THE GLOBAL ECONOMY

“WHY ARE THE

REGIONS AROUND
THE GLOBE HAVE
GLARING
DIFFERENCES WHEN
IT COMES TO
ECONOMY?”
 CHANGES IN THE GLOBAL ECONOMY

 For the past centuries, the global economy has

significantly changed.
 In the 11th century, the long distance trading
flourished between Venice and the Netherlands.
 The wool industry in the 13th century in
Flanders and in 14th century in Florence can also
be an example of a sustained economic growth
throughout history.
 Those global changes have contributed much to
the economy of the world.
 There was the birth of capitalism.
 In Gary Gereffi’s journal, The
Global Economy: Organization,
Governance, and Development, he
mentioned that the global changes are
attributed to how the global economy is
organized and governed. He furthered
that these changes give impact not only
to the flow of goods and services across
national borders, but also the
implications of these processes for how
a particular country move up or down
in the international scene.
 Nowadays, the various countries’ strategies
on development are influenced by the new
degree on how industries are organized.
 These development strategies are
manifested in a shift in theoretical
frameworks from those centered on the
legacies and actors of nation-states to a
greater concern with supranational
institutions and transnational
organizations.
 Developed countries and developing
countries like the Philippines have to fully
understand the impact of the contemporary
global economy to improve their position in
the global system.
There is no singular
academic field that can
completely explain the topic
of global economy because it
is inherently
interdisciplinary.
According to Gereffi, the
global economy can be
studied at different levels of
analysis.
 THE MACRO LEVEL
 This includes the international organizations and
regimes that establish rules and norms for the global
community.
 The World Bank, the International Monetary Fund,
the World Trade Organization, and the International
Labor Organization are the existing international
organizations that make impact to the economy of the
world.
 The regional integration schemes like the European
Union and the North American Free Trade Agreement
are also part of these organizations.
 Since these regimes blend both the rules and
resources, they substantiate the widest parameters
within which the global economy operates.
 THE MESO LEVEL

It is believed that the building

blocks for the global economy are the
countries and firms.
The global economy is seen as the
arena in which countries compete in
different product markets.
 THE MICRO LEVEL
 The development of a world trading system over a
period of several centuries helped to create the
tripartite structure of core, semi peripheral, and
peripheral economic areas.
 According to world-systems theory, the upward or
downward mobility of nations in the core, semi
periphery, and periphery is determined by a
country’s mode of incorporation in the capitalist
world-economy, and these shifts can only be
accurately portrayed by an in-depth analysis of the
cycles of capitalist accumulation in the longue
durée of history
 The foundation for a process of
industrialization and new
international divisions of labor on a
global scale is attributed to the
dynamics of the capitalist world-
system.
 Adam Smith, an eighteenth-century
political economist, defined “division
of labor” as the specialization of
workers in different parts of the
production process, usually in
factory setting.
 Gereffi stressed that the division of
labor also acquired a geographical
dimension during the influx of
industrial economies as evolved.
 In a global scope, the “classic”
international division of labor was
between the industrial countries
producing manufactured goods and the
non-industrialized economies that
supplied raw materials and agricultural
products to the industrial nations which
became a market for basic
manufacturers.