Global Economy

Notes: The emergence of global governance was an important factor with regards to the emergence of
global economic governance because the changes and trends brought about by global governance are
very much evident in the field of economics. For example, one of the characteristics of the world today
is interdependence (all of us are affected); the effects of this is evident in the field of economics. For
instance, yung presyo ng langis ngayon sa world market ay mataas, and every one of us is affected by it,
hindi lang yung malalaking bansa at providers ng oil.

Bretton Woods Agreement

 Before the end WWII.

 Bretton Woods, New Hampshire
 730 delegates from 44 allied nations
 Efficient foreign exchange system
 Prevent competitive devaluation of currencies
 promote international economic growth
 IMF, World Bank, and GATT
 Facilitate worldwide economic coordination, and development (Mingst & Arreguin-Toft, 2017)

Notes:

- the creation of different financial institutions, lending bodies, and multilateral agreements also
contributed to the global economic governance. And one multilateral agreements that countries
decided to sign and create is the Bretton Woods Agreement.
- agreement that was negotiated before the end of WWII (1944) – on going ang WWII but the
allied nations decided to negotiate and come up with such agreement
- It was signed or was reached in Bretton Woods, New Hampshire in USA (ito yung lugar kung san
ginawa yung agreement)
- there were 730 delegates that came from 44 allied nations that participated
- the goals of the Bretton Woods Agreement was: to promote/create an efficient foreign
exchange system, to prevent competitive devaluation of currencies, and to promote
international economic growth.
- To sum up the goals of this agreement, their main goal in creating this agreement was to
prevent the outbreak of another world war by ensuring economic stability (not only for
powerful countries but also for smaller and less powerful states) kasi aside from the political
events that led to WWII, it is not only the political events that caused WWII, you also have to
consider the economic situation in Europe and other parts of the world before WWII.
Remember, bago nagkaroon ng WWII, mayrong tinatawag na great depression, kung saan ang
daming Europeans, Americans, at ibang bansa ang nagsuffer economically at dahil bagsak ang
ekonomiya ng mga bansa, naging opportunity iyon para sa iilang mga personalidad para maseize
ang kapangyarihan gaya ni Adolf Hitler. He capitalized on the economic situation in Germany; he
used the economic suffering of many Germans to seize power. His promise was to regain the
former glory of Germany and uplift the lives of Germans from poverty kaya ang tingin sa kanya
ng mga tao is like a Messiah na tagapagligtas kaya sinuportahan talaga siya ng mga Germans
noon because they believed in his promises. Yun naman ang gusting pigilan ng Bretton Woods
 Agreement. The allied forces knew that if another great depression would happen in the future,
then malaki ang chance na magkaroon muli ng Adolf Hitler na want na magseize ng
kapangyarihan. Napakahalaga ng ekonomiya dahil may mga taong magseseize ng opportunity to
a mass power.
- This agreement also led to the creation of different institutions like IMF, WB, and GATT (WTO)
that aimed to facilitate worldwide economic coordination and development

IMF (International Monetary Fund)

 To oversee the Global rules governing money in general and, in particular, to maintain currency
stability through a system of fixed exchange rates (Heywood, 2013).
 To provide stability in exchange rates (Mingst & Arreguin-Toft, 2017)
 Its functions, today, include policy advice on macroeconomic issues and economic restructuring
(Mingst & Arreguin-Toft, 2017).
 Supporters - amidst problems like insability and insecurities, free trade, market-oriented
economy, remains the only reliable road to long-term economic success.
 Critics - IMF is a political arm of neoliberal Globalization and is used to push countries to accept
Western economic model.

Notes:

- Economic restructuring can also mean making your economy market-oriented, opening your
country to free trade or to the world, and liberalizing your economy. It can also mean following
the economic model of the west kaya maraming critics ng IMF ay ditto galling dahil sinasabi ng
IMF na it’s better to follow the economic model of the west. You have to make your economy
market-oriented, open your economy to the world, allow investors to easily invest in your
country, and embace free trade. At itong mga principles or elements na ito ay present sa
economic model na ginagamit sa west (ex: USA). Kaya ang sinasabi ng critics towards IMF that it
was only a political arm of the neoliberal globalization and even used by the west to accept
western economic model. In short, critics see IMF as an armed or tool of the west to advance
their political and economic interests.
- Supporters of the IMF, on the other hand, will tell that free trade and market-oriented economy
remain to be a reliable source or role to long-term economic success.

World Bank

 Designed to reduce the element of risk in foreign lending, thereby underpinning economic
stability (Heywood, 2013).
 Reconstruction and development of Europe.
 From reconstruction to development.
 States can loan for economic development projects.
 Today, World Bank focuses on structural, social, and human aspects of development.
 It promotes projects in relation to rural development and projects that aim to provide basic
needs for the people.
 Supporters - resources from rich countries are transferred to poor countries.
 Critics - financing is not enough.
 Not effective in poverty reduction.
  World Bank and IMF - uphold inequalities among states.

