ECONOMIC GLOBALIZATION
According to Benczes (2014),
- economic globalization is the increasing
integration of economies around the world mainly
through the movement of goods, services, and
capital across borders
WHAT'S THE DIFFERENCE Between economic
globalization and internationalization?
Internationalization can refer to a company that
takes steps to increase its footprint or capture
greater market share outside of its country of
domicile by branching out into international markets
INTERCONNECTED DIMENSIONS OF
ECONOMIC GLOBALIZATION
GLOBALIZATION HAS FOUR DISTINCT
DIMENSIONS OF GLOBALISM
Economic, military, environmental, and social
According to Benczes (2014), the phenomenon
can does have several interconnected
dimensions are:
● The globalization of trade of goods and
services
● The globalization of financial and capital
markets
● The globalization of technology and
communication
● The globalization of production
THE INTERNATIONAL MONETARY SYSTEM
It is a set of internationally agreed rules,
conventions and supporting institutions that
facilitate international trade, cross border
investment and generally the reallocation of capital
between states that have different countries.
Provides framework within which foreign exchange
are determined
The foreign exchange rate is the price of one
currency expressed in terms of another currency
FOUR MONETARY REGIMES
1. The Classical Gold Standard (1870’s to
1914)
2. Gold Exchange Standard (1914- 1944)
3. Bretton Woods System (1944 to 1973)
4. “Non-system” of floating and fixed
exchange rates (1973 to present)
THE CLASSICAL GOLD STANDARD REGIME
(1870-1914)
Money = Fixed amount of Gold
Backed by British Hegemony
Ended because of World War 1
“We have gold because we cannot trust
governments” - Herbert Hoover
THE GOLD EXCHANGE STANDARD REGIME
(1914-1944)
After World War I, Britain attempted to establish a
gold exchange regime
Consist of both gold and reserve currencies which
is the British pound in the interwar period
Permits more flexibility in increasing international
reserves
CAUSES OF THE GREAT DEPRESSION
● Competitive devaluation
● A shift to a floating rather than the fixed
exchange rate
● Destabilizing speculative capital flows
Increased trade protection
● Rapid economy expansion
THE BRETTON WOODS SYSTEM REGIME
● The creation of Bretton Woods resulted in
countries pegging their currencies to the
U.S. dollar.
● In turn, the dollar was pegged to the price
of gold, and the U.S. became dominant in
the world economy.
● Provides exchange rate stability, and
avoids competitive devaluations
 ● North Atlantic Treaty Organization (NATO)
● Association of South East Asian Nations
THREE MAJOR ELEMENTS (ASEAN)

GOLD EXCHANGE STANDARD INTERNATIONAL NON-GOVERNMENTAL

A compromise of fixed but adjustable exchange ORGANIZATIONS
rate system. -A voluntary group of individuals or organizations

INTERNATIONAL MONETARY FUND (IMF) EXAMPLES OF INTERNATIONAL

NONGOVERNMENTAL ORGANIZATIONS
Help sustain the benefits of global economic
integration, by promoting cooperation between ● International Federation of Red Cross
countries and their citizens when transacting. ● Amnesty International
● Oxfam International
EXCHANGE AND CAPITAL CONTROLS ● Save the Children

Help countries to avoid downward pressure on the MULTINATIONAL CORPORATIONS

exchange rate. - MNCs are Corporations which have
overseas branches

T H E FL E X I B L E E X C H A N G E R A T E EXAMPLES OF INTERNATIONAL
S REGIME NONGOVERNMENTAL ORGANIZATIONS
1. Apple
WHAT IS AN EXCHANGE RATE? 2. Microsoft
An exchange rate regime is a system for 3. Amazon
managing the foreign exchange market and the 4. McDonald’s
currency of other countries or currency unions.
BEFORE 1870
TYPES OF EXCHANGE RATES REGIME ERA OF BIMETALLISM
Fixed exchange rates rarely change -Trade using gold and silver
-The fixed exchange rate is determined by the
government or central bank of the country

Floating exchange rates change constantly

-With floating exchange rates, the value of each
currency can fluctuate based on market conditions,
primarily supply and demand.

