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Lesson 2 Structures of Globalization

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23 views

Lesson 2 Structures of Globalization

Uploaded by

Ella Mae Mabini
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Republic of the Philippines

MARINDUQUE STATE UNIVERSITY


COLLEGE OF BUSINESS AND ACCOUNTANCY
Tanza, Boac, Marinduque

Lesson The Structures of Globalizations-


2 Global Economy

The Global Economy

Globalization
 worldwide interconnectedness in all aspects of contemporary social aspects
 Multidimensional phenomenon
 But the economic dimension is one of the major driving
forces

Economic Globalization
 A historical process
 Increasing integration of economies around the world
through the movement of goods, services, and capital
across borders. (Transportati on and Communication
Revolution)
Republic of the Philippines
MARINDUQUE STATE UNIVERSITY
COLLEGE OF BUSINESS AND ACCOUNTANCY
Tanza, Boac, Marinduque

ACTIVITY : How close is the world to me ?

 What’s the origin of the most recent song or piece of music that you listened to? (Identify the
nationality of the creator of the music as well as the tradition to which it belongs.)
 What technology do you most commonly use to listen to music?
 Where is the technology made? Where is the company that owns the technology based?
 How have you obtained music – online purchases or physically bought from retail outlets?

Economic Globalization
A process making the world economy an “organic
system” by extending transnational economic
processes and economic relations to more and more
countries and by deepening the economic
interdependence among them (Szentes)

Attributes of Economic Globalization


The globalization of trade of goods and services;
The globalization of financial and capital markets;
The globalization of technology and communication; and
The globalization of production

When did economic globalization start?

History of Economic Globalization


Republic of the Philippines
MARINDUQUE STATE UNIVERSITY
COLLEGE OF BUSINESS AND ACCOUNTANCY
Tanza, Boac, Marinduque

Grills and Thompson, globalization began since Homo sapiens


began from migrating from the African continent to populate the
rest of the world
Frank and Grills considered the Silk Road (Asia, Europe, Africa) the
best example for archaic globalization 5,000 years ago

History
of

Economic Globalization
 Adam Smith considered the discovery of America by
Christopher Columbus in 1492 and the discovery of the
direct sea route to India by Vasco de Gama in 1498 as
the two(2) greatest achievements of human history
 British Industrial Revolution spread to Continental
Europe and North America
 17th – 19th century, economic nationalism and
monopolized trade such as the British (1600) and the
Dutch (1602)
East India
Companies

th
20 century transport revolution :
 The “golden age of
globalization because of :
 Relative peace
 Free – trade
 Financial and
economic stability

What is the role of nation –state in economic globalization ?


Republic of the Philippines
MARINDUQUE STATE UNIVERSITY
COLLEGE OF BUSINESS AND ACCOUNTANCY
Tanza, Boac, Marinduque

Nation – State &


Economic Globalization

 For hyperglobalists, states ceased as primary


economic organization
 People consume highly standardized global products
and services produced by global corporations in a
borderless world
 There will be no national products, technologies, no
national companies

 Neo - Liberals claim that nation –states have lost an


important element of economic sovereignty
 “Buy Taiwan, hold Italy and sell France”, Thomas
Friedman compared countries to individual stocks.
 The major players of global economy are the
transnational corporations or TNCs

TRANSNATIONAL CORPORATIONS
are constantly evolving as a result of outsourcing
activity
Republic of the Philippines
MARINDUQUE STATE UNIVERSITY
COLLEGE OF BUSINESS AND ACCOUNTANCY
Tanza, Boac, Marinduque

- Going out to find the source of what you need

 We live in an age of outsourcing.


 Firms are subcontracting an expanding set of activities. Some have become “virtual”
manufacturers, owning designs for so many products but making almost nothing themselves.

 Example : AMERICAN CAR (WTO)


KOREA – assembly
JAPAN – components & advanced technology
GERMANY – design
TAIWAN & SINGAPORE – minor parts
UK – advertising and marketing services
IRELAND/ BARBADOS – data process

The global commodity chains


 TNCs gather resources, transform them into goods or
commodities and finally distribute them to consumers in the
world market

Impact of Economic Globalization


 World Bank(WB) claims that globalization can indeed
reduce poverty but it definitely does not benefit all nations.

 The World System Analysis


 Capitalism under
economic globalization
creates INEQUALITY.
 The ratio of the richest region’s
GDP per capita to the poorest
Republic of the Philippines
MARINDUQUE STATE UNIVERSITY
COLLEGE OF BUSINESS AND ACCOUNTANCY
Tanza, Boac, Marinduque

 1000, 1 : 1
 1500 , 1: 2
 1820, 1 : 3
 1871, 1: 5
 WW I, 1: 9
 1950, 1: 15

DUTERTENOMICS
 Based on the rule of law
 Driven by massive infrastructure
spending
 Slogan of “Build, build, build.”

 The competitiveness of an economy and the impact of economic globalization depend on the
capacity of the nation - state for political intervention in order to regulate TNCs, IGOs and
other market players.

Nation –states are not influenced uniformly by economic globalization

INTERNATIONAL MONETARY SYSTEM (IMS)


 Rules , customs, instruments, facilities, and organizations for effecting international payments
 Facilitates cross-border transactions involving trade and investment
 The Gold Standard
19th century, UK, France, USA, Italy, Germany and other European nations adopted the gold
standard as a fixed exchange rate regime until 1930s
Republic of the Philippines
MARINDUQUE STATE UNIVERSITY
COLLEGE OF BUSINESS AND ACCOUNTANCY
Tanza, Boac, Marinduque

 The Bretton Woods System


Adopted the gold - dollar exchange standard. Various currencies were fixed to the US dollar
until 1971
International Banks Reconstruction and Development (IBRD)
International Monetary Fund (IMF)

10 Points of the Washington Consensus (1990)


 Fiscal policy discipline
 Effective public spending
 Tax reform
 Competitive exchange rates
 Trade liberalization
 Financial market liberalization
 Liberalization of foreign direct investment
 Privatization
 Deregulation
 Security of property right

 European Monetary Integration


 Germany, France, Italy, Netherlands,
Belgium and Luxembourg created a
common market where goods and services,
capital and labor moved freely
 European Economic Community,1957
 European Monetary System, 1979
 European Exchange Rate Mechanism
 European Economic and Monetary Union,
1992
 European Central Bank, 1999
 EURO as a reserved currency

International Trade & Trade Policies


 David Ricardo’s comparative advantage
 Every single nation must have a relative advantage in something irrespective of its
initial condition.
 Most – Favored Nation (MFN) Principle states that any negotiated reciprocal tariff reductions
between two parties should be extended to all other trading partners without conditions
 Kennedy Round (1962) - tariff cuts
 Tokyo Round ( 1970)– subsidies and procurement codes
 Uruguay Round (1986/1994 ) – multilateral trade negotiations
Republic of the Philippines
MARINDUQUE STATE UNIVERSITY
COLLEGE OF BUSINESS AND ACCOUNTANCY
Tanza, Boac, Marinduque

 World Trade Organization (WTO), 1995 (industrialized countries trade to developing countries,
specifically on agriculture)
 Doha Round – to lower trade barriers
 United Nations Conference on Trade and Development (UNCTAD) to promote trade and
cooperation between the developing and developed nations

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