GLOBAL ECONOMY

PRESENTATION BY: MAGBANUA, JELLAH AND MOSQUEDA, ALIAH JULIANA

ECONOMIC GLOBALIZATION AND GLOBAL
TRADE

◼ According to the United Nations, “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 millennium.
TWO TYPES OF ECONOMIES
◼ There are two different types of economies associated with globalization – protectionism and trade liberalization

◼ PROTECTIONISM- “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.”
◼ TRADE LIBERALIZATION- is the removal or reduction of restrictions or barriers on the free exchange of goods
between nations. These barriers include tariffs, such as duties and surcharges, and nontariff barriers, such as
licensing rules and quotas.
◼ This policy was practiced during the mercantilist era, from sixteenth to seventeenth centuries until the earlier
years of industrial revolution (Chorev, 2007). The great depression of 1929 marked the peak of protectionism.
Until today, protectionism exists in the world economy despite the growth of trade liberalization.
Examples and Types of Protectionism

Tariffs – This is a tax on imports.

Quotas – This is a physical limit on the quantity of imports
Embargoes – This is a total ban on a good, this may be done to stop dangerous substances
Subsidies – If a government subsidised domestic production this gives them an unfair
advantage over competitors.
Administrative barriers – Making it more difficult to trade, e.g. imposing minimum
environmental standards.
Competitive devaluation – manipulating currency to make exports cheaper.
Free trade
World War II heavily influenced the shifting of the dominant economic policy from protectionism to
trade liberalization or free trade. Free trade agreements and technological advances in transportation
and communication mean goods and services move around the world more easily than ever.
Example:
◼ The United States currently has a number of free trade agreements in place. These include multi-
nation agreements such as the North American Free Trade Agreement (NAFTA), which covers the
U.S., Canada, and Mexico,3 and the Central American Free Trade Agreement (CAFTA), which
includes most of the nations of Central America. There are also separate trade agreements with
nations from Australia to Peru.
◼ Collectively, these agreements mean that about half of all goods entering the U.S. come in free of
tariffs, according to government figures. The average import tariff on industrial goods is 2%.
GLOBALIZATION
◼ Globalization made some countries, especially the developing ones, to gain
more in the global economy at the expense of other nations.
◼ There are various ways, however, the country can make trade easier with
other countries while lessening the inequities in the global world. One of
them is fair trade.
◼ Fair trade, as defined by the International Fair Trade Association, is the
“concern for the social, economic, and environmental well-being of
marginalized small producers”
◼ It aims for a more moral and equitable global economic system.
Example of fair trade

A concrete example of the growth of fair trade is the case of American coffee chains such as
Starbucks and Dunkin’ Donuts. In 2006, there are $2.2 billion dollars spent on certified products,
which is 42% greater than the preceding year (Ritzver, 2015). In turn, coffee growers such as
those in Brazil “get at least $1.29 per pound of coffee beans compared to the current market
price of $1.25
ECONOMIC GLOBALIZATION AND
SUSTAINABLE DEVELOPMENT

◼ 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.
◼ 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. 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, make advancements in
transportation and communication. However these positive effects of
development put our environment at disadvantage. Climate change
accelerated and global inequality was not eradicated. This means
that development, although beneficial at one hand, entails cost on the
other.
Examples of Sustainable Development
1. Wind Energy
2. Solar Energy
3. Crop Rotation
4. Water efficient fixtures
5. Green Spaces
ENVIRONMENTAL DEGRADATION
◼ Development, especially economic development, was hastened by the
Industrial Revolution. This period in human history made possible the
cycle of efficiency. Efficiency means finding the quickest possible way
of producing large amounts of a particular product. This process
made buying of goods easier for people.
◼ This cycle harms the planet in number of ways. For instance, the
earth's atmosphere is damaged by more carbon emissions from
factories around the world. Another example is the destruction of
coral reefs and marine biodiversity as more and more waste are
thrown into the ocean.
◼ Environmentalists argue that environmental issues should be given priority
over economic issues. Free trade, through its emphasis on the expansion of
manufacturing, is associated with environmental damage.
◼ For instance, ecological modernization theory sees globalization as a process
that can both protect and enhance the environment. Various efforts are
underway to deal with climate change. However, strong resistance on the part
of governments and corporations counters these.
◼ Previous experience in dealing with the environmental issues indicates that a
global view of the problem is required. Instead of dealing with the causes of
global warming, there is some interest in “ technological fixes” such as
geoengineering.
Geoengineering (literally "Earth-engineering") is the currently fashionable term for
making large-scale interventions in how the planet works to slow down or reverse the
effects of climate change.
The most prominent subcategories of climate engineering are solar radiation
management and carbon dioxide removal
FOOD SECURITY
◼ Global food security means delivering sufficient food to the entire world population. It is,
therefore, a priority of all countries, whether developed or less developed. The security of
food also means the sustainability of society such as population growth, climate change,
water scarcity, and agriculture.
◼ The challenges to food security can be traced to the protection of the environment. A major
environmental problem is the destruction of natural habitats, particularly through
deforestation. Industrial fishing has contributed to a significant destruction of marine life
and ecosystems. Biodiversity and usable farmland have also declined at a rapid pace.
◼ Another significant environmental challenge is that of the decline in the availability of
freshwater. The decline in the water supply because of degradation of soil or desertification,
has transformed what was once considered a public good into a privatized commodity.
◼ Food production is ultimately dependent on other ecosystem services so it is
essential that these are maintained. For example, agriculture uses 70% of all fresh
water, produces around a third of all GHG emissions, and contributes to
biodiversity loss and soil degradation (around 69% of agricultural land is degraded).
If food demand continues to grow as projected, by 2050 we would need 120% more
water, 42% more cropland, lose 14% more forest, and produce 77% more GHG
emissions. Even with yield gap closure through SI, we would still need 56% more
water, 5% more cropland, lose 8% more forest and produce 42% more GHG
emissions (ref 6).
◼ It is clear that we will need to use every technology available, alongside best
practice farming to sustainably increase production, but this has to be accompanied
by changes to food demand including measures on both consumption and waste
 Food Security also means that the people who produce our food are able to earn a decent, living wage growing, catching,

