GEC 13- CONTEMPORARY WORLD

Learning Activity Sheet #3

I. LEARNING SKILLS:
At the end of this lesson, the student must be able to:
1. Understand adequately the role of international financial institution in the creation of
a global economy;
2. Narrate a short history of the global economic integration; and
3. Identify and describe the attributes of a global corporations.

II. PRE-TEST:

1. What do we call the Items bought from other countries?

a. Exports b. Deports c. Imports d. Quotas

2. The cost of using someone else’s money

a. Comparative advantage b. Absolute advantage c. Interest rate d. Import

3. Exists when a country specializes in the production of a good and service at which it is
relatively more efficient.
a. Trade deficit c. Comparative Advantage
b. Trade surplus d. Absolute advantage

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MA. THERESA S. BARRIOS, PhD
Prof. Lecturer
4. Occurs when a country buys more than it sells
a. Quota b. Tariff c. Trade Deficit d. Trade Surplus

5. The amount a country owes to other countries is ____________.

a. National Debt b. Trade Deficit c. Foreign Debt d. Balance

6. A tax that a government places on certain imported products.

a. Embargo b. Deficit c. Tariff d. Quota

7. Dainielle's company is expanding into Korea and has asked her to research the language,
customs and values of the Korean people. Which aspect of the international business
environment is Danielle investigating?
a. Political concerns b. Economic progress c. Cultural influences d. Geography

8. Which of the following represents an absolute advantage?

a. Canada in rice production c. Honduras in banana production
b. Norway in orange and pineapple production d. Saudi Arabia in fresh fish production

9. It completely prohibiting the import or export of a product.

a. Quota b. Trade Deficit c. Embargo d. Tariff

10. Items sold to other countries.

a. Tariff b. Imports c. Exports d. Trade balances

III. VOCABULARY LIST:

1. Market – the area of economic activity in which buyers and sellers come together and the
forces of supply and demand affect prices.
2. Global marketplace – a key factor for success that refers to the international production
and exchange of goods, services and money.
3. Socialism – political and economic theory of social organization which advocates that the
means of production, distribution, and exchange should be owned or regulated by the
community as a whole.
4. Capitalism – is an economic system in which private individuals or businesses own
capital goods. The production of goods and services is based on supply and demand in
the general market—known as a market economy—rather than through central
planning—known as a planned economy or command economy.
5. Global governance – is a movement towards political cooperation among transnational
actors, aimed at negotiating responses to problems that affect more than one state or
region.
6. Corporations – is a legal entity that is separate and distinct from its owners. Corporations
enjoy most of the rights and responsibilities that individuals possess: they can enter
contracts, loan and borrow money, sue and be sued, hire employees, own assets and pay
taxes.
7. Shareholder – also referred to as a stockholder, is a person, company, or institution that
owns at least one share of a company’s stock, which is known as equity. Because
shareholders are essentially owners in a company, they reap the benefits of a business’
success.
8. Commodity– is a basic good used in commerce that is interchangeable with other goods
of the same type. Commodities are most often used as inputs in the production of other

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MA. THERESA S. BARRIOS, PhD
Prof. Lecturer
 goods or services. The quality of a given commodity may differ slightly, but it is essentially
uniform across producers.

IV. INTRODUCTORY CONCEPT:

HISTORY OF GLOBAL MARKET INTEGRATION

The Agricultural Revolution and the Industrial Revolution

Agricultural Revolution is the first big economic change ( Pomeranz, 2000). When people
learn how to domesticate plants and animals, they realized that it was much more productive
than hunter-gatherer societies. This became the new agricultural economy. Farmers helped
societies build surpluses, meaning, not everyone had to spend their time producing food. This,
in turn, led to major developments like permanent settlements, trade networks, and population
growth.
Industrial Revolution is the second major economic change. With the rise of industry
came new economic tools, like steam engines, manufacturing, and mass production. Factories
popped up and changed how work functioned. Instead of working at home where people worked
for their family by making things from start to finish, they began working as wage laborers and
then becoming more specialized in their skills. Overall, productivity went up, standards of living
rose, and people had access to a wider variety of goods due to mass production.
Every economic revolution comes with economic casualties. The workers in the factories-
who were mainly poor women and children-worked in dangerous conditions for low wages. As a
result, nineteenth-century industrialists were known as robber barons- with more productivity
came greater wealth, but also greater economic inequality. In the late nineteenth century, labor
unions began to form. These organizations of workers sought to improve wages and working
conditions through collective action, strikes, and negotiations. Inspired by Marxist principles,
labor unions gave way for minimum wage laws, reasonable working hours, and regulations to
protect the safety of workers.

