We often hear the word globalization in many contexts and repeated frequently as a concept to denote

more trade, foreign companies and even the ongoing economic crisis. Before we launch into a full-
fledged review of the term and its various manifestations, it is important to consider what exactly we
mean when we say globalization.

Globalization is the free movement of goods, services and people across the world in a seamless and
integrated manner. Globalization can be thought of to be the result of the opening up of the global
economy and the concomitant increase in trade between nations.

In other words, when countries that were hitherto closed to trade and foreign investment open up their
economies and go global, the result is an increasing interconnectedness and integration of the
economies of the world. This is a brief introduction to globalization.

Further, globalization can also mean that countries liberalize their import protocols and welcome foreign
investment into sectors that are the mainstays of its economy. What this means is that countries become
magnets for attracting global capital by opening up their economies to multinational corporations.

Further, globalization also means that countries liberalize their visa rules and procedures so as to permit
the free flow of people from country to country. Moreover, globalization results in freeing up the
unproductive sectors to investment and the productive sectors to export related activities resulting in a
win-win situation for the economies of the world.

Globalization is grounded in the theory of comparative advantage which states that countries that are
good at producing a particular good are better off exporting it to countries that are less efficient at
producing that good. Conversely, the latter country can then export the goods that it produces in an
efficient manner to the former country which might be deficient in the same.

The underlying assumption here is that not all countries are good at producing all sorts of goods and
hence they benefit by trading with each other.

Further, because of the wage differential and the way in which different countries are endowed with
different resources, countries stand to gain by trading with each other.

Globalization also means that countries of the world subscribe to the rules and procedures of the WTO
or the World Trade Organization that oversees the terms and conditions of trade between countries.
There are other world bodies like the UN and several arbitration bodies where countries agree in
principle to observe the policies of free trade and non-discriminatory trade policies when they open up
their economies.

In succeeding articles, we look at the various dimensions of globalization and the impact it has had on
the global economy as well as in the mobility of people from poverty to middle class status.

The point here is that globalization has had positive and negative effects and hence a nuanced and deep
approach is needed when discussing the concept. What is undeniable is that globalization is here to stay
and hence it is better for the countries in the global economy to embrace the concept and live with it.

WEEK #2

Economic Globalization

Economic globalization refers to the increasing interdependence of world economies caused by the
growing scale of cross-border trade of commodities and services, the flow of international capital, and
the vast and rapid spread of technologies. It reflects the continuing expansion and mutual integration of
market frontiers and is an irreversible trend for the economic development in the entire world at the
turn of the millennium. The rapidly growing significance of information in all productive activities and
marketization are the two major driving forces for economic globalization. In other words, the fast
globalization of the world's economies in recent years is primarily based on the rapid development of
science and technologies that has resulted from the environment. In this market, the economic system
has been fast spreading throughout the world and developed based on increasing cross-border division
of labor penetrating down to the level of production chains within the enterprises of different countries.

(Shangquan, 2000)

The proponents of economic globalization argued that it leads to an efficient division of labor,
remarkable specialization, increased productivity, high standards of living and wealth, and the end of
poverty. Proponents also argued that recent economic growth has significantly contributed to the high
standard of living enjoyed by many within the developed world and raised the living standards of many
people formerly living in abject poverty. However, many people have not made such gains.
Benefits of Economic Globalization:

Foreign Direct Investment (FDI) – Foreign direct investment tends to increase at a much greater rate than
the growth in world trade, thereby boosting technology transfer, industrial restructuring, and the
development of global companies.

Technological Innovation – Increased competition from globalization stimulates new technology

development, particularly with FDI growth, which improves the economic output by making processes
efficient.

Economies of Scale – Globalization enables large companies to realize economies of scale that reduce
costs and prices, supporting further economic growth. However, this phenomenon can hurt many small
businesses attempting to compete domestically.

Telecommunication – Economic globalization has been expanding since the emergence of trade due to
improvements in the efficiency of long-distance transportation, advances in telecommunication, the
importance of information instead of physical capital in the modern economy, and developments in
science and technology.

Actors That Facilitate Economic Globalization

Acting in the globalized world due to the increased liberalization of markets, especially socioeconomic
reforms, is necessary for realizing the full impact of globalization. The actors that facilitate economic
globalization are the following:

International Economic and Financial Organizations – They provide structure and funding for many
unilateral and multilateral development projects. Such organizations deal with the significant economic
and political issues facing domestic societies and the international community. These organizations
promote sustainable development by assisting private companies in obtaining global financial markets
and providing business and government advice and technical assistance.

International Governmental Organizations (IGOs) – IGOs have international membership, scope, and
presence. Their primary members consist of sovereign states. These organizations bring member states
together to cooperate on a particular issue that has global impacts and implications. Examples of these
issues are human rights, trade, development, poverty, gender, and migration.
Multilateral Development Banks – Multilateral development banks are financial institutions that are
found in every country. The four regional multilateral development banks are the Inter-American
Development Bank, the African Development Bank, the Asian Development Bank, and the European
Bank for Reconstruction and Development. These institutions provide loans, grants, guarantees, private
equity, and technical assistance to public and private sector projects in developing countries.

Nation-States – Nation-states refer to a form of state that derives its political legitimacy from serving as a
sovereign entity for a nation within its territorial space. The state is a political entity, whereas a country is
a cultural and/or ethnic entity. The term “nation-state” indicates that the two geographically coincide,
distinguishing the nation-states from the other types of state that preceded it.

Nongovernmental Organizations (NGOs) – NGO refers to a legally constituted organization created with
no participation or representation of any government. These organizations are task-oriented and
perform a variety of service functions. Some organizations revolve around specific issues, such as human
rights, environment, gender, and health. In many jurisdictions, these types of organizations are called
“civil society organizations.”

Transnational Corporations (TNCs) – Transnational Corporations exert considerable power in the

globalized world economy. Many corporations are more prosperous and powerful than the states that
seek to regulate them. Through mergers and acquisitions, corporations have been increasing. Some of
the largest TNCs now have annual profits exceeding the GDPs of many low- and medium-income
countries.

Modern World System

The concept of the “world system” is a crucial component of our current understanding of globalization.
It captures the idea of causal interconnectedness across the globe among major organizations, firms,
populations, and states (Thoma, 2005).

World-Systems Theory WST

Immanuel Wallerstein (1976) developed the World-Systems Theory (WST) and asserted that a world
system is a social system with boundaries, structures, member groups, rules of legitimation, and
coherence. Wallerstein refers to a world system as interconnected economic systems of countries
worldwide. In this financial system, several countries benefit, while others take advantage of it.
Therefore, the WST is an illustration of worldwide inequality among nation-states. It consists of a three-
level hierarchy that is known as the tripartite world system, as follows:

Core States – Within the context of the world system, core nations compete among themselves for
economic advantage. They are characterized by fully developed economic and political institutions,
advanced technology, a robust education system, and strong financial and military power.