Notes:

- Initially, WB was established for the purpose of reconstruction and development of Europe.
Eventually, it shifted its focus from reconstruction to development, not only in Europe, but also
in other parts of the world. Kaya today, states can loan from WB and the money that they
acquired from loaning will be used for economic development projects.
- Today, WB focuses on structural, social, and human aspects of development
- Supporters of WB will tell that WB was successful in transferring the resources from rich to poor
countries. However, critics will tell that the financing is not enough, the institution is not
effective in poverty reduction, and they will tell that IMF and WB, instead of resolving and
addressing inequality, they even tend to perpetuate inequalities among states.
- Kasi ang pakiramdam ng mga tao, definitely many critics come from other parts of the world,
hindi lang sa west. Voting structures need to be reformed kasi they feel that poor countries have
lesser voice in these institutions. Kumbaga, namomonopolize ng malalaking bansa yung
decision-making process na mayroon sa institutions na ito. Instead of addressing inequalities,
they believe that IMF and WB are even upholding and perpetuating inequalities that exist
among states.
- Hindi ganon kadaling manghiram sa mga financial institutions like World Bank

Conditionalities

 Numerous conditions - 67 to almost 200 conditions.

 Economic policy reforms.
 Trade liberalization.
 Privitization of essential services

Notes:

- Bago makahiram sa mga lending bodies and financial institutions, they have to satisfy or meet a
lot of conditionalities
- Bago makapagloan ang isang bansa, that country has to satisfy 67 to almost 200 conditions
- Mostly, many of these conditions often push countries to commit controversial economic policy
reforms, such as trade liberalization and privatization of essential services

Asian Infrastructure Investment Bank

 A new international development bank that provides financing for infrastructure projects in Asia
(not only in Asia, but also in different parts of the world like Europe and Africa) (Investopedia).
 AIIB vs. IMF, World Bank, ADB.
 AIIB has lesser conditions that IMF and World Bank.
 China's desire to level the playing field – economic world order.
 Economic World Order - inclusive and more states to benefit.
 China as the representative of the developing world.

Notes:
 - acts like a WB
- many people see this as something that China’s way of challenging the existing international
lending bodies but it has lesser conditions than an IMF and WB
- because of the AIIB and BRI, the accusation to China is that it is trying to challenge the existing
international economic system, but the answer is no, China doesn’t want to change the existing
international system, but it wants to reform it. And by reforming it, it means levelling the playing
field. Kasi ang pakiramdam ng China, yung existing international economic system na meron
tayo ngayon, eh namomonopolize ng mga western countries, especially USA.
- Now, China, believing that AIIB is the representative of the developing world (China sees itself as
a developing country)
- Ang goal ng China is to reform the international economic system in a sense na magkaroon ng
mas maraming boses ang mga nasa developing world. And as a representative of the developing
world, China believes that it is their duty to make it more inclusive and allow many states to
benefit. That is why they introduce BRI and AIIB.
- Pero ang problem or criticism lang dito ay yung debt trap diplomacy kasi kapag umutang ang
isang country doon, para rin silang umutang sa Chinese. Kumbaga, less conditions but the
conditions are less clear. At hindi masyadong hinahighlight.
- debt trap diplomacy ay may kasamang collateral (Halbatotabae in Sri Lanka). Ito kinatatakutan
ng maraming critics kasi kapag di nabayaran ang utang, magiging sa China na yung mga
collateral
- dapat we need to ensure that yung utang natin ay within our capacity at dapat ayung inutang
natin is for projects that are beneficial and dapat may ROI. (ex: MRT 7)

GATT or General Agreement on Tariffs and Trade

 Support of trade liberalization, because trade is the engine for growth and economic
development
 Nondiscrimination in trade — the most-favored-nation (MFN) principle— whereby states agree
to give the same treatment to all other GATT members as they give to their best (most-favored)
trading partner
 Preferential access in developed markets to products from the South to stimulate economic
development in the South
 Support for “national treatment” of foreign enterprises — that is, treating them as domestic
firms

Notes:

- principles of GATT were implemented for the purpose of moving towards free trade
- ginawa ito ng GATT by lowering trade barriers
- Eventually, GATT became WTO

From GATT to WTO/WorldTrade Organization

 WTO - venue for trade review, dispute settlement, and enforcement.

 TPRM or Trade Policy Review Mechanism and Dispute Settlement Body.
 TPRM - to check trade practices of member states.
 Dispute Settlement Body - hear and settle disputes between member states.
  WTO - an economic government in the making as Heywood stated.
 Joining WTO - come up with legislation or amend existing laws - rules, procedures, and
principles of WTO.

