The Contemporary World

WALT ROSTOW'S FOUR

STAGES OF MODERNIZATION
ACCORDING TO AMERICAN ECONOMIST WALT ROSTOW,
MODERNIZATION IN THE WEST HAVE FOUR STAGES

TRADITIONAL STAGE

It refers to societies that are structured around small

local communities, typically bring done in family
settings. Because these societies have limited
resources and technology, most of their time is spent
on laboring to produce food, which creates a strict
social hierarchy.
ACCORDING TO AMERICAN ECONOMIST WALT ROSTOW,
MODERNIZATION IN THE WEST HAVE FOUR STAGES

TAKE- OFF STAGE

People begin to use their individual talents to produce

things beyond the necessities. This innovation creates
new markets for trade. In turn, greater individualism takes
hold and social status is more closely linked with material
wealth.
ACCORDING TO AMERICAN ECONOMIST WALT ROSTOW,
MODERNIZATION IN THE WEST HAVE FOUR STAGES

TECHNOLOGICAL MATURITY

Technological growth reductions in absolute poverty

begins to bear fruit in the form of population growth,
reductions in absolute property levels and more
diverse job opportunities.
ACCORDING TO AMERICAN ECONOMIST WALT ROSTOW,
MODERNIZATION IN THE WEST HAVE FOUR STAGES

HIGH MASS CONSUMPTION

It is when your country is big enough

that production becomes more about
wants than needs.
MODERNIZATION THEORY

by exporting their technologies and

things, like agriculture machinery,
information technology, as well as
providing foreign aid.
DEPENDENCY THEORY AND
THE LATIN AMERICAN
EXPERIENCE
PERIPHERAL NATIONS
are countries that are less developed and
receive an unequal distribution of the
world's wealth.

CORE COUNTRIES
it is more industrialized nations who receive
the majority of the world's wealth.
DEPENDENCY THEORISTS:
saw that the development of peripheral nations is stagnant
because of the exploitative nature of the core nations (Ferraro,
2008)

Less developed periphery countries are said to primarily serve

the interests of the wealthier countries and end up having little to
no resources to put toward their own development.

The theory points out that the economies of periphery

countries rely on manual labor and to the export of raw
materials to core nations.
The Contemporary World

THE MODERN
WORLD-SYSTEM
 THE MODERN WORLD-SYSTEM
According to Immanuel Wallerstein, he describes
this community of nations as the Modern World
System, a social system comprised of nations
that are politically and economically
interdependent (Wallerstein 1974). Within the
modern world system, nations are hierarchically
structured according to a world-wide division of
labor in the world economy.

THE MODERN WORLD-SYSTEM

Just as modernization theory had its critics, so
does dependency theory. Critics argue that the
world economy is not a xero-sum game, where
one country is getting richer does not mean the
other countries are getting poorer. Innovation
and technological growth can spill over to the
countries, improving all nations.
 CORE COUNTRIES
WALLENSTEIN DESCRIBED HIGH-INCOME NATIONS AS THE “CORE” OF THE
WORLD ECONOMY. THIS CORE IS THE MANUFACTURING BASE OF THE
PLANET WHERE RESOURCES FUNNEL TO BECOME THE TECHNOLOGY
AND WEALTH THAT IS ENJOYED BY WESTERN WORLD TODAY.