Peripheral States – Peripheral states are dependent upon core nations and have been a source of
conflict between core nations. They are characterized by primary economic activities, natural resources,
and raw materials. In general, peripheral countries are economically unstable and weak.

Semiperipheral States – These states serve as intermediate trading areas between the core and
peripheral nations. Given that semiperipheral states are generally industrialized, they are responsible for
the manufacture and export of goods.

The relationship between the three types of states explains how inequality is institutionalized in this
system. Scholars argue that some states deliberately exploit economically weaker states to make
themselves core states, thereby establishing a three-tiered hierarchy of these states in the international
system.

Similarities of World-Systems Analysis and Globalization

Both approaches are multisectoral with a focus on the economy. Both aspire to describe macrosocial
changes as a whole based upon a materialist understanding of social change.

Both approaches place the state at the center stage in their analysis to downgrade it as an analytical
(world-systems analysis) or political category (globalization).

Neither approach proposes a multisectoral alternative organization nexus to the state, but both relate
marginally to the literature on world cities.

Global Economic Integration

Economic integration is an arrangement among nations that typically includes reducing or eliminating
trade barriers and coordinating monetary and fiscal policies. It aims to reduce costs for consumers and
producers and increase trade between the countries involved in the agreement. Moreover, economic
integration is occasionally referred to as regional integration because it often occurs among neighboring
nations (Kenton, 2021).

Advantages of Global Economic Integration

The advantages of economic integration fall into three categories: trade benefits, employment, and
political cooperation. Economic integration typically leads to a reduction in the cost of trade, improved
availability and a wide selection of goods and services, and increased efficiency that leads to increased
purchasing power. Employment opportunities tend to improve because trade liberalization leads to
market expansion, technology sharing, and cross-border investment. Political cooperation among
countries can also improve because of strong economic ties, which provide an incentive to resolve
conflicts peacefully and instability. (Kenton, 2021)

WEEK #3

Preliminary Activity for Week 3

Read the news article below entitled "P.H. told to prepare industries for ASEAN market integration"
published by Inquirer.net and answer the following questions.
P.H. Told to Prepare Industries for ASEAN Market Integration
By: Eileen Garcia-Yap
The Philippine government and business people are encouraged to prepare the country's industries
for the coming integration of the Southeast Asian countries by 2015 through the ASEAN Economic
Community 2015 (AEC 2015).
They need to prepare these industries to compete and maximize the opportunities when the
integration would happen, said Asian Development Bank senior country economist Norio Usui.
AEC 2015 is designed to make ASEAN (Association of Southeast Asian Nations) a single market
and production base and a solid regional economic bloc in the global economy. There will be a free
flow of goods, services, investment capital and skilled labor following the liberalization.
The countries that will be integrated include the Philippines, Brunei, Cambodia, Indonesia, Laos,
Malaysia, Myanmar, Singapore, Thailand, and Vietnam.
"The Philippines had a dramatic liberalization too, and this integration should benefit you. However,
you must aptly prepare your industries so that you can compete with all the products that will flow
freely into the domestic market," said Usui.
Usui spoke to over 50 people in business and business group leaders in Marco Polo Plaza Hotel last
Tuesday for the 2nd National Business Conference of Independent Business Clubs and Chambers.
Philexport executive director Fred Escalona agreed.
“From my point of view, one way to ensure the competitiveness of our local industries, especially the
exporters, is to do something about our cost structures," said Escalona. Escalona said that our
yearly wage adjustment would make export manufacturers less competitive because they would
incur more operational costs making them unable to compete based on price points with our
neighbors in the region.
On the brighter side, Escalona said that the local manufacturers could outsource jobs to other
countries with lower labor costs like Myanmar and Laos once AEC 2015 convene.
Trade Undersecretary Adrian Cristobal Jr., however, said that the government had already
developed a unified industry and international trade strategy guided on the three pillars, which
included institutionalizing stakeholder engagement in industry and trade policy-making, trade and
industry policy research network and capacity building, and enhanced inter-agency coordination and
capacity building for trade negotiators.
“At the base of these three pillars is our industry competitiveness. This is one of the major shifts in
strategy lacking in the past, a foundation upon which our international trade policy and negotiation
positions are aligned. We need to identify the strengths and weaknesses of our industries, the
opportunities and threats," said Cristobal.
He said they worked on road maps for specific sectors like chemicals, copper, and copper products,
furniture, biodiesel, petrochemicals, and auto parts. "We expect to complete most of these road
maps and the comprehensive industrial strategy by the 1st quarter of 2013.this, in turn, will feed into
the PDP (Philippine Development Plan) review and the IPP (Investment Priorities Plan) for 2013,"
Cristobal said.
One of the best ways to increase productivity in export and ensure that industries can compete when
the integration comes in to attract manufacturers to locate in the country said Usui.
Cristobal agreed and added that the government was aggressively marketing the country as a
destination for manufacturing companies.
According to Cristobal, companies like Fujifilm Optics Philippines, Inc., a subsidiary of Fujifilm Japan,
manufacture high-performance lenses for digital cameras, projectors and CCTV (surveillance)
cameras, Philippine Manufacturing Co. of Murata, to manufacture electronics products are now in
the country. "We are now encouraging 230 suppliers of Canon in Japan and China to co-locate in
the Philippines," Cristobal.
(Garcia-Yap, 2012)
Answer the questions below:
1. What is the news article all about?
2. How is market integration being defined in the news article?

WEEK 3 #2

Global market integration refers to the increasing uniformity of prices or the elimination of price
differences because all markets become one. Economic theorists argue that the spatial aspect of
globalization influences the financial relationships of different units of analysis in the global system.
According to Shangquan (2000), the fast globalization of the world’s economies in recent years is
based mainly on the rapid development in science and technology. It has resulted from the
environment in which the market economic system has been fast spreading throughout the world
and has developed based on increasing cross-border division of labor penetrating down to the level
of production chains within the enterprises of different countries.

History of Global Market Integration

The Bretton Woods Agreement is the landmark system for monetary and exchange rate
management established in 1944. This agreement was developed at the United Nations Monetary
and Financial Conference held in Bretton Woods, New Hampshire, from July 1, 1944, to July 22,
1944. Under this agreement, currencies followed the price of gold and the U.S. dollar as a reserve
currency linked to the cost of gold.

From a global economic perspective, the two world wars exposed a considerable flaw in how
currencies and exchange rates were managed at the international level. Powerful nations have a
high level of agreement that failure to coordinate exchange rates exacerbated political tensions,
which facilitated the decisions reached by the Bretton Woods Conference. All the participating
governments at Bretton Woods Conference agreed that the monetary chaos of the interwar period
had yielded several valuable lessons.

