UNIT II

STRUCTURES OOF
. ..

GLOBALIZATION .

Lesson 3

The Global Economy

LESSON OBJECTIVES

At the end of this lesson, you should be able to:

1 define economic globalization;

2. identify the actors that facilitate economic globalization;

3. define the modern world system; and

4. articulate a stance on global economic integration.

wwwww wwwwwwww.wwwwwwwwwwwwwww.wwwwwwwwwwwwwwwwwwwww.wwww**

Definition of Terms
national economies, the
Economic globalization is the expansion of
modern technologies and institutional set ups
global market driven by
that promote faster and easier flow
of goods and capital (Sugden and

Wilson, 2005).
economies of various countries
Global economy denotes that the
interconnected from extraction, production,
distribution,
are more
and services (Carfi and Schilirò, 2018).
consumption, to disposal of goods
International financial institutions
areglobal financial institutions
economic growth through support (i.e., loans,
that support a country's
sectors other private
and now
technical assistance) to governments
(Wood, 2019).
organization international with 183
Monetary Fund is an
International
international monetary cooperation
member countries that promotes
foster economic growth and high employment
and exchange stability to
financial assistance to countries to help
ease
and to provide short-term
balance of payments adjustments
(IMF, 2019).

23
 Global civil society is a system of nongovernment institutions that
Operate across geographical borders and organize and mobilize ror a

common issue or cause (Keane, 2003: 8).

OODal Corporation is an "enterprise that engages in activities which
add value (manufacturing, extraction, services, marketing, etc) in more

than one country" (UCTC, 1991).

World system is based on the theory of Wallerstein (1974) that recognizes
that social and economic change is not only endogenous to a county, Dut
Is affected by its interaction to exogenous institutions, thus the focus on

world-systems (Chase-Dunn, 2018).

Economic integration is a process of combining or increasing the
interconnectivity of national economies to the regional or lobal
economies (Clark et al., 2018).
www***

INTRODUCTION
As discussed in the earlier section, central to the discussion about
globalization
is its economic dimension. The
phenomenon of economic globalization
includes
greater integration of economic activities, products, and systems across the world.
As Szentes (2003:69) argues,
globalization in economic terms extends economic
projects and relations transnationally and promotes economic interdeperndencies
among different countries.
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
goods from one country another, but also involves creating
to
exporting
institutions for
market integration and globalization.
Inthis section, we will deepen our disCussion on
economic globalization.
Specifically, this lesson aims to answer, "Who are the actors that drive
economic
olobalization?" and "What is the modern world system?" At the end of this
the lesson.
students should also express their stance on the
ongoing global economic
integration.

24 A Course Module for The Contemporary World

 DEFINITION OF ECONOMIC GLOBALIZATION

Most of the definitions of globalization centers on its economic dimensions.

Economic globalization is driven by the "growing scale of cross-border trade of
commodities and services" (Shangquan, 2000:1). Critical to economicglobalization is
global economic integration. Economic integration means that separate production
operations are functionally related to each other and form a unified product
or service. This requires efficient management of economic operations from
different areas in the world. In current times, this is made possible by innovations
in transport logistics, modernization of communication and transport systems,
policies supporting integration of different process along the globe, among others.
The various definitions of the economic globalization focus on increasing
economic trade interrelations among countries (Steger, 2010; Al-Rodhan, et al.,
2006; Shangquan, 2000). This is governed by neoliberal principles with the role
of the market as a central driver of economic activities, with less government
interventions (Martin, Schumann &Camiller, 1997). Economic globalization entails
global industrial restructuring and readjustments where developed countries
play a dominant role (Shangquan, 2000:3).
However, the process of global economic integration is not a modern
phenomenon. The voyages of earlier explorers including the formation of empire
(i.e., Roman empire) were critical in intercontinental trade and were also a
precursor of modern economic globalization. Chinese, and even earlier, trades
in Asia also serve as first-forms of economic expansion and later integration.
Gills and Thompson (2006: 1) argues that the globalization processes "have been
ongoing ever since Homo sapiens began migrating from the African continent
ultimately to populate the rest of the world." Explorations in earlier times tend
to focus on a relatively smaller target of commodities of high value like spices,
tea, gold, or other precious metals. The difference now is the extent and reach
of economic globalization, restructuring of economic systems, and the dominant
influence of the private sector in the global economy (Shangquan, 2000)

Who are the Actors that Facilitate Economic Globalization?

