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mainstays of its economy.
LESSON 1: GLOBALIZATION
GLOBALIZATION
The term “globalization has several
contending meanings. We can rundown
some of the
widely accepted definitions of globalization
to prove this point.
• Globalization refers to the ongoing process are driving home the point that globalization
of increasing interconnectedness,
integration,
and interdependence among individuals,
businesses, nations, and economies
worldwide. It is
a multifaceted phenomenon characterized
by the exchange of goods, services,
information,
technology, capital, and ideas across
national boundaries.
• Globalization is the increasingly interaction baloney, with the latter being used
of people, states, or countries through the
growth of the international flow of money,
ideas, and culture.
• It is the liberalization of countries of their validate the so-called evidentiary
impact protocols and welcome foreign
investment into sectors that are the
“Does globalization exist?” In the SAGE
Handbook, Steger says no and yes. These
answers are polarized, and each one is
supported with approaches and specific
arguments. They can be summarized in the
statement below:
NO: Globalization as “Globaloney”
Globalization does not exist—this is the
bottom line of the proponents of this
approach. They conclude that the existing
accounts of globalization are incorrect,
imprecise, or exaggerated, pointing out as
proof the indiscriminate way that “just about
everything that can be linked to some
transnational process is cited as evidence
for globalization and its growing influence.”
Therefore, the proponents dismiss the
discussion of globalization as nothing more
than baloney. The “globaloney” advocates
is really not that substantive and distinct as
claimed; it is a cliché because anything and
everything can be considered connected in
some way—in a small or large amount, in a
weak or strong form, and in a direct or
indirect way—to anything that is
international in nature.
The word globaloney is a coined
conjugation of the word’s globalization and
idiomatically to mean “nonsense.” In the
absence of clear-cut definitions or norms for
filtering data and an analytical method to
information, the “globaloneyists” aver that
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globalization becomes nothing more than a There is a greater demand in business

normal course of life; it is not a scientific and industry, health, engineering and
phenomenon. Ironically, though, with the technology to have people who can work
seeming shallow dismissal of the with people of other nations and cultures.
globalization phenomenon, the “globaloney” There is a greater demand of promoting
arguments turn out to be more elaborate the local business and industry to other
and in-depth. countries and if need be, owners travel
independently and
YES: Globalization as an Economic, Political internationally for a better promotion.
Process, or Cultural Process Creating meaningful harmonious, and
Globalization, as an economic process, workable relationship that link globally is an
refers to the increasing interconnectedness important aspect of the merits of
and interdependence of countries through globalization, especially if one wish to be the
the exchange of goods, services, capital, President of the future generation.
technology, and information on a global The contemporary world faces global
scale. It has been a defining feature of the challenges that will take interdisciplinary
contemporary world and has significantly groups to solve these challenges: These
influenced economic systems, policies, and challenges are how to provide access to
practices worldwide. clean water, a clean environment, clean
Globalization, as a political process, refers renewable energy that is affordable to
to the growing interdependence and everyone, and how to deal with the
influence of political actors, institutions, and unpredictable climate change just to name a
policies on a global scale. It involves the few. These global challenges need to be
interactions and coordination of solved as soon as possible through the
governments, international organizations, gathering and sharing of information across
non-state actors, and citizens across disciplines, institutions, and other entities on
borders in addressing global challenges and a global
shaping global governance structures. scale –how is this possible?
Globalization has significantly impacted Knowledge of the merits, demerits, and
political systems, ideologies, and dynamics reasons for globalization will enable the
in the contemporary world. students to work as models of collaborative
Globalization, as a cultural process, refers international teams in the near future along
to the diffusion, exchange, and blending of with the areas of business, education,
cultural practices, values, beliefs, ideas, and health, science, arts, engineering, and hotel
expressions on a global scale. It involves the industries, and discuss best products in
interconnectedness and interaction of these areas.
cultures across borders, leading to the
creation of a According to Neil Kokemuller (n.d.), a writer,
global cultural landscape. In the globalization is the expansion of local
contemporary world, globalization has had a economies and businesses into a broader
profound international marketplace.
impact on cultural identities, practices, and WHY?
experiences. • small businesses have gotten active in the
global environment as the Internet and
The Importance of Studying Globalization mobile technology have enabled
In today’s contemporary world, it is communication across continents and
important for students to understand and countries.
appreciate the study of globalization for the • Globalization has become important for a
following reasons: number of reasons, including thenoverall
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need for businesses to compete, according An open economy spurs fast innovations
to Kokemuller. with fresh ideas from abroad.
• The internet revolutionized the business Export jobs often pay more than other
arena because it created a whole new virtual jobs.
marketplace that expands beyond physical Free of capital flow keeps interest rates
and geographical boundaries. Companies in low.
foreign countries can now compete for Living standards go up faster
customers in Productivity grows more quickly when
the United States by leveraging their own countries produce goods and services in
country’s resources, lower costs of labor, which they are of comparative advantage.
and affordable distribution processes---EX.: Countries liberalize their visa rules and
rise in the number of multinational and procedures so as to permit the full flow of
transnational corporations in the country. people from country to country.
It results in freeing up the unproductive
Reasons for Globalization sector to investment and the productive
Why do we have to globalize especially in sector to export related activities resulting in
this contemporary world? Here are the a win-win situation for the world economy.
reasons:
Rapid shrinking of time and distance Disadvantages of Globalization
across the globe. One can easily cross the Several people lose their jobs when
bridge going to the other side of the companies import cheap labor or materials
marketplace due to advanced tools of or shift production abroad.
technology than before. Workers face pay cut demands from
Domestic markets are no longer rich as a employers who often threaten to export jobs.
consequence of many interlocking factors. Unregulated globalization can cause
Companies and institutions go global to serious problems to poor and developing
find political and economic stability which is countries in terms of labor force, wages,
relatively good in other countries than the benefits, job termination, and others.
country of origin High foreign stake in industries where it is
To get technological and managerial not necessarily needed could affect the
know-how of other countries due to their economic growth of domestic enterprise.
advancement in science, technology, Sovereignty of a country and
education, health, and other fields of company/institutions may be at stake.
discipline.
