the developing world, to reduce tariffs and open up their economies, arguing that it is the quickest way to progress. Advocates of the Washington Consensus conceded that, along the way, certain industries would be affected and die, but they considered this “shock therapy” necessary for long-term economic growth. ‘The appeal of neo like US President Re Margaret Thatcher spending by compa ‘Thatcher, in particula who reined in overspe ‘The problem wit are not households. F households cannot. } governments provide them to pay and refin: Despite the init ‘Thatcher and Reagar became immediately post-communist Ru: the 1990s, the IMF « government industrie free these industries to the more dynami happened, however, v accumulated wealth | money to purchase t elites relied on easy. industries. This pra dominates the Russi The Global Fin to Neoliberalis of neoliberalism did economists who bel recent repudiation 0 crisis of 2008-2009.oil. 1973- gold, result have ecline place g was mists at the omies thout rgued roper ail to d was alism. lified Vorld ation tariff ne to omic ished debt. olled port, rally, orld, s the nsus cted y for The Globalization of World Economics | 19 ‘The appeal of neoliberalism was in its simplicity. Its advocates like US President Ronald Reagan and British Prime Minister Margaret Thatcher justified their reduction in government spending by comparing national economies to households. ‘Thatcher, in particular, promoted an image of herself as a mother, who reined in overspending to reduce the national debt. ‘The problem with the household analogy is that governments are not households. For one, governments can print money, while households cannot, Moreover, the constant taxation systems of governments provide them a steady flow of income that allows them to pay and refinance debts steadily. Despite the initial success of neoliberal politicians like ‘Thatcher and Reagan, the defects of the Washington Consensus became immediately palpable. A good early example is that of post-communist Russia. After Communism had collapsed in the 1990s, the IMF called for the immediate privatization of all government industries. The IMF assumed that such a move would free these industries from corrupt bureaucrats and pass them on to the more dynamic and independent private investors. What happened, however, was that only individuals and groups who had accumulated wealth under the previous communist order had the money to purchase these industries. In some cases, the economic lites relied on easy access to government funds to take over the industries. This practice has entrenched an oligarchy that still dominates the Russian economy to this very day. The Global Financial Crisis and the Challenge to Neoliberalism a's case was just one example of how the “shock therapy” af liberalism did not lead to the ideal outcomes predicted by economists who believed in perfectly free markets. The greatest recent repudiation of this thinking was the recent global financial crisis of 2008-2009,| | The Structures of Globalization Neoliberalism came under significant strain during the global financial crisis of 2007-2008 when the world experienced the greatest economic downturn since the Great Depression. The crisis can be traced back to the 1980s when the United States systematically removed various banking and investment restrictions, The scaling back of regulations continued until the 2000s, paving the way for a brewing crisis. In their attempt to promote the free market, government authorities failed to regulate bad investments occurring in the US housing market. Taking advantage of “cheap housing loans,” Americans began building houses that were beyond their financial capacities. ‘To mitigate the risk of these loans, banks that were lending houseowners’ money pooled these mortgage payments and sold them as “mortgage-backed securities” (MBSs). One MBS would be a combination of multiple mortgages that they assumed would pay a steady rate. Since there was so much surplus money circulating, the demand for MBSs increased as investors clamored for more investment opportunities. In their haste to issue these loans, however, the banks became less discriminating. They began extending loans to families and individuals with dubious credit records—people who were unlikely to pay their loans back. These high-risk mortgages became known as sub-prime mortgages. Financial experts wrongly assumed that, even if many of the borrowers were individuals and families who would struggle to Pay, a majority would not default. Moreover, banks thought that since there were so many mortgages in just one MBS, a few failures would not ruin the entirety of the investment. Banks also assumed that housing prices would continue to increase. Therefore, even if homeowners defaulted on their loans, these banks could simply reacquire the homes and sell them at a higher price, turning a profit, Sometime in 2007, however, home prices stopped increasing as supply caught up with demand. Moreover, it slowly became apparent that families realization triggered th stors tried to get rid cycle reached a tipping investment banks lik depleting major investm The crisis spread investors were foreign g The loss of their money These series of inter effect that sent ripples banks heavily depende them, they failed to refi crunch, three of Icelan 2007 to 2008, Iceland’s. Until now, count: indebted (almost like has come at a high pri by Germany and the spending, Affecting ser forms of social securit the poor. Moreover, tl slowed down growth at The United States large Keynesian-style Obama pushed for in f be said for many ot! economic crisis has s right parties like Mar risen to prominence | woes, claiming that tl movements blend po racism. We will discus:g the enced ssion. Inited tment 000s, mote sulate aking Iding ding | sold Id be d pay . the more pans, egan redit ‘hese f the le to that lures ie to ans, ata sing ame The Globalization of World Economics | 21 apparent that families could not pay off their loans. ‘This realization triggered the rapid reselling of MBSs, as banks and investors tried to get rid of their bad investments. This dangerous cycle reached a tipping point in September 2008, when