Globalization has opened the doors for other non-state authority and
actors in driving economic globalization (Madsen & Christensen, 2016; Sassen,
2006). Non-state actors include international economic organizations, private
sector led by multinational companies, central banks, and civil society. Let us
discuss how each actor contributes to economic globalization.
 irst are international economic organizations such as the International
Monetary Fund (IMF), World Bank, and Organization for Economic Cooperation
and Development (OECD). These organizations are critical in developing and

pushing for neoliberal policies among different countries. They also help taciltate
trade and development discussions among various states. Another example are
egional organizations such as the Association of Southeast Asian Nations (ASEAN)
and North American Free Trade
Agreement (NAFTA). These organizations promote
egional agreements and standards that facilitate better trade and exchange of
knowledge, human resources, and regional cooperation. The Group o 8 (G8)
and G20 are
advisory organizations that discuss current economic
political and
problems and transfer the ideas from the groups' forum to national legislative
regulations (Shangquan, 2000: 280).
Second are multinational considered to be
companies (MNCS), which are
the main carriers of economic
globalization (Shangquan, 2000:2). In 1996, there
were 44,000 MNCs in the world with 280,000 overseas subsidiaries and branch
offices (ibid). In 2006, there were 88,000 MNCs identified
(UNCTAD, 2007). In
earlier times, trade
companies such as the Dutch and British East India, Muscovy
Company, Royal African Company, and Hudson Bay
Company were precursors
of the modern day MNCs (Hirst &
Thompson, 2002). MNCs started to emerge
during World War ll when US industrial production increased 44 by percent
(Strange, 1996).
Other prime movers of economic globalization are central banks. They are
considered one of the most powerful institutions in the
world economy since
they can lead economic development, and some authors
contend that central
bank governors are more influential in their own national economy than some
politicians (Shangquan, 2000: 280).
Lastly is the
global civil society as a major driver of economic
The global civil society has made its mark in globalization.
global development arena
particularly during the UN Conference on Environment and
1992 (Keane, 2003). Global civil society Seen as
Development in
either composed of
orgroups of individuals disadvantaged by the effects of the
individuals
AOrld economy, they protest and seek globalization of the
alternatives while
the other hand,
on
global social movement constituting a basis for an
alternative to a new world
order (Gherghel, n.d.). Part of the giobal cVII SOCiety are
Networks (TAN), networks whicn are "oganized tO Transnational Advocacy
promote causes, Drincipled
ideas, and norms, and they often involve individuals
that cannot be easily linked to a rationalist advocating policy
cy changes
(Keck&Sikking, 1998:8-9). understanding of their 'interests

A Course Module for The contemporary World

International Monetary Fund (IMF)
The IMF is international organization of 183 menmber countries to promotee
an

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 adjustments (IME, 2019).
International Financial Institutions (IFIs)

The generic name given to all financial institutions operating on an

international level, ranging from development banks, such as the World
Bank and the European Bank for Reconstruction and Development (EDB),
and monetary authorities, such as the International Monetary Fund. These
organizations give loans to governments for large-scale projects, restructuring
and balance of payments on condition that they make specific changes that
IFls believe will boost economic growth (Shangquan, 2000).