To reduce high transportation costs if oneTheories of Globalization
goes globally using the advance tools of World-System Theory – a perspective
communication and information. that globalization is essentially the
To be close to raw materials and to expansion of the capitalist system around
markets for their finished products which arethe globe. Capitalist world-system originated
not available in the country of origin in the 16th century, when European’s
The creation of the World Trade traders established enduring connections
Organization (WTO) had made it possible in with Asia, Africa and the America. The core
stimulating increased cross border trade of the system, the dominant classes were
supported by strong states as they exploited
Advantages of Globalization labor, resources, and trade opportunities,
Global competition and imports keep a lid on most notably in peripheral areas. Central
prices such that inflation is less likely to purpose is capital accumulation by
derail economic growth. competing firms, which go through cycles of
growth and decline.
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World Polity Theory – state remains an
important component of world society, but
primarily attention goes to the global cultural
and organization. All-encompassing world-
polity and its associated with world culture,
which supplies a set of cultural rules or
scripts that
specify how institution around the world
should deal with common problem. Key
elements is a general, globally legitimated
model of how
to form a state. Carriers of global principles,
these organizations then help to build and
elaborate world culture and world society
further.
World Culture Theory – the world culture
is indeed new and important, but less
homogeneous than world polity.
Globalization is a process of relativization.
World society thus consists of a complex set
of relationships among multiple units in the
global field. Globalization compresses the
world into a single entity, and people
necessarily become more and more aware
of their relationship to this
global presence. Central importance to this
process is the problem of globality how to
make living together in one global system
meaningful
or even possible.
HOMOGENEOUS WORLD
Certain activities or institutions become
global, they must displace existing local
variable activities and institution. If there are can take place above the state through
more linkages, global institutions, and global political integration schemes such as the
values, presumably this means that more
people will have more in common.
Reasons Why Globalization will not make IMF, the WB, and the WTO. Political activity
the World
Homogeneous
• General rules and models are interpreted
in light of local circumstances. Regions
respond to similar economic constraints in
different ways; countries still have great
leeway in structuring their own policies; the
same television program means different
things to audiences; such as McDonald's
adopts its menu and marketing to
local tastes.
• Growing similarity provokes reactions.
Advocates for many cultures seek to protect
their heritage or assert their identity. (action
of indigenous people to claim their right to
cultural survival.)
-Cultural and political differences have
themselves become globally valid. The
notion that the people and countries are
entitled to their particularity of
distinctiveness is itself part to global culture.
The tension between homogeneity and
heterogeneity is integral of globalization.
Is Globalization Harmful?
Globalization may be harmful to the
well-being (fears) of individuals, countries
and cultures :If the market is the driving
force - it is bound to exacerbate (worsen)
inequality by creating winners and losers. If
makes world homogeneous - many cultures
are in troubles. Loss of local autonomy may
mean that the more people will be
vulnerable (defenseless) to economic
swings, environmental degradation, and
epidemics.
Interdisciplinary Understanding of
Globalization
Political Scientist
Political activity increasingly takes place at
the global level. Under globalization, politics
European Union, the ASEAN integration
where Philippines is involved though
intergovernmental organizations such as the
can also transcend national borders through
global movements and Non- Governmental
Organization (NGO)Civil society
organizations act globally by forming
alliances with organizations in other
countries, using global communication
system, and lobbying international
organizations and actors directly, instead of
working through their national governments.
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Economist
Integration through international trade of
markets in goods and services as reflected
in variety of possible measures (direct
measures of barriers such as tariffs and
transport costs, trade volumes and price
related measures).foreign direct investment,
increased trade in intermediate product,
international outsourcing of services like the
call center industry, and international
movement of persons like our OFWs.
Include the international spread of ideas,
from consumer tastes (like Coke and
Hershey's) to intellectual ideas like
technology patents and management
principles and accounting standards.
Sociologist
An on-going process that involves
interconnected changes in the cultural and
social spheres.it involves the spread and
diffusion of ideologies- values, ideas, norms,
beliefs and expectations - that foster, justify
and provide legitimacy for economic and
political globalization
fueled by globally integrated communication
systems like social media, media coverage
of the world's elite and their lifestyles, the
movements
of people around the world via business and
leisure travel, and the expectations of these
travelers that the host societies will provide
amenities and experiences that reflects their
own cultural norms.
Historian
Historian follow rather than lead the way.
Globalization is not new as a phenomenon
but the word itself took hold only recently
which records shows first use in English in
1930 and shows that usage soared
suddenly in 1990's. Globalization defined
most succinctly as the interconnection of
places far distant from each other.
Globalization is still too much entangled with
world history, global history and
transnational history.
What is Globalization?
• Refers to the processes by which more
people across large distances become
connected (connectivity and
interconnectivity) in more
different ways.
------ This happens when a country loses of
control our own system.
• Deterritorialization is the process through
which the constraints of physical space lose
their hold on social relations
• The process by which capitalism expands
across the globe as powerful economic
actors seek profit in global markets and
impose their rules everywhere.
• Also known as Neoliberalism.
• Means different things to different people.
The general consensus of the theorists:
Globalization involves cultural, economic,
political transformations. ARGUMENT:
Theorizing on how these domains intersect,
overlap, and influence one another.
ROOTS OF GLOBALIZATION
(3 competing views of theorists)
1. Globalizing forces have been evolving
since the beginning of human history (over
5,000 years).
2. Globalization began with the rise of the
modern era and the development of
capitalism; 500 years ago (Immanuel
Wallerstein).
3. Globalization became intense in the 2nd
half of the second century(post-industrial
economies and contemporary restructuring
of capitalism.
Immanuel Wallerstein (1930 – present)
- It was with the emergence of the
modern world economy in the 16th
century Europe that we saw the
economic predominance of market
trade.
- This was the system called
capitalism.
- Capitalism and a world economy...
are observe sides of the same coin.
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A theory of Globalization that explains
capitalism
• World-System Theory – a perspective
that globalization is essentially the
expansion of the capitalist system around
the globe.
• The capitalist world system originated in
the 16th century when European
traders/colonizers established
connections/colonies in Asia, Africa, and
Latin America.
• At the core of the system, the dominant
classes were supported by strong states as
they exploit cheap labor, resources, and
trade opportunities, most notably in
peripheral areas (DEPENDENCY)
• Central purpose is capital accumulation
through profit gained by competing firms,
which go through cycles of growth and
decline (Transnational and multinational
corporations).
