QUEZON CITY UNIVERSITY

College of Education
General Education
DEPARTMENT OF SOCIAL SCIENCES AND PHILOSOPHY

THE CONTEMPORARY WORLD

First Semester, 2023

LEOPOLDO CINCO CATCHUELA

Professorial Lecturer

Doctor in Public Administration (c ), EARIST, Manila

Master in Public Administration, EARIST, Manila

Bachelor of Laws (Juris Doctor), University of the East, Manila

A.B. Political Science, San Sebastian College - Recoletos, Manila

It is my strong belief that our ultimate aim in life is not to

be wealthy, prosperous, or problem free. Our ultimate aim in
life is to bring GLORY TO GOD! In view of this, and for our
FAITH JOURNEY, may I cordially invite you to watch,
subscribe, like, comment, and share my YOUTUBE Channel,
SIGE KUYA POL. When we live to the GLORY OF GOD,
we show HIS goodness living through us instead of just
ourselves. GOD BLESS YOU!

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LEARNING CONTENT:

Module 3: Facilitators of Globalization and Theories of Globalization

Facilitators of Globalization. Today’s globalization will not become

possible without the crucial roles rendered by the following facilitators:

1. State Actors - A state has a core responsibility to provide and ensure

sustainable living to its constituents. A state needs to establish an
economic climate and institutionalize policies conducive to economic
growth and development. By sealing trade agreements with its neighbors
and economic partners, opportunities can be consequently created as
barriers against free trade commerce have been significantly reduced.
Some states built their respective markets as export oriented such as South
Korea and China to which most of the goods that they sell abroad are of
high value in the international market. Most states in the African continent
failed to undergo a transition from agricultural to industrial economy but
nevertheless opened their markets for foreign goods. Meanwhile,
Singapore and Hongkong took advantage of their strategic locations as
business haven for MNCs market operation in Asia.

There are four types of barriers against international trade

A. Natural barrier such as distance and geographic location- exporting

goods in the Himalayan Kingdoms will cost a lot.
B. Political barrier - There are few governments which are considered
hostile to international trade such as North Korea. US President Donald
Trump opted to strengthen domestic market than actively participating in
Free Trade commerce.
C. Tariff barrier- A tariff exists when taxes are being imposed on foreign
goods by a local market. In 2018, China imposed 25% tariff on $16 billion

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worth of foreign goods from USA which include vehicles and crude oil in
retaliation on USA tariff against Chinese goods worth of $16 billion.
D. Non Tariff barrier- it includes quota, embargo, prohibition, and
exchange control

2. Multi-National Corporations (MNCs)- In an era where the tide of

capitalism is deregulated and market further liberalized, multi-national
corporations can be acknowledged as the key driver of globalization. Its
political and economic influences can closely resemble to that of the state.
Few years ago, the United Nations revealed that of the 100 economic
entities with the biggest Gross National Product, half of them are
classified as MNCs. The market capitalization of Apple, the world’s most
valuable brand, exceeded the GDP of South Korea, Saudi Arabia, Taiwan,
UAE, Spain and Australia.

In terms of operation and market share: MNCs are operating in the four
corners of the globe. Starbucks, the world’s largest coffeehouse, has
30,626 chain stores across continents. MNCs are more of oligipolistic or
monopolistic entities.

In terms of workforce, MNCs have sizeable number of employees.

Amazon has more than 1 million employees. In the early days of modern
industrialization, automobile industries employed millions of workers such
as Ford, Toyota, General Motors and among others.

In terms of profitability, MNCs usually earn millions of dollars in revenue.

Google is earning around $115,150 per minute or $1,919 per second.

In terms of innovation and competitiveness, MNCs have enough funding

for Research and Development (R&D) and be able to hire individuals with
exceptional skills on top of their attractive compensations.

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In terms of contribution to domestic economy, MNCs have huge
contrbution in the GDP growth of domestic markets. Samsung, a reputable
Chaebol, annually produces 17% of South Korea’s GDP.

In terms of political and economic clout, MNCs can lobby for government
policies favoring their respective interests or block any executive and
legislative agenda that may potentially hurt their standing in the market.

In the age of border-less economy, MNCs operation can migrate to other

countries using two possible approaches to lessen the cost of production
and maximize profits: Outsourcing and Offshoring. Outsourcing exists
when a business entity takes limited function of the firm such as call
center, data encoding, and marketing to another entity and exactly
performs the same functions. Offshoring typically happens when the
factory of a company moves from its home based to another country.

