Lesson 2: The Globalization of World Economic

OBJECTIVES
At the end of this lesson, you should be able to:
1. Define economic globalization;
2. Identify the actors that facilitate economic globalization;
3. Narrate a short history of global market integration in the twentieth
century; and
4. Articulate your stance on global economic integration.

What is Economic Globalization?

 As a historical process representing the result of human innovation and

technological progress. It is characterized by the increasing integration of
economies around the world through the movement of goods, services, and
capital across borders.

Examples:
1. Ten years ago, buying books or music indicates acquiring physical items.
Today, however, a book can be digitally downloaded to be read with an e-reader,
and a music album refers to the 15 songs on mp3 format you can purchase and
download from iTunes.
2. Parts of automobiles being assembled in United States while coming from
Japan.
3. A shirt sold in Europe could have been made from Chinese cotton by
workers in Thailand.
4. Dozens of Asian restaurants in a western country.
5. A fashion in Europe can come all the way to Pakistan.

According to the United Nations Conference on Trade and Development

(UNCTAD), the amount of foreign direct investments flowing across the world was
US$ 57 billion in 1982. By 2015, that number was $1.76 trillion.

What is International Trading System?

International trading systems are not new. The oldest known international
trade route was the Silk Road – a network of pathways in the ancient world that
spanned from china to what is now the Middle East and to Europe. It was called
as such because one of the most profitable products traded through this network
was silk, which was highly prized especially in the area that is now the Middle East
as well as in the West (today’s Europe).
However, while the Silk Road was international, it was not truly “global”
because it had no ocean routes that could reach the American continent.
According to historians Dennis O. Flynn and Arturo Giraldez, the age of
globalization began when all important populated continents began to exchange
products continuously –both with each other directly and indirectly via other
continents – and in values sufficient to generate crucial impacts on all trading
partners.

What is the Bretton Woods System?

The Bretton Woods agreement of 1944 established a new global monetary
system. It replaced the gold standard with the U.S. dollar as the global currency.
By so doing, it established America as the dominant power in the world economy.
After the agreement was signed, America was the only country with the ability to
print dollars.
The agreement created the World Bank and the International Monetary Fund
(IMF), U.S.-backed organizations that would monitor the new system. Under the
agreement, countries promised that their central banks would maintain fixed
exchange rates between their currencies and the dollar. If a country's currency
value became too weak relative to the dollar, the bank would buy up its currency
in foreign exchange markets.
The Bretton Woods system was largely influenced by the ideas of British
economist John Maynard Keynes who believed that economic crises occur not
when a country does not have enough money, but when money is not being
spent and, thereby, not moving. When economies slow down, according to
Keynes, governments have to reinvigorate markets with infusion of capital. This
active role of governments in managing spending served as the anchor for what
would be called a system of global Keynesianism.

Two Financial Institutions

1. International Bank for Reconstruction and Development (IBRD)
2. International Monetary Fund

International Bank for Reconstruction International Monetary Fund

and Development (IBRD)
Assist in reconstruction and Surveillance (like a doctor) gathering
development of its member countries. data and assessing economic policies
of countries.
Promote private foreign investment Technical Assistance (like a technical)
strengthening human skills and
institutional capacity of countries.
Promote balanced growth of Financial assistance (like a banker)
international trade. lending to countries to support
reforms.
Assist in bringing about a smooth It promotes orderly adjustment for
transition from war to peaceful exchange rates to promote exchange
economies. stability.

Neoliberalism and Its Discontents

The high point of global Keynesianism came in the mid-1940s to the early
1970s. During this period, governments poured money into their economics,
allowing people to purchase more goods and, in the process, increase demand for
these goods. Western and some Asian economies like Japan accepted this rise in
prices because it was accompanied by general economic growth and reduced
unemployment. The theory went that, as prices increased, companies would earn
more, and would have more money to hire workers. Keynesian economist
believed that all this was a necessary trade-off for economic development.
In the early 1970s, however, the prices of oil rose sharply as a result of the
Organization of Arab Petroleum Exporting Countries’ (OAPEC, the Arab member-
countries of the Organization of Petroleum Exporting Countries or OPEC)
imposition of an embargo in response to the decision of the United States and
other countries to resupply the Israeli military with the needed arms during the
Yom Kippur War. Arab countries also used the embargo to stabilize their
economies and growth. The “oil embargo” affected the Western economics that
were reliant on oil. To make matters worse, the stock markets crashed in 1973-
1974 after United States stopped linking the dollar to gold, effectively ending the
Bretton Woods System. The result was a phenomenon called stagflation, in which
a decline in economic growth and employment (stagnation) takes place alongside
a sharp increase in prices (inflation).
Economist like Friedman used to economic turmoil to challenge the
consensus around Keyne’s ideas. What emerged was a new form of economic
thinking that critics labeled neoliberalism. From the 1980s onward, neoliberalism
became the codified strategy of the United States Treasury Department, the
World Bank, the IMF, and eventually the World Trade Organization (WTO) – a new
organization founded in 1995 to continue the tariff reduction under the GATT.
The policies they forwarded came to be called the Washington Consensus.
 The Washington Consensus dominated global economic policies from the
1980s until the early 2000s. Its advocates pushed for minimal government
spending to reduce government debt. They also called for the privatization of
government-controlled services like water, power, communications, and
transport, believing that the free market can produce the best results. Finally,
they pressured governments, particularly in the developing world, to reduce
tariffs and open up their economies, arguing that it is the quickest way to
progress. Advocates of the Washington Consensus conceded that, along the way,
certain industries would be affected and die, but thy considered this “shock
therapy” necessary for long-term economic growth.