3 types of world systems
1. World empires (e.g., Rome,medieval
China)
2. World economies (no one nation has
control)
• 3. Socialist world gov’t (does not/has not
existed)
Core Nation
-Capitalist nations/highly developed
(Finished Products)
Semi Peripheral Nations
-Capitalist nation
Peripheral Nations
-Developing nations(struggling and exploited
nations) export raw materials
Emergence of Globalization
• Globalization has been happening for a
long time. (16th century Europe as the
original source.)
• Europeans established worldwide trade
connections on their own terms, brought
their culture to different regions by settling
vast areas, and defined the ways in which
the different people were to interact with
each other.
• Late 19th century the period of intense
globalization, when million migrated, trade
generally expanded and new norms
(Western orientation) and organizations
came to govern international conduct.
• 20th-century movement of people, goods,
and finance across national borders was at
least as free and significant as it is today.
The 2nd half of the 20th century was a
significant period of globalization in its own
right.
• World War II gave globalization a new
impetus. Obscured by Cold War divisions,
the transformation of world society – in
terms of linkages, institutions, culture, and
consciousness was nevertheless profound.
GLOBALIZATION AND THE EXPANDING
MARKET
• Expanding Market - is the process of
offering a product or service to a wider
section of an existing market or into a new
demographic, psychographic or geographic
market.
• An economic system operating along
capitalist lines now encompasses most
regions of the world, and economic
motivates always have been important in
creating global linkages, globalization takes
place in many spheres for many reasons.
• The economy may be a driving force in
creating global change in some periods, but
its effects depend on what happens outside
of the world market.
Impact to Societies
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• improving maternal health

HOMOGENEOUS WORLD • combating diseases like HIV/AIDS and
• Activities or institutions become global, malaria
displacing existing local variable activities • ensuring environmental sustainability,
and institutions. • global partnership for development (United
• Linkages, global institutions, and global Nations, 2015)
values----- means that more people will have
more in common (outcome of Global economic integration, characterized
interconnectivity) by the increasing interconnectedness and
interdependence of economies worldwide,
Reasons Why Globalization will not make has become a defining feature of the
the World Homogenous contemporary world. This topic explores the
• General rules and models are interpreted challenges and opportunities associated
in light of local circumstances. with global economic integration,
• Regions respond to similar economic considering factors such as trade
constraints in different ways; countries still liberalization, financial flows, technological
have great leeway in structuring their own advancements, and geopolitical dynamics.
policies; the same television program means
different things to audiences; ---- (for ---choose one from the phrases in green and
example, McDonald’s adapting its menu and give your views on it.
marketing to local tastes)—other
examples?? Global economy refers to the international
• Growing similarity provokes reactions. exchange of goods and services that is
Advocates for many cultures seek to protect expressed in monetary units of money. It
their heritage or assert their identity. (action may also mean the free movement of goods,
of indigenous people to claim their right to capital, services, technology, and
cultural survival. Impact of modernity?? information.
• Cultural and political differences have
themselves become globally valid. The global economy plays a pivotal role in
• The notion that the people and countries shaping the contemporary world and
are entitled to their particularity of influencing the economic landscape of
uniqueness/distinctiveness is itself part of nations. In this era of increasing
global culture. interconnectivity and globalization, countries
• The tension between homogeneity and like the Philippines are intricately linked to
heterogeneity is integral to globalization. the global economic system. Understanding
the dynamics of the global economy and its
LESSON 2: THE GLOBAL ECONOMY impact on the Philippines is crucial for
policymakers, businesses, and individuals
The United Nations (UN) tried to address the alike.
different problems in the world. Their efforts
were guided by the eight Millennium The Philippines, an archipelago located in
Development Goals, which they created in Southeast Asia, has emerged as one of the
the 1990s. fastest-growing economies in the region.
• eradication of extreme poverty and With a population of over 110 million and a
hunger; strategic geographical location, the
• achieving universal primary education Philippines holds immense potential for
• promoting gender equality and women’s economic growth and development. The
empowerment country's integration into the global economy
• reducing child mortality has been facilitated by factors such as trade
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liberalization, foreign direct investment, and
participation in regional economic initiatives
did not include routes to the American
continents. Thus, this results in the
questions: “When did full economic
globalization start?” This was addressed by
historians Dennis O. Flynn and Arturo
Giraldez, stating that globalization began
when “all important populated continents
began to exchange products continuously –
both with each other directly and indirectly
via other continents and in values sufficient
to generate crucial impacts on all trading
partners.

The International Monetary Fund (IMF) The galleon trade took place during the age
regards “economic globalization” as a of mercantilism. During the 16th century until
historical process representing the result of the 18th century, countries, mainly in
human innovation and technological Europe, competed with one another to sell
progress. It is characterized by the more goods in order to increase their
increasing integration of economies around country’s income (which was soon termed
the world through the movement of goods, monetary reserves). These regimes,
services, and capital across borders. particularly the monarchies, applied various
ways to defend their products from
The World Bank, is an international competitors who sold goods at cheap prices.
development organization owned by 189 They imposed high tariffs, prohibited
countries. Its role is to reduce poverty by colonies from trading with other countries,
lending money to the governments of its limited trade channels, and subsidized
poorer members so that they can improve exports. Therefore, mercantilism was also a
their economies and the standard of living of global trade system that had multiple
their people. Since 1947, the World Bank restrictions.
has funded over 12,000 development
projects via traditional loans, interest-free
credits, and grants

International Trading System

International trading systems are not new.
The Silk Road is the oldest known
international trade route. It had a network of
routes that connected different parts of the
ancient world from China to what is the
Middle East today and to Europe. It was
called such because one of the most
profitable products traded through this
network was silk, which was highly prized,
especially in the area that is now the Middle
East as well as in the West (today’s
Europe).
Although the Silk Road was considered
international, it was not exactly “global”, as it principles of neoliberalism, its impact on
Neoliberalism and Its Discontents
Neoliberalism has emerged as a dominant
economic and political ideology in the
contemporary world, shaping the policies
and practices of nations across the globe.