Transnational Corporations
"Enterprise that engages in activities which add value (manufacturing.
extraction, services, marketing, etc.) in more than one country (UCTC, 1991)"

Unit II STRUCTURES OF GLOBALIZATION 27

G8 and G20 organization
that discuss
di

Group of nations that serve as an advisory

the ideas from forum
therorum
transfer
economic and political
problems and
current 2018)
in national legislative regulations (Weiss,

Global Civil Society

of
individuals
disadvantaged ed byby
groups
Either composed of individuals or protest
a n a seek

the world economy,

they
the effects of the globalization of
social movement constituting a
global
alternatives while on the other hand,
order (Gherghel, n.d.; Keane, 2005)
Dasis new world
for an alternative to a

What is the Modern World System?

on the world-system theory
The seminal work of Immanuel Wallerstein
In this work,
(1974) is a critical reference in the theorization of globalization.
he expounded the theory on how the core came to dominate
on
the periphery
areas particularly in the economic world system as a
basis of his analysis. This
with nation-state as
transgresses from the traditional analysis of colonization
starting point.
For Wallerstein, a world system constitutes a social system composed of
boundaries, structures, member groups, rules of legitimation, and coherence
(Wallerstein, 2011). World economy, according to Wallerstein (2011), is divided
into core states and peripheral areas including semi-peripherals. According to
the world-system theory, the peripherals are mostly where production or raw
materials are sourced out, while the semi-peripherals processed or distributed
the products to the core areas-sites of major demands for goods and
services
(Wallerstein, 2011). There are significant and meaningful movements of resources,
products, people in different economies facilitated by modern
transport and
communication (Chase-Dunn, 2018).
SUMMARY

This lesson sets out to answer the following questions: "what is economic
globalization?", "who are the actors that drive economic globalization?", and
"what is the modern world system?"

1. Economic globalization is the expansion of national economies, the global

market driven by modern technologies and institutional set ups that
promote faster and easier flow of goods and capital (Sugden & Wilson,
2005). The global economy is a product of this economic globalization
where each countries' economies are more interconnected and affected by
each other.
2. There are different actors and institutions that drive economic globalization,
most of which are non-state actors. These include international economic
organizations like IM, WB, ADB; central banks; private sectors led by MNCs;
and civil society. These organizations affect trade and economic policies
and serve as source of support (funds, services, technical) for economic
globalization.
3. The modern world system is based on the theory of Wallerstein (1974), which
posited that the global economy is divided into the core, semi-periphery,
and periphery. The core is the center of economic activities where most
Unit II STRUCTURES OF GLOBALIZATION 29
 population lives and economic institutions and
Or the
service d r e dased
are done o r sourced
However, majority of the raw materials and productions
or
areas serve as
distrioutors add
Out in the periphery. The semi-peripherv
areas.
them for the core
V a l u e to the r a w materials by
processing
 Lesson 4

The Global Interstate System

LESSON OBJECTIVESS
When you finish reading this chapter, you should be able to:

1. explain the effects of globalization on governments;

2. identify the institutions that govern international relations; and

3 differentiate internationalism from globalism.

Definition of Terms

Global interstate System- is an institutional arrangement of governance

that addresses regional or globalized issues that go beyond the scope
of a nation-state (Chase-Dunn, 1981)
Internationalism - puts emphasis on
diversity and celebrates
multiculturalism, while globalism focuses more on the economic aspect
of the exchanges among countries and society
**** ********************************** **** *****

INTRODUCTION
In a globalized society, observe
we a greater flow of capitals, goods,
services, and people. This is supported by developments and modernization
of transport, communication, and financial services in the world.
However, with
this, the traditional state system is now becoming limited to address
globalizing
issues and patterns. Internationalist thinkers that
argue the key motivating
principles of traditional state systems of power and sovereignty runs counter
on the need for
greater political and economic cooperation among different
states and people (Daly, 1999). Thus, in this
chapter,
we will further unpack how
globalization affects national governments and countries. We will also identify
the global institutions that govern international relations.
Here, we contend that
these institutions include non-state
organizations and private sector. Lastly, we
will differentiate internationalism from
globalism. Definitions of concepts are
important in order for us to critically understand a certain phenomenon and as
a basis of our opinion and review of such cases.