CANADA GERMANY JAPAN SINGAPORE UNITED STATES

CORE COUNTRY
01 CANADA IS A WEALTHY NATION WITH A
STRONG AND DIVERSIFIED ECONOMY. A
LARGE PART OF ITS ECONOMY DEPENDS ON
THE MINING OF NATURAL RESOURCES, SUCH
AS GOLD, ZINC, COPPER, AND NICKEL, WHICH
ARE USED EXTENSIVELY AROUND THE
WORLD. CANADA IS ALSO A LARGE PLAYER IN
THE OIL BUSINESS WITH MANY LARGE OIL
COMPANIES. CANADA'S PROSPERITY CAN BE
ATTRIBUTED TO ITS VAST NATURAL
RESOURCES, SIZABLE MANUFACTURING BASE,
AND VIBRANT SEAFOOD INDUSTRY.
CANADA
“Great White North”
CORE COUNTRY
02 GERMANY IS CONSIDERED A CORE COUNTRY
BECAUSE OF ITS STRONG ECONOMY AND
POLITICAL INFLUENCE IN EUROPE AND THE
WORLD. CORE COUNTRIES ARE DEFINED AS
INDUSTRIALIZED CAPITALIST OR IMPERIALIST
COUNTRIES THAT CONTROL AND BENEFIT
FROM THE GLOBAL MARKET. THEY ARE
USUALLY RECOGNIZED AS WEALTHY STATES
WITH A WIDE VARIETY OF RESOURCES AND
ARE IN A FAVORABLE LOCATION COMPARED
TO OTHER STATES.
GERMANY
“Deutschland”
 CORE COUNTRY
03
JAPAN IS CONSIDERED A CORE COUNTRY
BECAUSE OF ITS WEALTHY, DEVELOPED AND
INDUSTRIALIZED ECONOMY, WHICH IS
CHARACTERIZED BY HIGH LEVELS OF
INDUSTRIALIZATION AND URBANIZATION.
JAPAN HAS A WELL-FUNDED MILITARY AND
ADVANCED ECONOMY THAT ENABLES IT TO
INFLUENCE THE GLOBAL ECONOMIC MARKET.

JAPAN
“The Land of the Rising Sun”
CORE COUNTRY
04 SINGAPORE IS A WEALTHY COUNTRY DUE TO
THE FOLLOWING REASONS:
THE IMMENSE GROWTH OF ITS GDP PER
CAPITA WHICH CURRENTLY STANDS AT
S$87,108 FROM A LOWER S$1,310.
THE REDUCTION IN THE RATE OF
UNEMPLOYMENT FROM 14 PERCENT TO
1.9 PERCENT.
STRONG AND PRAGMATIC LEADERSHIP.
CAPITALIZING ON ITS STRATEGICALLY
LOCATED PORT.
OPENING THE COUNTRY TO ATTRACT
SINGAPORE FOREIGN INVESTMENTS FROM MNCS
“The Land of Lions”
CORE COUNTRY
05 THE UNITED STATES IS CONSIDERED A CORE
COUNTRY BECAUSE IT IS ONE OF THE MOST
INFLUENTIAL COUNTRIES IN THE WORLD
ECONOMIC SYSTEM. IT HAS A HIGHLY
DEVELOPED ECONOMY, A POWERFUL
MILITARY, AND A STRONG POLITICAL
SYSTEM. THE UNITED STATES IS ALSO HOME
TO SOME OF THE WORLD’S LARGEST
CORPORATIONS, WHICH HAVE SIGNIFICANT
INFLUENCE OVER THE GLOBAL ECONOMY

UNITED STATES
“The Land of Opportunity”
 PERIPHERAL NATIONS
WALLENSTEIN CALLED THE LOW-INCOME COUNTRY AS “PERIPHERY”
WHOSE NATURAL RESOURCES AND LABOR IS SUPPORTED BY THE
WEALTHIER COUNTRIES.

AFGHANISTAN ETHIOPIA MALI RWANDA YEMEN

PERIPHERAL NATIONS
01 IT IS A LANDLOCKED NATIONALITY IN ASIA. THE
COUNTRY WAS THE SCENE OF SEVERAL WARS IN THE
TWENTIETH CENTURY AND ITS RELATIONSHIP WITH
ITS NEIGHBORS, PAKISTAN AND IRAN IS NOT STABLE.
IT IS AN EXTREMELY POOR COUNTRY AND THE
MAJORITY OF THE POPULATION IS ENGAGED IN
AGRICULTURE GROWING CEREALS, COTTON, FRUIT
TREES, NUTS, AND PAPAYA. SHEEP
HERDING"KARAKUL"AND CARPET CRAFTS ARE OTHER
IMPORTANT ACTIVITIES.
IT HAS MINERALS AND RESOURCES SUCH AS
NATURAL GAS. TODAY, THIS COUNTRY HAS NOT BEEN
AFGHANISTAN DEVELOPED BY WARS, TRIBAL CONFLICTS AND BAD
“The Islamic Emirate of
Afghanistan”
GOVERNMENTS.
PERIPHERAL NATIONS
02
IT IS A LANDLOCKED COUNTRY LOCATED IN THE
HORN OF AFRICA. IT IS THE SECOND COUNTRY IN
AFRICA IN POPULATION DENSITY AND ITS ECONOMY
IS BASED ON AGRICULTURE, WHICH REPRESENTS 45%
OF THE GDP. 90% OF THE EXPORTS AND 80% OF THE
WORKERS ARE DEDICATED TO IT.
COFFEE IS THE MAIN PRODUCT AND IS DESTINED FOR
EXPORT. INTERNATIONALLY, THE PRICE OF COFFEE
INFLUENCES THE ECONOMY OF THE COUNTRY, SINCE
ITS AGRICULTURE IS BASED ON A SINGLE PRODUCT.

