CHAPTER 1: GLOBALIZATION: A CONTESTED CONCEPT by Manfred

The term globalization can be traced back to the 1940’s. Its explosive usage came during the 1990’s. The twenty years later, millions of
references to globalization was experienced in both virtual and printed space.

Unfortunately, the bestsellers on the subject such as The of the Nation State by Kenichi Ohmae and the The Lexus and the Olive Tree
have left their readers the impression that globalization was an inevitable techno-economic juggernaut preaching capitalism and Western
values through elimination of local traditions and national cultures. The Global War on Terror showed the Americanization of the rest
of the world as US spearheaded the massive offense against the world known terrorists. As a result, many people still have trouble
recognizing globalization for what it is: the myriad forms of connectivity and flows linking the local (and national) to the global—as
well as the West to the East, and the North to the South (Manfred:2013)

As an illustration of such a more practical understanding of globalization as a thickening ‘global-local nexus’—or what some global
studies scholars refer to as ‘glocalization’—let us consider the world’s most popular sports event: the Football World Cup. First
organized in 1930 by the International Federation of Football Associations (FIFA), the event was soon seen as the ultimate national
contest pitting country against country in the relentless pursuit of patriotic glory. The World Cup has since been held every four years
(except for 1942 and 1946) in host countries located on all continents except Oceania.

Towards a definition of Globalization

There are several connotations from different writers regarding the term globalization. Hence, I suggest that we adopt the term globality
to signify a social condition characterized by tight global economic, political, cultural, and environmental interconnections and flows
that make most of the currently existing borders and boundaries irrelevant (Madfred: 2013).

The term globalization applies to a set of social processes that appear to transform our present social condition of conventional nationality
into one of globality. this does not mean that the national or the local are becoming extinct or irrelevant. In fact, the national and local
are changing their character as a result of our movement towards globality. At its core, then, globalization is about shifting forms of
human contact. Indeed, any affirmation of globalization implies three assertions: first, that we are slowly leaving behind the condition
of modern nationality that gradually unfolded from the 18th century onwards; second, that we are moving towards the new condition of
postmodern globality; and, third, that we have not yet reached it. Indeed, like ‘modernization’ and other verbal nouns that end in the
suffix ‘-ization’, the term ‘globalization’ suggests a sort of dynamism best captured by the notion of ‘development’ or ‘unfolding’ along
discernible patterns.

Finally, let us adopt global imaginary as a concept referring to people’s growing consciousness of global connectivity.

To argue that globalization constitutes a set of social processes enveloped by the rising global imaginary that propel us towards the
condition of globality, a movement towards more intense forms of connectivity and integration.

There is a unique characteristic of social process that globalization involves with, a reason for scholarly dispute provoking oppositions
on the definition of the term globalization. This opposition is a result of the different experiences from all across the globe which scholars
have gone encountered. After all, globalization is an uneven process, meaning that people living in various parts of the world are affected
very differently by this gigantic transformation of social structures and cultural zones. Scholars not only hold different views with regard
to proper definitions of globalization, they also disagree on its scale, causation, chronology, impact, trajectories,
and policy outcomes.

The ancient Buddhist parable of the blind scholars and their encounter with the elephant helps to illustrate the academic controversy
over the nature and various dimensions of globalization. Even those few remaining scholars who still think of
globalization as a singular process clash with each other over which aspect of social life constitutes its primary domain. Many global
studies experts argue that economic processes lie at the core of globalization. Others privilege political, cultural, or ideological aspects.
Still others point to environmental processes as being the essence of globalization.

Like the blind men in the parable, each globalization researcher is partly right by correctly identifying one important dimension of the
phenomenon in question. However, their collective mistake lies in their dogmatic attempts to reduce such a complex phenomenon as
globalization to one or two domains that corresponds to their own expertise. Surely, a central task for the new field of global studies
must be to devise better ways for gauging the relative importance of each dimension without losing sight of the interdependent whole.

The Globalization Scholars and the Elephant

Let us consider the following definitions of globalization:

Globalization can thus be defined as the intensification of worldwide social relations which link distant localities in such a way that
local happenings are shaped by events occurring many miles away and vice versa. (Anthony Giddens, Former Director of the London
School of Economics)

Globalization may be thought of as a process (or set of processes) which embodies a transformation in the spatial organization of social
relations and transactions—assessed in terms of their extensity, intensity, velocity and impact—generating transcontinental or
interregional flows and networks of activity, interaction, and the exercise of power. (David Held, Professor of Politics and International
Relations, Durham University)

Globalization as a concept refers both to the compression of the world and the intensification of consciousness of the world as a whole.
(Roland Robertson, Emeritus Professor of Sociology, University of Aberdeen, Scotland)

These definitions point to four additional qualities or characteristics at the core of globalization.