Since its inception in the late 20th century,
neoliberalism has significantly influenced
economic systems, governance structures,
and societal norms, promoting free markets,
individualism, and limited government
intervention. This article delves into the key
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various aspects of society, and the ongoing Cultural Dimensions:

debates surrounding its efficacy. Beyond its economic and political
dimensions, neoliberalism has permeated
Understanding Neoliberalism cultural and societal norms. It has promoted
Neoliberalism is rooted in the belief that consumerism, emphasizing individual choice
economic growth and individual freedoms and personal gratification. The proliferation
are best achieved through free markets and of advertising, branding, and the
minimal state intervention. It advocates for commodification of culture reflect this
deregulation, privatization, and the reduction consumer-centric worldview. Critics argue
of government expenditure and welfare that this has led to shallow consumer
programs. Neoliberal policies emphasize the culture, environmental degradation, and the
importance of competition, erosion of social cohesion.
entrepreneurship, and global trade as
drivers of economic development Economic Globalization Today: Recent
Trends in the Contemporary World
Economic Impact: The global financial crisis will take decades
One of the central tenets of neoliberalism is to resolve. The solutions proposed by
the promotion of free trade and certain nationalist and leftist groups of
globalization. Proponents argue that closing national economies to world trade,
opening up markets to international however, will no longer work. The world has
competition fosters efficiency, innovation, become too integrated. Washington
and economic growth. This has led to the Consensus---- employed ten economic
proliferation of trade agreements and policies to standardize economic reforms
economic blocs such as NAFTA (North among nations through IMF and WB, this
American Free Trade Agreement) and the failed because of limited instruments used
European Union. especially for developing countries. --- “one-
size fits” all to development
Political and Social Implications:
Neoliberalism has also had a profound Recent Trends in Economic
impact on governance structures and social Globalization: International Trade
policies. The ideology emphasizes the International trade continues to play a
importance of individualism, personal significant role in economic globalization.
responsibility, and marketoriented solutions While the COVID-19 pandemic temporarily
to societal problems. As a result, disrupted global trade flows, there has been
governments have increasingly embraced a gradual recovery and resurgence. Trade
privatization, outsourcing public services, agreements, such as the Comprehensive
and reducing social welfare programs. and Progressive Agreement for Trans-
Pacific Partnership (CPTPP) and the
While proponents argue that these Regional Comprehensive Economic
measures enhance efficiency and reduce Partnership (RCEP), have emerged to
the burden on taxpayers, critics contend that facilitate trade and investment among
they erode social safety nets and participating nations. However, geopolitical
exacerbate inequality. The privatization of tensions and trade disputes pose challenges
education and healthcare, for example, has to the expansion of global trade. • What is
raised concerns about accessibility and global political tension and what are its
affordability, particularly for marginalized effects on international trade?
communities.
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Impact in the Philippines:
International trade has been a significant
driver of economic activity in the Philippines.
• strong trade links with major global
partners, particularly in the Asia-Pacific
region----electronic products, machinery,
garments, and agricultural commodities.
• Exports benefit from a vibrant services
sector, including business process
outsourcing (BPO) and remittances from
overseas Filipino workers, which contribute
significantly to its foreign exchange
earnings.
It is important to note that economic
globalization goes beyond
internationalization. Economic globalization
involves the integration of functions and
processes of economic activities ( Dicken,
2004). This means that economic integration
requires not just having an international
consumer or exporting goods from one
country to another, but also involves
creating institutions for market integration
and globalization.
Economic Globalization and Sustainable
Development
There are some significant downsides to
globalize trade and perhaps the strongest
arguments against economic globalization:
• lack of sustainability or the degree to
which the earth’s resources can be used
for our needs, even in the future.
Specifically, the development of our
world today by using the earth’s
resources and the preservation of such
sources for the future is called
sustainable development. In other
words, development has to be ensured in
and for future generations. One significant
global response or approach to economic
globalization is that of sustainable
development, which seeks to chart a middle
path between economic growth and a
sustainable environment (Borghesi and
Vercelli, 2008). The relationship between
globalization and sustainability is multi-
dimensional – it involves economic, political,
and technological aspects
The continuous production of the world’s
natural resources, such as water and fossil
fuel allows humanity to discover and
innovate many things. We were able to
utilize energy, discover new technologies,
and make advancements in transportation
and communication. However, these
positive effects of development put our
environment at a disadvantage. Climate
change accelerated and global in equality
was not eradicated. This means that
development, although beneficial at one
hand, entails cost on the other.
Environmental Degradation
Development, especially economic
development, was hastened by the industrial
Revolution. The earth’s atmosphere is
damaged by more carbon emissions from
factories around the world. The destruction
of coral reefs and marine biodiversity as
more and more wastes are thrown into the
ocean.
Many experts do not think that the planet
can sustain a growing global economy.
Deforestation, pollution, and climate change
will not adjust for us, especially if increases
in living standards lead people to demand
more consumer goods like cars, meat, and
smartphones.
Economic Globalization, Poverty, and
Inequality
Economic and trade globalization is the
result of companies trying to outmaneuver
their competitors. While you search for the
cheapest place to buy shoes, companies
search for the cheapest place to make those
shoes. They find the cheapest sources of
leather, dye, rubber, and of course, labor.
The result is that labor-intensive products
like shoes are often produced in countries
with the lowest wages and the weakest
regulations. This process creates winners
and losers. The winners include
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corporations and their stockholders who periphery. The core is the center of
earn more profit. They also include economic activities where most of the
consumers who get products at a cheaper population lives and economic institutions
price. The losers are high wageworkers who and services are based. However, majority
used to make those shoes. of the raw materials and productions are
done or sourced out in the periphery. The
Global Income Inequality semi-periphery areas serve as distributors or
Globalization and Inequality are closely add value to the raw materials by processing
related. We can see how different nations them for the core areas.
are divided between the North and the
South, developed and less developed, and Global Governance
the core and the periphery. These This term global governance is sometimes
differences mainly reflect one key aspect of referred to as world governance. Global is a
inequality in the contemporary world – global movement towards political cooperation
economic inequality. There are two main among transnational actors, negotiating
types of economic inequality: wealth responses to problems that affect more than
inequality and income inequality. Wealth one state or region. Institutions of global
refers to the net worth of a country. It takes governance – the United Nations, the
into account all the assets of a nation – may International Criminal Court, the World
they be natural, physical, and human – less Bank, etc. – tend to have limited or
the liabilities.A global company is generally demarcated power to enforce compliance.
referred to as a multinational corporation The modern question of world governance
(MNC). An MNC is a company that operates exist in the context of globalization and
in two or more countries, leveraging the globalizing regimes of power; politically,
global environment to approach varying economically and culturally. In response to
markets in attaining revenue generation. the acceleration of worldwide
interdependence, both between human
What is the role of global corporations in societies and between humankind and the
globalization? biosphere, the term “global governance”
Multinational corporations have played a may mean the process and designating
leading role in this globalization, establishing laws, rules, or regulations intended for a
multiple links between the economies of global scale.