Capitalism
-a system in which all-natural resources and means of production 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 one’s product and reducing its
prices. This is what economist Adam Smith in the 1770s called the “invisible hand” of the market.
The idea is that if one leaves a capitalist economy alone, consumers will regulate things
themselves by selecting goods and services that provide the best value.

Socialism
-the means of production are under collective ownership. It rejects capitalism’s property and
hands-off approaches. Instead, in socialism, property is owned by the government and allocated
to all citizens, not only those with the money to afford it. It emphasizes collective goals, expecting
everyone to work for the the common good and placing a higher value on meeting everyone’s
basic needs than on individual profit.

Corporations are defined as organizations that exist as legal entities and have liabilities that are
separate from its members. They are their own thing. More and more these days, corporations
are operating across national boundaries which means that the future of the Philippine economy-
and most countries’ economies-will play out on a global scale. No one knows what the next
economic revolution is going to look like. Nowadays, a key part of both our economic and political
landscape is corporations.

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MA. THERESA S. BARRIOS, PhD
Prof. Lecturer
 ROLE OF INTERNATIONAL FINANCIAL INSTITUTIONS IN THE CREATION OF GLOBAL
ECONOMY

International Financial Institutions (IFIs). An international financial institution is chartered

by more than one country and therefore are subjects to international law. Its owners or
shareholders are generally national governments, although other international institutions and
other organizations occasionally figure as shareholders. The most prominent IFIs are creations
of multiple nations, although some bilateral financial institutions (created by two countries) exist
and are technically IFIs. The best known IFIs were established after World War II to assist in the
reconstruction of Europe and provide mechanisms for international cooperation in managing the
global financial system.

1. The International Financial Institutions (IFIs) are:

2. International Monetary Fund (IMF)
➢ Multilateral Development Banks (MDBs) which include:
➢ World Bank Group
➢ African Development Bank
➢ Asian Development Bank
➢ Inter-American Development Bank
➢ European Bank for Reconstruction and Development

The last four (4) of these each focus on a single world region and thus are often called Regional
Development Banks (RDB).

Global in scope are International Monetary Fund and the World Bank. They are also specialized
agencies in the United Nation system but are governed independently of it.

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 to countries from the region)
4. Has its own independent legal and operational states

Main objectives:

IMF provides temporary financial assistance to member countries to help ease balance of
payments adjustments.

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 of 30-40 years) at interest
rates 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.

All IFIs are active in supporting programs that are for the global economy- in addition to their
primary role of financing and providing technical assistance to programs at the country level.

The Global Interstate System

World-systems are defined by the existence od a division of labor. The modern world-
system has a multi-state political structure (the interstate system) and therefore its division of

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MA. THERESA S. BARRIOS, PhD
Prof. Lecturer
labor is international division of labor. In the modern world-system, the division of labor consists
of three zones according to the prevalence of profitable industries or activities: core, semi
periphery, and periphery. Countries tend to fall in to one or another of these interdependent
zones core countries, semi-periphery countries and the periphery countries. Resources are
redistributed from the underdeveloped, typically raw materials-exporting, poor part of the world
(the periphery) to developed, industrialized core.

Contemporary Global Governance

Global governance or world governance is a movement towards political cooperation

among transnational actors, aimed at negotiating responses to problems that affect more than
one state or region. Institutions of global governance- the United Nations, the International
Criminal Court, the World Bank, etc.-have limited or demarcated power to enforce compliance.
The modern question of world governance exists in the context of globalization and globalizing
regimes of power: politically, economically, and culturally. In response to the acceleration of
worldwide interdependence both between human societies and between humankind and the
biosphere, the term “global governance” may name the process of designating laws, rules, or
regulations intended for a global scale.

Global governance is not a singular system. There is no “world government” but the many
different regimes of global governance do have commonalities.

When prices among different location or related goods follow the same patterns over a
long period of time, market integration exist. Similarly, when groups of prices often move
proportionally to each other and when this relation is very clear among different markets it is
said that the markets are integrated. Hence, it could be concluded that market integration is an
indicator that explains how much different markets are related to each other.

Market integration is a term that is used to identify a phenomenon in which markets of

goods and services that are somehow related to one another being to experience similar patterns
of increase or decrease in terms of the prices of those products. The term can also refer to a
situation in which the prices of related goods and services sold in a defined geographical location
also begin to move in some sort of similar pattern to one another. At times, the integration may
be intentional, with a government implementing certain strategies as a way to control the
direction of the economy. At other times, the integrating of the markets may be due to factor
such as shifts in supply and demand that have a spillover effect on several markets.

