SOUTH EAST ASIAN INSTITUTE OF TECHNOLOGY, INC.

National Highway, Crossing Rubber, Tupi, South Cotabato

GENERAL EDUCATION DEPARTMENT

___________________________________________________

LEARNING MODULE
FOR
GE 113: THE CONTEMPORARY WORLD

_____________________________________________________

WEEK 7

GE 113: The Contemporary World

SOUTH EAST ASIAN INSTITUTE OF TECHNOLOGY, INC.
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 COURSE OUTLINE

COURSE CODE : GE 113

TITLE : The Contemporary World
TARGET POPULATION : All First Year and Second Year Students
INSTRUCTOR : Ms. Jezlle B. Paguntalan

Overview:
This course introduces students to the contemporary world by examining the multifaceted
phenomenon of globalization. Using the various disciplines of the social sciences. It examines the
economic, social, political, technological, and other transformation that has created an increasing
awareness of the interconnectedness of people and places around the globe.
Objectives:

1. Distinguish different interpretations and approaches to globalization.

2. Describe the emergence of global economic, political, social, and cultural systems.
3. Analyze contemporary news events in the context of globalization, and issues in
relation to Filipinos and the Philippines.
4. Articulate personal positions on various global issues.

The following are the topics to be discussed

Week 7 THE GLOBAL ECONOMY
Week 8 ECONOMIC GLOBALIZATION AND SUSTAINABLE
DEVELOPMENT
Week 9 ECONOMIC GLOBALIZATION, POVERTY, AND INEQUALITY
Week 10 THEORIES OF GLOBAL STRATIFICATION
Week 11 MARKET INTEGRATION

Instruction to the Learners

Each chapter in this module contains lessons involving the theories of Globalization, Global
Economy, Market Integration and Global Interstate System. The units are characterized by
continuity, and are arranged in such a manner that the present unit is related to the next unit. For
this reason, you are advised to read this module. After each unit, there are exercises to be given.
Submission of task given will be every ___________ during your scheduled class hour.

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 WEEK 7

THE GLOBAL ECONOMY

The United Nations (UN) tried to address the different problems in the word. Their efforts were
guided by the Eight Millennium Development Goals, which they created in the 1990s.

Eight (8) Millennium Development Goals

1. The eradication of extreme poverty and hunger

2. Achieving universal primary education
3. Promoting gender equality and women empowerment
4. Reducing child mortality
5. Improving maternal health
6. Combating diseases like HIV/AIDS and malaria
7. Ensuring environmental sustainability
8. Having a global partnership for development

Poverty Line –also known as poverty threshold. A person is officially living in poverty if he
makes less than 100,534 pesos a year, around 275 pesos a day.
Extreme Poverty –also known as absolute poverty. A condition characterized by severe
deprivation of basic human needs including food, safe drinking water, sanitation facilities, health,
shelter, education, and information.

ECONOMIC GLOBALIZATION AND GLOBAL TRADE

Economic Globalization –refers to the increasing interdependence of world economics as a

result of the growing scale of cross-border trade of commodities and services, flow of international
capital, and wide and rapid spread of technologies.
Two different types of economies
1. Protectionism
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.
Trade protectionism usually comes in the form of tariffs and quotas. Tariffs are
required fees on imports or exports.

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 2. Trade Liberalization
Free trade agreements and technological advances in transportation and
communication mean goods and services move around the world more easily than ever.
We are talking about everything from shoes and bananas to innovation and ideas.
According to economist Jeffrey Sachs, mobile phones are the “single most transformative
technology” when it comes to the developing world. Phones give people access to banking
and payment systems and better access to education and information.
Leapfrogging –is the idea that countries can skip straight to more efficient and cost-
effective technologies that were not available in the past. International trade has also
created new opportunities for people to sell their products and labor in a global
marketplace.
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 them is “Fair trade”. As defined by the International Fair Trade Association, is
the concern for the social, economic, and environmental well-being of marginalized small
producers”. It aims for a more moral and equitable global economic system.