various countries. Using capital from
developed countries, MNCs establish LESSON 3: MARKET INTEGRATION
factories and plants in developing countries,
where they can access raw materials and These developments are due to increasing
labor more cheaply. market integration, which has two kinds –
horizontal and vertical integration
Global Interstate System (Grossman & Hart, 1986). Horizontal
World-systems are defined by the existence integration happens when a firm gains
of a division of labor. control of other firms performing similar
marketing functions at the same level in the
The modern world-system has a multi-state marketing sequence.
political structure (the interstate system) and
therefore its division of labor is international • In the Philippines, an example of local
division of labor. The modern world system market integration is when Landbank of the
is based on the theory of Wallerstein (1974), Philippines acquired the Philippine Postal
which posited that the global economy is Savings Bank, for the latter to focus on
divided into the core, semi-periphery, and
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overseas Filipino worker clients (ABS-CBN It allows countries to take advantage of

News, 2017). comparative advantages, specialize in the
production of goods and services in which
Vertical integration happens when one they have a competitive edge, and
company owns the operations and products participate in global value chains. Market
from one stage to the other along the supply integration promotes efficiency by
chain. For example, an iron mining company encouraging competition, innovation, and
operates a steel manufacturing firm. Another the efficient allocation of resources. It also
instance is when Mcdonald’s owns the land fosters economic growth, raises living
where its supplies are located to avoid the standards, and expands consumer choices
cost of the lease. In this chapter, we will by providing access to a wider range of
discuss the role of different institutions like products and services from around the
international financial institutions and global world.

Market Integration Role of International Financial Institutions in

Is a process by which economies are
becoming more interdependent and
interconnected in terms of commodity flows
including externalities and spillover of
impacts (Genschel and Jacktenfuchs,
2017).
When prices among different locations or
related goods follow the same patterns over
a long period of time, market integration
exist. Similarly, when groups of prices often
move proportionally to each other and when
this relation is very clear among different
markets it is said that the markets are
integrated. Hence, it could be concluded
that market integration is an indicator that
explains how much different markets are
related to each other.
Market integration refers to the process of
linking separate markets together to create a
unified and interconnected economic
system. It involves the removal or reduction
of barriers, such as tariffs, quotas, and trade
restrictions, that hinder the free flow of
goods, services, capital, and labor across
national boundaries. Market integration
facilitates increased trade, investment, and
economic cooperation among countries,
leading to the development of a global
marketplace.
In the context of economic globalization,
market integration holds great significance.
the Creation of Global Economy
International financial institutions are global
financial institutions that support a country’s
economic growth through support that is
loans, technical assistance to governments
and now other private sectors (Wood,
2019).
- An international financial institutions is
chartered by more than one country and
therefore are subjects to international law.
Its owners or shareholders are generally
national governments, although other
international institutions and other
organizations occasionally figure as
shareholders.
International Financial Institutions
International Monetary Fund (IMF)
World Bank (WB)
European Investment Bank (EIB)
Islamic Development Bank (IDB)
Asian Development Bank (ADB)
European Bank for Reconstruction and
Development (EBRD)CAF
Development Bank of Latin America Inter-
American Development Bank Group (IADB)
African Development Bank (AfDB)
Asian Infrastructure Investment Bank (AIIB)
The International Financial Institutions
(IFIs) are:
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1. International Monetary Fund (IMF) is an
international organization with 183 member
countries that promotes international
monetary cooperation and exchange
stability to foster economic growth and high
employment and to provide short-term
financial assistance to countries to help
ease balance of payments adjustment (IMF,
2019).
-The primary purpose of the IMF is to
provide global monetary cooperation and
international financial stability. The
institution, created in 1945, was design to
monitor the system of pegged or fixed
exchange rates. In this system, official
exchange rates of currencies were related to
gold and US. Dollar. It was designed to
prevent the trade wars that occurred during
the interwar period due to competitive
devaluations of states of their currencies
(Cohn, 2011)
-When states suffer from balance-of-
payments deficits, they reduce the value of
their currencies to boost exports with
cheaper products and decrease imports. A
balance-of-payment deficits occurs when a
country spends more than it takes in.
-The role of IMF is to provide short-term
loans to prevent devaluation and retain the
state’s fixed exchanged rate in instances of
the temporary balance of payment deficits. -
The institutions was designed for the
mandate of ensuring international financial
cooperation and reinforces international
trade (Benczes, 2014).
2. World Bank (WB) The World Bank is an
international development organization
owned by 187 countries. Its role is to reduce
poverty by lending money to the
governments of its poorer members to
improve their economies and to improve the
standard of living of their people. The World
Bank supports investments in countries that
underpin long-term growth and that help to
meet the needs of their citizens. We work
with policy makers to develop markets,
institutions, and economies that are stable,
equitable, and efficient.
3. European Investment Bank (EIB) The
European Investment Bank (EIB) furthers
the objectives of the European Union by
providing long-term project funding,
guarantees and advice. It supports projects
both within and outside the EU. Its
shareholders are the Member States of the
EU.
4. Islamic Development Bank (IDB) The
purpose of the Bank is to foster economic
development and social progress of member
countries and Muslim communities in non-
member countries individually as well as
jointly in accordance with the principles of
Shari'ah i.e., Islamic Law.
5. Asian Development Bank (ADB) provides
loans, grants and technical assistance to its
developing member countries, to the private
sector and through public-private
partnerships to support the building and
maintenance of infrastructure. The majority
is in water, energy, transport, urban
development, and information and
communications technology.
6. European Bank for Reconstruction and
Development (EBRD) is a development
bank that provides project financing for
banks, industries and businesses, both new
ventures and existing companies. It
prioritizes support for countries in Central
and West Asia, and North Africa
7. Development Bank of Latin America
a development bank committed in improving
the quality of life for all Latin Americans and
Caribbeans. Their actions promote
sustainable development and regional
integration. Aim to convert there selves into
the green and blue bank, and the one
responsible for the economic and social
reactivation of the region.
8. Inter-American Development Bank Group
(IADB) The IDB is the most important
multilateral source of development financing
for Latin America and the Caribbean. It aims
to reduce poverty and inequality and to
promote sustainable economic development
in the region.