The experience of World War II (WWII) was fresh in the minds of public officials. The Bretton Woods
Conference planners aimed to avoid a replay of the Treaty of Versailles, which produced enough
economic and political strain to lead to WWII following World War I. After World War I, Britain owed
the United States a substantial sum that Britain could not repay because it used the funds to support
allies such as France during the war. The Allies could not pay back Britain. Hence, Britain could not
pay back to the United States. The solution at Versailles for the French, British, and Americans
seemed to be “make Germany pay for it all.” If the demands on Germany were unrealistic, then it
was realistic for France to pay back to Britain and for Britain to pay back the United States. Thus,
many international assets on bank balance sheets were unrecoverable loans that culminated in the
1931 banking crisis. The breakdown of the international financial system and a worldwide economic
downturn resulted from creditor nations’ adamant insistence on recovery of allied war debts and
reparations, along with a trend toward isolationism. The so-called “beggar thy neighbor” policies that
emerged as the crisis continued saw some trading nations using currency devaluations to increase
their competitiveness. However, recent research suggested that this de facto inflationary policy may
have offset some of the contractionary forces in the world price levels.

In the 1920s, the international flows of speculative financial capital increased, leading to extremes in
the balance of payment situations in various European countries and the United States. World
markets never broke through the haphazardly designed, nationally motivated, and imposed hurdles
and restrictions on international trade and investment volume barriers in the 1930s. Various
anarchic, autarkic protectionist, and neo-mercantilist national policies, which, when they merged in
the first part of the decade, worked ineffectively and counterproductively to encourage national
import substitution, enhance national exports, divert foreign investment and trade flows, and even
outright prohibit specific types of cross-border trade and investment. Central bankers from around
the world met to try to control the issue, but their lack of comprehension of the situation and
difficulties communicating globally hampered their efforts.

Britain in the 1930s had an exclusionary trading bloc with the nations of the British Empire known as
the “sterling area,” which was named after the British currency. If Britain imported more than it
exported to South Africa, then the South African recipient of pounds sterling tended to place them
into London banks. This phenomenon meant that although Britain was running a trade deficit, it had
a financial account surplus and payments balanced. Britain’s positive balance of payments requires
keeping the wealth of Empire nations in British banks. For example, one incentive for South African
holders of rand to park their wealth in London to save the money in Sterling was a strongly valued
pound sterling. The only option to get out of the trade imbalance as Britain deindustrialized in the
1920s was to devalue the currency. However, Britain could not downgrade, or the Empire surplus
would leave its banking system.

By 1940, Nazi Germany had formed an alliance with a group of controlled countries. Germany
pushed surplus-producing trading partners to spend their surplus on German imports. As a result,
Britain was able to preserve Sterling country surpluses in its financial system, while Germany was
able to force trading partners to buy its goods. The United States was concerned that a sharp
reduction in war spending would return the country to the 1930s levels of unemployment. Thus, the
U.S. wanted the sterling nations and all European countries to import from them. As a result, the
United States backed free trade and the ability to change currencies into gold or dollars on a global
scale.

At the Bretton Woods conference, many of the same specialists who watched the 1930s became the
architects of a new, united postwar system, whose guiding ideas became “no more beggar thy
neighbor” and “manage flows of speculative financial capital.” It was sought to avoid a repeat of this
competitive devaluation process, which would not force debtor countries to reduce their industrial
bases, by keeping interest rates high enough to attract international bank deposits. John Maynard
Keynes, the foremost British economist whose core ideas essentially changed our understanding of
macroeconomics and economic policy trends, became wary of returning to the Great Depression. He
was behind Britain’s proposal to force surplus nations by a “use-it-or-lose-it” mechanism to either
import from debtor nations, build factories in debtor nations, or donate to debtor nations (Bretton
Woods System, 2016).

The U.S. opposed Keynes' plans. Keynes’ recommendations were rejected by a senior Treasury
official in favor of an international monetary fund with sufficient resources to offset disruptive
speculative finance flows. In contrast to the present IMF, however, the United States Treasury’s
proposed fund would have balanced dangerous speculative flows automatically without any political
string attached, that is, no IMF conditionality. According to economic historian Brad Delong, on
almost every point where the Americans overruled him, Keynes was later proved correct by
succeeding events.After WWII, several developing countries attained independence from their
former colonial rulers. One of the most prominent accusations made by leaders of independence
movements was that colonialism was to blame for the colonies’ continuing low living standards. As a
result of the humanitarian desire to improve living standards, economic growth became a
governmental goal following independence, and political promises were made. The independence
movement’s failure to make headway toward development could be regarded as a failure.
Developing countries in Latin America and elsewhere that had never been, or had only recently
been, colonies shared the same idea that industrial countries’ economic dominance had stifled their
development, and they entered the race for quick expansion.

Many policymakers were haunted by memories of the Great Depression, when developing
countries’ terms of trade fell dramatically, resulting in severe drops in per capita income. Finally, the
Keynesian legacy placed a high value on investment, even in wealthy countries.
Underdevelopment was blamed on a “lack of capital” in this environment. The policy should aim at
an accelerated rate of investment. Given that most countries with low per capita incomes were also
heavily agricultural (and imported the majority of manufactured goods consumed domestically), rapid
investment in industrialization and the development of manufacturing industries to supplant imports
through “import substitution” was a viable development path. There was also a fundamental distrust
of markets. Therefore, a significant role was assigned to the government in allocating investments.
Distrust of markets extended, especially to the international economy (Myint &Krueger, 2016).

Frieden sees the development of economic globalization after WWII in the context of this prior epoch
of economic globalization and its collapse due to WWI, the Great Depression, and WWII. All these
events had adverse effects on almost all major economies (the U.S. economy was a significant
exception, at least in terms of the impact of the two world wars).

How Global Market Integration Started in the 20th Century

Two world wars and the Great Depression shattered the international economic unity that had been
developed throughout the nineteenth century. After WWII, the major powers undertook the complex
tasks of rebuilding the physical infrastructure and international trade and monetary systems. The
industrial core, including Japan, United States, and Western Europe, ultimately succeeded in
restoring a substantial degree of economic integration. However, decades passed before trade as a
share of global output reached pre-World War I levels.

International Financial Institutions (IFIs) and the Global Economy

In many parts of the world, IFIs play a significant role in nations’ social and economic development
programs with developing or transitional economies. This role includes advising on development
projects, funding them, and assisting in their implementation. Examples of the IFIs are the following:

Bretton Woods System

In times of globalization, the economic environment changes rapidly. Capital movements become
more significant and less controllable. Therefore, the need for a stabilizing system became
increasingly apparent. Such a system was established at the Bretton Woods conference, that is, the
Bretton Woods System. In 1944, British economist John Maynard Keynes emphasized “the
importance of rule-based regimes to stabilize business expectations,” something he accepted in the
Bretton Woods System of fixed exchange rates.