ETHIOPIA
“Abyssinia”
PERIPHERAL NATIONS
03

IT IS THE EIGHTH LARGEST COUNTRY IN AFRICA.

BETWEEN 1992 AND 1995, THE GOVERNMENT
IMPLEMENTED AN ECONOMIC PROGRAM THAT
BOOSTED ECONOMIC GROWTH AND REDUCED
NEGATIVE BALANCES. GDP HAS RISEN SINCE THEN.

MALI
“Sudanese Republic”
PERIPHERAL NATIONS
04
IT IS A LANDLOCKED STATE. RWANDA IS A COUNTRY
WITH LOW FISCAL PRESSURE, WHICH HAS ALLOWED
IT TO ATTRACT FOREIGN INVESTMENT AND HAS
ENSURED THE CONTINENT'S HIGHEST GROWTH.
THE MAJORITY OF THE POPULATION WORK IN
SUBSISTENCE AGRICULTURE. ITS INDUSTRY IS
DIVIDED INTO MINERAL PRODUCTION AND
PROCESSING OF AGRICULTURAL PRODUCTS.
TOURISM IS THE COUNTRY'S MAIN SOURCE OF
INCOME, ALONG WITH MINING.
RWANDA
“The Land of Thousand Hills”
PERIPHERAL NATIONS
05 IT IS A BICONTINENTAL COUNTRY, LOCATED
BETWEEN THE MIDDLE EAST AND AFRICA. IT SHARES
BORDERS WITH SAUDI ARABIA AND OMAN. ITS
CAPITAL IS SANA'A AND THE CURRENT STATE WAS
FORMED FOLLOWING THE UNIFICATION OF THE ARAB
REPUBLIC OF YEMEN (NORTHERN YEMEN) AND THE
DEMOCRATIC PEOPLE'S REPUBLIC OF YEMEN (SOUTH
YEMEN) IN 1990. SINCE THEIR UNION, THE COUNTRY
HAS SUFFERED CIVIL WARS.
1% OF THE SURFACE OF THE COUNTRY IS IRRIGABLE,
NEVERTHELESS IT EMPHASIZES THE CULTIVATION OF
GRAINS AND THE CATTLE RANCH OF SHEEP. OIL AND
YEMEN NATURAL GAS HAVE RECENTLY BEEN FOUND, WHICH
“Kingdom of Yemen”
COULD CHANGE THE COUNTRY'S SITUATION.
 SEMI-PERIPHERY
THE SEMI-PERIPHERY IS GENERALLY INDUSTRIALIZED. SEMI-PERIPHERAL
COUNTRIES CONTRIBUTE TO THE MANUFACTURING AND EXPORTATION
OF A VARIETY OF GOODS.

ARGENTINA BRAZIL CHINA

The Contemporary World

MARKET INTEGRATION
 MARKET INTEGRATION
MARKET INTEGRATION IS A TERM THAT IS USED
TO IDENTIFY A PHENOMENON IN WHICH
MARKETS OF GOODS AND SERVICES THAT ARE
SOMEHOW RELATED TO ONE ANOTHER BEING TO
EXPERIENCE SIMILAR PATTERNS OF INCREASE OR
DECREASE IN TERMS OF THE PRICES OF THOSE
PRODUCTS.
PRIMARY SECTOR
EXTRACTS RAW MATERIALS FROM
NATURAL RESOURCES.
SECONDARY SECTOR
IT GAINS THE RAW MATERIALS FROM THE
PRIMARY SECTOR AND TRANSFORMS IT
INTO A MANUFACTURED GOODS.
TERTIARY SECTOR
IT INVOLVES SERVICES RATHER THAN
GOODS. IT OFFERS SERVICES BY DOING
THINGS RATHER THAN MAKING THINGS.
 INTERNATIONAL
FINANCIAL INSTITUTIONS
INTERNATIONAL FINANCIAL
INSTITUTIONS