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First, it involves both the creation of new social networks and the multiplication of existing connections that cut across traditional
political, economic, cultural, and geographical boundaries. As we have seen in the case of the Manny Pacquiao’s fights, today’s media
combine conventional TV coverage with multiple feeds into digital devices and networks that transcend nationally based services.

The second quality of globalization is reflected in the expansion and the stretching of social relations, activities, and connections.
Today’s financial markets reach around the globe, and electronic trading occurs around the clock. A good example is the current trends
of aggressive online selling and buying through shopee, zalora, lazada and etc. One can place his investments with an investment bank
which allows the investor to monitor his investment online 24/7 and render a financial decision based on his monitored activities.

Third, globalization involves the intensification and acceleration of social exchanges and activities. As the Spanish sociologist Manuel
Castells has pointed out, the creation of a global network society fuelled by ‘communication power’ required a technological
revolution—one that has been powered chiefly by the rapid development of new information and communication technologies. For
example, the present pandemic has forced a transformation of the conventional classroom into a virtual platform such as what we are
doing right now with the use of canvas, google classroom, zoom. As have been noted in a certain Asian country during this pandemic,
a court judge in such country issued a guilty verdict through the use of zoom since social distancing might be compromised if the actual
court proceedings were required. Sophisticated social networking by means of Facebook or Twitter has become a routine activity for
more than a billion people around the globe with the downside of fake news fast spreading.

Fourth, as we emphasized in our definition of the global imaginary, globalization processes do not occur merely on an objective, material
level but they also involve the subjective plane of human consciousness. Without erasing local and national attachments, the compression
of the world into a single place has increasingly made global the frame of reference for human thought and action. Hence, globalization
involves both the macro-structures of a ‘global community’ and the micro-structures of ‘global personhood’.

If we allow a shorter definition of the term globalization then the following might suffice:
“Globalization refers to the expansion and intensification of social relations and consciousness across world-time and world-
space.”

We should consider an important objection raised by global studies scholars sensitive to historical matters:
Is globalization really all that different from the centuries-old process of modernization? Some critics have responded to this question
in the negative, contending that even a cursory look at history suggests that there is not much that is new about contemporary
globalization.

CHAPTER 2: IS GLOBALIZATION A NEW PHENOMENON? by Manfred

As important as technology is for the intensification of global connectivity, it provides only a partial explanation for the latest wave of
globalization since the 1980s. Yet, it would be foolish to deny that these new innovations have played a crucial role in the compression
of world-time and world space (Manfred:2013). The Internet, in particular, has assumed a pivotal function in facilitating globalization
through the creation of the World Wide Web that connects billions of individuals, civil society associations, and governments. Because
of what is said above, it might be tempting to assume that indeed globalization is a relatively new phenomenon. Is that really so?

We noted in the previous chapter the dynamic nature of globalization as a phenomenon. The global expansion of social relations and
the rise of the global imaginary are gradual processes with deep historical roots. The engineers who developed personal computers and
supersonic jet planes stand on the shoulders of earlier innovators who created the steam engine, the cotton gin, the telegraph, the
phonograph, the telephone, the typewriter, and etc. That means, the mobile phone today which has gone through several stages of
revisions have its prototype in the old telephone set, while the desktop computer is an innovation of the age old typewriter we see today
in some conventional offices and courtrooms. In order to acknowledge the full historical record, we might reach back even further to
such momentous technological and social achievements as the production of paper, the development of writing, the invention of the
wheel, the domestication of wild plants and animals, the slow outward migration of our common African ancestors, and, finally, the
emergence of language at the dawn of human evolution.

So we ask the question again, is globalization a new phenomenon?

the answer to the question of whether globalization constitutes a new phenomenon depends upon how far we are willing to extend the
web of causation that resulted in those recent technologies and social arrangements that most people have come to associate with our
buzzword. Some scholars consciously limit the historical scope of globalization to the post-1989 era in order to capture its contemporary
uniqueness. Others are willing to extend this timeframe to include the ground-breaking developments of the last two centuries. Still
others argue that globalization really represents the continuation and extension of complex processes that began with the emergence of
modernity and the capitalist world system in the 1500s. And a few remaining researchers refuse to confine globalization to time periods
measured in mere decades or centuries. Rather, they suggest that these processes have been unfolding for millennia (Manfred:2013).