When a market integration exists, the events occurring within two or more markets are
exerting effects that also prompt similar changes or shifts in other markets that focus on related
goods. For example, if the demand for baby dolls within a given geographical market were to
suddenly be reduced by 50%, there is a good chance that the demand for baby doll clothing
would also decrease in proportion within that same geographical market. Should the baby
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MA. THERESA S. BARRIOS, PhD
Prof. Lecturer
market increase, this would usually mean that the market for doll clothing would also increase.
Both markets would have the chance to adjust pricing in order to deal with the new
circumstances surrounding the demand, as well as adjust other factors, such as production.

Market integration may occur with just about any type of related markets. With a stock
market integration, similar trends in trading prices for assets related to a given industry may be
found in two or more markets around the world. In like manner, financial market integration
may occur when lending rates in several different markets begin to move in tandem with one
another. In some cases, the integration within a nation may involve the emergence of similar
patterns within the capital, stock, and financial markets, with those trends coming together to
exert a profound influence on the economy of that nation.

The social institution that has one of the largest impacts on society is the economy. You
might think of the economy in terms of number – number of unemployed, gross domestic
product) GDP), or whatever the stock market is doing today. While we often talk about it in
numerical terms, the economy is composed of people. It is the social institution that
organizes the production, consumption, and trade of goods in the society. Well, there are many
ways in which products can be made, exchanged, and used. Think about capitalism or socialism.
These economic systems – and the economic revolutions that created them- shape the way people
live their lives.

Please visit: https://www.slideshare.net/sakthivelRamar/m2arket-integration-80094070

Economic system varies from one society to another. But in any given economy,
production typically splits into three sectors. The primary sector extracts raw materials from
natural environments. Workers like farmers or miners fit well in the primary sector. The
secondary sector gains the raw materials and transforms them into manufactured goods. This
means for example, that someone from the primary sectors extracts oil from the earth then
someone from the secondary sector refines the petroleum to gasoline. Whereas, the tertiary sector
involves services rather than goods. It offers services but doing things rather than making things.
Thus, economic system is more complicated or at least more sophisticated than the way things
used to be for much of human history.

Economic globalization and trade globalization are the result of companies trying to
outmaneuver their competitors. While you search for the cheapest place to buy shoes, companies
search for the cheapest place to make those shoes. The find the cheapest sources of leather, dye,
rubber, and of course, labor. The labor-intensive products like shoes are often produced in
countries with the lowest wages and the weakest regulations. This process creates winners and
losers. The winners include corporations and their stockholders who earn more profit. They also
include consumers who get products at a cheaper price. The losers are high wageworkers who
used to make those shoes. Their jobs moved overseas. But what about the low wage
foreign workers? Are winning or losing? a lot of workers are thrown into hazardous working
conditions but it is also true that many workers in developing countries are at least making
money. These jobs pay above average wages. People want these jobs and although the pay would
be unacceptable in developed countries, they are often the best alternative.

International financial Institutions – World economies have been brought close together
by globalization. It is reflected in the phrase ‘When the American economy sneezes, the rest of
the world catches a cold’. But it is important to remember that it is not only the economy of the
United States but other economies in the world that have a significant impact on the global
market and finance. For example, the financial crises experienced Russia and affected the world
economy. The strength of a more powerful economy brings greater effects on other countries. In
the same manner, cities on weaker economies have less effect on other countries. For instance,
Argentina’s financial crisis in the late 1990s and early 2000s had a comparatively small impact
on the global economy.

