The Global Economy

THE STRUCTURES OF GLOBALIZATION
The Global Economy

I. Economic Globalization & Global Trade
II. EG & Sustainable Development
I. Environmental Degradation
II. Food Security
III. EG, Poverty & Inequality
I. Global Income Inequality
II. The Global City
IV. Theories of Global Stratification
The Global Economy
• The United Nations (UN) tried to address the

different problems in the world.
• Their efforts were guided by the (8) Millenium

Development Goals, which they created in the
1990s.
• The UN tried to achieve them by the year 2015.

The Global Economy
• In the Philippines, a person is officially living in

poverty if he makes less than 100,534 pesos a
year, around 275 pesos a day. This is called the
poverty line/poverty threshold.
• The UN defines extreme or absolute poverty as

living on less than $1.25 a day.
The Global Economy
• Nowadays, extreme poverty is falling due to many

factors like better access to education,
humanitarian aid, and the policies of international
organizations like the UN have made a difference.
• However, the greatest contributor is economic

globalization.
“Economic Globalization refers to the increasing

interdependence of world economies as a result of
the growing scale of cross-border trade of
commodities and services, flow of international
capital, and wide and rapid spread of technologies. It
reflects the continuing expansion and mutual
integration of market frontiers, and is an irreversible
trend for the economic development in the whole
world at the turn of the millenium.”
Two (2) Different Types of Economies

a. Protectionism
b. Trade Liberalization
• Protectionism means “a policy of systematic

government intervention in foreign trade with the
objective of encouraging domestic production. This
encouragement involves giving preferential
treatment to domestic producers and discriminating
against foreign competitors.”
i.e. tariffs, quotas

• (Trade Liberalization) Free trade agreements and

technological advances in transportation and
communication mean goods and services move
around the world more easily than ever.
• Fair Trade is defined as the concern for the social,

economic, and environmental well-being of
marginalized small producers.
QUESTIONS
1. Do you think that the Philippines is harmed as other

countries transfer their activities to us through
outsourcing?
2. In what ways do international organizations help our
country's economy?
3. Does the position of rich countries as giants in the
economic chain threaten the status of less developed
countries in the global market?
ACTIVITY
1. Each group will be assigned to any one of the followng

products being sold in the PH. Choose a specific foreign
brand.
• coffee
• sports car
• laptop
• hamburger
• shoes
2. List down the main ingredients/raw materials in
manufacturing the chosen product. Identify the
corresponding country from which each ingredient or
raw material came in.
3. Identify the countries involved. Indicate the
corresponding service the country does for the
product.
4. Aside from the PH, list other countries in which the
product is being sold.
5. Cite the kinds of technology that made the
creation of the product possible. Consider
communications and transportation.
6. Write one to three statements about the creation of
the product.
The Global Economy
II. Food Security
II. The Global City
• Sustainable Development - the development

of our world today by using the earth's
resources and the preservation of such
sources for the future.
-a global response/approach to
economic globalization, thus involves
economic, political, and technological aspects
• The continuous production of natural

resources allows humanity to discover
and innovate many things. i.e. water,
fossil fuel
• However, this development put our
environment at a disadvantage. i.e.
climate change
A. Environmental Degradation
• Industrial Revolution - hastened
economic development, and made
possible the cycle of efficiency.
• Efficiency - finding the quickest possible
way of producing large amounts of a
particular product
• Efficiency - produce something without
wasting materials, time or energy
• ↑ demand = ↑ efficiency
• *this cycle harms the planet in any ways i.e. carbon
emissions, marine bio & coral reefs destruction,
deforestation, pollution, climate change
• Efficiency - produce something without
wasting materials, time or energy
Neoliberals and environmentalists debate
on the impact of free trade on the
environment. (Harvey, 2005)
Perspective Towards Globalization
Neoliberals Environmentalists
Efforts of environmentalists are Environmental issues should be
serious impediments to trade. given priority over economic issues.
Economic Priorities Environmental Damages
Ecological Modernization Theory