ACTIVITY #7
(To be submitted on _________, 2020)

Discussion Points and Exercise Questions

Direction: Read and understand this module. Provide what is being asked. Write your answer in a
1 whole sheet of yellow pad paper. Answers should have at least 5 sentences. Follow the rubric
below as your guide. (10 points each)

1. Do you think that the Philippines is harmed as other countries transfer their activities to us
through outsourcing?

2. In what ways do international organizations help our country’s economy?

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 3. Does the position of rich countries as giants in the economic chain threaten the status of
less developed countries in the global market?

Rubric:
Level Description
Well written and very organized. Excellent grammar mechanics.
Outstanding Clear and concise statements.
(9-10 points) Excellent effort and presentation with details.
Demonstrate a thorough understanding of the topic.
Writes fairly clear. Good grammar mechanics.
Good
Good presentation and organization.
(7-8 points)
Sufficient effort and detail.
Minimal effort. Good grammar mechanics.
Fair
Fair presentation.
(6 points)
Few supporting details.
Somewhat unclear. Shows little effort. Poor grammar mechanics.
Poor
Confusing and choppy, incomplete sentences.
(4-5 points)
No organization of thoughts.
Lacking effort. Very poor grammar mechanics.
Very Poor Very unclear.
(1-3 points) Does not address topic.
Limited attempt.

End of seventh week

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 SOUTH EAST ASIAN INSTITUTE OF TECHNOLOGY, INC.
National Highway, Crossing Rubber, Tupi, South Cotabato

GENERAL EDUCATION DEPARTMENT

___________________________________________________

LEARNING MODULE
FOR
GE 113: THE CONTEMPORARY WORLD

_____________________________________________________

WEEK 8

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 WEEK 8

ECONOMIC GLOBALIZATION AND SUSTAINABLE DEVELOPMENT

Sustainable Development –is the development of our world today by using the earth’s resources
and the preservation of such sources for the future. It seeks to chart a middle path between
economic growth and a sustainable environment. The relationship between globalization and
sustainability is multi-dimensional –it involves economic, political, and technological aspects.
The continuous production of the world’s natural resources, such as water and fossil fuel
allows humanity to discover and innovate many things. We were able to utilize energy, discover
new technologies, and make advancements in transportation and communication. However, these
positive effects of development put our environment at a disadvantage. Climate change
accelerated and global inequality was not eradicated. This means that development, although
beneficial at one hand, entails cost on the other.

Environmental Degradation
Efficiency means finding the quickest possible way of producing large amount of a particular
product. This process made buying of goods easier for the people. Then there is an increased
demand. Ultimately, there was an increased efficiency. This cycle harms the planet in a number of
ways. For instance, the earth’s atmosphere is damaged by more carbon emissions from factories
around the world, the destruction of coral reefs and marine biodiversity as more wastes are thrown
into the ocean.
Harvey (2005) noted that neoliberals and environmentalists debate the impact of free trade on
the environment. Environmentalists argue that environmental issues should be given priority over
economic issues. Neoliberals see the efforts of the environmentalists as serious impediments to
trade. Some seek to integrate these approaches. For instance, ecological modernization theory
sees globalization as a process that can both protect and enhance environment.

Various efforts to deal climate change:

1. Kyoto Protocol –aimed at a reduction of global carbon emissions, but failed to take off
largely because it was not ratified by the United States.
2. Carbon Tax and Carbon Neutrality
3. Ethanol –as an alternative to gasoline (Barrionuevo).
4. Technological Fixes –geoengineering

Food Security
Global food security means delivering sufficient food to the entire world population. It is,

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therefore, a priority of all countries, whether developed or less developed. The security of food
also means the sustainability of society such as population growth, climate change, water scarcity
and agriculture. Breene (2016) cited the case of India to show hoe complex the issue of food
security is in relation to other factors:

Agriculture accounts for 18% of the economy’s output and 47% of its
workplaces. India is the second biggest producer of fruits and vegetables in
the world. Yet according to the Food and Agriculture Organization (FAO) of
the United Nations, some 194 million Indians are undernourished, the largest
number of hungry people in any single country. An estimated 15.2% of the
population of India are too malnourished to lead a normal life. A third of the
world’s malnourished children live in India (n.p.).

