GROUP 1

Mae Ann Acuña

Jovy Ordoñez
Alexis Gabo
Janice Regalario
Marc Aron Del Mundo

INTERNATIONAL TRADING SYSTEM

The net work of laws, regulations and agreements that govern the exchange of goods and services between
countries.
According to Dennis O. Flynn and Arturo Giraldez, the globalization begins when those country with highest
population begin to exchange products internationally.

3 Types of International Trade

 Export Trade – good manufactured in a specific country purchased by the resident of another country.
 Import Trade – goods and services are brought into one country from another country.
 Entrepot- goods are imported into a country and then re-exported out without being distributed within
the importing country.

The Great Depression,

the worst and longest recession in Western history,
began in the 1920s and continued until the 1930s,
- making it difficult to return to a pure standard.
- Economists argued that it was largely caused by the gold standard,
- as it limited circulating money and reduced demand and consumption. Governments' capacity to print money
and increase the money supply was severely curtailed.

Economic historian Barry Eichengreen argues that the recovery of the United States really began when, having
abandoned the gold standard, the US government was able to free up money to spend on reviving the
economy." At the height of World War II, other major industrialized countries followed suit.
The 1973-74 stock market crash, following the US's discontinuation of linking the dollar to gold, led to the
collapse of the Bretton Woods system, resulting in stagflation, a decline in economic growth and employment,
and a sharp increase in prices.
During this period, economists like Hayek and Friedman challenged Keynesian economic orthodoxy, arguing
that government intervention in economies caused inflation by increasing demand without necessarily
increasing supply, and that this distortion of market functioning was fundamental.
Economists like Friedman challenged Keynes's ideas during economic turmoil, leading to the emergence of
neoliberalism.
This strategy became the basis for the US Treasury Department, World Bank, IMF, and WTO, which later
formed the Washington Consensus to continue tariff reduction under GATT.
Neoliberalism's appeal was its simplicity, with advocates like Reagan and Thatcher justifying government
spending reductions by comparing national economies to households, with Thatcher promoting a mother
image to reduce national debt.
Reagan and Thatcher, neoliberal politicians, initially succeeded in the Washington Consensus.
Post-communism, the IMF called for privatization of public industries, aiming to rid them of corrupt
bureaucrats and open them to private investors. This created the oligarchy in Russia.

The Global Financial Crisis and the Challenge to Neoliberalism

The Global Financial Crisis (GFC) of 2007-2008 marked one of the most significant economic and financial
events in recent history, leading to a widespread reevaluation of the principles of neoliberalism. Neoliberalism,
characterized by free-market capitalism, deregulation, and limited government intervention, had dominated
economic policy for decades. However, the GFC exposed critical flaws in this ideology, challenging its core
tenets and leading to a reevaluation of its merits. This report examines the Global Financial Crisis and its
subsequent challenges to neoliberalism.
1. Background of the Global Financial Crisis.
1. Causes of the GFC
The GFC had several key triggers, including:
1. "CHEAP HOUSING LOAN OF US" -US opened cheap housing loans but Americans abused this and began
building hones beyond their financial capacities.
Unpaid loans, let the banks decide to impose Mortgages Payments. As a result, US banks filed for bankruptcy
including the Lehman Brother. It was an investment bank in US which collapsed on September 15, 2008,
affected not just the US but also its foreign investor.
The International monetary fund (IMF) ordered the countries with depts to cut back social and public spending
or reduction of government spending which eventually slowed down the economic growth and ensured high
rate of unemployment. This affects pensions, health care, social security which are felt mostly by the poor.
US recovered relatively using the keynesian style pushed by the president Barack Obama in the first month of
office. However, many countries are still suffering for financial crisis for
economies.
Mortgages - a legal agreement by which a bank or other creditor lends money at interest in exchange for
taking title of the debtor's property, with the condition that the conveyance of title becomes void upon the
payment of the debt.
"Subprime" refers to the below-average credit score of the individual taking out the mortgage, indicating that
they might be a credit risk. The interest rate associated with a subprime mortgage is usually high to
compensate lenders for taking the risk that the borrower will default on the loan.
2. Impact of the GFC
The consequences of the GFC were profound and included:
1. **Global Recession**: The crisis led to a severe global economic downturn, resulting in job losses,
bankruptcies, and decreased economic growth.
2. **Banking Bailouts**: Governments worldwide were forced to bail out major financial institutions to
prevent a complete collapse of the banking system.
3. **Housing Market Collapse**: Many homeowners faced foreclosure as housing prices plummeted.
4. **Widespread Public Outcry**: There was significant public anger over taxpayer-funded bailouts of banks
while ordinary citizens suffered.

Economic globalization today

Economic globalization
- refers to the widespread international movement of goods and services
Financial Crisis
situations in which some financial assets suddenly lose a large part of their nominal value.
trade liberalization is profoundly altered the dynamics of the global economy
trade liberalization is a reduction of trade barriers

Localizing the material

GATT = (General Agreement on tariffs and trade~Provisional, Concerned with
goods
WTO = (World Trade Organization) ~It is permanent, it concerned with goods service and intellectual property.
Walden Bello and a team of researchers -focus on the Global South.
In 1993, coconut exports amounted to $1.9 billion, and after a slight increase to $2.3 billion in 1997, it
returned to $1.9 billion in 200.
Bello and Company-Noted that the Philippines became a net food importer under the GATT.