UNIT ll: Structures of

Globalization
A PRESENTATION BY GROUP 5
Lesson 3: The Global Economy

 The global economy refers to the interconnected economic system that encompasses all the
economies of the world’s countries. It emphasizes how countries, businesses, and individuals
interact across borders and the economic relationships that develop as a result.
Objectives:

 Define economic globalization;

 Identify the actors that facilitates economic globalization
 Define the modern world system; and
 Articulate a stance on global economic integration.
Definition of Terms:

Economic globalization is the expansion of national economies, the global market driven by modern
technologies and institutional set ups that promote faster and easier flow of goods and capital
(Sugden and Wilson, 2005).
Global economy denotes that the economies of various countries are more interconnected from
extraction, production, distribution, consumption, to disposal of goods and services (Carfi and
Schilirò, 2018).
 International financial institutions are global financial institutions that support a country’s
economic growth through support (i.e., loans, technical assistance) to governments and now other
private sectors (Wood, 2019).
International Monetary Fund is an international organization with 183 member countries that
promotes international monetary cooperation and exchange stability to foster economic growth and
high employment and to provide short-term financial assistance to countries to help ease balance of
payments adjustments (IMF, 2019).
Global civil society is a system of nongovernment institutions that operate across geographical
borders and organize and mobilize for a common issue or cause (Keane, 2003; 8).SIJABOJE
 Global corporation is an “enterprise that engages in activities which add value (manufacturing,
extraction, services, marketing, etc) in more than one country” (UCTC, 1991).
World system is based on the theory of Wallerstein (1974) that recognizes that social and economic
change is not only endogenous to a county, but is affected by its interaction to exogenous institutions,
thus the focus on world-systems (Chase-Dunn, 2018).
 Economic integration is a process of combining or increasing the interconnectivity of national
economies to the regional or global economies (Clark et al., 2018).
Introduction

 The phenomenon of economic globalization includes greater integration of economic activities,

products, and systems across the world. As Szentes (2003:69) argues, globalization in economic
terms extends economic projects and relations transnationally and promotes economic
interdependencies among different countries.

 It is important to note that economic globalization goes beyond internationalization. Economic

globalization involves the integration of functions and processes of economic activities (Dicken,
2004).
Definitions of Economic Globalization

 Economic globalization is driven by the “growing scale of cross-border trade of commodities and
services”.
 Economic integration means that separate production operations are functionally related to each
other and form a unified product or service. This requires efficient management of economic
operations from different areas in the world. In current times, this is made possible by
innovations in transport logistics, modernization of communication and transport systems,
policies supporting integration of different process along the globe, among others.
 The various definitions of the economic globalization focus on increasing economic trade
interrelations among countries. This is governed by neoliberal principles with the role of the
market as a central driver of economic activities, with less government interventions.
 The voyages of earlier explorers including the formation of empire were critical in
intercontinental trade and were also a precursor of modern economic globalization. Chinese, and
even earlier, trades in Asia also serve as first-forms of economic expansion and later integration.
 Gills and Thompson (2006) argues that the globalization processes “have been ongoing ever since
Homo sapiens began migrating from the African continent ultimately to populate the rest of the
world.”
 Explorations in earlier times tend to focus on a relatively smaller target of commodities of high
value like spices, tea, gold, or other precious metals.
Who are the Actors that Facilitate the
Economic Globalization

 First are international economic organizations such as the International Monetary Fund (IMF),
World Bank, and Organization for Economic Cooperation and Development (OECD). These
organizations are critical in developing and pushing for neoliberal policies among different
countries. They also help facilitate trade and development discussions among various states.
 Second are multinational companies (MNCs), which are considered to be the main carriers of
economic globalization. In 1996, there were 44,000 MNCs in the world with 280,000 overseas
subsidiaries and branch offices (ibid). In 2006, there were 88,000 MNCs identified (UNCTAD,
2007). In earlier times, trade companies such as the Dutch and British East India, Muscovy
Company, Royal African Company, and Hudson Bay Company were precursors of the modern
day MNCS.
 Lastly is the global civil society as a major driver of economic globalization. The global civil society
has made its mark in global development arena particularly during the UN Conference on
Environment and Development in 1992 , Global civil society seen as either composed of individuals
or groups of individuals disadvantaged by the effects of the globalization of the world economy, they
protest and seek alternatives while on the other hand, global social movement constituting a basis for
an alternative to a new world order. Part of the global civil society are Transnational Advocacy
Networks (TAN), networks which are “organized to promote causes, principled ideas, and norms, and
they often involve individuals advocating policy changes that cannot be easily linked to a rationalist
understanding of their interests”.
International Monetary Fund (IMF)

 The IMF is an international organization of 183 member countries to promote

international monetary cooperation and exchange stability; to foster economic
growth and high employment; and to provide short-term financial assistance to
countries to help ease balance of payments adjustments (IMF, 2019).
 International Financial Institutions (IFIs)