A major environmental problem is the destruction of natural habitats, particularly through

deforestation. Industrial fishing has contributed to a significant destruction of marine life and
ecosystems. Biodiversity and usable farmland have also declined at a rapid pace. Another
significant environmental challenge is that of the decline in the availability of fresh water. The
decline in the water supply because of degradation of soil or desertification. The problem is further
intensified by the consumption of “virtual water”, wherein people inadvertently use up water from
elsewhere in the world through the consumption of water-intensive products. The destruction of
the water ecosystem may lead to the creation of “climate refugees”, people who are forced to
migrate due to lack of access to water or due to flooding.
Pollution through toxic chemicals has had a long-term impact on the environment. The use of
persistent organic pollutants (POPs) has led to significant industrial pollution. Greenhouse gases,
gases that trap sunlight and heat in the earth’s atmosphere, contribute greatly to global warming.
Furthermore, population growth and its attendant increase in consumption intensify ecological
problems.

Different models and agenda pushed by different organization to address the issue of global
food security:
1. Sustainability. The United Nations has set ending hunger, achieving food security and
improved nutrition, and promoting sustainable agriculture as the second of its 17
Sustainable Development Goals (SDGs) for the year 2030.
2. New Vision for Agriculture. The World Economic Forum (2010) addressed the issue in

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 2009 wherein public-private partnerships were established. The forum’s initiative were
launched to established cooperation and encourage exchange of knowledge among
farmers, government, civil society, and the private sector in both regional and national
levels.

ACTIVITY #8
(To be submitted on ________, 2020)

Direction: Read and understand this module. Write your answer in a ¼ sheet of illustration board.
Do this by pair.
1. In a ¼ sheet of illustration board, create a collage about an environmental degradation.

Rubric:

CATEGORY 20 15 10 5
All of the graphics or Most of the graphics or Only a few graphics or None of the graphics or
objects used in the objects used in the objects reflect student objects reflects student
Creativity collage reflect a collage reflect student creativity, but the ideas creativity.
degree of student creativity in their were typical rather
creativity in their display. than creative.
display.

Design Graphics are cut to an 1-2 graphics are 3-4 graphics are Graphics are not an
appropriate size, lacking in design or lacking in design or appropriate size shape.
shape and are placement. There may placement. Too much Glue marks evident.
arranged neatly. Care be a few smudges or background is Most of the background
has been taken to glue marks. showing. There are is showing. It appears
balance the pictures noticeable smudges or little attention was
across the area. glue marks. given to designing the
Items are glued neatly collage.
and securely.

Time and Effort Much time and effort Class time was used Class time was not Class time was not
went into the planning wisely. Student could always used wisely. used wisely and the
and design of the have put in more time student put in no
collage. It is clear the and effort. additional effort.
student used class
time efficiently.

Attention to The student gives a The student gives a The student gives a The student's
reasonable explanation reasonable explanation fairly reasonable explanations are weak
Theme of how every item in of how most items in explanation of how and illustrate difficulty
the collage is related to the collage are related most items in the understanding how to
the assigned theme. to the assigned theme. collage are related to relate items to the
For most items, the For many of the items, the assigned theme. assigned theme.
relationship is clear the relationship is clear
without explanation. without explanation.

Presentation The student speaks The student speaks The student somewhat The student does not
clearly, with confidence clearly, with confidence speaks clearly, with speak clearly, without
and poise. Completely and poise. Reasonably confidence and poise. confidence and poise.
conveys message of conveys message of Somewhat conveys Does not convey
collage as it relates to collage as it relates to message of collage as message of collage as
personal style choices. personal style choices. it relates to personal it relates to personal
style choices style choices

End of eight week

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 SOUTH EAST ASIAN INSTITUTE OF TECHNOLOGY, INC.
National Highway, Crossing Rubber, Tupi, South Cotabato

GENERAL EDUCATION DEPARTMENT

___________________________________________________

LEARNING MODULE
FOR
GE 113: THE CONTEMPORARY WORLD

_____________________________________________________

WEEK 9

GE 113: The Contemporary World

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 WEEK 9

ECONOMIC GLOBALIZATION, POVERTY, AND INEQUALITY

Economic and trade globalization is the result of companies trying to outmaneuver their
competitors. While you search for the cheapest place to buy shoes, companies search for the
cheapest place to make those shoes. The result is that labor-intensive products like shoes are
often produced in countries with the lowest wages and the weakest regulations. This process
creates winners and loser. The winners include corporations and their stockholders who earn
more profit. The losers are high wageworkers who used to make those shoes.