Leading industrial nations called for a renewal of the purpose and the spirit of this system to cope
with the growing size of international trade and capital flows. The Bretton Woods Institutions were
established only over 50 years ago after WWII and in the aftermath of the Great Depression to aid in
the reconstruction of Europe and make it less likely that another global calamity, would occur again
as an afterthought.

The system that was agreed upon at Bretton Woods, New Hampshire, in July 1944 had several
significant objectives, including the following:

This system sought to avoid the exchange rate instability of the floating rate regime of the 1920s,
which had impeded external adjustment and post-World War I reconstruction of trade and finance.

This system aimed to prevent a repetition of the beggar-thy-neighbour policies that had
characterized the latter stages of the interwar gold exchange standard. Countries used trade
restrictions and competitive currency devaluations to increase trade surpluses (or reduce trade
deficits) to reduce domestic unemployment, thereby shifting unemployment to other countries.

This system aimed to provide autonomy for national authorities to pursue domestic to achieve full
employment.

This system sought to attain symmetric adjustment between those countries with balance-of-
payment surpluses and those with balance-of-payment deficits.

This system aimed to achieve symmetric positions among national currencies within the international
financial regime.

International Monetary Fund (IMF)

The IMF was formally created on December 27, 1945, when the Bretton Woods Conference’s 29
participant countries signed its Articles of Agreement. The IMF commenced its financial operations
on March 1, 1947. The IMF today consists of 183 member countries.

It's also a target for critics who regard it as backing industrialized countries’ efforts to impose their
policies on developing nations. Its advocates consider it as critical to the global economy’s rise and
growth.

The IMF arose from countries’ experiences during the interwar period, notably the Great Depression.
In the 1920s and 1930s, many nations attempted to maintain domestic income in the face of
shrinking markets through the competitive devaluation of their currencies and resort to exchange
and trade restrictions. Such measures could achieve their objectives only by aggravating the
difficulties of trading partners who were led to adopt similar policies, thereby leading to a destructive
vicious cycle. The purposes of the IMF are as follows:

To promote international monetary cooperation by establishing a global monitoring agency that

supervises, consults, and collaborates on economic problems

To facilitate world trade expansion and contribute to promoting and maintaining high employment
and absolute income levels (Dammasch, n.d.) & (The Role of IMF in the Reinforcement and
Development of International Economic Relations, 2015)

World Bank

The World Bank is an international organization that helps emerging market countries to reduce
poverty. Its first goal is to end extreme poverty. The World Bank wants no more than 3% of people to
live on $1.90 a day or less by 2030. Its second goal is to promote shared prosperity. It wants to
improve the incomes of the bottom 40% of the population in each country. It has funded more than
12,000 projects since 1947.

The World Bank Group's most important component is the International Bank for Reconstruction and
Development (IBRD), which is officially known as the World Bank (WBG). The International Bank for
Reconstruction and Development, or IBRD, was founded in 1944 at Bretton Woods and commenced
operations in 1964. The World Bank is not a bank in the traditional sense; rather, it is made up of two
organizations: the International Bank for Reconstruction and Development (IBRD), which provides
loans, credit, and grants, and the International Development Association, which provides low-interest
or no-interest loans to low-income countries. The World Bank works closely with three following
organizations in the WBG:

The International Finance Corporation provides investment, advice, and asset management to
companies and governments.

The Multilateral Investment Guarantee Agency insures lenders and investors against political risks,
such as war.

The International Centre for the Settlement of Investment Disputes settles investment disputes
between investors and countries (Amadeo, 2021).
General Agreement on Tariffs and Trade (GATT)

The GATT, signed by 23 countries on October 30, 1947, was a legislative agreement that aimed to
reduce trade barriers by abolishing or reducing quotas, tariffs, and subsidies while maintaining
considerable controls. It was created to aid post-World War II economic recovery by reorganizing
and liberalizing global commerce. It came into effect on January 1, 1948 and it has been refined
since the beginning, eventually leading to the World Trade Organization (WTO) creation on January
1, 1995, which absorbed and extended it. At present, 125 nations were signatories to its
agreements, covering approximately 90% of global trade.

The GATT is also a set of multilateral trade agreements that abolish quotas and reduce tariff duties
among the contracting nations. When such an agency fails to emerge, the GATT is amplified and
further enlarged at several succeeding negotiations. It is subsequently proven to be the most
effective instrument of world trade liberalization, thereby playing a significant role in the massive
expansion of world trade in the second half of the 20th century.

The GATT was established to establish regulations to abolish or limit the most costly and unwelcome
characteristics of the prewar protectionist period, notably quantitative trade barriers like trade
controls and quotas. The agreement established a system for resolving international commercial
disputes, as well as a framework for multilateral tariff reduction negotiations. The organization was
regarded as a significant success during the postwar years.

Trade without discrimination was one of the GATT’s major accomplishments. All signatory members
of the GATT were treated as equals, known as the most favored nation principle, and it has been
carried through into the WTO. Once a country had negotiated a tariff reduction with some other
countries, a practical result was that once a country had negotiated a tariff reduction with some other
countries (usually its most important trading partners). All GATT signatories would be subject to the
same reduction. There were escape provisions in place, allowing countries to negotiate exclusions if
tariff reductions would disproportionately hurt their domestic producers (Majaski, 2021) & (GAAT
Structure, Functions and Roles in the Current International Business Scenario, 2020).

World Trade Organization

The WTO started on January 1, 1995, but its trading system is half a century older. Since 1948, the
GATT provided the rules for the system. The second WTO ministerial meeting held in Geneva in May
1998 included a celebration of the 50th anniversary of the system. Shortly, the General Agreement
gives birth to an unofficial, de facto international organization, which is also known informally as
GATT. Over the years, GATT evolved through several rounds of negotiations. The last and largest
GATT round was the Uruguay Round, which lasted from 1986 to 1994 and led to the creation of
WTO. Meanwhile, GATT had mainly dealt with trade in goods; the WTO and its agreements now
cover trade in services and traded inventions, innovations, and designs (intellectual property).

The past 70 years have seen exceptional growth in world trade. Merchandise exports have grown on
average by 6% annually. This trade growth has been a powerful engine for overall economic
expansion, and on average, work has increased by 1.5 times more than the global economy each
year. The total exports in 2016 were 250-fold higher than that in 1948. The GATT and WTO have
helped create a solid and prosperous trading system contributing to unprecedented growth.

Role of IFIs in the Creation of Global Economy

1. Bretton Woods System – It plays a vital role in making globalization work smoothly. It was
created in 1944 to restore and sustain the benefits of global integration by promoting
international economic cooperation. At present, they pursue the common objective of broadly
shared prosperity within their respective mandates.

2. IMF – It focuses on the functioning of the international monetary system and promoting
sound macroeconomic policies as a precondition for sustained economic growth.

