GLOBALIZATION & GLOBAL EXPERIENCES i.

Development of a global financial

systems
j. Increase in the share of the world
GLOBALIZATION
economy controlled by multinational
• It is the process of bringing people corporations
together and making them interact and Advantages of Globalization
exchange ideas across traditional
borders. The world, driven largely by a. Peaceful Relations
advances in technology, has become ⎯ Most countries have resorted to
interconnected across distances and trade relations with each other in
other boundaries order to boost their economy,
• It is the increasing economic, political leaving behind any bitter past
and cultural integration and experiences if any
interdependence of diverse cultures b. Employment
• The formation of Global Village- closer ⎯ Considered one of the most
contacts between different parts of the crucial advantages, globalization
world, with increasing possibilities of has led to the generation of
personal exchange, mutual numerous employment
understanding, and friendship, between opportunities. Companies are
world citizens moving toward developing
countries to acquire the labor
force
c. Education
⎯ A very critical advantage that has
aided the population is the spread
of education. With numerous
educational institutions around
the globe, one can move out from
the home country for better
opportunities elsewhere.
d. Product Quality
⎯ The product quality has been
Signs of Globalization enhanced to retain the customers.
a. Increasing in international trade Today the customers may
b. Increase in international flow of capital compromise with the price range
including foreign direct investment
the process in which a
minority group or culture but not with the quality of the
comes to resemble a
society's majority group or product. Low or poor quality can
c. Greater trans-border data flow, using assume the values,
such technologies such as the internet, behaviors, and beliefs of adversely affect consumer
another group whether
communication satellites and telephones fully or partially. satisfaction
d. Spreading of multiculturalism and better ⎯ Globalization has brought in
The process by individual access to cultural diversity, on fierce competition in the markets.
Communication every single
which a cultural
element blends into
another culture by
the other hand, some reduction in This theory proposes that
Western thought has led to
modifying the
diversity through assimilation, globalization, and that
globalization propagates
piece of information is easily
element to fit
cultural norms.
hybridization, Westernization, Western culture, leading to
a cycle of Westernization.
accessible from almost every
Americanization, or Sinosization of corner of the world. Circulation of
cultures the process by which information is no longer a tedious
non-Chinese societies
e. Greater international travel and tourism come under the influence task and can happen in seconds.
of Chinese culture
the exporting of
American f. Greater international cultural exchange, The internet has significantly
brands and
consumer for example through the export of affected the global economy,
thereby providing direct access
goods.
Hollywood and Bollywood movies
g. Greater immigration, including illegal to information and products
immigration e. Transportation
h. Development of global ⎯ Considered as the wheel of every
telecommunications infrastructure business organization,

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 connectivity to various parts of the
world is no more a serious
problem. Today with various
modes of transportation available,
one can conveniently deliver the
products to a customer located at
any part of the world
f. Travel and tourism
⎯ Through globalization, different
places in every part of the world
are being promoted through
social media and different
websites. International trade
among different countries also
helps in increasing the number of
tourists that visit different places
around the world
Disadvantages of Globalization
a. Health Issues
⎯ Globalization has given rise to
more health risks and presents
new threats and challenges for the
epidemic – the dawn of HIV/ AIDS.
Not only this, the world is
experiencing a pandemic-the
rampant spread of coronavirus
b. Loss of Culture
⎯ Globalization greatly affects the
culture of one nation because
large number of people are
moving into and out of the country
that result to the loss of identity.
People may adopt to the cultural
norms of the resident country, and
they tend to follow the foreign
culture more, forgetting their own
roots. This can give rise to cultural
conflicts
c. Uneven Wealth Distribution
⎯ It is said that the rich are getting
richer while the poor are getting
poorer. In the real sense,
globalization has not been able to
reduce poverty
d. Environment Degradation
⎯ The industrial revolution has
changed the outlook of the
economy. Industries are using
natural resources by means of
mining, drilling, etc. which puts a
burden on the environment
e. Disparity
⎯ Though globalization has opened
new avenues like wider markets
and employment, there still exists
a disparity in the development of
the economies. Rich nations are
huge difference
moving their factories to foreign
countries where there is cheaper
labor
GLOBAL ECONOMY
GLOBAL ECONOMY
• Global Economy or the world economy is
the economy of all humans of the world,
referring to global economic system that
includes all economic activity within
nations and between nations, including
production, consumption, economic
management, exchange of financial
values and trade of goods and services
• The economy of every country which is
considered as giant economic system
• It includes everything we all buy, sell and
own
When we talk about global economy:
a. Interdependence of nations- one
nations depend on the other nations
b. Globalization – process by which
national and regional economies,
societies and cultures have become
integration by
means of integrated through the global network of
international
commz and trade trade, communication, immigration, and
transportation
c. International Trade- refers to the
exchange of goods and services between
different countries, and it has also helped
products/services countries to specialize in products which
specialization
of a country and
showcase it to they will be known and will have an
other nations
advantage over the others
d. International Finance- money can be
transferred at a faster rate between
countries compared to goods, services
and people, making international finance
one of the primary features of global
economy. It talks about currency
exchange rates.
e. Transaction – is between countries can
be significant in assessing the economic
conditions of the other country
f. Global Investment- refers to an
investment strategy that is not
constrained by biographical boundaries
investment on markets (ex: bitcoin)
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Why is Global Economy Important? Benefits of Global Economy:
demolishes trade barrier and allows a nation to introduce,
Microeconomics- is the study of individuals a. Free trade export and establish their products and services
gives numerous job opportunities across the globe;
and businesses decision b. Movement of labor removes geographical inequality
c. Increased economies scale lowers price rates for consumers
Macroeconomics- looks at the decisions of
d. Increased investment
countries and government
MARKET INTEGRATION
Economic importance at a macro and micro
level: MARKET INTEGRATION