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. One of the best way to help those in extreme poverty is to enable them to participate in
the economy. A perfect example is microcredit –implemented by a Bangladesh professor,
Muhammad Yunus. Microcredit is not going to solve the problem of extreme poverty but it
supports the idea that enabling people to participate in the economy ca make their lives better.

Global Income Inequality

Globalization and inequality are closely related. We can see how different nations are divided
between the North and the South, developed and less developed, and the core and the periphery.

Two main types of economic inequality

1. Wealth inequality.
Wealth refers to the net worth of a country. It takes into account all assets of a nation –
may they be natural, physical, and human –less the liabilities.
This means that wealth inequality speaks about distribution of assets.

2. Income inequality.
Income is the new earnings that are constantly being added to the pile of country’s
wealth. When we talk about income inequality, we mean that new earnings are being
distributed; it values the flows of goods and services, not a stock asset.

Branko Milanovic (2011), an economist who specializes in global inequality, explained all this
by describing an “economic big bang” wherein the Industrial Revolution caused the differences
among countries.; through this “explosion” of industry and modern technology, some nations
became economically developed while others were developing. Ultimately, the result is the

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economic gap among countries.
Access to technology also contributed to worldwide income inequality. It complemented skilled
workers but replaced many unskilled workers. In modernized economies, jobs are more
technology-based, generally requiring new skills. This is what economists referred to as skill-
based technological change. As a result, workers who are more educated and skilled would thrive
in those jobs by receiving higher wages.

The Third World and the Global South

When Western policymakers began talking about the world as three distinct political and
economic blocs. Western capitalist countries were labeled as the “First World”. The Soviet Union
and its allies were termed the “Second World.” Everyone else was group into “Third World.” There
are more than 100 countries that fit the label of “Third World,” but they have vastly different levels
of economic stability. Some are relatively poor, but many are not.

A new and simpler classification, North-South, was created as Second World countries joined
either the First World or the Third World. First World countries, such as the United States, Canada,
Western Europe, and developed parts of Asia are regarded as the “Global North,” while the
“Global South” includes the Caribbean, Latin America, South America, Africa, and parts of Asia.
These countries were used to be called the Third World during the Cold War.

The terms “Global North” and “Global South” are a way for countries in the South to make a
stand about the common issues, problems, and even causes in order to have equality all
throughout the world. These distinctions point largely to racial inequality, specifically between the
Black and White. According to Ritzer (2015), “At the global level, whites are disproportionately in
the dominant North, while blacks are primarily in the south; although this is changing with South-
to-North migration”. In other words, the differences between the Global North and the Global
South are shaped by migration and globalization. Nevertheless, the economic differences
between the wealthy Global North and poor Global South “have always possessed a racial
character”.

The Global City

The rural –urban differentiation has a significant relationship to globalization. Globalization has
deeply altered North-South relations in agriculture. For instance, the relations of agricultural
production have been altered due to the rise of global agribusiness and factory farms. Schlosser
(2005) pointed out that as commercial agriculture replaces local provisioning, the relations of

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 social production are also altered. Rural economies are exposed to low prices and mass
migration.

Sassen (1991) used the concept of global cities to describe the three urban centers of New
York, London, and Tokyo as economic centers that exert control over the world’s political
economy. World cities are categorized as such based on the global reach of organizations found
in them. Not only are there inequalities between these cities, there also exists inequalities within
each city. Alternatively, following Castells (2002), these cities can be seen as important nodes in a
variety of global networks.

ACTIVITY #9
(To be submitted on _____________, 2020)

Direction: Make a 2-3 minutes video presentation. Do this by pair.