Although countries are heavily affected by the gains and crisis in the world economy, the
organizations that they consist also contribute to these events. The following are the financial
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MA. THERESA S. BARRIOS, PhD
Prof. Lecturer
institutions and economic organizations that made countries even closer together, at least, when
it comes to trade. 1. The Bretton Woods System The major economies in the world had suffered
because of World War I, the Great Depression in the 1930s, and World War II. Because of the
fear of the recurrence of lack of cooperation among nation-states, political instability, and
economic turmoil (especially after Second World War), reduction of barriers to trade and free
flow of money among nations became the focus to restructure the world economy and ensure
global financial stability (Ritzer, 2015). These consist the background for the establishment of
Bretton Wood system. The Bretton Woods system has five key elements. 1. Expression of
currency in terms of gold or gold value to establish a par value (Boughton, 2007) 2. The official
monetary authority in each country (a central bank or its equivalent) would agree to exchange
its own currency for those of other countries at the established exchange rates. 3. Bretton Woods
system is the establishment of an overseer for these exchange rates, thus the International
Monetary Fund (IMF) was founded. 4. Eliminating restrictions on the currencies of member
states in the international trade and 5. The U. S dollar became the global currency. 2. The
General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) The
GATT was established in 1947 (Goldstein et al, 2007). It was a forum for the meeting of
representative form 23 member countries which focused on trade goods through multinational
trade agreements conducted in many “rounds” of negotiation. However, it was out of the Uruguay
Round (1986-1993) that an agreement was reached to create the World Trade Organization
(WTO)”, (Ritzer, 2015, p. 60) 3. The International Monetary Fund (IMF) and the World Bank the
IMF and World Bank were founded after WW II. They were designed to complement each other.
The IMF’s goal was to help countries which were in trouble at that time and who could not obtain
money by any means. Perhaps, their economy collapsed or their currency was threatened. IMF,
in this case, served as a lender or a last resort for countries which needed financial assistance.
The World Bank, however had more long-term approach. Its main goals helped them reach their
goals, especially in poor countries. An example of such is their investment in education in 1962
in developing nations like Bangladesh, Chad and Afghanistan. Unfortunately, the reputation of
these institutions has been dwindling mainly due to practices such as lending the corrupt
government or even dictators and imposing ineffective austerity measures to get their money
back. 4. The Organization for Economic Cooperation and Development (OECD), The Organization
of Petroleum Exporting Countries (OPEC), and the European Union (EU). The most
encompassing club of the richest countries in the world is the Organization for Economic
Cooperation and Development (OECD), with 35 member States as of 2016, with Latvia as its
latest member. It is highly influential, despite the group having little formal power. This emanates
from the member countries’ resources and economic power. In 1960, the Organization of
Petroleum Exporting Countries (OPEC) was originally comprised of Saudi Arabia, Iraq,
Kuwait, Iran and Venezuela. They are still part of the major exporters of oil in the world today.
OPEC was formed because member countries wanted to increase the price of oil, which in the
past had a relatively low price and had failed in keeping up with inflation. Today, the United
Arab Emirates, Algeria, Libya, Qatar, Nigeria, and Indonesia are also included as members. 5.
North American Free Trade Agreement (NAFTA) The North American Free Trade Agreement
(NAFTA) is a trade pact between the United States, Mexico, and Canada created on January 1,
1994 when Mexico joined the two other nations. It was first created in 1989 with only Canada
and the United States as trading partners. NAFTA helps in developing and expanding world trade
by broadening international cooperation. It also aims to increase cooperation for improving
working conditions in North America by reducing barriers to trade as it expands the markets of
the three countries.

Ours is the time of information revolution. Technology has 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 has had a lot of residual effects on our
economy. Computers and other technologies are beginning to replace many jobs because of
automation or outsourcing jobs offshore. We also see the decline in union membership.
Nowadays, most unions are for public sector jobs, like teachers.

What do jobs in a post-industrial society look like? Agricultural jobs, which once were a
massive part of the Philippine labor force, have fallen drastically over the last century. In other
countries such as the United States, manufacturing jobs which were the lifeblood of their
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MA. THERESA S. BARRIOS, PhD
Prof. Lecturer
economy for such of the twentieth century have declined in the last 30 years. The US economy
began with their many workers serving in either the primary or secondary economic sectors. But
today, much of their economy is centered on the tertiary sector or the service industry. The
service industry includes every job such as administrative assistants, nurses, teachers and
lawyers. This is a big and diverse group because the tertiary sector, like all the economic sectors
we have been discussing, is defined mainly by what it produces rather than what kinds of jobs
it includes.

***
V. LEARNING ACTIVITIES

TASK 1: The products that we consume and use-foods, clothing, and gadgets-are part of our
way of life. Globalization allows for a worldwide exchange of these commodities and exposure to
different cultures as well. This activity will allow the students to investigate the origin and spread
of the products and services sold in our country. They will also be able to know the countries
involved in the production, distribution, and consumption of the products being sold and
consumed in the country. The following are the steps to accomplish this activity:

Each student will choose any of the following products being sold in the Philippines.
a. Coffee
b. Sports car
c. Wristwatch
d. Shoes

List down the main ingredients or raw materials of the chosen product. Identify the
corresponding country from which each ingredient or raw material came from. Then
indicate the corresponding service the country does for the product.

Write 3-5 statements about the creation of the product. Make it in a form of
Advertisement.