⎯ Microeconomics and • Occurs when prices among different

macroeconomics are two fields of locations or related goods follow similar
study that involves the behavior in patterns over a long period of time
certain areas of the economy over • Groups of goods often move
a period of time proportionally to each other and when
⎯ Microeconomics is specific and this relation is very clear among different
smaller in scale, looking at the markets it is said that the markets are
behavior of consumers, the integrated
supply and demand equation in
Role of International Financial Institutions in
individual markets, and the hiring
the Creation of Global Economy
and wage-setting practices of
individual companies ⎯ IFI’s (International Financial
⎯ Macroeconomics has a broader institution) is charted by more than one
focus, such as the impact of fiscal country and therefore are subjects to
policy, big picture causes of international law. Its owners or
unemployment or inflation, and shareholders are generally national
how government actions impact governments, although other
nationwide economic growth international institutions and other
⎯ Macroeconomics strive to answer organizations occasionally figure as
the following: shareholders
a. Which factors determine how ⎯ The most prominent IFI’s are creations of
many goods and services a multiple nations, although some bilateral
country can produce financial institutions (created by two
b. What determines the number countries) exists and technically IFI
of jobs available in an ⎯ The best known IFI were established after
economy? World War II to assist in the
c. What factors cause the reconstruction of Europe and provide
economy to speed up or to mechanisms for international
slow down cooperation in managing the global
d. What causes of organization to financial system
hire or fire more labor in a
national scale The International Financial Institutions (IFIs)
e. What causes the economy to 1. International Monetary Fund (IMF)
grow over the long term? 2. Multi-Cultural Development Bank
f. What the State of the nation (MDB’s) which include:
economic health is based on a. World Bank Group provides loans

the improvement in the b. African Development Bank

standard of living, low c. Asian Development Bank
unemployment and low
⎯ Government
inflation
⎯ Private sector
secure financial stability and sustainable
⎯ Non-government organization
economic growth; reduce poverty around
the world
⎯ Development agencies
⎯ Community based
organization
⎯ The different foundation