Exchange rates float freely against one another,

which means they are in constant fluctuation

BRETTON WOOD AGREEMENT

1944, the gold standard
1973, no floating exchange rate
1976, IMF legalized floating exchange rate

GLOBAL ACTORS IN GLOBALIZATION

INTERNATIONAL GOVERNMENTAL
ORGANIZATION
- The IGOs strive for peace, and security
and deal with economic and social
questions

EXAMPLES OF INTERNATIONAL
GOVERNMENTAL ORGANISATIONS

● The United Nations

● The World Bank

LESSON 2
INTERNATIONAL FINANCIAL INSTITUTION
“International Financial Institutions (IFIs) Refers to
financial institutions that have been established (or
chartered) by more than one country and hence are
subject to international law”
HOW IFIS WORKS?
IFI it provides a long term low interest loans credits
and grants to finance projects run by governments
or the private sector. They operate through
shareholdings trade services and bank shares and
of course to provide technical and policy advice to
governments private enterprises and civil society.
THE WORL BANK was established along the
international Monetary fund at 1944 brentton
Woods Conferenfce.
The World Bank Group is a unique global
partnership: five institutions working for sustainable
solutions that reduce poverty and build shared
prosperity in developing countries.
● IBRD (The International Bank for
Reconstruction and Development)
● IDA (The International Development
Association)
● IFC (The International Finance
Corporation)
● MIGA (The Multilateral Investment
Guarantee Agency)
● ICSID (The International Centre for
Settlement Investment Disputes)
The World Bank Group is one of the world’s largest
sources of funding and knowledge for developing
countries.
Developing countries = lower- middle ang GDP per
capita
($1,036 - $4,045)
• The World Bank has two goals: end extreme
poverty and promote shared prosperity in a
sustainable way
THE FIVE ORGANIZATIONS OF WORLD BANK
● The International Bank for
Reconstruction and Development
The International Bank of Reconstruction and
Development (IBRD) is one of the two major
institutions that make up the World Bank, with the
other being the International Development
Association (IDA).
● The International Development
Association
IDA complements the World Bank’s original lending
arm—the International Bank for Reconstruction and
Development (IBRD). IDA supports a range of
development activities that pave the way toward
equality, economic growth, job creation, higher
incomes, and better living conditions.
● The International Finance Corporation
The International Finance Corporation (IFC)
provides financing of private-enterprise investment
in developing countries around the world, through
both loans and direct investments.
The International Finance Corporation was
established in 1956 as a member of the World Bank
Group, focused on investing in economic
development.
● The Multilateral Investment Guarantee
Agency
The Multilateral Investment Guarantee Agency
(MIGA) promotes foreign direct investment (FDI)
into developing countries to support economic
growth, reduce poverty, and improve people’s lives.
● The International Centre for Settlement
Investment Disputes
ICSID was established in 1966 by the Convention
on the Settlement of Investment Disputes between
States and Nationals of Other States (the ICSID
Convention). The ICSID Convention is a multilateral
treaty formulated by the Executive Directors of the
World Bank to further the Bank’s objective of
promoting international investment.
International Monetary Fund
The IMF was established in 1944 in the aftermath
of the Great Depression of the 1930s. 44 founding
member countries sought to build a framework
for international economic cooperation. Today, its
membership embraces 190 countries, with
staff drawn from 150 nations.
The IMF is governed by and accountable to
those 190 countries that make up its near-
global membership.

MARKET INTEGRATION
Market integration is the fusing of many markets
into one.
Global Market integration means that price
differences between countries eliminated as all
markets become one.
THE EUROPEAN INTEGRATION
European integration is the catch-all term for
cooperation between European countries, usually
but not exclusively referring to EU member states.
More integration implies greater shared decision-
making, shared laws, and shared legal and political
systems
the EU is at the core of European integration and
represents the deepest political, economic and legal
integration of countries anywhere in the world.
European Union (EU), is an international
organization comprising 27 European countries and
governing common economic, social, and security
policies. The EU was created by the Maastricht
Treaty, which entered into force on November 1,
1993.
● Based on the Lisbon Treaty new
institutions of the EU were created, and
changes were made in relation to the
powers of the existing institutions,
especially the European Parliament, whose
role in the legislative procedure became
more significant.
THE BENEFITS OF EURO
The euro is the official currency of the European
Union (EU); it was introduced in 1999 and is used
in 19 of the 28 member countries. The euro is the
world's second-largest reserve currency after the
U.S. dollar.
Benefits:
● Improved economic stability and growth.
● Greater influence in the global economy
● It enables easy travel and cross-border
transactions.
● Reduced transaction costs.
● It increases price transparency.
● It provides a stable currency.

LEGAL BASIS OF EUROPEAN UNION

The European Union is based on the rule of law.

The phrase "legal basis" refers to a clause in one

of the EU's treaties that grants the EU the power to
take action. The EU is not allowed to pass laws on
topics that are not covered by one of the treaties.

The present-day functioning of the EU—based on

the Treaty of Lisbon—has been in force since
December 2009.

The legal basis of the EU today

● Two treaties currently in force: the Treaty
on the European Union (TEU) and the
Treaty on the Functioning of the European
Union (TFEU).

● The TEU defines the objectives and

principles of the EU. In contrast,
organizational and functional issues are
addressed in the TFEU.