ADVANCING THE GLOBAL ECONOMY

1. Different concepts of globalization

 Academic, economic, technological, social
aspect

2. Five core claims of market globalism

a. Liberalization (less restraint/control
from govt)
b. Inevitable/irreversible
c. Nobody is in control of globalization
d. Benefits everyone
e. Facilitates the spread of democracy

DISCUSSION

ADVANCING THE GLOBAL ECONOMY

The discussion will primary be guided by this question: “Why do the
regions around the globe have glaring differences when it comes
to economy?”

Not evenly?

Economic globalization
 Historical process that is the result of human innovation and
technological progress.
Most advanced countries – high technologies
 Increasing integration of economies around the world, particularly
though movement of goods, services, and capital across borders.
  For the past centuries, the global economy has significantly changed.
In the 11th century, the long distance trading flourished between
Venice and the Netherlands.

 The woolen industry in the 13th century in Flanders and in 14th

century in Florence can also be an example of a sustained economic
growth throughout history. Those global changes have contributed
much to the economy of the world. There was the birth of capitalism.

HISTORICAL BACKGROUND

Pre-Colonial Period

 Economic System:
trade/barter/bullion system

No money
Food = food

 The standards of living of most of

the population in the globe have remained at the subsistence levels
until in the middle of 18th century

Subsistence level = basic needs = food, clothing, shelter



1800s
 Gold Standard
 Commitment between countries –
currency is gold
 Gold = stable economic environment
= accelerating international trade
 However, it slowed down, since
countries were afraid that their gold
reserves would fluctuate.
19th century
 International trading
- Technological innovations in productions
and transportations
- Inventions, Engines, Machineries
- Value of paper bills and coins & Manpower
- Labor
- Start of Colonialism, Imperialism to
exploit resources of other countries
- Communication
- International trade improves

World War 1
 Also known as Great War, in 1914,
after the assassination of Archduke Franz
Ferdinand of Austria
 Disruption of gold standard
 Weakened Europe
 United States became the center of the
capitalized world

1929
 Great depression due to world war
1
 Although it originated in the United
States, the Great Depression caused
drastic declines in output,
severe unemployment,
and acute deflation in almost every
country of the world. 
World War 2
 Darkest period of economic history
 US vs Japan: Bombing of Pearl Harbor; Hiroshima and Nagasaki
 Russia vs. Germany
 Competitive devaluation: when countries seek to reduce the value
of their exchange rate to make their exports cheaper and gain a
competitive advantage in world trade over other countries.
 Weakened economy of the entire globe
 Deflation (nasirang infrastructures, closed businessed) chaos in
international trade system

Scenario: 1hr naglakad sa Cabanatuan (OLFU MEGA)

Mainit/pinawisan
Paguwi mo ng bahay =

1944
 Refreshment of economy

 Brettons wood system:

demolished gold standard- changed to
international currency (US$)

International currency

 International Organizations
 World Bank = previously known as international bank for
reconstruction and development
RECONSTRUCTION = broken => fix

 International Monetary Fund

 World Trade Organization = previously general agreement
on tariffs and trade
Tariffs = charges/fees, export and import products

1971
 1944: Bretton woods system – US $ as
an international currency
 Smithsonian agreement: the dollar was devalued against foreign
currencies by about 8%, while the currencies of the surplus countries
were revalued.
 Realignment of currencies and a new set of pegged exchange rates.
 China rose in the economic competition

2009
 Washington Consensus: a
set of economic
policy recommendations for
developing countries, and Latin
America in particular.
 It refers to the level of agreement
between the International Monetary
Fund (IMF), World Bank, and U.S.
Department of the Treasury on those policy recommendations.
 All shared the view, typically labelled neoliberal, that the
operation of the free market and the reduction of
state involvement (liberalization) were crucial to
development in the global South.
 Free market, international trade, backed up by the international
organizations

GLOBAL CHANGES

 In Gary Gereffi’s journal, The Global Economy: Organization,

Governance, and Development, he mentioned that the global changes
are attributed to how the global economy is organized and governed
 Global changes give impact:
1. flow of goods and services across national borders,
2. how a particular country move up or down in the
international scene. = social/economic hierarchy

 Nowadays, the various countries’ strategies on development are

influenced by the new degree on how industries are organized.
 These development strategies are manifested in
a shift in theoretical frameworks from those
centered on the legacies and actors of nation-
states a greater concern with supranational
institutions and transnational
organizations.

TF1 TF2
BEFORE NOW
those centered on the a greater concern with
legacies and actors of supranational
nation-states institutions and
transnational
organizations.

utilize our own Supra = inter

people International
own government organizations/institutions
BIGGER orgs/outside
own country
  Developed countries and developing countries like the Philippines
have to fully understand the impact of the contemporary global
economy to improve their position in the global system.

 There is no singular academic field that can completely explain the

topic of global economy because it is inherently interdisciplinary.
According to Gereffi, the global economy can be studied at
different levels of analysis.