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 d. Inter-American Development Bank
e. European Bank of Reconstruction and
Development
Membership Composition of IFIs
1. Only sovereign countries are admitted as
member-owner
2. Broad country membership to include
borrowing developing countries and
developed donor countries
3. Membership in regional development
banks include countries around the world
as members (not limited countries from
the region)
4. Has its own independent legal and
operational states
Main Objectives:
1. IMF provides temporary financial
assistance to member countries to help
ease balance of payments adjustments
2. MDBs provide financing for development
to developing countries through:
⎯ Long term loans (with maturities of
up to 20 years) at interest rates
way below market rates. Funding
comes from international capital
markets and relend to borrowing
government in developing
countries
⎯ Very long-term loans (sometimes
called credits with maturities at
30-40 years) at interest rate below
market rates. Funding for loans
come from direct contributions by
government in the donor
countries
⎯ Grant financing by some MDBs for
technical assistance advisory
service or project preparation
GLOBAL CORPORATION
• It is known as global economy. It is
coined from the base term “global”
which means all around the world. It is
one that operates in more than one
country. This is generally referred to as
multinational corporations (MNC). It is a
company that operates in two or more
countries, leveraging the global
environment to approach varying
markets in attaining revenue
generations.
• These international operations are
pursued as a result of strategic potential
provided by technological developments
making new markets a more convenient
and profitable pursuit both in sourcing
production and pursuing growth
Significance of Global Corporation
⎯ International operations are therefore a
direct result of either achieving higher
levels of revenue or a lower cost structure
within the operations or value-chain.
⎯ MNC operations often attain economies
of scale, through mass producing in
external markets at substantially cheaper
costs, or economies of scope, through
horizontal expansion into new
geographic markets. If successful, these
both results in positive effects on the
income statement (either larger revenues
or stronger margins), but contain the
innate risk in developing these new
opportunities
Why is Global Corporation Important?
1. Operating in more countries means
access to more customers, which means
more revenue and profit. If you sell goods,
higher volumes can reduce costs
2. Operating in global markets is also good
way to reduce risks and to leverage new
opportunities
GLOBAL INTERSTATE SYSTEM
• It is the whole system of human
interactions. The modern world system is
structured politically as an interstate
system- a system of competing and
allying states. Political scientist
commonly call this the international
system and this is the focal point of the
field of international relations
• World systems are defined by the
existence of division of labor. It has a
multi-state political structure and
therefore its division of labor is
international division of labor
Three zones of Division of Labor of
Wallerstein
1. Core
⎯ high income nations in the world
economy. This is the
manufacturing base of the planet
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 where resources funnel in to
become the technology and
wealth enjoyed by Western World
today
⎯ are dominant capitalist countries
that exploit peripheral countries
for labor and raw materials
2. Semi-Periphery
⎯ Are the middle-income countries,
such as India and Brazil. These are
considered semi-periphery due
to their closer ties to the global
economic core
⎯ Peripheral countries share
characteristics of both core and
peripheral countries
3. Periphery
⎯ Called as the low-income
countries, whose natural
resources or labor support the
wealthier countries, first as
colonies and now by working for
multinational corporations under
neocolonialism
⎯ Peripheral countries are
dependent on core countries for
capital and have underdeveloped
industry
HISTORY OF GLOBAL MARKET
INTEGRATION
• Before the rise of modern economy,
people only produced for their family.
Nowadays, economy demands the
different sectors to work together in
order to produce, distribute and
exchange products and services. What
cause this shift in the way people produce
for their needs? Let us go back 12,000
years ago
1. The Agricultural revolution and
Industrial revolution
⎯ The first big economic change is
Agricultural revolution
(Pomeranz,2000). When people
learned how to domesticate plants
and animals, they realized that it
was more productive than hunter-
gatherer societies. This became
the new agricultural economy.
Farming helped societies build
surpluses, meaning, not everyone
had to spend their time producing
their foods. This led to major
developments like permanent
settlements, trade networks and
population growth
2. Industrial Revolution
⎯ This is the 2nd major economic
revolution of the 1800. With the
rise of the industry, new economic
tools like steam engines,
manufacturing and mass
production came. Factories
popped up and work functions
changed. Instead of woring aat
home like what they did before,
they started to work as wage
laborers and then becoming more
skilled and began master their
the use of economic,
political, cultural, or strengths in their chosen field.
other pressures to
control or influence Overall, productivity went up,
other countries,
especially former standards of living rose and
dependencies.
people had access to varieties of
goods due to mass production
A. Capitalism- it is a system in
which all natural resources
and means of productions are
privately owned. It
emphasizes profit
maximization and competition
as the main drivers of
efficiency. This means that
when one owns a business, he
needs to outperform his
competitors if he is going to
succeed. He is incentivized to
be more efficient by
improving the quality of the
product and reducing its cost
B. Socialism – the means of
production are under
collective ownership. It rejects
capitalism’s private property
and hands-off approaches. In
here, property is owned by
the government and allocated
tame (an animal) and
keep it as a pet or for to all citizens, not only those
farm produce.
with the money to afford it. It
emphasizes collective goals,
expecting everyone to work
for the common good and
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 placing a higher value on
meeting everyone’s basic
need than on individual profit

3. Information Revolution
⎯ This is our time- the rise of
technology. This reduced the role
of human labor and shifted it from
a manufacturing-based economy
to one that is based on service
work and the production of ideas
rather than goods. This had
residual effects on the economy.
Computer technology is at the
root of this change, and continuing
advancements in that technology
seem to ensure that this revolution
would touch the lives of people

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