3. World Bank – It concentrates on long-term investment projects, institution-building, and

social, environmental, and poverty issues.

4. GATT – It has reduced the tariff and boosted the economy after WWII ended by encouraging
imports and exports among countries again. GATT was formed to develop the country to
work well in international trade.

5. WTO – WTO is the only international organization dealing with the global rules of trade. Its
primary function is to ensure that workflows as smoothly, predictably, and freely as possible.
(Glossary of Statistical Terms, 2001)

Global Corporations

A global corporation, also known as a global company, is coined from the term “global,” which means
worldwide. Hence, a global company is a company that does business worldwide. Only a few
companies in the world can boast of having a business presence in every major country; they
probably can be numbered on the fingers of both hands. Therefore, the definition of a global
company should be slightly lenient to accommodate this fact, which would enable other companies
to call themselves global companies. Any company that operates in at least one country other than
its home country is considered a global corporation. Realistically, expanding to even one additional
country takes a considerable amount of work; therefore, it is a remarkable achievement. Operating in
one country, selling your products worldwide, and shipping them to customers in Europe while you
are in the Philippines does not necessarily mean your company is a global one.

To be a global company, you need to introduce your products and company to people who live in
another country. You need to conduct significant research to determine which country is your best
choice for expansion and how to introduce yourself. You will have to send some of your employees
to that country to speak with people face-to-face and experience that country on a first-hand basis
before you decide whether the country is the right one for your company. Once you expand to
another country and establish yourself successfully, you will want to try another country, then
another. This phenomenon is how global companies have started, and now they have a massive list
of countries in which they do business.

Example:

Coca-Cola beverages are presently available in over 200 countries. The Coca-Cola Company sells
its popular fizzy drinks, such as Coke, Fanta, and Sprite, as well as 3,800 other products, including
soy-based beverages that have been enriched with vitamins. One of the reasons for this company’s
great success in practically every country where it has set up shop is that it never takes a
standardized approach to all countries; instead, each one is looked at individually. The company will
ensure that it only sells things that are appropriate for the local community’s tastes and culture.
Hence, Coca-Cola must create entirely new products to suit a market’s demographics or tweak an
existing product to appeal to residents in a specific locality. Some Coca-Cola products are available
in some countries but not in others because those products were created for that country or tweaked
to suit the preferences of a specific country (LaMarco, 2018).

Attributes of Global Corporations

WEEK 4 LESSON

Globalism vs. Internationalism

Globalism and internationalism are two of the basic concepts in international relations. The
processes and agreements that define globalism and internationalism contribute to developing a
system of relations among nations called the global interstate system. Additionally, globalization and
internationalization affect how national governments are shaped.
Globalism is the idea that promotes globalization. It is primarily an economic concept related to the
movement of capital, goods, and service. Globalists’ decisions pertain to making the most out of
resources to produce products for international trade efficiently. On the other hand, internationalism
is the idea that all nations should contribute to international relations. Internationalism is a political
framework that deals with how countries use decision-making power in international relations.

Globalization

As discussed in the previous lesson, globalization is the unfettered movement of commodities or

goods and services globally. To move commodities less costly and time-consuming, national
governments develop infrastructure within nations.

Because of the need for more efficient production methods, governments need to reorganize at the
international, national, and subnational levels. This results in the reorganization of production,
international trade, and the integration of financial markets. In turn, these processes affect how
products are manufactured, technological development, accessibility of capital, and how labor is
sourced.

When reorganization happens, governments will restructure budgets. Some sectors will be
distributed with fewer resources as an effect. For example, the need for mass production was
followed by increased child labor rates because children are a source of cheap and renewable labor.

As shown in the example and other issues in other countries, we can infer that other rule systems
need to be implemented to regulate globalization. Instead of enhancing peaceful international
relations, globalization resulted in nations looking after their interests in destructive ways to make the
most out of their capital (Steger, 2008).

The following infrastructure has changed to serve the purpose of globalization:

Communications – Existing technologies have significantly changed how we communicate and

exchange information with one another within or across national borders. Traditional means of
communication are now replaced by more efficient, fast, and less error-prone communication
technologies, such as e-mail, messaging applications, smartphones, and social networking sites. For
example, we can communicate with our loved ones in real-time through Skype, Viber, or Facebook
Messenger. It eliminates the difficulties posed by distance and physical barriers, such as national
borders or oceans, that traditional means of correspondence such as postal mail and telegram must
overcome to do so.
Information Technology – The traffic of information is more rapid and advanced than ever. The
Internet has revolutionized the availability and access of data and other resources to humankind. It
has broadly impacted science and different fields of knowledge, such as information, data, and
research. Developments are relatively more accessible and utilized with greater relevance and
accuracy than in the past. With recent advances on the Internet, such as online information
repositories or online libraries, access to information no longer requires physical presence and
extended periods to conduct research. News and information about real-time events worldwide are
also presented conveniently by news channels with an elaborate network of news reporters and
gatherers.

Culture – Societies are culturally homogenizing. Meaning, differences among civilizations are
gradually weakening, and there is an ongoing universalization of cultures among various groups of
people. Today, different societies now can influence the culture of other groups and vice versa. For
example, we see the assimilation of foreign popular cultural influences, such as rock and pop music,
hip hop culture, Korean pop, manga, and anime, into our local culture and vice versa. We can also
observe this movement in various types of cuisine that we enjoy, such as French fries, sushi,
kimbap, tacos, nasi goreng, pudding, etc. Our exposure to different cultures and practices through
various television shows us other people’s ways of life, such as MTV, HBO, Asian Food Channel,
etc.

Economics – Globalization is evident in the economic aspects of social existence. Indelible gains of
globalization are readily detectable in this aspect. Widespread global economic interdependence can
be observed in the commodity chains of products that we patronize and use. For example, a t-shirt
that we buy in Philippine malls may not necessarily be produced in Philippines or one country alone.
Its raw material, like cotton, may have been cultivated in the United States and shipped to countries
such as Bangladesh or Indonesia to transform it into thread and cloth. It is then sold to factories in
China, Bangladesh, Vietnam, or the Philippines, transformed into finished clothing products. It is
then boxed and shipped back to companies in the United States, printed with their respective brand
names, repackaged, and distributed to different markets worldwide.

Another example is the well-defined interdependence of our financial institutions. Our banking
industry’s well-entrenched linkages with the worldwide banking system hasten financial transactions
worldwide. Although it has advantages, there are also inherent risks. It could cause the devaluing of
local property, such as what happened in the United States of America’s mortgage problems. The
mortgage problems also grew into the global financial crisis worldwide in 2008.