Globalization can both protect and enhance the environment.
Various efforts are underway to deal with
climate change. However, strong resistance on
the part of the governments and corporations
counters these.
i.e. Kyoto Protocol, “Carbon Tax”, “Carbon
Neutrality”, alternatives to fossil fuels
Previous experience in dealing with environmental
issues indicates that a global view of the problem is
required.
A focus on specific regions overlooks impacts in

other regions.
Instead of dealing with the causes of global warming,

there is some interest in “technological fixes” such as
geoengineering.
B. Food Security
The demand for food will be 60% greater

than it is today and the challenge of
food security requires the world to feed
9 billion people by 2050 (Breene, 2016).
B. Food Security
Global Food Security - delivering

sufficient food to the entire world
population.
- the sustainability of society
such as population growth, climate change,
water scarcity, and agriculture.
B. Food Security
In INDIA...
• Agriculture - 18% economy's output
- 47% workforce
• 2nd biggest producer of fruits &
vegetables
• 194 million - undernourished (15.2%)
• 1/3 malnourished children lived here
B. Food Security
Challenges to FS:
• Environmental Protection
(Deforestation, Farmlands, Industrial Fishing)
• Availability of Fresh Water
(Desertification, Water Ecosystems, Virtual Water)
• Pollution
(Chemicals, Gases, Electronic Wastes)
B. Food Security
There are different models and agenda
pushed by different organizations to
address the issue of global food
security. One of it is through
sustainability.
-UN through its SDGs, World Economic Forum through New Vision
for Agriculture
The Global Economy
II. Food Security
II. The Global City
“The 1 to 2 billion poorest in the world

who don't have food for the day suffer
from the worst disease, globalization
deficiency. The way globalization is
occuring could be much better, but the
worst thing is not being part of it.”
Hans Rosling, Swedish statistician
Economic and trade globalization is the result of
companies trying to outmaneuver their
competitors. The result is labor-intensive
products produced in countries with the lowest
wages and the weakest regulations.
Winners : Corporations, Stakeholders &
Consumers
Losers: High Wageworkers
Low Wage Foreign Workers: winners or losers?
Multiplier Effect : An increase in one

economic activity can lead to an
increase in other economic activities.
i.e.investing to local businesses will
lead to more jobs and more income
Opponents of economic globalization
called the outsourcing of jobs as
exploitation and oppression, a form of
economic colonialism that puts profits
before people.
they are concern on:
protectionist policies, foreign workers,
working environment, wage laws, child
In the absence of regulation, it is still possible
that workers would not be horribly mistreated.
1. Public awareness is growing along with the
pressure from the international community to
take steps to protect workers.
2. The pro-globalization set argues that as
developing economies grow, there are more
opportunities for workers, which leads to more
competition for labor and higher wages.
Economic globalization has helped millions
of people get out of extreme poverty but
the challenge of the future is to lift up the
poor while at the same time keep the
planet livable.
i.e. microcredit implemented by Prof.
Muhammad Yunus in 2006 at Bangladesh
“In my experience, poor people are the

world's greatest enterpreneurs. Every day
they must innovate in order to survive.
They remain poor because they do not
have the opportunities to turn their
creativity into sustainable income.”
Yunus, 2012
A. Global Income Inequality
Globalization and inequality are closely related.
There are 2 types of economic inequality:
1. Wealth Inequality (distribution of assets)
2. Income Inequality (new earnings are being
distributed, it values the flow of goods and
services, not a stock of assets)
“While the bottom half collectively own less than
1 percent of total wealth, the wealthiest top 10
percent own 89 percent of all global assets”
(Credit Suisse Research Institute, 2016).
Current Global Wealth: around 3.5 trillion dollars