9. African Development Bank (AfDB) As the
premier development finance institution on
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the continent, the AfDB's mission is to help countries aim to stimulate economic
reduce poverty, improve living conditions for progress and world trade by providing a
Africans and mobilize resources for the platform to compare policy experiences and
continent's economic and social identify good practices in domestic and
development. international economic policies and
10. Asian Infrastructure Investment Bank programs of its members. -Food and
(AIIB) meets its commitment to actively Agriculture Organization of the United
support infrastructure projects that Nations (FAO) – leads international efforts to
contribute to climate change mitigation, defeat hunger, eliminate food insecurity and
adaptation and resilience, and reinforces its malnutrition, and increase resilience of
mission to promote sustainable livelihoods and food.
infrastructure development in Asia and
beyond. Global Corporation
While many use “global” in the same way as
Membership Composition of IFIs international when it comes describing a
1. Only sovereign countries are admitted as business some analysts make distinctions
member owner between how each operates. On a basic
2. Broad country membership to include level, a global corporation is one that
borrowing developing countries and operates in more than one country.
developed donor countries Particularly in the United States, the term
3. Membership in regional development can mean different things to different
banks include countries around the world as context, with the characteristics of a global
members (not limited to countries from the corporation varying accordingly. (Craig
region) Berman, 2017).
4. Has its own independent legal and
operational states Business analyst and academics, such as
the groundbreaking Michael Porter at
Other examples of International Harvard University, defined global business
Organizations that Govern Globalization - more narrowly and distinguish them from
World Trade Organization (WTO) – other operations overseas. He defined a
regulates international trades, ensures global business as one that maintains a
smooth flow of trade and provides a forum strong headquarters in one country, but has
for negotiations for trade agreement among investments in multiple foreign locations.
countries and regions of the world Such investments may involve direct
(International Monetary Fund, 2019) investments in foreign assets, such as
-World Health Organization (WHO) – manufacturing facilities or sales offices. The
responsible for global researchers on headquarters generally is its home country,
medicines and vaccines including the World through some moves to more favorable
Health Report and Survey regulatory or taxation locations over time.
-International Labor Organization (ILO) –
deals with labor problems and international These global entities, IFIs and global
labor standards and social protection for corporations, play a significant role in global
workers. wealth creation and distribution, including
-UNESCO – contributes to peace and global economic development (Neubauer,
security by promoting international 2014). However, the significant growth of
collaboration through educational, scientific, IFIs and global corporations is complicated
and cultural reforms by ever-dynamic context and patterns.
-Organization for Economic Cooperation and These trends include global inequality,
Development (OECD) – thirty five member system stability and viability of the global
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financial system and climate issues, and
issues on human security. Although IFIs
have a stronger societal development
outlook, they have a larger responsibility to
safeguard against unintended negative
outcomes of some of their investments and
to balance rapid economic growth with
social well-being and ensuring
environmental health. Similarly, global
corporations need to embrace that their
impact to society and environment goes
beyond profit, products, and employment but
more so to social development and ensuring
environmental integrity in the midst of their
operations and expansion (Neubauer,
2014).
Market Integration
The European Union (EU) and the adoption
of the Euro as a single currency have
brought several benefits to its member
states. Here are some key advantages
Enhanced Trade and Economic Integration:
The Euro eliminates currency exchange
costs and fluctuations within the Eurozone,
making trade between member countries
more efficient and less costly. It has also
stimulated cross-border investments and
encouraged economic integration.
Price Transparency and Competition: The
Euro facilitates price transparency across
member states, enabling consumers to
compare prices easily and promoting
competition. This has led to increased
efficiency and reduced price differentials
within the Eurozone.
Increased Financial Integration: The Euro
has facilitated greater financial integration
within the Eurozone, promoting cross-border
banking and capital flows. This integration
has led to more efficient financial markets,
enhanced access to credit, and improved
risk-sharing mechanisms.
Increased Foreign Direct Investment (FDI):
The Euro provides a stable and attractive
investment environment, attracting higher
levels of FDI into the Eurozone. This has
contributed to economic growth and job
creation in member countries.
Improved Monetary Policy and Stability: The
European Central Bank (ECB) oversees
monetary policy for the Eurozone, which
promotes stability and consistency in
interest rates and inflation across member
states. This has helped maintain
macroeconomic stability and reduce
exchange rate risks.
Elimination of Exchange Rate Uncertainty:
The Euro eliminates exchange rate volatility
between member states, reducing
uncertainty for businesses and investors.
This stability encourages long-term
investment planning and fosters economic
growth.
Asian Integration
Established on August 8, 1967 in Bangkok
Thailand
Founding members
• Indonesia
• Malaysia
• Philippines
• Singapore
• Thailand
Additional members
Brunai joined on January 7, 1984; Vietnam
on July 28, 1985; Lao PDR and Myanmar on
July 23, 1997 and Cambodia on April 30,
1999
ASEAN : ASEAN ECONOMIC
COMMUNITY (AEC) 2025
The ASEAN Economic Community (AEC)
Established in 2015, Kuala Lumpur,
Malaysia is a regional economic integration
initiative by the Association of Southeast
Asian Nations (ASEAN). The AEC envisions
the creation of a single market and
production base that will enhance economic
cooperation and integration among ASEAN
member states. The AEC Blueprint 2025
outlines the strategic measures and targets
for achieving the goals of the AEC by the
year 2025.
Objectives: The AEC 2025 aims to establish
a highly integrated and cohesive economy
among ASEAN member states. The
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objectives include creating a single market enhance the competitiveness and efficiency
and production base, facilitating the of service sectors within the region.
movement of goods, services, and 3. Free flow of investment This principle
investments, promoting competition and aims to attract and promote investment
innovation, enhancing connectivity and flows within ASEAN by creating a conducive
regional economic integration, and and transparent investment environment. It
developing a resilient, inclusive, and involves removing investment barriers,
sustainable economic community facilitating investment protection and dispute
settlement mechanisms, and promoting
ASEAN Community Vision 2025 investment promotion and facilitation
The ASEAN Community Vision 2025 measures. The goal is to stimulate
aims to create a people-centered and investment activities and promote economic
people-oriented community that is politically integration within the region.
cohesive, economically integrated, socially 4. Free flow of capital This principle focuses
responsible, and environmentally on facilitating the movement of capital within
sustainable. It envisions an ASEAN. It involves liberalizing capital flows,
ASEAN community that is resilient, harmonizing capital market regulations, and
inclusive, and dynamic. enhancing financial integration within the
ASEAN Political Security Community 2025 region. The objective is to deepen financial
The APSC aims to promote political and markets, improve access to capital, and
security cooperation among ASEAN promote financial stability and resilience
member states, ensuring peace, stability, within ASEAN.
and resilience in the region. 5. Free flow of skilled labor This principle
ASEAN Socio-Cultural Community (ASCC) aims to promote the mobility of skilled labor
aims to promote social progress, cultural within ASEAN. It involves facilitating the
development, and human resource capacity- movement of professionals, skilled workers,
building within ASEAN. and talents across borders within the region.