The advocates of the first approach have marshalled impressive evidence for their view that the dramatic expansion and acceleration of
global exchanges since the 1980s represents a quantum leap in the history of globalization. The proponents of the second view correctly
emphasize the tight connection between contemporary forms of globalization and the explosion of technology known as the Industrial
Revolution. The representatives of the third perspective rightly point to the significance of the time-space compression that occurred
in the 16th century when Eurasia, Africa, and the Americas first became connected by enduring trade routes. Finally, the advocates of
the fourth approach advance a rather sensible argument when they insist that any truly comprehensive account of globalization falls
short without the incorporation of ancient developments and enduring dynamics into our planetary history.

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GENERAL OVERVIEW OF GLOBALIZATION

What is it about?
• World wide integration and deepening of economic activities
• Existence of integrated production and consumption systems
• Facilitated by IT revolution, liberalization and deregulation.
• Unprecedented mobility of goods, services, capital and people
• Events all over the world strongly interdependent like the creation of trade associations like the EU (European Union), NAFTA
(North American Free Trade Agreement), the BRICS (Brazil, Russia, India, China, and South Africa).

Definition:
• The integration of national economies into the international economy through trade, direct foreign investment, short term capital
flows, international flows of workers and humanity generally, and flows of technology according to Bhagwati.

What does it encompass?

• Internationalization (trade & investment)
• Liberalization (freeing markets as opposed to the principle of protectionism)
• Universalization (cultural interchange)
• Westernization (western cultural dominance)
• Deterritorialization (compression of time and space)

Two types of Globalization:

1. Globalization of consumption.
The nation in which a product was made becomes independent of the nationality of the consumer.
2. Globalization of production/ownership
The nationality of the owner and controller of productive assets is independent of the nation housing them. For
example, a lot of American brands are now mostly produced in Asian countries like Ford cars produced in Indonesia
or China. Also the Airbus Consortium where the product is jointly owned by several countries like France, Germany,
Britain, and Spain. It is said the wings are from Britain, the Fuselage and tail from Germany, the doors from Spain,
and the cockpit and final assembly from France.

Integration of Economies.
The integration of economies can result in the following:
• The increasing reliance of economies on each other, e.g. the formation of trading associations like BRICS, EU, and NAFTA.
• The presence of opportunities to be able to buy and sell in any country in the world (e.g. the ability to use online trading of
anything)
• The presence of opportunities for labor and capital to be located anywhere in the world (e.g. global resource allocation is
already a reality now and the human resource outsourcing from other countries).
• The growth of global markets in finance (e.g. stock markets are now accessible from anywhere in the world).

Integration of Economies is made possible by:

• Technology
• Communication networks
• Internet access
• Growth of economic cooperation like trading blocs such as EU, NAFTA, BRICS
• Collapse of communism
• Movement to free trade

Trade vs. Aid?

In the present world, globalization has posed so much challenge to all economies from the peripheral to the core. Hence, we
examine the benefits and disadvantages of global trading for all economies.

Benefits of Trade would be:

• Increased choice
• Greater potential for growth
• Increase international economies of scale (i.e. there is an increasing degree of output even with a decreasing amount of input
without sacrificing its quality of production or simply increasing level of efficiency)
• Greater employment opportunities (i.e. any economy will have lower propensity of unemployment issues provided its human
resource are well-equipped and highly trained to perform work)

Disadvantages of Trade would be:

• Increase in gap between the rich and the poor (particularly in densely populated economies where the majority are not
employable nor productive)
• Dominance of global trade by the rich, northern hemisphere countries (i.e. global divide of the North and the South)
• Lack of opportunities for the poor to be able to have access to markets
• Exploitation of workers and growers (i.e. increasing cases of unfair labor practices upon the vulnerable members of poorer
nations which include the issues of child labor and under employment).

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Corporate Expansion
• Multinational or trans-national (MNCs or TNCs) are businesses with headquarters in one country but with business operations
in a number of other countries.