Economic Big Bang (Branko Milanovic, 2011) :
wherein the Industrial Revolution caused the
differences among countries. Through this explosion
of industry and modern technology, some nations
become economically developed while others were
developing. Result is economic gap.
e.g. (1820) UKGBNR & The Netherlands were only 3x
richer than India and China
(today) 100:1 ratio
Although IR allowed a significant inequality in
the past, economic globalization and
international trade are the forces responsible in
today's global income inequality. Yet, many
economists believe that theworld's poorest
people gained something from globalization.
Harvard economist Richard Freeman (2011)
noted, “The triumph of globalization and market
capitalism has improved living standards for
billions while concentrating billions among the
few” (as presented in OECD Policy Forum,
Paris, May 2).
Lastly, the access to technology
contributed to worldwide income inequality.
The result is a widening gap between the
rich and the poor as well as between high-
skilled and low-skilled workers.
B. Global City
The rural-urban differentiation has a significant
relationship to globalization. Globalization has
deeply altered North-South relations in
agriculture.
i.e. (McMichael, 2007) rise of global agribusiness & factory
farms
(Schlosser, 2005) commercial agriculture replaces local
provisioning, rural econs are exposed to low prices and
mass migration
B. Global City
There are internal inequalities in global cities
and as well as among these cities. Moreover, all
of these cities are considered important nodes
in a variety of global networks (Castells, 2000).
B. Global City
Although cities are major beneficiaries of
globalization, Bauman (2003) claimed that they
are also the most severely affected by global
problems. Therefore, the city faces peculiar
political problems, wherein it is often fruitlessly
seeking to deal locally with global problems and
“local politics has become hopelessly
overloaded”.
The Global Economy
II. Food Security
II. The Global City
1. Modernization Theory
It frames global stratification as a function of
technological & cultural differences between
nations. It specifically pinpoints two (2)
historical events that contribute to Western
Europe developing at a faster rate than much of
the rest of the world.
1. Modernization Theory
a. Columbian Exchange - spread of goods,
technology, education, and diseases between
Americas and europe after C. Columbus' so-
called “discovery of the Americas”
b. Industrial Revolution - 18th-19th century,
introduction of new technologies, increased
productivity
2. Walt Rostow's Four Stages of

Modernization
According to American economist W. Rostow,
modernization in the West took place in four
stages.

Modernization
a. Traditional Stage. Refers to societies that
are structured around small, local communities
with production typically being done in family
settings. i.e. feudal Europe, Chinese dynasties

Modernization
b. Take-off Stage. People begin to use their
individual talents to produce things beyond
necessities.

Modernization
c. Drive to Technological Maturity. Nations in
this phase typically begin to push for social
change along with economic change, like
implementing basic schooling for everyone and
developing more democratic political systems.

Modernization
d. High Mass Consumption. It is when your
country is big enough that production becomes
more about wants than needs.
3. Dependency Theory & the Latin American

Experience
It focuses on how poor cuntries have been
wronged by richer nations. Global stratification
starts with colonialism.
4. The Modern World-System

The history of colonialism inspired American
sociologist Immanuel Wallerstein model of
what he called the capitalist world economy.
4. The Modern World-System

High-income countries : core
Low-income countries : periphery
Middle-income countries: semi-periphery

The Global Economy

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THE STRUCTURES OF GLOBALIZATION

The Global Economy

• The United Nations (UN) tried to address the

• Their efforts were guided by the (8) Millenium

• The UN tried to achieve them by the year 2015.

• In the Philippines, a person is officially living in

• The UN defines extreme or absolute poverty as

• Nowadays, extreme poverty is falling due to many

• However, the greatest contributor is economic

“Economic Globalization refers to the increasing

Two (2) Different Types of Economies

• Protectionism means “a policy of systematic

i.e. tariffs, quotas

• (Trade Liberalization) Free trade agreements and

• Fair Trade is defined as the concern for the social,

1. Do you think that the Philippines is harmed as other

1. Each group will be assigned to any one of the followng

• Sustainable Development - the development

• The continuous production of natural

Ecological Modernization Theory

A focus on specific regions overlooks impacts in

Instead of dealing with the causes of global warming,

The demand for food will be 60% greater

Global Food Security - delivering

“The 1 to 2 billion poorest in the world

Multiplier Effect : An increase in one

“In my experience, poor people are the

Current Global Wealth: around 3.5 trillion dollars

2. Walt Rostow's Four Stages of

2. Walt Rostow's Four Stages of

2. Walt Rostow's Four Stages of

2. Walt Rostow's Four Stages of

2. Walt Rostow's Four Stages of

3. Dependency Theory & the Latin American

4. The Modern World-System

4. The Modern World-System

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