Unit Il STRUCTURES OF GLOBALIZATION 33

 Let us first define an interstate system. Chase-Dunn defines an interstate
system as a
system of unequally powerful and competing states in which no single state
s Capable of imposing control on all others. These states are in interdction
wIEn one another in a set of shifting alliance and wars and changes in
Telative power of states upsets any temporary set of alliances, leading to a
restructuring of the balance of power" (Chase-Dunn, 198120).
nus, an interstate system is the form of governance for a 8loDalization

(Chase-Dunn, 1981).

Effects of Globalization on Governments

As the world becomes more interconnected through politics, trade, and
communications, the role of nation-states and government are also shifting
Thus, national and local policies are not only based on local context but also
international and global realities. One example of a global treaty is the Montreal
Protocol on Substances that Deplete the Ozone Layer, which aims to phase out
the production of numerous substances responsible for ozone depletion, signed
in August 26, 1987 with 46 country signatories (US EPA, 2017). A definitive evidence
of the Montreal Protocol's success was discussed by NASA and projected that
ozone levels will return to 1980 levels by 2032 (Watts, 2018). This is an example of
how international agreements and efforts could fight borderless challenges and
issues specifically by domesticating international norms.

However, there is another side of globalization that negatively affects local

governments and local communities. A local government would like to attract
major global investors in their community by setting up for instance their
manufacturing firm in the area. This could create jobs for the local people and
generate income for local businesses. However, it entails converting tracks of
agricultural land into an industrial zone. Farmers will be displaced and agricultural
production of the area will be afected. The global corporation is also demanding
lower taxes and lower income wage in order to finalize their investment in the
area. They argue that they will Create more jobs and more income from the local

community and government. How could local governments balance improved

economic performance and participation in the global economic scene without
cacrificing local social and environmental well-being? Here, we see
how local
aOvernments are heavily influenced by powerful corporate entities.

34 A Course Module for The Contemporary World

Institutions that Govern Globalization
With the growing globalization, the governance of global relations goes
beyond nation-state governments. Nation-state governments' Scale and
scope are limited in addressing regional and global issues like climate change,
cybercrime, and global financial crises. Works by authors like Dryzek (2012) and
Castells (2008) show the growing emphasis on the role of non-state actors in
globalgovernance. These non-state actors include NGOs, advocacy networks,
voluntary associations, and interest groups (Castells, 2008). Their congenial
and more approachable strategies appeal the community and even other state
actors and has a potential to organize acros areas (Dryzek, 2012).
The shift of authority to actors above and below the state is termed as
As the role of
"glocalization" or "internal globalization" (Roudomentof, 2005: 113).
new actors has
the nation-state and governments shifted, participation of these
renowned modern examples of
opened up (Boli & Thomas, 1999). One of the most
1992 UN Conference
the active role of non-state actors in global movements is in the
on Environment and Development.
The world saw the most active and broadest role
of non-state actors in pushing for more just and sustainable development (Bouman-
Dentener & Devos, 2015).

There several institutions that govern international relations and affairs.

are
seen as the
First and foremost is the United Nations. With 192 member states, it is
facilitator of global governance (Meyer, 2011). Another is regional commissions,
which are group of officials from different countries that instruct and debate,
Unit l STRUCTURES OF GLOBALIZATION 35
 and are in charge of making certain laws promulgate certain rights
are the
for economir
Economic

of these
are the Econ. onomic
Commission for Africa (ECA),
and social development (CEPALEconomic
et al., 2015). amples
Commissi for Europe (ECE),
Economic
Ecor and onomic
Economi mic and
and
(ESCLAC),
Carribbean
Commission for Latin American and the dnd Social
Pacific (ESCAP),
and Economic
SOCial Commission for Asia and the

Commission for Western Asia (ESCWA) (ibid).

that provides
an international
financial institution
he World Bank (WB) is tne Bretton
established during
Oansto countries of the world for capital proiects, the International
members like
Woods Conference in 1944 and include other
International Development
5ank for Reconstruction and Development (IRDB),
ASSOCiation (IDA), International Finance Corporation
(IFC), and Multilateral
investment Guarantee Agency (MIGA) (The World Bank,
n.d.). These institutions
in
provide loans to middle income countries and even private sectors developing
COuntries to create markets and improve local economies.

