Global Economy Additional Notes

After WWII

- United Nations was established on October 24, 1945 after the unsuccessful League of Nations.
- United Nations was tasked to promote international cooperation and restore international
order.

Earlier in 1944, the first government – sponsored international financial institutions were established:

 World Bank (WB) – is an intergovernmental and private financial institution that aims to end
extreme poverty and promote shared prosperity in a sustainable way. It helps in project lending,
establishes structural reforms, provides support and technical assistance, and helps design
modern and durable social safety nets for the benefit of both developed and developing nations
- 5 Organizations that belong to WB:
A. International Bank for Reconstruction and Development
B. International Development Association
C. International Financial Corporation
D. Multilateral Investment Guarantee Agency
E. International Center for Settlement and Investment Disputes
- These organizations facilitate the granting of loans and financial assistance to
developing countries.

 International Monetary Fund (IMF) – also an intergovernmental institution, which works to

foster global monetary cooperation, secure financial stability, facilitate international trade. It
also grants financial assistance to developing countries. This helps establish institutional bodies
to address and reduce poverty like the African Regional Technical Centers (AFRITACS) in 2001.

1960

Regional Development banks were established:

 Asian Development Bank (ADB)
 African Development Bank (AfDB)
 These two are intergovernmental financial institutions that were created to spur
social progress and economic growth in order to address and reduce poverty.
They are anchored on the goal of fostering sustainable development in their
respective member countries.

Private International Financial Institutions: Citigroup and Merrill Lynch

 Citigroup is an American multinational investment banking and financial corporation, 4th largets
bank in the US
 Merrill Lynch is the wealth management division of the Bank of America.
 Both institutions provide investments around the world ( such as direct, stocks
or financial loans)
GLOBAL MARKET INTEGRATION

- This was the result of the establishment of global economy that involved the
homogenization of trade and commerce.
- International trade and exchange of goods and services were already practiced
prior to the trends in the 20th century
- Colonialism and Imperialism rose as the new ways of putting order to the
economic interrelationships among countries.
- Equity, corporate ownership, management subsidiaries, and central
headquarters which supply and distribute goods and services were established
through colonialism.

Integration of the Global Market

- Started when big American corporations began to emerge after the WWII with the
rise of the new conglomerates.

 International Telephone and Telegraph bought Avis Rent-a-Car, Continental Banking, Sheraton
Hotels, and Hartford Fire Insurance
 Japanese global automobile corporations like Toyota, Nissan, and Isuzu took off after the giant
American companies flourished – these companies prospered as the primary and global makers
of trucks for the Japanese military
 Renault automobiles- a French multinational automobile manufacturer, was also used to help in
the military post-war operations

Development of International Trade

 International companies are importers and exporters with no investments outside their home
countries.
 Multinational companies (MNCs) have investments in other countries. They are more focused
on adapting their products and services to each individual local market.
 Transnational Companies (TNCs) are more complex organizations that have investments in
foreign operations, have a central corporate facility but give decision-making. R&D, and
marketing powers to each individual foreign market.

1974
It was acknowledged that the major global economic actors were MNCs

 Caroll (2003) termed the emergence of international, multinational, global, and transnational
companies in US, EU, and Japan as the TRIAD- the major economies of the world.
 The ascent of global corporations is a reflection of a globalized market integration
 TNCs and MNCs are no longer limited to their home countries have common attributes: An
agent of desired economic development.
 Common attributes of Global Corporations:
 an agent of desired economic development
 an economic prominence
 a very powerful entity that can create a crisis
International Financial Institutions play an important role in the social and economic development