 The generic name given to all financial institutions operating on an international

level, ranging from development banks, such as the World Bank and the European
Bank for Reconstruction and Development (EDB), and monetary authorities, such
as the International Monetary Fund. These organizations give loans to
governments for large-scale projects, restructuring and balance of payments on
condition that they make specific changes that IFIs believe will boost economic
growth (Shangquan, 2000).
 Transnational Corporations

 "Enterprise that engages in activities which add value (manufacturing. extraction,

services, marketing, etc.) in more than one country (UCTC, 1991)
 G8 and G20

 Group of nations that serve as an advisory organization that discuss current

economic and political problems and transfer the ideas from the forum in national
legislative regulations (Weiss, 2018)
 Global Civil Society

 Either composed of individuals or groups of individuals disadvantaged by the

effects of the globalization of the world economy, they protest and seek
alternatives while on the other hand, global social movement constituting a basis
for an alternative to a new world order (Gherghel, n.d.; Keane, 2003)
 What is the Modern World System?

 The seminal work of Immanuel Wallerstein on the world-system theory (1974) is a

critical reference in the theorization of globalization. In this work, he expounded
on the theory on how the core came to dominate the periphery areas particularly in
the economic world system as a basis of his analysis. This transgresses from the
traditional analysis of colonization with nation-state as starting point.
 For Wallerstein, a world system constitutes a social system composed of boundaries,
structures, member groups, rules of legitimation, and coherence (Wallerstein, 2011).
World economy, according to Wallerstein (2011), is divided into core states and
peripheral areas including semi-peripherals. According to the world-system theory,
the peripherals are mostly where production or raw materials are sourced out, while
the semi-peripherals processed or distributed the products to the core areas-sites of
major demands for goods and services (Wallerstein, 2011). There are significant and
meaningful movements of resources, products, people in different economies
facilitated by modern transport and communication (Chase-Dunn, 2018).
 SUMMARY

 This lesson sets out to answer the following questions: "what is economic
globalization?", "who are the actors that drive economic globalization?", and
"what is the modern world system?"

1. Economic globalization is the expansion of national economies, the global

market driven by modern technologies and institutional set ups that promote faster
and easier flow of goods and capital (Sugden & Wilson, 2005). The global
economy is a product of this economic globalization where each countries'
economies are more interconnected and affected by each other.
 2. There are different actors and institutions that drive economic globalization,
most of which are non-state actors. These include international economic
organizations like IMF, WB, ADB; central banks; private sectors led by MNCs;
and civil society. These organizations affect trade and economic policies and serve
as source of support (funds, services, technical) for economic globalization.
 3. The modern world system is based on the theory of Wallerstein (1974), which
posited that the global economy is divided into the core, semi-periphery, and
periphery. The core is the center of economic activities where most of the
population lives and economic institutions and services are based. However,
majority of the raw materials and productions are done or sourced out in the
periphery. The semi-periphery areas serve as distributors or add value to the raw
materials by processing them for the core areas.
MARKET
INTEGRATION
Learning Objectives

Explain the role of International Financial Institutions (IFIs)

in globalization.
Summarize the history of global market integration in the
20th century.
Identify the characteristics and impact of global
corporations.
WHAT ARE IFI?

 Institutions providing loans, grants, and technical assistance

for economic and social development (Bhargava, 2006).
International Monetary Fund (IMF), World Bank Group,
regional development banks.Identify the characteristics and
impact of global corporations.
 IFIs AND THE GLOBAL
ECONOMY

 Key roles:
- Provide financial resources for development projects.
- Offer technical expertise and policy advice.
- Promote macroeconomic stability and infrastructure development.
- Support private sector expansion.
 Benefits:
- Contributed to social and economic progress.
- Increased trade and investment flows.
 Challenges:
- Legitimacy: Concerns about power imbalances in decision-making.
- Effectiveness: Questions about the impact of some development projects.
- Conditionality: Loan terms sometimes criticized as imposing Western policies.
- Sustainability: Balancing financial viability with social and environmental goals.
 A History of Global Market Integration

First wave (16th-18th centuries):

- Increased trade, capital, and immigration flows.
- Limited international institutions to manage these dynamics.
- Driven by capital accumulation, technological advancements, and
exploration.
Second wave (post-WWII to late 1990s):
- Establishment of modern international economic architecture.
- Expansion of multinational corporations (MNCs).
- Trade liberalization and free flow of capital.
 Third wave (late 1990s-present):
• Rise of the internet and World Trade Organization (WTO).
• China's entry into the global trading system.
• Global economic boom followed by financial crisis and political instability.
• Fourth Industrial Revolution: Potential for slower growth, political
challenges, and power shifts.
The Rise of Global Corporations

• Growth of MNCs and Transnational Corporations (TNCs).

• MNCs: Centralized decision-making with foreign subsidiaries.
• TNCs: More autonomy for individual foreign market
investments.
• Shift in capital flows: South-South and South-North flows
increasing.
• Impact:
- Global wealth creation and distribution
- Economic development.
- Inequality and environmental concerns.
Conclusion/Summary

• IFIs and global corporations play significant roles in market

integration.
• Balancing economic growth with social well-being and
environmental sustainability is crucial.
• Increased transparency, responsibility, and positive impact
are needed from these entities.
THANK YOU!