Politics – The focus of this aspect is the state’s role and the impact of globalization upon it.
Traditionally, all political, social, and economic activities were conducted within the state’s sphere of
influence. Increasingly unhampered transnational and cross-border economic activities have caused
the decline in the importance of the nation-state and the growth of a global political system. Thus,
this necessitated the creation of international bodies of governance, such as the United Nations
(UN), International Tribunals, North Atlantic Treaty Organization (NATO), etc. We can also observe
this phenomenon in the increasing regionalization of countries worldwide. Nation-states willingly
enter into treaties and agreements that seek to establish universal policies, norms, or laws that
govern the etiquette of various state and non-state actors at the national and international levels.
Examples are the Universal Declaration of Human Rights, the International Tribunal on the Law of
the Seas, and the International Criminal Court. Some local political issues can now be known in the
international sphere. Through social media and real-time messaging apps, the Arab Spring, a series
of anti-government movements in Tunisia, spread through neighboring Arab countries with varying
consequences.

Environment – In this aspect, the focus is the shared world that we have. The balance between our
consumption of resources that we all need to survive and how we sustainably or unsustainably use
these resources is of great concern. The consequences of our carelessness and neglect of the
environment are devastating to our chances of future survival, given our environment’s rapid
deterioration.

Internationalism

Internationalism is a political principle that advocates greater political or economic cooperation

among nations and people (Arora, n.d.). Internationalists generally believe that we need to be united
with other people from different countries to overcome common problems. One of the strategies
internationalists promote is governments’ cooperation for long-term benefits instead of focusing on
short-term disputes (Halliday, 1988).

Internationalism is generally the opposite of nationalism or the idea that one’s nation’s good is more
important than other countries. Because of this, internationalists support international institutions,
such as the United Nations. They advocate a cosmopolitan outlook that promotes and respects
different cultures and customs.

Institutions that Govern International Relations

To regulate how nations relate to each other, nation-states agreed to form institutions. Today, we use
an interdisciplinary approach to study and practice international relations. Meaning, aside from a
background in economics and policy, we need to be knowledgeable about social science, policy
development, environmental science, and other fields of study. This is so because international
relations deal with various topics, such as human rights, global poverty, the environment, economics,
globalization, security, global ethics, and the political climate.

International relations or international affairs is studied to understand the following:

The origins of the war and the maintenance of peace;

The nature and exercise of power within the global system;

The changing character of state and non-state actors who participate in international decision-
making; and

Other issues affecting international relations.

Because of the broad scope of international relations, international institutions were formed to solve
complex cross- and trans-border issues. International institutions govern considerable interaction at
the system level. When necessary, these institutions outlaw several traditional institutions and
practices of international relations deemed destructive to society.

Humanitarian Organizations

Humanitarian organizations are also called aid organizations because they provide aid or help to
countries that need it (Götz, Brewis, & Werther, 2020). Humanitarian aid is the type of assistance
that provides essential needs for survival such as food, shelter, water, and sanitation. On the other
hand, development aid is provided to countries in economic, environmental, social, and political
expertise called technical assistance (Develtere, 2012).

The first picture, in which U.S. Army Sergeant Kornelia Rachwal gives a young Pakistani girl a drink
of water as they are airlifted from Muzaffarabad to Islamabad, Pakistan, is an example of the
provision of humanitarian aid.

An example of development aid is providing resources for building a housing complex, as seen in
the next photo. The photo shows the Soviet-style Michenzani apartment blocks built-in 1968 in
Zanzibar as part of the East German development assistance.

Sanitation. On the other hand, development aid is provided to countries in economic, environmental,
social, and political expertise called technical assistance (Develtere, 2012).

The first picture, In which U.S. Army Sergeant Kornelia Rachwal gives a young Pakistani girl a drink
of water as they are airlifted from Muzaffarabad to Islamabad, Pakistan, is an example of the
provision of humanitarian aid.
An example of development aid is providing resources for building a housing complex, as seen in
the next photo. The photo shows the Soviet-style Michenzani apartment blocks built-in 1968 in
Zanzibar as part of the East German development assistance.

Examples of humanitarian organizations are the following:

Action Against Hunger – a global humanitarian organization that takes decisive action against the
causes and effects of hunger.

International Committee of the Red Cross – has the mandate to protect victims of war and armed
conflicts because of international or local issues.

Oxfam International – a global movement of people working together to end the injustice of poverty.
It believes in reducing inequality, which keeps people poor. It saves, protects, and rebuilds lives
when disaster strikes and helps people build better lives for themselves and others. It also takes on
issues such as land rights, climate change, and discrimination against women.

UN World Food Program – the organization, supports resilience-building to improve food security
and nutrition. It helps the most vulnerable people strengthen their capacities to absorb, adapt, and
transform in the face of shocks and long-term stressors.

Intergovernmental Organizations

Intergovernmental organizations are composed of member nation-states. These organizations

function by developing public international law.

Examples of intergovernmental organizations are:

The Association of South-East Asian Nations (ASEAN) – an organization that fosters economic,
political, military, security, and sociocultural among its member states.

The United Nations (UN) Is the largest intergovernmental organization aiming to maintain
international peace and security and international cooperation. It has numerous branches that deal
with different aspects of peace and security and can take action on the issues confronting humanity
in the 21st century, including maintaining international peace and security, protecting human rights,
delivering humanitarian aid, promoting sustainable development, and upholding international law. It
also has its justice system to punish people responsible for crimes against humanity.

World Trade Organization (WTO) – deals with the global rules of trade between nations and
functions to ensure that trade flows as smoothly and freely as possible.

NATO – aims to guarantee the freedom and security of its members through political and military
means. NATO promotes democratic values and provides members with the opportunity to consult
and cooperate on defense and security-related issues.

International Communications

Organizations that specialize in international communications are those that maintain the free
exchange of information across the globe. Their main concern is to call out injustices to freedom of
speech and expression.

Examples of this type of organizations are:

Amnesty International – a global movement of more than 7 million people who deal with injustices.
The organization campaigns for a world where all enjoy human rights.

Freedom House – founded on the ideology that freedom flourishes in democratic nations where
governments are accountable to their people and that the rule of law prevails, the organization
upholds freedoms of expression, association, and belief, as well as respect for the rights of women,
minorities, and historically marginalized groups, are guaranteed.

Human Rights Watch – defends people’s rights in 90 countries worldwide, highlighting abuses and
bringing perpetrators to justice.
Reporters Without Borders – an international organization that safeguards the right to freedom of
information. Its advocacy is founded on the belief that everyone requires access to the news and
information, inspired by Article 19 of the Universal Declaration of Human Rights that recognizes the
right to receive and share information regardless of frontiers, along with other international rights
charters.

Lesson Proper for Week 5

United Nations

The name United Nations (UN) was first used in the Declaration by the UN on January 1, 1942,
during World War II. It was coined by then the United States President Franklin D. Roosevelt.
Founded in 1945, the UN Is an international organization whose mission and vision are guided by
the objectives and principles contained in its founding charter.

