The

Globalization
of Economic
Relations
István Benczes

Prepared by:
MARLON F. ADLIT 1
▪ What are the word or words that you can attribute about the
globalization of economic relations? 2
OBJECTIVES
▪Define economic globalization,
▪Identify the actors that facilitate
economic globalization,
▪Define the modern world system,
and
▪Articulate a stance on global
economic integration. 3
 Economic globalization is a historical
process, the result of human innovation
and technological progress. It refers to the
increasing integration of economies
What is around the world, particularly through the
movement of goods, services, and capital
economic across borders. The term sometimes also
globalization? refers to the movement of people (labor)
and knowledge (technology) across
international borders. (IMF, 2008)
4
ACTORS

▪ As new actors appear on the stage ▪ For some, contemporary

of political and cultural globalization is equated primarily
globalization (such as the United
Nations (UN) or non- with TNCs, the main driving forces
governmental organizations of economic globalization of the
(NGOs)), economic globalization last 100 years, accounting for
produces its own new entrants as roughly two-thirds of world export
well. (Gereffi, 2005)
▪ In all probability the major players
of present-day global economy are
the transnational corporations
(TNCs). 5
ACTORS
▪ Delegates also agreed on the
establishment of two international
▪New international institutions. The International
monetary regime in the Banks for Reconstruction and
Development (IBRD) became
framework of the United responsible for post-war
Nations Monetary and reconstruction, while the explicit
Financial Conference in mandate of the International
Bretton Woods, New Monetary Fund (IMF) was to
Hampshire (US), in July promote international financial
cooperation and buttress
1944. international trade. 6
ACTORS