TASK 2: Film Viewing: “The Corporation” directed by Mark Achbar and Jennifer Abbott Mazower,
Mark. 2006. “An International Civilization? Empire, Internationalism and the Crisis of the Mid-
Twentieth Century.”International Affairs 82(3): 553– 566.

https://www.youtube.com/watch?v=zpQYsk-8dWg

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MA. THERESA S. BARRIOS, PhD
Prof. Lecturer
 M R OVIE EVIEW
***********************************************************************************************************
TITLE: __________________________________________________________________________________________

FILM INFO (section, year, producer, director, starring):

_________________________________________________________________________________________
_________________________________________________________________________________________

CATCHY INTRODUCTION/HOOK:
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________

STORYLINE:
What was the movie about? ________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________

THEMES/ THE “BIG PICTURE” OR MESSAGE OF THE MOVIE:

Ex.: _______________________________________________________
Friendship, _______________________________________________________________________
Determination, Courage _______________________________________________________

KEY CHARACTERS AND THEIR ROLES WITHIN THE FILM:

❖ Why was the main character likeable or not likeable?

___________________________________________________________________
___________________________________________________________________

❖ What made the actors/actresses convincing or unconvincing?

____________________________________________________________________
____________________________________________________________________

WHAT I LIKED (AND PROOF): _____________________________________________________________________

___________________________________________________________________________________

YOUR OPINION: ________________________________________________________________________________

___________________________________________________________________________________

CLOSING: (Movie Recommendation): _____________________________________________________________

___________________________________________________________________________________
___________________________________________________________________________________
_________________________________________________________________________________

Movie Critic 9|Page

MA. THERESA S. BARRIOS, PhD
Prof. Lecturer
 VI. POST TEST: True or False?
Directions: Write T if the statement is true and F if it is otherwise.

_______________1. With a free trade zone, member countries agree to remove duties and trade
barriers on products traded among them.
_______________2. Franchising is selling the right to use a trademark or brand name for a fee or
royalty.
_______________3. Without foreign trade, many things you buy would cost more or not be
available.
_______________4. Domestic business refers to business activities needed fro creating, shipping,
and selling goods across national borders.
_______________5. One goal of the World Trade Organization is to eliminate import quotas.
_______________6. The value of currency in one country compared with the value in another is
called the interest rate.
_______________7. Milk is not imported to the United States in any great quantity.
_______________8. Absolute Advantage exists when a country specializes in the production of a
good or service at which it is relatively more efficient
_______________9. An economy that is largely involved in agriculture is generally unable to
provide its citizens with a large number of high-quality products.
______________10. The value of currency in one country compared with the value in another is
called the interest rate.

VII. REFLECTION:

➢ What significant values in life do the role of international financial institutions try to
instill in the minds and hearts of all the people around the globe based on what you
have watched and read about market integration?
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________

VIII. RUBRIC

Creativity – 10 pts.
Content & organization of thoughts – 10 pts.
Overall impression – 5 pts.
Total – 25 pts.

Content & organization of thoughts – 10 pts.

Fluency of expression – 10 pts.
Overall impression – 5 pts.
Total – 25 pts.
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MA. THERESA S. BARRIOS, PhD
Prof. Lecturer
 IX. ASSIGNMENT:

READING MATERIALS:

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 Manila University Press, pp. 1-31.

REFERENCES:
San Juan, D.M., (2018). Journeys through our Contemporary World: Vibal Group Publishing,
Inc.
Ariola, M., (2018). The Contemporary World: Library Service & Publishing Inc.
Aldama, P.K.R., (2018). The Contemporary World: Rex Book Store, Inc.Benczes, I.(2014).The
globalization of economic relations. Available at:
https://www.researchgate.net/publication/293358032_The_globalization_of_e
conomic_relations
Walden, Deane Neubauer Bello, “ The Rise of the Global Corporations”, 2006
slideshare.net/jpsivam/market-integration
https://www.slideshare.net/sakthivelRamar/m2arket-integrration-80094070
Claudio, Lisadro E., Abinales, Patricio N., The Contemporary World, Copy right 2018
Aldama, Prince Kennex Reguyal, The Contemporary World, First Edition, Rex Bookstore,
2018
James P. and Steger, M. (2014). A genealogy of globalization: The career of a concept. Available
at: https://edisciplinas.usp.br/pluginfile.php/2923102/mod_resource/content/1/2014_Ja
mes%20%20Steger_Globalizations%20-%20genealogy%20of%20the%20concept.pdf

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MA. THERESA S. BARRIOS, PhD
Prof. Lecturer