Efforts are made to enhance the recognition
Asian Economic Community of qualifications, streamline visa and work
permit procedures, and promote mutual
5 Core Principles ASEAN recognition arrangements for professional
Single Market and Production Base: services. The goal is to address labor
1. Free flow of goods This principle aims to market demands, enhance regional
create a seamless and efficient flow of competitiveness, and promote human
goods within the ASEAN region. It involves resource development within ASEAN.
eliminating tariff and non-tariff barriers,
harmonizing customs procedures, and The World’s Largest Economies based
enhancing trade facilitation measures. The on data from the International Monetary
goal is to promote trade liberalization and Fund, 2018 as cited in Smith Country
enhance market access for goods produced Value
within ASEAN.
2. Free flow of services This principle
focuses on liberalizing trade in services
within ASEAN. It involves reducing
restrictions on the movement of service
providers, facilitating the recognition of
professional qualifications, and promoting
cross-border trade in services. The aim is to
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Lesson 4 :Market Globalization 4. Technological Advancements:

Globalization has been fueled by
Market globalization refers to the increasing technological advancements, making it
interconnectedness, integration, and easier to communicate, share information,
interdependence of markets worldwide. It is and conduct business across borders. The
characterized by the flow of goods, services, rise of the internet and digital
capital, and information across national communication has facilitated e-commerce,
borders, facilitated by advancements in enabling companies to reach consumers
technology, transportation, and worldwide and revolutionizing the way
communication. Market globalization is business is conducted.
driven by various factors, including 5. Transnational Corporations:
multinational corporations, trade Multinational corporations have been major
liberalization, and digitalization, and it has drivers of globalization. These companies
significant implications for businesses, can operate in various countries, leveraging
economies, and societies. Market economies of scale, accessing new markets,
globalization enables businesses to access and creating employment opportunities.
a global customer base, source inputs from However, the influence of large corporations
various countries, and establish production has raised concerns about their power and
facilities in different regions. impact on local economies.
6. Cultural Exchange and Homogenization:
Key aspects of globalization and its Globalization has led to cultural exchange,
impact on the world economy: with people from different cultures
1. Increased International Trade: interacting and sharing ideas and values.
Globalization has facilitated a surge in However, there are concerns about cultural
international trade. Nations can specialize in homogenization, as global media and
producing goods and services in which they consumer trends sometimes overshadow.
have a comparative advantage, leading to 7. Income Inequality:
greater efficiency and higher productivity. While globalization has lifted many out of
This has resulted in the expansion of global poverty, it has also exacerbated income
supply chains, where products are inequality, both within and between
manufactured across multiple countries, countries. Developed countries often benefit
allowing for cost-effective production and more from globalization, leaving some
more extensive market access. developing nations behind and creating
2. Boosting Economic Growth: income disparities within countries.
Globalization has contributed to economic
growth, particularly in emerging economies.
Access to international markets and 8. Environmental Impact:
investments has accelerated the Globalization's demand for increased
development of these countries, lifting production and transportation has
millions out of poverty and improving living raised environmental concerns. Issues like
standards. carbon emissions, deforestation,
3. Financial Integration: and resource depletion need to be
Financial globalization has interconnected addressed to achieve sustainable
global financial markets, allowing for greater globalization.
capital mobility and investment 9. Policy Challenges:
diversification. However, it has also Globalization has presented challenges for
increased the susceptibility to financial policymakers, as they must strike
crises, as shocks in one part of the world a balance between promoting economic
can quickly spread globally. growth and ensuring social and
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environmental welfare. Cooperation among
nations is necessary to manage
global issues such as climate change and
financial stability effectively.
Role of Technology, Trade Liberalization,
and Multinational Corporations: -
Technology: Technological advancements,
such as the internet, telecommunications,
and transportation systems, have
revolutionized global communication,
production, and distribution. E-commerce
platforms have allowed businesses to reach
customers worldwide, while advanced
logistics have facilitated the efficient
movement of goods across continents. -
Trade Liberalization: Trade agreements,
such as those within regional blocs (e.g.,
European Union, ASEAN) and global
institutions (e.g., World Trade Organization),
have reduced tariffs, quotas, and other trade
barriers, encouraging international trade and
market integration.
-Multinational Corporations: MNCs are at the
forefront of market globalization. Their global 1. Colonialism and Imperialism:
operations, investment in multiple countries,
and establishment of subsidiaries and
branches have enabled the flow of goods,
services, and capital on a global scale.
Real-World Examples of Global
Companies and Their Impact:
-Apple Inc.
Apple is a multinational technology company of colonies into global markets created
known for its iconic products like the iPhone economic interdependencies and
and MacBook. By leveraging global supply
chains and outsourcing manufacturing to
countries like China, Apple has achieved
cost efficiency and quick product delivery. Its The Industrial Revolution, which began in
products have a significant impact on local
markets worldwide, driving demand for
related services and accessories.
-McDonald's Corporation:
McDonald's is a leading global fast-food
chain operating in numerous countries.
Through franchising and localized menus,
McDonald's tailors its offerings to suit the
tastes and preferences of local consumers.
The company's global presence has not only
influenced eating habits but also created
employment opportunities and contributed to
local economies.
-Coca-Cola Company:
Coca-Cola is a multinational beverage
corporation that operates in over 200
countries. Its global marketing campaigns
and product distribution have made Coca-
Cola one of the most recognizable brands
worldwide. The company's presence has
impacted local markets by influencing
consumer preferences and supporting local
bottling and distribution networks.