Characteristics of Corporate Expansion:

• Expanding revenue
• Lowering costs
• Sourcing new materials
• Controlling key supplies (may be a key reason for global expansion)
• Control of processing
• Global economies of scale

Corporate Domination
If there is corporation expansion, such can result in corporate domination. This corporate domination is beset with certain key
issues such as:
• Damage to the environment
• Exploitation of labor
• Monopoly power
• Economic degradation (particularly of the smaller companies by the huge competitive companies)
• Non-renewable resources (particularly in the mining industry where resources are depletable)
• Damage to cultures (particularly the emergence of the western culture as a superior culture, the propagation of pornography,
and etc.)

FIVE ASPECTS OF GLOBALIZATION:

• Economic
• Technological
• Cultural
• Political
• Military

Economic Globalization.
Early Capitalists ideas:
1. Free Market Economy of Adam Smith wherein the Market is free from state control
2. Division of labor ( as an evidence of efficiency of work)
3. Competition
It is in this aspect where one can also relate the validity of trading associations like EU, BRICS, and NAFTA.
Multinational corporations contribute so much to this aspect resulting in corporate domination.

Technological Globalization.
Computers can now move money around the world.

Cultural Globalization.
Cultural imperialism can result in dominance of one culture over others. Example preference of Filipinos for MacDonald’s, Disneyland,
and Starbucks.

Political Globalization.
Obviously the UN is in place in order to exhibit a preview of a world government which up to this time does not really carry a strong
political will.

Military Globalization.
Leading economies are campaigning for demilitarization as early as the 1980s. However, some nations today are competing globally
with a showcase of its nuclear weapons.

The Metaphors of Globalization: SOLID, LIQUID

Solidity:
People, things, information and places harden over time and therefore have limited mobility.
Example: solidity of materials-stone tablets, newspapers, magazines, books or solidity of information before high-tech and
internet age)
Solidity of places like mountains, rivers, oceans
Humanly constructed solidity like walls, gates, borders (e.g. border lockdown)
The most concrete example of solidity concept of GLOBALIZATION is the NATION STATE.

With recent developments in transportation and communication mobility of people and objects across the globe is just very easy.
Even with the existence of a lockdown, we can make use of technology in order to hurdle over the challenges set by COVID-19 such as
the use of E learning for some students using an online LMS.
Such development is an example of liquidity or the capacity to adopt to recent developments occurring in the global scene. Any
individual who is also future proof must have the idea of liquidity instead of getting stuck in the old and conventional trend of doing
things. Thus, anyone who can take up the challenge of the “new normal” is an epitome of a transition from solid to liquid in terms of
globalization. For example, one employs the means of paying online instead of taking the risk of going out of the house and visit a
nearby bank in order to make a payment.

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However, globalization is not suppose to eradicate the idea of solidity like the nation-state. In other words, global mindedness does not
require one to relinquish his being a Filipino just to embrace totally the concept of globalization.

TYPES OF FLOWS:
• Interconnected flows. Global flows which interconnect at different points and times.
• Multi-directional flows. All sorts of things flowing in every conceivable direction among many points in the world.
• Conflicting flows. Transplanetary processes which conflict with one another.
• Reverse flows. Processes which, while flowing in one direction, act back on their source.

SUMMATIVE POINTS FROM THE GLOBALIZATION OF ECONOMIC RELATIONS BY ISTVAN BENCZES:

What Is Economic Globalization? According to one of the most often cited definitions, [e]conomic globalization is a historical process,
the result of human innovation and technological progress. It refers to the increasing integration of economies around the world,
particularly through the movement of goods, services, and capital across borders. The term sometimes also refers to the movement of
people (labor) and knowledge (technology) across international borders. (IMF, 2008).

The phenomenon can thus have several interconnected dimensions, such as (a) the globalization of trade of goods and services; (2) the
globalization of financial and capital markets; (3) the globalization of technology and communication; and (4) the globalization of
production.

What makes economic globalization distinct from internationalization is that while the latter is about the extension of economic activities
of nation states across borders, the former is ‘functional integration between internationally dispersed activities’ Dicken (2004: 12). That
is, economic globalization is rather a qualitative transformation than just a quantitative change. The definition provided bySzentes (2003:
69) befits the purposes of this particular chapter: ‘In economic terms globalisation is nothing but a process making the world economy
an “organic system” by extending transnational economic processes and economic relations to more and more countries and by
deepening the economic interdependencies among them.’