1. Make a video presentation about the Third World country vs. Global South Global City.
Rubric:
Excellent Good Satisfactory Needs
(20pts) (15pts) (10pts) Improvement
(5pts)
Concept The video clearly The video The video The video does
demonstrates a demonstrates key demonstrates a not demonstrate a
key concept. concepts. previous concept. clear concept.

Design The quality and The quality and The quality and The quality and
materials in the materials in the materials in the materials in the
video are very well video adequately video lacked some video are not
organized and organized and organization and organized and lack
understandable. somewhat clear. 50% clear. clarity.
Participation All members The majority of Half of the group Only one person
demonstrate an the members did most of the demonstrated an
Active role in the demonstrate an work. active role.
process. active role.
Final Product Final product looks Final product looks Final product l Final product looks
professional and decent and the required more unrefined and the
the concepts were concepts were revisions and the concepts were not
visibly somewhat concepts were not demonstrated.
demonstrated. demonstrated. clearly
demonstrated.

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 End of ninth week
---------------------------------------------Nothing Follows--------------------------------------

SOUTH EAST ASIAN INSTITUTE OF TECHNOLOGY, INC.

National Highway, Crossing Rubber, Tupi, South Cotabato

GENERAL EDUCATION DEPARTMENT

___________________________________________________

LEARNING MODULE
FOR
GE 113: THE CONTEMPORARY WORLD

_____________________________________________________

WEEK 10

GE 113: The Contemporary World

SOUTH EAST ASIAN INSTITUTE OF TECHNOLOGY, INC.
Page 14 of 24
 WEEK 10
THEORIES OF GLOBAL STRATIFICATION

A. Modernization Theory
This theory frames global stratification as a function of technological and cultural
differences between nations. It specifically pinpoints two historical events that contributed
to Western Europe developing at a faster rate than much of the rest of the world.

1. Columbian Exchange –refers to the spread of goods, technology, education, and

diseases between the Americas and Europe after Christopher Columbus’s so-called
“discovery of Americas.” The exchange worked out well for the European countries.
They gained agricultural staples, like potatoes and tomatoes, which contributed to
population growth and provided new opportunities for trade, while also
strengthening the power of the merchant class.
2. Industrial Revolution –this is when new technologies, like steam power and
mechanization, allowed countries to replace human labor with machines and
increase productivity. Industrial technology was very productive that it gradually
began to improve standards of living for everyone.

Modernization theory argues that the tension between tradition and technological
change is the biggest barrier to growth. A society that is more steeped in family systems
and traditions may be less willing to adopt new technologies and the new social systems
that often accompany them.

B. Walt Rostow’s Four Stages of Modernization

1. Traditional Stage. This refers to societies that are structured around small, local
communities with production typically being done in family settings. Because these
societies have limited resources and technology, most of their time is spent on
laboring to produce food, which creates a strict social hierarchy.
2. Take-off Stage. People begin to use their individual talents to produce things
beyond the necessities. This innovation creates new markets for trade. In turn,
greater individualism takes hold and social status is more closely linked with
material wealth.
3. Drive to Technological Maturity. Technological growth of the earlier periods begins

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 to bear fruit in the form of population growth, reductions in absolute poverty levels,
and more diverse job opportunities. Nations in this phase typically begin to push for
social change along with economic change, like implementing basic schooling for
everyone and developing more democratic political systems.
4. High Mass Consumptions. It is when your country is big enough that production
becomes more about wants than needs. Many of these countries put social
support systems in place to ensure that all of their citizens have access to basic
necessities.

C. Dependency Theory and the Latin American Experience

Starting in the 1500s, European explorers spread throughout the Americas, Africa, and
Asia, claiming lands for Europe. At one point, the British Empire covered about one-fourth of the
world. The transatlantic slave trade followed a triangular route between Africa, the American and
Caribbean colonies, and Europe. Guns and factory –made goods were sent to Africa in exchange
for slaves, who were sent to the colonies to produce goods like cotton and tobacco, which were
then sent back to Europe.

After the Second World War, there were many questions about international relations. One of
those questions was “Why are many countries in the world not developing?” The traditional
answer to the question was because these countries are not pursuing the right economic policies
or their governments are authoritarian and corrupt. Dependency theory was a product of this
experience. Dependency is the condition in which the development of the nation-states of the
South contributed to a decline in their independence and to an increase in economic development
of the countries of the North.