Economic Globalization Today

The global financial crisis will take decades to resolve. The solutions
proposed by certain nationalist and leftist groups of closing national economies to
world trade, however, will no longer work. The world has become too integrated.
Whatever one’s opinion about the Washington Consensus is, it is undeniable that
some form of international trade remains essential for countries to develop in the
contemporary world.
First, exports, not just the local selling of goods and services, make
national economies grow at present. In the past, those that benefited the most
from free trade were the advanced nations that were producing and selling
industrial and agricultural goods. The United States, Japan, and the member-
countries of the European Union were responsible for 65 percent of global
exports, while the developing countries opened up their economies to take
advantage of increased fre trade, the shares of the percentage began to change.

Second, developed countries are often protectionist, as they repeatedly

refuse to lift policies that safeguard their primary products that could otherwise
be overwhelmed by imports from the developing world.
 Last, the beneficiaries of global commerce have been mainly transnational
corporations (TNCs) and not government. And like any other business, these
TNCs are concerned more with profits that with assisting the social programs of
the governments hosting them.

Online references:
https://www.thebalance.com/bretton-woods-system-and-1944-agreement-
3306133#:~:text=2%EF%BB%BF-,The%20Bretton%20Woods%20Agreement,their
%20currencies%20and%20the%20dollar

Agcaoli, Lawrence. “Remittances, PBO Revenues may Top $51B this Year”. PhilStar
Global, June 2, 2016. Last accessed February 24, 2017.
http://www.philstar.com/business/2016/06/02/1589080/remittances-bpo-
revenues-may-top-51-b-year.

Ang, Alvin P., GuntureSugiyarto, and Shikha Jha, “Remittances and Household
Behavior in the Philippines”. Asian Development Bank Working Paper Series No
188, (December 2009): xii

Lesson3 : A History of Global Politics

Objectives
At the end of this lesson, you should be able to:

1. Identify key events in the development of international relations;

2. Differentiate internationalization from globalization;
3. Define the state and the nation;
4. Distinguish between the competing conceptions of internationalism; and
5. Discuss the historical evolution of international politics.
 International relations is a vague and widely used term with two main
meanings. The first meaning of term pertains to interactions among states and
between states and state based actors across state boundaries. In this sense, the
term can be compared with another widely used term: international politics.
However, international relations is wider than international politics. Thus, the
second term is included in the first. Indeed, international politics is usually seen as
one of the most important sub-fields of international relations. This first meaning
of the term ‘international’ relations was coined by Jeremy Bentham – it makes it
first appearance in his 1789 book Principles of Morals and Legislation.
The second meaning of the term – International Relations (IR) – denotes a
separate field of academic inquiry, distinct from other social sciences like
Economics, Law, and Sociology etc. This second meaning of the term (IR)
effectively originated in 1919 with the establishment of the first chair in the field
at the University of Wales, Aberystwyth. This second meaning of the term, then,
has the first as its object of scholarly scrutiny. IR has, since its origins in the wake
of the First World War, developed several theoretical perspectives in order to
identify and explain the recurring patterns of international relations – most
notably the causes of war and the preconditions for peace. Many contemporary
universities offer courses and degrees in IR; these offerings often cohabit
Departments of Political Science together with close academic relations such as
Political Theory, Comparative Politics, Public Policy or International Political
Economy
These two meanings are abstract and conventional. In practice, they
overlap; it is often hard to tell where one ends and the other begins. This chapter,
“The Development of International Relations” is a case in point. It draws on
academic perspectives to present a simple overview of international relations
through modern history. If it draws heavily – some might say excessively – on
Western events, this has a simple explanation: Conventions of the IR discipline
singles out the territorial state as the dominant actor in international relations.
Since the territorial state is largely a Western invention the attention of this
chapte
r is biased towards Western events.
World politics today has four key attributes:
1. There are countries or states that are independent and govern themselves.
2. These countries interact with each other through diplomacy.
3. There are international organizations, like the United Nations (UN), that
facilitate these interactions.
4. Beyond simply facilitating meetings between states, international
organizations also take on lives of their own.