CREATED IN 1987, THE INTERNATIONAL FINANCIAL

INSTITUTIONS GROUP (IFI) IS AN AFFILIATION OF
HUMAN RESOURCES AND COMPENSATION
SPECIALISTS FROM INTERNATIONAL ORGANIZATIONS
WITH THE GOAL OF FOSTERING COLLABORATION
AND ADVANCING BEST PRACTICES.
 INTERNATIONAL
FINANCIAL INSTITUTIONS

WORLD ECONOMIES HAVE BEEN BROUGHT CLOSER TOGETHER BY

GLOBALIZATION. IT IS REFLECTED IN THE PHRASE “WHEN THE AMERICAN
ECONOMY SNEEZES, THE REST OF THE WORLD CATCHES COLD." BUT IT IS
IMPORTANT TO REMEMBER THAT IT IS NOT ONLY THE ECONOMY OF THE
UNITED STATE BUT ALSO OTHER ECONOMIES IN THE WORLD THAT HAVE A
SIGNIFICANT IMPACT ON THE GLOBAL MARKET AND FINANCE.
POWERFUL ECONOMIES
VS.
WEAKER ECONOMIES
 POWERFUL ECONOMIES
For instance, the financial crises
experienced by Russia and Asia affected
the world economy. This means that the
strength of a more powerful economy
brings greater effect on other countries.

WEAKER ECONOMIES
In the same manner, crises on weaker
economies have less effect on other
countries. For example, Argentina's
serious financial crisis in the late 1990s
and early 2000s had a comparatively
small impact on the global economy.
 THE BRETTON
WOODS SYSTEM
THE BRETTON WOODS SYSTEM

THE MAJOR ECONOMIES IN THE WORLD HAD

SUFFERED BECAUSE OF WORLD WAR I, THE GREAT
DEPRESSION IN THE 1930S, AND WORLD WAR II.
BECAUSE OF THE FEAR OF THE RECURRENCE OF LACK
OF COOPERATION AMONG NATION-STATES,
POLITICAL INSTABILITY, AND ECONOMIC TURMOIL
(ESPECIALLY AFTER THE SECOND WORLD WAR),
REDUCTION OF BARRIERS TO TRADE AND FREE FLOW
OF MONEY AMONG NATIONS BECAME THE FOCUS TO
RESTRUCTURE THE WORLD ECONOMY AND ENSURE
GLOBAL FINANCIAL STABILITY (RITZER, 2015).
5 KEY ELEMENTS OF
BRETTON WOOD SYSTEM
First element is the expression of currency in
terms of gold or gold value to establish a
par value (Boughton, 2007). For instance, a
35 U.S. dollar pegged by the United States
per ounce of gold is the same as 175
Nicaraguan cordobas per ounce of gold. The
exchange rate therefore would be 5
cordobas for 1 dollar.
Another element is that “the official
monetary authority in each country (a
central bank or its equivalent) would agree
to exchange its own currency for those of
other countries at the established exchange
rates, plus or minus a one-percent
margin”(Boughton, 2007, pp. 106-107).
The third element of the Bretton Woods
system is the establishment of an overseer
for these exchange rates; thus, the
International Monetary Fund (IMF) was
founded.
Eliminating restrictions on the currencies of
member states in the international trade is
the fourth key element.
The final element is that the U.S. dollar
became the global currency.
GENERAL AGREEMENT
ON TARIFFS AND
TRADE (GATT)
GATT
General Agreement on Tariffs and Trade (GATT) is
one of the systems born out of Bretton Woods
System and was established in 1947 (Goldstein et
al., 2007)
It is a forum for the meeting of representatives from
23 member countries
It focused on trade goods through multinational
trade agreements conducted in many “rounds” of
negotiation
WORLD TRADE
ORGANIZATION
WTO
It was out of the Uruguay Round (1986-1993) that
an agreement was reached to create the World
Trade Organization (WTO) (Ritzer, 2015, p.60)
WTO is an independent multilateral organization
located in Geneva, Switzerland with 152 member
states as of 2008 (Trachtman, 2007)
The general idea where WTO is based was that of
neoliberalism (by reducing or eliminating barriers,
all nation will benefit)
CRITICISMS TO WTO
Trade barriers created by developed countries
cannot be countered enough by WTO, especially in
agriculture
Grain prices increased and food riots occurred in
many member states of WTO like Mexico, Egypt, and
Indonesia in 2008.
The decision-making processes were heavily
influenced by larger trading powers, in the so called
Green Room, while excluding smaller powers in
meetings.
 THE INTERNATIONAL
MONETARY FUND (IMF)
AND THE WORLD BANK
IMF AND WORLD BANK
They were founded after the World War II
It was founded mainly because of peace advocacy
after the war
These institutions aimed to help the economic
stability of the world
They are basically banks that were started by
countries
IMF served as a lender or a last resort and the
World Bank revolved around the eradication of
poverty and it funded specific projects
 ORGANIZATION FOR
ECONOMIC COOPERATION
AND DEVELOPMENT (OECD)
OECD
The most encompassing club of the
richest countries in the world with 35
member states as of 2016
It is highly influential, despite the group
aving little formal power
 ORGANIZATION OF
PETROLEUM EXPORTING
COUNTRIES (OPEC)
OPEC
OPEC was formed because member
countries wanted to increase the price of oil
Originally comprised of Saudi Arabia, Iraq,
Kuwait, Iran, and Venezuela
Today, the United Arab Emirates, Algeria,
Libya, Qatar, Nigeria and Indonesia are also
included as members
EUROPEAN
UNION (EU)
EU
is made up of 28 member states
Critics argue that the euro increased the
prices in Eurozones and resulted in
depressed economic growth rates, like in
Greece, Spain, and Portugal
The policies of the European Central Bank
are considered to be a significant
contributor in these situations
The Contemporary World