3. International Institutions- Global institutions that promotes

globalization can be categorized into two: International Government
Organizations (IGOs) and International Non Government Organizations
(INGOs).

A. International Government Organizations- a body comprised of

sovereign states with specific charter bound to be observed by member
states. Examples of IGOs are as follows:

a. United Nations - is the most widely recognized international

organization today with almost universal membership. Established in
1945, UN has six primary organs and several specialized agencies.
Recently, United Nations successively launched global developmental
programs such as the MDGs and SDGs respectively.

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b. World Bank (or also known as International Bank for Reconstruction
and Development) and International Monetary Fund (IMF) - an
organizations created out of the Bretton Wood Agreement in 1944 to
which these two global financial institutions were founded by delegates
from 44 nations. World Bank is duty bound to finance economic growth in
the developing countries by facilitating loan whereas IMF has identical
function but financial loans are to be extended for member countries in
order to maintain monetary stability. These loans are to be provided to
member applicants with specific economic prescriptions which somehow
foster the climate of globalization.

The four major stipulated conditions prescribed by WB and IMF upon

securing the loan are as follows:

1. Deregulation - government must adopt hands off approach on market

governance. Under the presidency of Fidel Ramos in the Philippines, the
Oil Industry was deregulated causing the prices of petroleum products to
frequently fluctuate.

2. Market Liberalization -removal of barriers so that foreign players can

easily access local markets.

3. Privatization - Government assets should be converted into private

firms.

4. Austerity Measure - less spending on public welfare.

c. World Trade Organization (WTO) - The protectionist measures

prevailed after World War I resulted to another round of global war which
devastated the world economy. In order to prevent the recurrence of such

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catastrophe and immediately restore the economy, many countries agreed
in legal principle to establish a mechanism that shall promote international
trade by removing protectionist measures such the levying of tariff on
foreign goods. This came to known as General Agreement on Tariff and
Trade (GATT) which consequently replaced by World Trade Organization
(WTO) in 1995.

B.International Non-Government Organizations- are non-profitable

organizations which operate on transnational basis and aim to promote
global consciousness of universal issues with world-wide impact. Among
the recognized INGOs are Amnesty International (Human Rights
Issues), Greenpeace (Environmental Issues), and Transparency
International (Corruption).

Theories of Globalization

1. World System Analysis- A theory popularized by Immanuel

Wallerstein which calls for the international division of labor and
categorized countries into three typologies:

a. Core countries - principally focus on high value skills and . capital

intensive production (more into the establishment of manufacturing and
service industries). These countries are essentially having stable political
system, efficient and huge military organization, wealthy resources, and
enormous global clout. They usually acquired cheap raw materials from
semi-periphery and periphery countries and converted it to commodities of
high value in the international market.

b. Semi Periphery countries- both focus on capital and labor intensive

production but also dependent on the extraction of raw materials
(extractive industry). These countries have diverse economic industries

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but the gap between the have and the have not is widening which put the
issue of poverty somehow unmanageable. Example of this countries would
be Indonesia, Brazil, Mexico, and Argentina.

c. Periphery Countries - mainly dependent on the extraction of natural

resources to which they primarily export agricultural and mineral
products. They have limited industries, a minuscule share of global
wealth, unstable government, and often exploited by powerful countries.

2. Dependency Theory - Developing countries are having weak economy

which necessitate the intervention of developed economies by facilitating
developmental loan and aid. There are number of countries which
incurred debt beyond their capacity to repay it. These countries are known
as HIPC (Highly Indebted Poor Countries). In the case of Haiti, the
domestic economy is almost non existing and poverty is pervasive. The
annual aid provided to Haiti by developed countries is already regarded as
a support lifeline. Without such aid, the government can hardly perform its
main functions.

3. Modernization Theory- In the past the word modernization is often

equated to westernization to which the economy of a country was made
modernize due to economic and political openness. Later, this equation
was challenged by East Asian countries to which they miraculously
achieved economic modernization without democratizing their political
system. At present, highly modernized countries enjoy two kinds of
power: Soft and Hard Power.

Soft Power - the ability of one country to attract another country without
using coercive instrument.

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Hard Power - When a country flex its economic and military muscles to
influence the behavior of another country, the element of hard power is
being employed.

Enjoy Reading!

Good Luck and Congratulations!

God bless you!

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