Other examples are listed in the table below.

Sources/Websites
International Organization Key Role/s ww0000*00*****

International Monetary Fund looks at the stability of the www.imf.org

(IMF) internationalmonetary
system by monitoring global
economy, lends to countries,
and provides policy and
technical advisory functions
tomembers (Maverick, 2019)
World Trade Organization regulates international www.wto.org
(WTO) trades, ensures smooth
flow of trade, and provides
a forum for negotiations for
trade agreements among
countries and regions of
theworld (International
Monetary Fund, 2019)
World Health Organization responsible for global
(WHO) researches on medicines and www.who.org
vaccines including the World
Health Report and
Survey
Organization for Economic thirty five member countries
Cooperation and aim to stimulate economic www.oecd.org
Development (OECD) progress and world trade
by providing a platform to
compare policy experiences
and identify good practices
in domestic and international
economic policies and
programs of its members
36 A Course Module for The Contemporary World
 International Labor
Organization (ILO)
Food and Agriculture
United
Organization of the
Nations (FAO)
UNESCO
International Civil
Aviation Organization
(ICAO); International
Maritime Organization
(IMO); International
Telecommunication Union
(ITU); The World Intellectual
Property Organization (WIPO)
deals with labor problems www.ilo.org
and international labor
standards and social
protection for workers
leads international efforts to www.fao.org
defeat hunger, eliminate food
insecurity and malnutrition,
and increase resilience of
|livelihoods and food
contributes to peace and www.unesco.org
security by promoting
international collaboration
through educational,
scientific, and cultural
reforms
for regulations of www.icao.int
international air transport; www.imo.org
shipping and prevention
www.itu.int
of pollution at sea;
developing standards on www.wipo.int
ICT; international intellectual
property rights standards
Globalism vs Internationalism
These two terms are ain to
and pertai
commonly used interchangeably
the
increasing interconnectivity people
the world throu
of the
of countries and
communications, transport, and technology (Roudometof,
2005). However,
2005). Hov
lowever, ther
the
are Internationalism
differences between internationalism and globalism. Internationa nalism iis
defined as political, economic, and cultural cooperation hetween nations,
between natiorions, while
whil
globalism is that flow of
people, goods,a
ds, and
ideology sed
anbased on the belief
belief that flowOP
information shouid
nformation (Roudometof, 2005)
should flow freely across national borders (Roudometof, 2005
Sargent (2008) argues that internationalism emphasizes diversity
diversity and
and cele
celebrates
cOnomic
multiculturalism, while globalism focuses more on the economic aspect of the
the
exchanges among countries and society.

CREATE.
* * * .

Create a
collage
depicts "A global citizen." You need to prepare the
that
COllage artwork in a one-piece cartolina. You should reflect on the qualities
and
characteristics of a global citizen and what a global citizen does or is into.
Class will hold
The
anexhibit where each student could showcase his/her
and output
explain it to the class.

SUMMARY
In this chapter, we discussed how globalization and the
of economics have affected traditional internationalization
national governance and
Although there are benefits of globalization for government.
addressing borderless
like climate change,
pollution, among others, there are also limits and challenges
posed in the local sovereignty and self-determination of nations challenges
and communities
Here, we also discussed the different
institutions that assist in global
governance. This includes institutions like the UN and
development organizations. Als, the growing international finance and
actors like civil society groups in international recognition the role of non-state
of
affairs is
Lastly,
highlighted.
we briefly discussed the difference
internationalism. While the former rocuses on between globalism and
the economic
globalization, the latter focuses on culture and
social
dimensions o
interactions

38 A Course Module for The Contemporary World