major investment banks like Lehman Brothers collapsed, thereby depleting major investments. The crisis spread beyond the United States since many investors were foreign governments, corporations, and individual The loss of their money spread like wildfire back to their countries. These series of interconnections allowed for a global multiplier effect that sent ripples across the world. For example, Iceland's banks heavily depended on foreign capital, so when the crisis hit them, they failed to refinance their loans. As a result of this credit crunch, three of Iceland’s top commercial banks defaulted. From 2007 to 2008, Iceland’s debt increased more than seven-fold. Until now, countries like Spain and Greece are heavily indebted (almost like Third World countries), and debt relief has come at a high price. Greece, in particular, has been forced by Germany and the IMF to cut back on its social and public spending. Affecting services like pensions, health care, and various forms of social security, these cuts have been felt most acutely by the poor. Moreover, the reduction in government spending has slowed down growth and ensured high levels of unemployment. ‘The United States recovered relatively quickly thanks to a large Keynesian-style stimulus package that President Barack Obama pushed for in his first months in office. The same cannot be said for many other countries. In Europe, the continuing economic crisis has sparked a political upheaval. Recently, far- Front National in France have right parties like Marine Le Pe risen to prominence by unfairly blaming immigrants for their woes, claiming that they steal jobs and leech off welfare. These movements blend popular resentment with utter hatred and racism. We will discuss their rise further in the final lesson.22 | The Structures of Globalization Economic Globalization Today The global financial crisis will take decades to resolve. The solutions proposed by certain nationalist and leftist groups of closing national economies to world trade, however, will no longer work. The world has become too integrated. Whatever one’s opinion about the Washington Consensus is, it is undeniable that some form of international trade remains essential for countries to develop in the contemporary world. Exports, not just the local selling of goods and services, make national economies grow at present. In the past, those that benefited the most from free trade were the advanced nations that were producing and selling industrial and agricultural goods. The United States, Japan, and the member-countries of the European Union were responsible for 65 percent of global exports, while the developing countries only accounted for 29 percent. When more countries opened up their economies to take advantage of increased free trade, the shares of the percentage began to change. By 2011, developing countries like the Philippines, India, China, Argentina, and Brazil accounted for 51 percent of global exports while the share of advanced nations — including the United States—had gone down to 45 percent.'* The WTO-led reduction of trade barriers, known as trade liberalization, has profoundly altered the dynamics of the global economy. In the recent decades, partly as a result of these increased exports, economic globalization has ushered in an unprecedented spike in global growth rates. According to the IMF, the global per capita GDP rose over five-fold in the second half of the 20th century, It was this growth that created the large Asian economies like Japan, China, Korea, Hong Kong, and Singapore." And yet, economic globalization remains an uneven process, with some countries, corporations, and individuals benefiting a lot more than others. The series of trade talks under the WTO have Jed! to unprecedent hut these processes First, develop repeatedly refuse products that cou the developing wo Japan’s determine: to protect its farn “sacred.” Ultimate economy that allo sector. ‘The United St forcing consumer prices instead of g America. Faced with powerful countric to make econom therefore, charact developing counts The benefici transnational cx And like any ot with profits tha governments hos laws, which prev and environmen members of theit to countries’ lo protection of wor high profit mar weaken environt consequences on their finite resouThe : of ger ne's hat sto es, hat ans ral of bal ies ve | 23 nted reductions in tariffs and other trade barriers, Jed to unprece jut these processes have often been unfair First, developed countries are often protectionists, as they repeatedly refuse to lift policies that safeguard their primary products that could otherwise be overwhelmed by imports from the developing world. The best example of this double standard is Japan's determined refusal to allow rice imports into the country lo protect its farming sector. Japan’s justification is that rice is sacred.” Ultimately, it is its economic muscle as the third largest economy that allows it to resist pressures to open its ag) cultural sector. ‘The United States likewise fiercely protects its sugar industry, forcing consumers and sugar-dependent businesses to pay higher prices instead of getting cheaper sugar from plantations of Central America. measures from Faced with these blatantly protectioni powerful countries and blocs, poorer countries can do very little to make economic globalization more just, Trade imbalances, therefore, characterize economic relations between developed and developing countries The beneficiaries of global commerce have been mainly transnational corporations (TNCs) and not governments. And like any other business, these TNCs are concerned more with profits than with assisting the social programs of the governments hosting them, Host countries, in turn, loosen tax laws, which prevents wages from rising, while sacrificing social and environmental programs that protect the underprivileged members of their societies. The term “race to the bottom” refers to 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. Governments weaken environmental laws to attract investors, creating fatal consequences on their ecological balance and depleting them of their finite resources (like oil, coal, and minerals).