NORTH AMERICAN FREE

TRADE AGREEMENT (NAFTA)
 NAFTA

UNITED STATES MEXICO CANADA

is a trade pact between the United States, Mexico,

and Canada created on January 1, 1994 when
Mexico joined the two other nations.
It was first created in 1989 with only Canada and the
United States as trading partners.
NAFTA helps in developing and
expanding world trade by
broadening international
cooperation.
It also aims to increase
cooperation for improving
working conditions in North
America by reducing barriers to
trade as it expands the market of
the three countries.
 POSITIVE

It lowered prices by removing tariffs,

opened up new opportunities for small-
and medium-sized businesses to
establish a name for itself, quadrupled
trade between the three countries, and
created five million U.S. jobs.

NEGATIVE

It include excessive pollution, loss of

more than 682,00 manufacturing jobs,
exploitation of workers in Mexico, and
moving Mexican farmers out of business.
The Contemporary World

HISTORY OF GLOBAL
MARKET INTEGRATION
Before the rise of today’s modern economy,
people only produced for their family.
Nowadays, economy demands the different
sectors to work together in order to
produce, distribute, and exchange products
and services.
 THE AGRICULTURAL
REVOLUTION AND THE
INDUSTRIAL REVOLUTION
 AGRICULTURAL REVOLUTION

People learned how to

domesticate plants and animals.
Farming helped societies build
surpluses.
Led to major developments

INDUSTRIAL REVOLUTION

New economic tools

Factories popped up and
changed how work functioned.
Productivity went up
However, every economic
revolution comes with economic
casualities. The workers in the
factories—who were mainly
poor women and children—
worked in dangerous conditions
for low wages.
 CAPITALISM
AND SOCIALISM
CAPITALISM
a system in which all natural
resources and means of
production are privately owned. It
emphasizes profit maximization
and competition as the main
drivers of efficiency.
SOCIALISM
emphasizes collective goals,
much of their econom
expecting everyone to work for
the common good and placing
a higher value on meeting
everyone's basic needs than on
individual profit.
THE INFORMATION
REVOLUTION
Technology has reduced the role of
human labor and shifted it from a
manufacturing-based economy to one
that is based on service work and the
production of ideas rather than goods.
This has had a lot of residual effects on our
economy. Computers and other
technologies are beginning to replace
many jobs because of automation or
outsourcing jobs offshore.
The Contemporary World MEMBERS

HAZEL ANN JENNY JOY JOSEPH

MENDOZA RODILLAS TRINIDAD

CATHERINE BERNADETTE LURYVIA ANN

JAYNE VALDEZ MARIE PANGGAT YASOÑA
 THANK YOU
FOR LISTENING!