Notes:

- When GATT became WTO, it became a more formal institution. It is true that WTO incorporated
many of the general ideas of GATT’s jurisdiction and WTO expanded and even introduced to
important procedures like TPRM (the purpose of this is to check trade practices of member
states and they are there to ensure that the member countries of WTO will follow principles like
free trade, market oriented economy, and countries continuing to lower trade barriers), Dispute
Settlement Body (hears and settles disputes between member states. In fact, WTO has the
power to impose sanctions on violators kaya sabi ni Heywood, WTO is an economic government
in the making.)
- Before a country can join WTO and become a full-pledged of WTO, it needs to come up with
legislation or it needs to amend existing domestic laws so that the rules, procedures, and
principles of WTO will reflect sa domestic laws ng bansang iyon. For example, ang China bago pa
makajoin sa WTO, it had to revise many of its existing laws to allow foreign investors to invest in
China. And China had to dismantle the trade barriers that were previously existing kaya hindi
ganon kadaling sumali sa WTO. At ang WTO will make sure that a country will continue
embracing the principles that it espouses like free trade.
- Philippines is also a member of WTO at marami tayong mga batas na nakaangkla sa mga
principles, rules, and procedures ng WTO. Example is Rice Tariffication Law

Rice Tariffication Law (2019)

 Liberalize the importation, exportation, and trading of rice.

 Aimed to remove limits on rice importation. Trade barriers were cut down.
 Supporters - commitment to follow WTO, beneficial for the Filipinos as it will cut down prices of
rice, tame inflation, and will help address malnutrition and poverty.
 Critics - farmers are on the losing end, importers and big-time traders are the ones that benefit
the most.
 2019 - Philippines was named as the biggest importer of rice.

Notes:

- Ang sinasabi ng mga supporters ng Rice Tariffication law na kailangan natin itong maipasya dahil
beneficial ito sa mga Pilipino sapagkat bababa ang presyo ng bigas, matatame ang inflation, at
maaaddress ang malnutrition at poverty. Pero higit sa lahat, itong RTL ay nagpapakita rin ng
ating commitment na sundang ang WTO. At eto yung mga ineemphasize ng mga senators nung
pinag-uusapan nila ang about dito. Mayroon kasi tayong commitment na dapat sundin in
relation to WTO kaya very powerful ang WTO.
- Critics naman would tell that the goal of RTL was never met. Dahil ang aim nga nito ay
pagandahin ang buhay ng mga magsasaka, pababain ang presyo ng bigas, pero look at it, ang
mga nasa losing end ay ang mga magsasaka. Kaya sabi ng mga critics na ang nakinabang lang sa
RTL ay yung mga importers at big time traders.
 - In 2019, bumagsak ang presyo ng palay, from 20 pesos to 15 pesos per kilo. In 2019 din, the
Philippines was named as the biggest importer of rice. Kaya di rin talaga self-sufficient ang Phil.
when it comes to supplies

WTO

 Supporters - sustainable growth in the world.

 Trade liberalization, free and market-oriented economies, free trade - mutually beneficial to all
countries.
 Competition is good and breeds success.
 Critics - WTO perpetuates inequalities.
 Negative impacts on workers' rights, and the environment.
 Larger and powerful states have more voices within the organization.

Notes:

- the supporters will argue na malaki ang role na ginampanan ng WTO to achieve sustainable
economic growth sa mundo. Trade liberalization, free and market-oriented economies, and free
trade benefits all countries and play an important role in achieving sustainable growth for every
country. If the country embraces them, eventually, there will be economic development in that
country
- on the other hand, critics will tell that WTO perpetuates inequality. Mas malaking boses ang
mayroon ang malalaking bansa kaysa maliliit na bansa at mayroon pa itong negative impact sa
worker’s right at environment dahil ang focus ay nasa production
- WTO believes that competition is good and breeds success, but for the critics, hindi.

Critics

 Economic policy must be under to state and its interests. Politics over economics. State interests
must be the ultimate goal.
 Liberal economic path - exploitation, dominance of the West, Imperialism.
 Reform have to be instituted within IMF, World Bank, and WTO - voting structure.
 These institutions have deviated from their original mandates.
 Negative impacts on local industries, national sovereignty, and flourishing of illicit activities.

Notes:

- yung ibang critics ng IMF, WB, at WTO ay sinasabi na dapat ang mga bansa ay pinaprioritize yung
interest ng bansa, hindi yung interest ng mga lending bodies. They have to advance the interest
of the country
- Critics are telling na imbis na magkaroon ng economic development ang bansa sa pag-embrace
ng market-oriented economy, free trade, at trade liberalization, ang nangyayari ay exploitation,
dominance of the West, and Imperialism. It is only the countries in the West that benefits from
the system
- There are also critics who are calling to reform these institutions, especially pagdating sa voting
structures
- pinag-uusapan na rin ng mga institutions ang ibang issue like women empowerment
 - Hindi economic development ang nangyari, these institutions, said by the critics, led to
exploitation of local industries, national sovereignty being put at risk because these institutions
are powerful, and flourishing of illicit activities like human and drug trafficking, smuggling, and
such.

There are different views regarding these institutions (IMF, WB, & WTO), but definitely, whatever our
views regarding them, we can say that they have, in one way or another, helped in the emergence and
spread of global economic governance, capitalism, and economic globalization. Because of them, more
and more countries today are embracing capitalism and the economic globalization have been
integrated in the world economy. Now, ang challenge sa mga maliliit na bansa is to come up with certain
measures and policies that will minimize the shock of these institutions and for people to enjoy the
benefits of these institutions. Kasi kung walang measures na itatake to minimize the impact of these
institutions, then malaki ang chance na tayo ay mapunta sa losing end kasi these institutions are
powerful and influential.