FIRST: MACRO-LEVEL ANALYSIS

Macro
Meso
Micro

MACRO= biggest/whole/ZOOM

SUPRA / international institutions/orgs

 The international organizations and regimes that establish rules

and norms for the global community.
 International Economic and Financial Organizations
 Their activities promote sustainable private and public sector
development primarily by:
1. Financing private sector projects located in the developing world
2. Helping private companies in the developing world mobilize
financing in international financial markets
3. Providing advice and technical assistance to businesses and
governments.
International Monetary Fund (IMF)

 Mission: to promote global economic growth and

financial stability, encourage international
trade and reduce poverty around the world
 1944: as part of Bretton Woods Agreement, which
attempted to encourage international financial
cooperation by introducing a system of
convertible currencies at fixed exchange rates.

World Trade Organization (WTO)

 Created in 1995: oversees the global trade rules among
nations.
 Supersedes the 1947 General Agreement on Tarrifs and
Trade (GATT) created in the wake of World War 2.
 Main function: help producers of goods and services,
exporters, and importers protect and manage their
businesses.

The World Bank

 1944
 Has 189 member nations and aims to
reduce poverty in the developing world
 An international organization dedicated
to providing financing, advice, and
research to developing nations to aid
their economic advancement.
- Two (2) goals
1. To end extreme poverty
2. To promote shared prosperity in a sustainable way

SECOND: MESO LEVEL

ANALYSIS
MIDDLE= MESO
countries

 The building blocks for the global economy are the countries and
firms.
 The global economy is seen as the arena in which countries compete
in different product markets.
 Competition = countries vs. countries

THIRD: MICRO-LEVEL ANALYSIS

Macro- intl orgs

Meso-countries
Micro - Consumers

Building blocks
 The last is at the micro level.
 resistance to globalization by
consumer groups, activists, and
transnational social movements.
 Therborn (2000) expressed, “There
are many theories related to economic
sociology incorporate the global
economy in their frameworks, but
they differ in the degree to which it is conceptualized as a system
that shapes the behavior and motivation of actors inside it, or as an
arena where nationally determined actors meet, interact, and
influence each other. ”

Regions have different economy?

TRIPARTITE STRUCTURE OF ECONOMIC
AREAS
 World-systems theory: the upward or downward mobility of
nations in the core, semi periphery, and periphery is determined by a
country’s mode of incorporation in the capitalist world-economy, and
these shifts can only be accurately portrayed by an in-depth analysis
of the cycles of capitalist accumulation in the longue duree of history
(Wallerstein 1974, 1980, 1989; Arrighi 1994).

 IMMANUEL WALLERSTEIN
 American sociologist / Economic Historian

Units of measurement = length = cm, m, ft, inch

Weight = kg, lbs

WORLD = society =/ SYSTEM

OLFU
System = staff = functions
 Guidance, deans, admin officers, HR, professors,
utility workers

 World-System Analysis: emphasis on the unit analysis: world

system rather than a state/society/social formation
 He viewed the globe as a system – not just a society
 World – not synonymous with global or planetary – simply refers
to a relatively large unit within which there is an axial
division of labor.
 Every world/large unit is composed of core and periphery

THREE DIVISIONS IN THE GLOBAL WORLD

CORE Peripheral Region SEMI=Peri
Capital intensive Labor intensive Both characteristics
Microchip/pharma Mining/Copra Pharma/mining
US, West Europe, K, J Philippines Greece, Portugal

a. CORE REGIONS/COUNTRIES
CENTER
- Innovative, capital intensive production that requires
higher and more specialized labor and professional skills
- Microchip production or pharmaceuticals
- US, West Europe, and some industrialized countries off Asia (Japan
and South Korea) are core countries

b. PERIPHERAL REGIONS
- Labor-intensive production that requires only low-level skills,
usually involving the mere extraction and/or preliminary processing
of resources
- Mining/copra production
Mina
LABOR
- Most of the industrializing or non-industrialized nations in Asia,
Africa and Latin America are peripheral countries.
-

c. SEMI-PERIPHERAL REGIONS
- Share some characteristics of both a core and a peripheral
region/country, or if they serve as a core to one region/country, while
at the same time serving as a periphery of another region/country
- Southern European countries (Spain, Greece and Portugal) are semi-
peripheral countries
  Core regions/countries typically treat their peripheries as source of
raw materials and laborer and as market for their surplus product

CORE= ask raw materials from PERIPHERIES

CORE = product
PERIPHERIES = core= technology
CORE = product  bebenta to own countries
= surplus => bebenta nila sa peri/semi peri
= price product = MAS MATAAS
Bibilhin

Sila kumite, tayo ang nalugi

 The economies of core regions/countries seemingly grow at the

expense of peripheral regions/countries
 Peripheral are permanently dependent on the core regions/countries
as they fail to or are hindered from using their natural resources for
industrialization and achieving capability in production and
innovation that requires higher levels of labor and professional skills
 The foundation for a process of industrialization and new
international divisions of labor on a global scale is attributed to the
dynamics of the capitalist world-system.
 Adam Smith, an eighteenth-century political economist, defined
“division of labor” as the specialization of workers in different
parts of the production process, usually in factory setting.
  In a global scope, the “classic” international division of labor was
between the industrial countries producing manufactured goods and
the non-industrialized economies that supplied raw materials and
agricultural products to the industrial nations which became a market
for basic manufacturers.
 Years after World War II, trade flows have become far more complex,
and so have the relationships between the developed and the
developing nations of the global economy.
 CHANGES IN GLOBAL ECONOMY => continuous