▪ In early 1973, industrialized ▪ In 1985 for instance, G7 countries

countries decided to float
their currencies and intervene the US dollar under the Plaza
in financial markets only in
case of drastic short-term
fluctuations. Longer-term
prices of currencies were
determined by demand and
supply forces exclusively.
This shift in exchange rate
policy was acknowledged by
the Jamaica Accords in 1976.
agreed on a substantial devaluation of
Agreement, as a result of an
increasing pressure of domestic US
manufacturers and agrarians to
restore their competitiveness on
world markets. Two years later, in
1987, the Louvre Accord was drawn
up in order to defend the dollar from
further devaluation on the markets.
7
ACTORS
▪ From a wider perspective,
▪ The 1990s saw the triumph of
the neoliberal, pro-market
Washington Consensus. Several
countries, especially the so-
called emerging markets such as
Mexico, Brazil or the East Asian
tigers, deregulated their
financial sectors and fully
liberalized capital transactions
from the late 1980s onwards.
Wallerstein (2005) commented the
change of economic thinking of
the late 1980s and early 1990s by
arguing that ‘development was
suddenly out. Globalization
arrived in its wake … Now, the
way to move forward was not to
import-substitute but to export-
orient productive activities. Down
not only with nationalized
industries but with capital transfer
controls; up with transparent,
unhindered flows of capital’ (2005:
8
1265).
 UNILATERAL
In seventeenth- and eighteenth-century
Europe international trade was basically a
means to accumulate surplus (gold reserves)
in the balance of payments by stimulating
export and restricting import. The mercantilist
era of the time was best characterized,
therefore, as a zero-sum game on the global
level. The surge of international trade arrived
Modern World only with Europe’s industrial revolution and
System the consequent repeal of the British Corn
Laws in 1846. Industrialists triumphed over
landowners and farmers, opening the way for
further industrialization in Britain. The so-
called Cobden-Chevalier treaty of 1860
allowed the UK and France to specialize in
commodities. 9
 UNILATERAL
World War I, however, was a dramatic blow to
free trade. Protectionism, in turn, was
detrimental to development, peace and stability
(Ruggie, 1982). Two rounds of World Economic
Conferences in 1927 and 1933 failed to deliver
tariff reductions and exchange rate stabilization
because of the unwillingness of the United States
to take the role of the hegemon as a successor of
Modern World atheweakened Great Britain. Domestic politics in
United States evidently turned against
System restrictions-free trade because of the Great
Depression of 1929–33. The Smoot-Hawley Act
of 1930 increased tariffs to record-high levels in
the United States. Retaliation was the rational
response from trading partners and international
trade dropped by one- to two-thirds therefore
(Irwin, 1998). 10
 MULTILATERAL
Multilateral rules-based system backed by a solid
legal approach to trade relations (Winham, 2008).
According to Ruggie (1982), it was a compromise
between the extreme liberal international regime of
the long nineteenth century and the economic
nationalism of the inter-war period. Originally, the
new international trade regime should have been
steered by the International Trade Organization
(ITO), which was originally conceived as one of the
Modern World three pillars of the Bretton Woods system (the other
two being the IMF and the IBRD). Although the
System United States played an undisputable role in
creating the ITO, a series of vetoes in the US
Congress blocked its formation. In place of a unique
trade organization, nations committed to a world of
lowered tariffs decided to coordinate their actions
under the auspices of the General Agreement on
Tariffs and Trade (GATT). 11
 MULTILATERAL
The major outcomes of the trade negotiations
were the agreements on trade-related
investment measures (TRIMs), trade in
services (GATS) and trade related aspects of
intellectual property rights (TRIPs). After
almost 50 years of rules-based trade
negotiations, the Uruguay Round gave birth
Modern World to a ‘real’ international trade institution, the
System World Trade Organization. The WTO was
launched on 1 January 1995 and has become
an official forum for trade negotiations. As
opposed to the GATT, it is a formally
constituted organization with legal
personality. 12
 GLOBAL ECONOMIC INTEGRATION
▪ Developing nations did not participate
actively in multilateral trade negotiations
for a relatively long time. Apart from the
so-called East Asian newly industrializing
countries, which adopted an outward-
oriented development strategy, most of the
developing countries did not manage to
integrate into the post-World War II
trading system successfully. On the one
hand, they followed an inward-looking,
import-substitution industrialization
strategy, which did not favor trade
MM.DD.20XX openness (Findlay and O’Rourke, 2007). 13
ADD A FOOTER
 GLOBAL ECONOMIC INTEGRATION
▪ The first major change in this situation
happened in 1964, when the United Nations
Conference on Trade and Development
(UNCTAD) was established. It aims to promote
trade and cooperation between the developing
and the developed nations. A decade later plans
for a new international economic order were
laid down, with the multiple objectives of
providing preferential access to advanced
countries’ markets, renegotiating debt,
establishing international commodity agreement
(to stabilize primary product prices) providing
transfer of technology, and increasing aid
MM.DD.20XX substantially (Salvatore, 2007). 14
ADD A FOOTER
 GLOBAL ECONOMIC INTEGRATION
▪ Originally, the round was meant to be a
grand bargain between developed and
developing economies (Ostry, 2002).
Agriculture has a share of one-third to
a half of the total economic output in
most developing countries. Without the
liberalization of agriculture, it is
simply impossible for developing
nations to fully integrate into the
MM.DD.20XX
global economy.
15
ADD A FOOTER
 GLOBAL ECONOMIC INTEGRATION
▪ All in all, the current trade regime and
especially its main propagator, the
WTO, is heavily criticized for ‘a
striking asymmetry. National
boundaries should not matter for trade
flows and capital flows but should be
clearly demarcated for technology
flows and labor flows … This
asymmetry … lies at the heart of
inequality in the rules of the game for
globalization’ (Nayyar, 2002: 158).
MM.DD.20XX
16
ADD A FOOTER
GUIDE QUESTIONS
1. What is economic globalization?
2. Who are the actors and name their contributions to economic
globalization?
3. Why did the modern world system shift from unilateralism to
multilateralism of economies?
4. Does economic integration really exist? Provide tangible examples.
5. Does economic integration promote inequality? Expound your answer.
6. Can we really prevent the economic globalization? Why or why not?
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ASSESSMENT
▪ POSITION PAPER: You are
expected to write a position
paper in favor or against this
statement - “Global free trade has
done more harm than good.”
▪ Check this link as a guide -
https://www.thoughtco.com/how
-to-write-a-position-paper-
1857251” 18
 RUBRIC FOR
ASSESSMENT
▪ Clarity of claims/ assumptions -
5 pts.
▪ Comprehensive presentation of
related literature and proper
citation – 5 pts.
▪ In-depth analysis and coherent
presentation of position – 5 pts.
▪ 19
 CLOSURE

https://www.weforum.org/agenda/2016/01/top-quotes-on-the- 20

global-economy-from-davos/
 ASSIGNMENT
▪ MARKET INTEGRATION.
▪ Chapter 17 of textbook: “The Rise of
the Global Corporation” by Deane
Neubauer
▪ Bello, Walden F. 2006. “The Multiple
Crises of Global Capitalism.” In
Deglobalization: Ideas for a New World
Economy. Quezon City: Ateneo de 21
Manila University Press, pp. 1-31.
THANK
YOU!

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