The UN represents the peak of modern globalization. This is, in fact, an intergovernmental
organization entrusted with promoting international relations as well as establishing and maintaining
international order. It was established on October 24, 1945, as a replacement for the ineffective
League of Nations right after World War II, in order to avoid another conflict. During its founding, the
UN had 51 member states; now, the member states are 193 (United Nations Organization [UNO],
n.d.). Its headquarters can be found in the city of New York, and is subject to extraterritoriality. While
some of its main offices are located in Geneva, Nairobi, and Vienna. What makes it interesting is that
voluntary contributions from the member states finance the organization. Maintaining international
peace and security, supporting human rights, fostering social and economic growth, safeguarding
the environment, and providing humanitarian help in the event of hunger, natural disasters, and
armed conflict are among the organization’s goals (Anonymous Patriots, 2017). Did you know that it
is the largest, most familiar, most internationally represented, and most powerful intergovernmental
organization globally?

Aside from this, the UN Charter was drafted at a conference between April and June 1945 in San
Francisco and is signed on June 26, 1945. After the conference, the charter took effect on October
24, 1945, and the UN began operation (Jochim, 2017). As a matter of fact, the Cold War between
the United States and the Soviet Union, as well as their respective allies, hindered the UN’s mandate
to maintain international peace in its early decades (Torell, 2018). In return, the organization
participated insignificant actions in Korea and Congo while in the process of approving the creation
of the Israeli state in 1947. The UN’s membership grew significantly following widespread
decolonization in the 1960s. By the 1970s, the UN’s budget for economic and social development
programs significantly exceeded its budget for peacekeeping. Meanwhile, after the end of the Cold
War, the UN took on some major military and peacekeeping missions carried out over the world with
varying degrees of success (United Nations, n.d.).
Role of the UN

The UN can act on issues confronting humanity in the twenty-first century, such as peace and
security, climate change, sustainable development, human rights, disarmament, terrorism,
humanitarian and health emergencies, gender equality, governance, and food production — all due
to the powers vested in its charter and its unique international character (UN-org, n.d.). Here are
some of the its specific roles:

Maintain International Peace and Security – In 1945, the UN came into being, following the
devastation of World War II, with one central mission — that is, the maintenance of international
peace and security. The UN accomplishes this by preventing war, assisting parties in dispute in
reaching an agreement, maintaining peace, and creating the circumstances for peace to last and
flourish. These tasks frequently overlap and, in order to be effective, thus need to be reinforced.
Such that the UN Security Council has the primary responsibility for international peace and security,
its General Assembly and the Secretary-General play major, essential, and complementary roles,
along with other UN offices and bodies (About Us, n.d.).

Protect Human Rights – It seems that the term “human rights” appears seven times in the UN’s
founding Charter, making its promotion and protection an important goal and guiding concept. In
1948, the Universal Declaration of Human Rights brought human rights into the realm of
international law. Since then, the UN has diligently protected human rights through legal instruments
and on-the-ground activities (United Nations, 2020).

Deliver Humanitarian Aid – One of the purposes of the UN, as stated in its charter, is “to achieve
international cooperation in solving international problems of an economic, social, cultural, or
humanitarian character.” The UN first did this in the aftermath of World War II on the devastated
continent of Europe, which it helped to rebuild. The UN is now being relied upon by the international
community to coordinate humanitarian relief operations due to natural and artificial disasters in areas
beyond national authorities’ relief capacity (About Us, n.d.).

Promote Sustainable Development – The UN’s major focus remains to be on improving people’s
well-being. Over time, people’s perceptions of development have also shifted, and countries today
believe that sustainable development offers the best path for improving people’s lives everywhere as
it promotes prosperity and economic opportunity, increases social well-being, and environmental
protection (About Us, n.d.).
Uphold International Law – The UN Charter has already set an objective, that is, to provide
conditions that allow for the maintenance of justice and respect for responsibilities originating from
treaties and other sources of international law. Since then, the development of and respect for
international law has been a vital part of the work of the UN. This task is carried out in multiple ways
— by courts, tribunals, and multilateral treaties, and by the Security Council, which can approve
peacekeeping missions, impose sanctions, or authorize the use of force when a threat to
international peace and security exists, if it is deemed necessary (United Nations, 2020).

UN System agencies include the World Food Program, UNESCO, and UNICEF. The UN’s most
prominent officer is the Secretary-General, an office held by Portuguese politician and diplomat
Antonio Guterres since 2017. Nongovernmental organizations may be granted consultative status
with the Economic and Social Council (ECOSOC) and other agencies to participate in the UN’s work.
The UN has six principal organs, as follows:

General Assembly – The General Assembly, the main deliberative assembly, is the UN’s central
policymaking and representative organ. The General Assembly is the only UN body with universal
representation, with all 193 member nations represented. Every September of every year, the
organization’s entire membership meets in the General Assembly Hall in New York for their annual
General Assembly session and a general debate, and many heads of state are expected to come
and speak. Two-thirds majority of the General Assembly is required to make decisions on crucial
issues such as peace and security, admission of new members, and budgetary matters. On the other
hand, some minor questions are decided by the majority. The General Assembly elects a President
each year to serve a 1-year term of office.

The Security Council – The Security Council is specifically for deciding specific resolutions for peace
and security. It has 15 members; specifically, 5 permanent and ten nonpermanent members. Each
member has an equavalent of one vote. Under the same charter, all member states are obligated to
comply with the decisions of the Council. With this, the Security Council determines whether or not
there is a threat to the peace or an act of aggression. It encourages disputants to resolve their
differences through peaceful ways and suggests techniques of adjustment or settlement terms. In
several cases, the Security Council can impose sanctions or even authorize efforts in maintaining or
restoring international peace and security. In addition, the Security Council has a Presidency, which
rotates and changes every month.

Economic and Social Council – The ECOSOC, which is mainly for promoting international economic
and social cooperation and development, is the primary sector in charge of coordination, policy
review, policy discourse, and recommendations on economic, social, and environmental issues and
the implementation of globally accepted development goals. It serves as the central mechanism for
the UN system’s economic, social, and ecological activities and its specialized agencies, thereby
supervising subsidiary and expert bodies. It has 54 members that the General Assembly elects for
overlapping three-year terms. It is the UN’s central platform for reflection, debate, and innovative
thinking on sustainable development.

The Secretariat – Meanwhile, the Secretariat provides studies, information, and facilities needed by
the UN. It is made up of the Secretary-General and tens of thousands of worldwide UN employees
who carry out the UN’s day-to-day operations as directed by the General Assembly and the
Organization’s other major organs. In fact, the Secretary-General is the chief administrative officer of
the UN, who is appointed by the General Assembly as per the suggestion or recommendation of the
Security Council. The term will last for five years and is renewable. Specfically, UN staff members
are recruited internationally and locally and work in duty stations and on peacekeeping missions
worldwide.