The Historical context and factors that
have contributed to market globalization
The historical context and factors that have
contributed to market globalization are
complex and multifaceted. Several key
events, policies, and developments have
shaped the trajectory of market
globalization. Let's explore some of the
significant historical contexts and factors:
Colonialism and imperialism, particularly
during the 16th to the 20th centuries, played
a significant role in laying the groundwork for
market globalization. European powers
established colonies, extracting resources
and establishing trade networks that
connected their colonies to the global
economy. This exploitation and integration
established the foundations for future global
trade.
2. Industrial Revolution:
the 18th century in Britain and later spread
to other parts of Europe and the United
States, revolutionized production processes.
The introduction of new technologies, such
as steam power and mechanization,
increased productivity and spurred
economic growth. Industrialization led to the
growth of markets, the expansion of trade
networks, and the emergence of
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multinational corporations, setting the stage Negative Impact: Increased competition

for market globalization. from global markets can negatively impact
3. Post-World War II Reconstruction: some domestic industries, leading to job
The devastation caused by World War II displacements and trade imbalances.
prompted the need for international Additionally, trade liberalization may result in
cooperation and economic reconstruction. the erosion of domestic industries that face
The establishment of international competition from lower-cost imports.
institutions like the International Monetary 2. Finance:
Fund (IMF) and the World Bank aimed to Positive Impact: Financial globalization has
stabilize economies and foster global trade increased access to capital and investment
and investment. Additionally, the opportunities for businesses and
establishment of the General Agreement on governments. It allows for portfolio
Tariffs and Trade (GATT), later replaced by diversification, lowering the cost of capital,
the World Trade Organization (WTO), and increasing investment efficiency.
facilitated trade liberalization and the Negative Impact: The interconnectedness of
reduction of trade barriers. financial markets has amplified the risk of
4. Technological Advancements: financial contagion during crises. Capital
Technological advancements have played a flows can be volatile, leading to sudden
crucial role in enabling market globalization.outflows that impact exchange rates and
The development of transportation asset prices.
technologies, such as steamships, railways, 3. Culture:
and later air travel, reduced the cost and Positive Impact: Market globalization has
time required for long-distance trade. facilitated cultural exchange and the spread
Communication technologies, from the of ideas, allowing individuals from different
telegraph to the internet, have revolutionizedcultures to connect and collaborate. This
global communication, allowing for instant exchange of cultural products and
exchange of information and coordination of experiences can lead to increased diversity
economic activities across borders. and appreciation of global cultures. Negative
5. Trade Liberalization: Impact: Some argue that market
Trade liberalization policies, including the globalization has led to cultural
reduction of tariffs, quotas, and trade homogenization, as dominant global cultures
barriers, have been instrumental in may overshadow local traditions and
promoting market globalization. Trade identities. Cultural products may become
agreements, such as the establishment of standardized to cater to global markets,
the European Union and the North American potentially eroding unique cultural
Free Trade Agreement (NAFTA), have expressions.
created regional economic blocs that 4. Technology:
encourage trade and investment Positive Impact: Market globalization has
driven technological advancements,
Impact of Market Globalization on particularly in communication and
Various Sectors: transportation. Innovations in digital
1. Trade: technologies have revolutionized global
Positive Impact: Market globalization has led supply chains, logistics, and online
to an increase in global trade volumes and commerce.
diversification of products. Countries can Negative Impact: Rapid technological
specialize in producing goods and services changes can create skill gaps and job
where they have a comparative advantage, displacement in certain sectors, leading to
resulting in efficiency gains and broader income inequality. Moreover, the reliance on
consumer choices. advanced technologies may increase the
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digital divide between developed and
developing nations.
5. Environment:
Positive Impact: Globalization has facilitated
international collaboration in addressing
environmental challenges. The sharing of
knowledge and technology has supported
sustainable practices and global
environmental initiatives.
Negative Impact: Increased production and
transportation in a globalized market can
lead to higher carbon emissions,
deforestation, and resource depletion. Some
environmental regulations may be relaxed in
countries aiming to attract foreign
investment.
From Laissez Faire To Neoliberalism
Laissez-faire and neoliberalism are two
economic ideologies that have shaped the
evolution of economic policies and
governance over the past few centuries.
Let's explore the transition from laissez-faire
to neoliberalism and understand the key
characteristics of each.
Laissez faire
is the belief that economies and businesses
function best when there is no interference
by the government. It comes from the
French, meaning to leave alone or to allow
to do. It is one of the guiding principles of
capitalism and a free market economy.
Neoliberalism a theory of political economic
practices that proposes that human well-
being can best be advance by liberating
individual entrepreneurial freedoms and
skills within an institutional framework
characterized by a strong private property
rights, free markets and free trade.
The Role of the State in Neoliberalism
• To create and preserve an institutional
framework appropriate to such practice.
• To guarantee, for example the quality and
integrity of money set up those military,
defense, police, and legal structures and
functions required secure private property
rights and to guarantee, by force if need be,
the proper functioning of markets.
• If markets do not exists (in areas such as
land, water, education, health care, social
security or environmental pollution) then
they must be created, by the state, if
necessary.
• State interventions in markets must be
kept to a bare minimum.
• The state cannot possibly possess enough
information to second-guess market signals
(prices) and because powerful interest group
will inevitably distort and bias state
intervention (particularly in democrats) for
their own benefit.
Key Characteristics of Neoliberalism:
Market-Centered Approach: Neoliberalism
prioritizes free markets and emphasizes that
market forces are the most efficient
allocators of resources.
Deregulation and Privatization: Neoliberal
policies often involve reducing government
regulations on businesses and privatizing
state-owned enterprises.
Fiscal Discipline: Neoliberalism advocates
for responsible fiscal policies, including
controlling public spending and maintaining
low budget deficits.
Free Trade and Globalization: Neoliberalism
supports liberalizing trade and promoting
globalization to expand market access and
economic opportunities.
Monetarism: Neoliberal economists often
emphasize the role of monetary policy in
stabilizing economies and controlling
inflation.
Privatization
It is the process of transferring an enterprise
or industry from the public sector to the
private sector. Some of the government
owned and controlled corporations were
already transferred from public to private
sector: Philippine Airlines (PAL)Philippine
Long Distance Corporation (PLDT)Manila
Electric Company (Meralco)Manila
Waterworks and Sewerage System (MWSS)
now Maynilad Water Services and Manila
Water Company.
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