The main advantage of the above definition is that although it does not deny the relevance of the ‘international’, ‘regional’ or ‘national’
levels, it refuses the assumption that the nation (state) is the only unit of analysis and that current trends in the world economy are simply
the redesign of the external relations of interacting nations.

On a more balanced account, Boyer and Drache admit that ‘[g]lobalization is redefining the role of the nation state as an effective
manager of the national economy’ (1996: 1), but refuse the hypothesis of uniform state policies and conceive the state as the main shelter
from the perverse effects of a free market economy.

As new actors appear on the stage of political and cultural globalization (such as the United Nations (UN) or non-governmental
organizations (NGOs)), economic globalization produces its own new entrants as well. In all probability the major players of present-
day global economy are the transnational corporations (TNCs).

The International Monetary Systems (IMS)

According to Krasner (1983: 2), regimes can be thought of as all the ‘implicit and explicit principles, norms, rules, and decision making
procedures around which actors’ expectations converge'. Consequently, an international monetary system or regime (IMS) ‘refers to the
rules, customs, instruments, facilities, and organizations for effecting international payments’ (Salvatore, 2007: 764).

In the liberal tradition, the main task of an IMS is to facilitate cross border transactions, especially trade and investment. An international
monetary system is, however, more than just money or currencies; it also reflects economic power and interests, as ‘money is inherently
political, an integral part of ’“high politics” of diplomacy' (Cohen, 2000:91).

The origins of the first modern-day IMS dates back to the early nineteenth century, when the UK adopted gold mono-metallism in 1821.
Half a century later, in 1867, the European nations, as well as the United States, propagated a deliberate shift to gold at the International
Monetary Conference in Paris. Gold was believed to guarantee a non-inflationary, stable economic environment, a means for
accelerating international trade (Einaudi, 2001).

In practice, the gold standard functioned as a fixed exchange rate regime, with gold as the only international reserve. Participating
countries determined the gold content of national currencies, which in turn defined fixed exchange rates (or mint parities) as well.

Monetary authorities were obliged to exchange their national currencies for gold at the official exchange rate without limits on
international markets.

One of the main strengths of the system was the tendency for trade balance to be in equilibrium. David Hume (1752) was the first to
elaborate on this mechanism by developing his quantitative theory of money. Accordingly, as a deficit nation's gold reserves diminished
(since its import was financed by gold), its general price level started to decline as well, which restored its competitiveness on
international markets. The price that such countries had to pay for the automatic adjustment mechanism was the loss of autonomy in
monetary policy. In practice, it also meant that deficit nations were enforced to initiate serious deflationary policies.

The outbreak of World War I brought an end to the classical gold standard. It was replaced by the gold exchange standard.

The International Banks for Reconstruction and Development (IBRD) became responsible for post-war reconstruction, while the explicit
mandate of the International Monetary Fund (IMF) was to promote international financial cooperation and buttress international trade.
The IMF was expected to safeguard the smooth functioning of the gold-exchange standard by providing short-term financial assistance
in case of temporary balance of payments difficulties.
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SUMMATIVE POINTS FROM THE SUSTAINABLE ECONOMIC SYSTEMS BY Póciennik Sebastian:
Stability.

Firmness in position, permanence and resistance to change, especially in a disruptive way – these are general associations connected
with the term ‘stability’. The International Monetary Fund (IMF) describes it as ‘avoiding large swings in economic activity, high
inflation, and excessive volatility in exchange rates and financial markets’ (International Monetary Fund, 2012).

This definition refers to indexes, which describe the economy in short-term categories. The challenge is that excessive highs and lows
should be avoided. In other words, extreme bubbles of economic activity must be calmed down before they burst. The idea of an anti-
cyclical policy sounds very modern, but is in fact very old. Tomas Sedlacek, the Czech author of an influential book on the history of
economics, reminds us in this context of the bible parable about pharaoh's bad dream, in which seven plump and healthy cows get
devoured by seven lean cows. Joseph said to the pharaoh that this dream was a prophecy showing seven affluent years and seven bad
years. The only way to react, then, is to save and store food in the time of plenty in order to react when people will be in need during
the dreary years (Sedlacek, 2011: 63).

This point of view has become clear since the Great Depression of 1929, when the economy collapsed in a dramatic way after long years
of post-war prosperity and overproduction. In fact during this disaster governments did not feel that it was their place to intervene.
Classical economists of this epoch believed in the self-regulation ability of economic systems and, in their view, an unrestricted price
mechanism should be enough to restore stability.