What are the origins of this system? A good start is by unpacking the definition of
its term and provides meaningful concordance to demystify our standing on
Nation-State and Nation and State.

What is Nation-State?
A territorially bounded sovereign polity—i.e., a state—that is ruled in the name of
a community of citizens who identify themselves as a nation. The legitimacy of a
nation-state’s rule over a territory and over the population inhabiting it stems
from the right of a core national group within the state (which may include all or
only some of its citizens) to self-determination. Members of the core national
group see the state as belonging to them and consider the approximate territory
of the state to be their homeland. Accordingly, they demand that other groups,
both within and outside the state, recognize and respect their control over the
state.
A nation state is a country formed and dominated politically by a
particular/distinct ethnic group. In this case, a vast majority of the population of
such a country tend to be of the same nationality. This is as opposed to a multi-
national state, such as can be found in many parts of Africa and South America
due mainly to the colonial influence, where no one ethnic group clearly holds
dominance over the others.
For example.
Japan, South Korea, Iceland, Portugal, Switzerland, China, and India are good
examples of nation-state they have a common ethnicity, or with many different
ethnic groups, can still develop a national culture around shared history, heroes,
or customs.
The nation-state is composed of two non-interchangeable terms:
1. Not all states are nations
2. Not all nations are states

What then is the difference between nation and state?

Nation - a large body of people, associated with a particular territory, that is
sufficiently conscious of its unity to seek or to possess a government peculiarly its
own.

Theories concerning the origin of Nation

1. Primordialism
2. Constructivist Approach
State – in layman’s term. State refers to a country and its government.
A state has four attributes:

 People
 Government
 Territory
 Sovereignty
1. People
A group of persons with common traditional, historical, or cultural ties, as
distinct from racial or political unity.
The members of a group under the leadership, influence, or control of a
particular person or body, as members of a group of servants, royal subjects, etc.

2. Government
The political direction and control exercised over the actions of the
members, citizens, or inhabitants of communities, societies, and states; direction
of the affairs of a state, community, etc.; political administration.
(https://www.dictionary.com/browse/government)
3. Territory
An area of land, or sometimes ocean, that is considered as belonging to or
connected with a particular country or person.
A geographic area belonging to or under the jurisdiction of a governmental
authority
(https://www.merriam-webster.com/dictionary/territory)
4. Sovereignty

• The quality or state of being sovereign, or of having supreme power or

authority.
• The status, dominion, power, or authority of a sovereign; royal rank or
position; royalty.
• Supreme and independent power or authority in government as possessed
or claimed by a state or community.
Theories concerning the origin of State
1. Divine Right Theory
2. Force Theory
3. Paternalistic Theory
4. Social Contract Theory
5. Natural Theory

The Interstate System

The origins of the present-day concept of sovereignty can be traced back to
the Treaty of Westphalia, which was a set of agreements signed in 1648 to tend of
the Thirty Years’ War between the major continental powers of Europe. After a
brutal religious war between Catholics and Protestants, the Holy Roman Empire,
Spain, France, Sweden, and the Dutch Republic designed a system that would
avert war in the future by recognizing that the treaty signers exercise complete
control over their domestic affairs and swear not to meddle in each other’s
affairs.
The Westphalia system provided stability for the nations of Europe, until it
faced its first major challenge by Napoleon Bonaparte believed in spreading the
principles of the French Revolution – liberty, equality, and fraternity – to the rest
of Europe and thus challenged the power of kings, nobility, and religion in Europe.
The Napoleonic Wars lasted from 1803-1815 with Napoleon and his armies
marching all over much of Europe. In every country they conquered, the French
implemented the Napoleonic Code that forbade birth privileges, encouraged
freedom or religion, and promoted meritocracy in government service
Always bear in your mind that in contemporary world we will be dealing most
likely on the various disciplines of Social Sciences which helps us understand the
trends and issues internationally and globally with full of bizarre events and
ambiguous scenarios which you don’t want to experienced alongside of your
journey as human so in this lesson we will bridge your uncertainty about
contemporary issues to a meaningful imagination which brighten you
understanding. I know that it isn’t easy to deal with hardest things but in order to
achieve meaningfully, you’re advised to read every now and then because one
thing to win this battle is to read in advance. I know you can do it!
Online References:
https://www.britannica.com/topic/nation-state
https://www.eolss.net/Sample-Chapters/C14/E1-35-01.pdf
Book References:

Cassels, Alan (1996). Ideology and International Relations in the Modern World.
London: Routledge [An accessible study of political ideas and ideologies and the
role they have played in international relations over the past two centuries].

Baylis, John & Steve Smith, eds. (2001). The Globalization of World Politics.
Oxford: Oxford University Press [A justly popular and representative introduction
to the academic study of International Relations].