The International Court of Justice – The primary judicial organ, called the International Court of
Justice, is at the Peace Palace in The Hague (Netherlands). It is the only one of the UN’s six main
organs that is not based In New York (United States of America). The Court’s role is to settle,
following international law, legal disputes submitted to it by states, and give advisory opinions on
legal questions by authorized UN organs and specialized agencies.

Trusteeship Council – The Trusteeship Council (inactive since 1994) was established in 1945 by the
UN Charter under Chapter XIII. This aims to provide international supervision for 11 trust territories
that had been placed under the administration of seven member nations and ensure that necessary
steps were taken to prepare the territories for self-government and independence. By 1994,
however, all trusted territories had attained self-government or independence. The Trusteeship
Council suspended operation on November 1, 1994 (Main Bodies, n.d.).

Functions of the UN

Although the UN does not support its military, it has peacekeeping forces supplied by its member
states. On the approval of the UN Security Council, these peacekeepers are assigned to areas
where armed conflict has recently ceased in order to prevent soldiers from resuming fighting.

Moreover, in 1948, the General Assembly adopted the Universal Declaration of Human Rights as a
standard for its human rights operations. The UN currently provides technical assistance in elections,
helps improve judicial structures and draft constitutions, train human rights officials, and provides
food, drinking water, shelter, and other humanitarian services to peoples displaced by famine, war,
and natural disaster.

Finally, the UN also contributes largely to social and economic developments through its UN
Development Program. This is by far the largest source of technical grant assistance in the world.
The World Health Organization, UNAIDS; The Global Fund to Fight AIDS, Tuberculosis, and Malaria;
the UN Population Fund; and the World Bank Group also play essential roles in this aspect of the
UN. The parent organization also annually publishes the Human Development Index to rank
countries in poverty, literacy, education, and life expectancy (Briney, 2019).

Global Governance in the 21st Century

Global governance was developed to explain an international system that was becoming
increasingly complex. It refers to the institutions, organizations, laws or principles, agreements,
treaties, and codes of conduct in the international system that controls or limit the behavior of
processes, flows, interactions, and actions or behaviors of actors in the international system. This
international system does not have a global government that exerts authority or implements laws
that members in the international system, states, or private organizations and individuals obey.
According to Adil Najam, global governance is the management of transnational processes in the
absence of a worldwide government. It requires a certain degree of organization and understanding
among key actors in the international system of regulating interdependent relationships globally.

Our current state of development appears to be marked by a growing sense of insecurity, social
disintegration, and division, as well as a lack of hope, even among the young — who often confront
a more uncertain future than their parents. Unfortunately, the economic system promotes profits
solely for the wealthy people, resulting in decades of stagnation, if not regression. Half of the world’s
population is still struggling to meet basic needs (The Challenges of the 21 st Century, n.d.) due to
poverty, exclusion, and other social challenges — with no secured solutions in sight. Aside from this,
the world economy is running on increasing debt, threatening a return to the financial chaos of a
decade earlier, with governments’ room for maneuver significantly reduced. Moreover, a universal
loss of moral responsibility, high ethics or values, and even spirituality, which filled the vacuum of any
higher human purpose in a materialistic culture, has contributed to all of this (Lewis, 2021).

It is not easy to set priorities among the many challenges of today because everything is interrelated.
Some of the challenges of global governance in the 21st century include the following:

Environmental Challenges – In the scientific community, the significant areas of urgent concern are
climate change, biodiversity loss, and pollution. For example, the global carbon dioxide emissions
from fossil fuels have grown at an average annual rate of 2% since 1990 and hit record levels in
2018, thereby reflecting the continued growth of the global economy (Dahl, Maja, & Lopez-Carlos,
2018).

Social Challenges – Unemployment is one of our most critical social challenges because it drives
exclusion and marginalization, with other negative consequences including increasing crime, drug
trafficking and use, domestic violence, family breakdown, juvenile delinquency, and migration in
search of better opportunities. Work done in the spirit of community service has numerous
advantages, including the development of human character and the empowerment of individuals to
reach their full potential. Unfortunately, neither governments nor private servants have found a
solution to this challenge at present. At the same time, this can be an effective tool to alleviate
poverty and provide a safety net for vulnerable groups; it does not address unemployment and the
associated waste of resources. Work is necessary for individual and social health (The Challenges of
the 21st Century, n.d.).

Economic Challenges – One economic challenge is the growing risk of a global financial collapse
when the present debt bubble bursts. No reliable, depoliticized mechanism can deal with a financial
crisis at present. Whether a country receives or is refused an International Monetary Fund (IMF)
bailout in the middle of an economic meltdown is a function not of a transparent set of internationally
agreed rules but of several other factors, including whether the IMF’s largest shareholders consider
the country to be a strategically worth supporting. No practical international legal framework exists to
ensure that global business enterprises are socially, environmentally, and economically responsible
(The Challenges of the 21st Century, n.d.).

Security Challenges – Productive capacity in the global economy was never high. In addition,
average life expectancy is at an all-time high; hence, the potential costs of global war are also at an
all-time high. The rewards of war among states, that is, loot, land, glory, and honor. Therefore,
populations sought greater wealth, social security, and various forms of protection which drove
nations to resort to war for ages.

Relevance of State Amid Globalization

Due to various meanings and shifting notions of globalization, the state’s role in it is complicated.
Globalization is commonly characterized as the fading or complete elimination of economic, social,
and cultural borders between nation-states, however, it has been defined in a variety of ways.
Several scholars have theorized that nation-states inherently divided by physical and financial
boundaries will be less relevant in a globalized world.

While increasingly low barriers to international trade and communication are sometimes viewed as a
danger to nation-states, these developments have persisted throughout history. On the other hand,
air and sea transportation made same-day travel to other continents possible, which considerably
expanded trade among countries. However, they did not abolish the sovereignty of individual
nations; rather, it was globalization that transformed the way nation-states interact with one another,
particularly in the area of international commerce (Hall, 2020).

Globalization has changed the state’s role politically because of strengthened interstate relationships
and dependence on one another. States were created to be sovereign. However, they would often
give their sovereignty away to pooling in conventions, contracting, coercion, and imposition. This
phenomenon has led to increasingly similar jurisdictions across states and power being economic
rather than political progress because conditions now make political progression and regression
together, thereby causing states to become increasingly developmental.
The state’s role has also changed because most states now have a high dependence on others.
Britain cannot govern and act as a state independently of the USA’s influence and relationship. Since
World War II, Britain and other Western states have become structurally dependent, militarily, and
financially on the USA. Thus, every state’s role has changed from being an authoritative figure to a
dependent figure relying on others to make decisions or based on other’s beliefs. However, this
factor can be positive because a strong state relies on strong allies (Buchanan, 2012).