John Maynard Keynes believed that it makes sense to raise government spending in harsh times in order to prevent long-lasting
depressions.

The global crisis in the 1970s, the time of surprising stagflation (rise in inflation and unemployment), opened the gates for new economic
ideas. One of them was monetarism and its premise that stabilization could be produced control of amount of money in circulation.

Sustainability.

Sustainability should be seen as different from stability, although at the first sight the overlap seems obvious. It considers the long-term
capacities of a system to exist, not its short-term resistance to change.
A well known definition of sustainability, which emphasizes its economic notion, comes from the Bruntland Report (World Commission
on Environment and Development, 1987) prepared for the United Nations in 1987. It says that ‘development that meets the needs of the
present without compromising the ability of future generations to meet their own needs’ deserves the label of sustainability. In other
words, it is about responsible use of resources.

Varieties of Capitalism (VoC).

This VoC is posited on a couple of basic assumptions. It considers firms as the most important actors for welfare creation in national
economies, since they provide innovations and new products. To achieve their goals they need access to resources, to mention the most
fundamental ones – capital, labour and skills.

It is easy to imagine that in different countries across the world institutions have very diversified characters. Some of them are
more market oriented, others put into transactions more hierarchy, rules of associations, networks, government regulation or even
religious norms.

VoC authors use in this context the term ‘institutional comparative advantage’, clearly referring to the traditional Ricardo's theory.

From the variety of systems we can distinguish two outermost, theoretical models: liberal market economy (LME) and coordinated
market economy (CME).

The first type, LME, can be characterized by dynamic access to resources, which means, that it is relatively inexpensive to change
conditions of transactions or resign from it. We can see this feature in design of markets for capital, labour and skills. Capital in LMEs
is derived often from stock markets, where assets can quickly change owners and their value is estimated by price mechanisms. The
labour market is also shaped by dynamic relations, where hire and fire is relatively easy thanks to limited regulation. If firms perceive
the market situation bad they simply lay off workers, but if prospects are promising they quickly employ. In the third area – skills –
individuals and potential workers – invest in their knowledge and then sell it to firms. However, due to flexibility of the labour market
they tend to choose transferable skill profiles, since they must consider their chances and balance the promise of getting a high salary
for unique skills with the risk of remaining unemployed. This kind of system, if well designed and transmitting right incentives, produces
radical innovations, since it is very open to new ideas and new products. It creates a good environment for new branches, like
telecommunication technologies, biotechnology, and media. A classic example is the USA.

The second outermost model is coordinated market economy (CME). Transactions are more stable and long term oriented. Capital is
provided by banks which create loyalty based relations with firms, thus the access is ‘patient’. The labour market is characterized by
long term contracts and relatively low differences in wage levels. Skills are produced rather in companies, which invest their own capital
in order to create a set of specific, rare qualifications fitting ideally into their product profile. Since workers get employed for a longer
time this kind of an investment makes sense. Japan and Germany have been considered as typical examples of CME. Their institutional
comparative advantage is found in branches, which demand very specialized skills and are based on incremental innovations. They do
not compete with low costs, but rather high quality. This is something that we can easily observe in German and Japanese factories for
cars or sophisticated machines.

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Approaches to Growth.

The Roll Over Effect.

The more products we are able to deliver, the better for everybody. Expression of this attitude is the domination of the GDP index in
measurements of performance of national economies. It shows the output in a given year and expresses it in monetary value (national
currency). It has many advantages. First of all the GDP offers statistical precision and comparative perspective, since it is relatively easy
to apply similar techniques of collecting and converting data in countries across the world. In this way GDP creates also a kind of
competitive environment for nations: it is evident who has the highest GDP growth or the highest GDP per capita.

However, the GDP is not flawless. Its beguilingly clear numbers can show only one dimension of growth, hiding others. This so called
flaw is known as “the Roll Over Effect”. Just to quote some examples: A dinner prepared at home by family members and friends is
worse for the economy than a dinner ordered in a restaurant. If there is no transaction, there is simply no growth measured. On the other
hand, a heavy smoker of cigarettes is a true GDP driver. Not only can the single transaction of buying cigarettes be supportive, but also
later visits to physicians and purchase of medicaments.

Where is the Roll Over Effect in the two examples, in the first case or in the second case? In the second case because frequent visits to
physicians and purchase of medications create transactions which actually in up in a personal economic loss of the patient whose
productivity in work might be negatively affected by his sickness.

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