producing, processing, transporting, retailing, and serving food. At the core of food security is access to healthy food and optimal

nutrition for all. Food access is closely linked to food supply, so food security is dependent on a healthy and sustainable food

system.A healthy, sustainable food system is one that focuses on Environmental Health, Economic Vitality, and Human Health & Social

Equity.

◼Environmental Health – ensures that food production and procurement do not compromise the land, air, or water now or for future generations.

◼Economic Vitality – ensures that the people who are producing our food are able to earn a decent living wage doing so. This ensures that producers can

continue to produce our food.

◼Human Health & Social Equity – ensures that particular importance is placed on community development and the health of the community, making sure

that healthy foods are available economically and physically to the community and that people are able to access these foods in a dignified manner.
ECONOMIC GLOBALIZATION, POVERTY AND
INEQUALITY
◼ Economic trade and 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.
◼ The result is that labor intensive products like shoes are often produced in
countries with lowest wages and weakest regulation.
◼ MULTIPLIER EFFECT means an increase in one economic activity can lead to an
increase in other economic activity.
◼ For instance, investing in local businesses will lead to more jobs and more
income.
◼ Not everyone agrees to this. Opponents of economic globalization called
the outsourcing of jobs as exploitation and oppression, a form of economic
colonialism that puts profits before people.
◼ The root of many arguments against economic globalization is that
companies do not have to follow the same rules they do in developed
countries.
◼ 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.
◼ One of the best way to help those in extreme poverty is to enable them to
participate in the economy. This applies to developing countries in the
global marketplace and to individuals at the local level.
GLOBAL INCOME INEQUALITY
◼ We can see how different nations are divided between North and South,
developed and less developed, and the core and the periphery.
◼ There are two main types of economic inequality: wealth inequality and income
inequality. WEALTH refers to the net worth of the country. It takes into account
all the assets of the nation may be natural, physical,and human less the
liabilities.In other words, wealth is the abundance of resources in a specific
country.
◼ In order to measure global economic inequality, economists usually look at
income using Gross Domestic Product (GDP). INCOME is the new earnings that
are constantly being added to the pile of country’s wealth. When we talk about
income inequality, we mean that new earnings are being distributed; it values
the flow of goods and services, not a stocks of assets(Economist,2012).
WEALTH INEQUALITY VS. INCOME INEQUALITY
Our wealth is all our possessions, including cash we have at home, money in the bank,
shares, bonds, property, vehicles, etc. In other words, our wealth is everything we own.
Our income, on the other hand, is the flow of money we receive such as our salary,
bonuses, and share dividends.
The profit we make when we sell something for more than we bought it for is also our
income. We usually calculate income per week, per month, or per year.

Therefore, wealth inequality looks at the distribution of all wealth in a country. It looks at
how fairly or unfairly total wealth is distributed across a population.
We also express wealth inequality in percentage terms. For example, I might say that ten
percent of the population own sixty percent of a country’s wealth.
THE THIRD WORLD AND GLOBAL SOUTH
◼ The terms date back to the cold war, when western policy makers began talking
about the world as three distinct political and economic blocs. Western capitalist
country were labeled as “ First World.” The Soviet Union and allies were termed the
“ Second World”. Everyone else was grouped into “Third World.”
◼ After the cold war ended, the category of Second World countries became null and
void, but somehow the terms “ First World and “Third World’ stuck around in the
public consciousness.
◼ Third World countries , which started as just vague catch call term for non alliance
country, came to be associated with impoverished states, while the First World was
associated with rich, industrialized country.
THE GLOBAL CITY
◼ The rural-urban differentiation has a significant relationship to
globalization.
◼ Globalization has deeply altered North-South relations in agriculture.
For instance, the relations of agricultural production have been altered
due to the rise of global agribusiness and factory farms.
◼ Schlosser (2005) pointed out that as commercial agriculture replaces
local provisioning, the relations of social production are also altere.
Rural economies are exposed to low prices and mass mitigation.
◼ Sassen(1991) used the concept of global cities to describe
the three Urban’s of New York, London and Tokyo as
economic centers that exerts control over the world’s
political economy.
◼ World cities are categorized such as based on the global
reach of organizations found in them. Not only in three
inequalities between these cities, there also exist
inequalities within each city.
THE END.