THE GLOBAL ECONOMY

INTENDED LEARNING OUTCOME

 At the end of this lesson, the learners are expected to

demonstrate the following:
◼ Define economic globalization;
◼ Analyze the actors that facilitates economic globalization;
and
◼ Articulate a stance on global economic integration
Economic Globalization

 According to the United Nations (as cited in Shangquan,

2000), “Economic globalization refers to the increasing
interdependence of world economies as a flow of
international capital, 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.”
INTERNATIONAL MONETARY FUND

 In 2008, the International Monetary Fund (IMF) defined

economic globalization as a historical process, the result of
human innovation and technological progress. “It refers to
the services increasing integration of economies around
the world, particularly through the movement of goods,
and capital across borders” (IMF, 2008).
 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” (McAleese, 2007 as cited in Ritzer, 2015, p.
1169).

*Two different
types of Trade liberalization – is the removal or reduction of
economies restrictions or barriers on the free exchange of goods
associated with between nations.
economic Economists often view the easing or eradication of these
globalization restrictions as steps to promote free trade.

• Tariffs – are required fees on imports or exports

Mercantilist era, from sixteenth to seventeenth centuries until the early 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. Countries such as China,
Japan, and the United States are being accused practicing protectionism (Ritzer, 2015).

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
the, is “fair trade”(Nicholls and Opal, 2005)
Fair trade – is the “concern for the social,
economic, and environmental well-being of
marginalized small producers”(Downie,
2007, pp. C1-C5)

• Aims for a more moral and equitable global

economic system
• It concerned with protection of workers and
producers, establishment of more just prices,
engagement in environmentally sound practices and
sustainable production, creation of relationships
between producers in the South and consumers in
the North, and promotion of safe working
environment. Products like coffee, bananas, cotton,
wine, tea, and chocolate have been exchanged in
light of fair trade.
 Economic Globalization

 World Trade Center ( WTO)

 Business Process Outsourcing (BPO)
  ensure that the trade flows
smoothly , predictably and freely as
World Trade possible and that their primary
Center purpose is to open trade for the
benefit of all.
  due to the lower cost of producing
specific goods or services in our country,
outsourcing has become a common
Business business strategy for many multinational
Process firms
Outsourcing
(BPO)
Actors that  Nation – states
Facilitate  Global corporations
Economic  Creation of International
Globalization Monetary System
  Boyer and Drache (1996) state that the role of
nation-states as manager of the national economy
is being redefined by globalization.
 The government as the “midwives” of
globalization.
 It means that nation-states are still relevant
Nation-states
despite assuming a global perspective and act as
mediators between the effects of globalization
and the national economy.
 Government policies and regulation either permit
or deny the smooth connection among world
economies.
  Ohmae (1995) argues that the nation-state has
ceased to exist as the primary economic
organization unit in the global market.
 Filipino consumers, for instance, prefer to
Global consume and avail of global products and
Corporations services like H&M, Uniqlo, Accenture, Amazon,
Alibaba and FedEx.
 As a result of transforming the national economy
into a global one.
  It refers to internationally agreed rules,
conventions, and institutions for facilitating
international trade, investments and flow of
International capital among nation-states.
Monetary  Historically, there are three global IMS – the gold
System standard, the Bretton Wood System, and the
European Monetary System (EMS).
Concepts connected to Global Economy
*Environmental Degradation

This is the period in human history that made possible the cycle of
efficiency, means finding the quickest possible way of producing large
amounts of a particular product.

This process made buying of goods easier for the people. Then, there is an
increased in demand. Ultimately there was an increase of efficiency. This
cycle harms the planets in a number of ways.
*Economic  The Swedish statistician Hans Rosling
Globalization, once said, “The 1 to 2 billion poorest in
the world who don’t have food for the
Poverty, and day suffer from the worst disease,
Inequality globalization deficiency. The way
globalization is occurring could be
much better, but the worst thing is not
being part of it.”
 Economic and trade globalization is the
result of companies trying to
outmaneuver their competitors.
 The multiplier effect means an increase in one
economic activity can lead to an increase in other
economic activities.
 For instance, investing in local business will lead to
more jobs and more income. According to the
economist Paul Krugman (as cited in The New York
Times, July, 8 2013), “the Bangladeshi apparel
industry is going to consist of what we would consider
sweatshops or it won’t exist at all. And Bangladesh, in
particular, really needs its apparel industry. It’s
pretty much the only thing keeping its economy
afloat.”
Not everyone agrees to this. Opponents of economic
globalization called outsourcing of jobs as exploitation
and oppression, a form of economic colonialism that
puts profits before people. A few call for protectionist
policies like higher tariffs and limitations on
outsourcing

In the absence of regulation, it is still possible that

workers would not be horribly mistreated. First,
public awareness is growing along with the pressure
from the international community to take steps to
protect workers.
  Income inequality is a global issue that
has become more prominent in recent
years.
 As the top 1 percent now own 40 percent
of all national wealth, economists and
politicians have been debating solutions
*Global for decreasing this growing wealth
Income disparity and increasing the economic
Inequality prospects of the lower and middle classes.

 High levels of poverty and disparate

wealth distribution are the clearest signs
of income inequality.
  The rise of Chinese exports has caused
the wages of the American middle class
to decline
 Fighting for Income Equality
Population
growth also  While inequality across the globe is a
influences massive issue, steps can be taken in the
effort to redistribute global wealth.
economic
growth.
 Promoting trade policy that is simultaneously
democratic and transparent can benefit workers,
employee health, public interest and the environment.

Inhibiting illicit financial outflows can

help reduce income inequality
Sentiments
Implementing a progressive income tax on the
wealthy can help decrease income disparities.

Advocating for the right to organize unions can

help members increase wages and bring other
benefits.
  Economic globalization affects all nations and
citizens through the increasing integration of
economies around the borderless world.
 Its important players are the nation-states,
global corporations, and the international
CONCLUSION monetary systems.
 Though some people believe that economic
globalization brings unity of all economic
movements, others believe that globalization
furthers the separation among nation-states
around the world.
FOR MIDTERM
Institutions that Govern International Relations
 MS. DITCHE - Peace Treaties and Military Alliances: The
UN and NATO
 MS. DOLLOSA - Global Economic Associations: The WTO
and NAFTA
 MS. ARCEL – Association of Southeast Asian Nations
 MS. ARMEL – European Union
 MS. FEDERIZO – Non-Governmental Organizations