Trade protectionism through import substitution is the key to self-sustaining path to

development, not liberal trade or export. In other words, rather than focusing on how poor
countries are doing wrong, dependency theory focuses on how poor countries have been wronged
by richer nations. Dependency theory was initially developed by Hans Singer and Raul Prebisch in
the 1950s and has been improved since then.

The terms “core nations” and “peripheral nations” are at the heart of dependency theory.
Peripheral nations are countries that are less developed and receive an unequal distribution of the
world’s wealth. Core countries are more industrialized nations who receive the majority of the
world’s wealth. Another common assumption of the theory is that “even after de-colonization, there
are still important ties between the developed and less developed countries, which mainly consist
in the exploitation of peripheral natural resources and workforce by the center.”

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 Two main sub-theories:
1. North American Neo-Marxist Approach
Andre Gunder Frank contended the idea that less developed countries would develop
by following the path taken by the developed countries. Develop countries were
undeveloped in the beginning but not underdeveloped. This means that the path taken by
the developed countries does not guarantee the same fate for the underdeveloped
countries.
2. Latin American Structuralist Approach
Palma noted that chief among the arguments accounting for Latin American
underdevelopment was the “excessive” reliance on exports of primary commodities, which
were the object of fluctuating prices in the short term and a downward trend in relative
value in the long haul.

D. The Modern World-System

Inspired by American sociologist Immanuel Wallerstein model of what he called the
capitalist world economy. He described high-income nations as the “core” of the world economy.
This core is manufacturing base of the planet where resources funnel in to become the technology
and wealth enjoyed by the Western world today. Low-income countries are called “periphery”,
whose natural resources and labor support the wealthier countries, first as colonies and now by
working for multinational corporations under neocolonialism. Middle-income countries, such as
India or Brazil, are considered the semi-periphery due to their closer ties to the global economic
core.

Critics argue that the world economy is not a zero-sum game –one country getting richer
does not mean other countries are getting poor. Innovation and technological growth can spill over
the other countries, improving all nations’ well-being and not just the rich. The growth of the world
economy and expansion of world trade have coincided with rising standards of living worldwide,
with even the poorest nations almost tripling in the last century. But with increase trade between
countries, trade agreement such as the North American Free Trade Agreement (NAFTA) have
become a major point of debate, pitting the benefits of free trade against the cost of jobs within a
country’s borders.

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 ACTIVITY #10
(To be submitted on _____________, 2020)

Direction: Write your answer in a 1 whole sheet of yellow pad paper. Answers should have at
least 5 sentences. Follow the rubric below as your guide. (10 points each)

1. In the case of Philippines, how much do you think are we involved in the modern world-
system? What do you think are the advantages and disadvantages of being a part of such?

2. How can we “upgrade” our economy given the strength of global economy, especially the
giant economies like the United States and Japan?

Rubric:
Level Description
Outstanding Well written and very organized. Excellent grammar mechanics.
(9-10 points) Clear and concise. Demonstrate a thorough understanding of the topic.
Good Writes fairly clear. Good grammar mechanics.
(7-8 points) Good presentation and organization. Sufficient effort and detail.
Fair Minimal effort. Good grammar mechanics.
(6 points) Fair presentation. Few supporting details.
Poor Somewhat unclear. Shows little effort. Poor grammar mechanics.
(4-5 points) Confusing and choppy, incomplete sentences. No organization of thoughts.
Very Poor Lacking effort. Very poor grammar mechanics.
(1-3 points) Very unclear. Limited attempt. Does not address topic.

End of tenth week

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 SOUTH EAST ASIAN INSTITUTE OF TECHNOLOGY, INC.
National Highway, Crossing Rubber, Tupi, South Cotabato

GENERAL EDUCATION DEPARTMENT

___________________________________________________

LEARNING MODULE
FOR
GE 113: THE CONTEMPORARY WORLD

_____________________________________________________

WEEK 11

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 WEEK 11
MARKET INTEGRATION

The social institution that has one of the biggest impacts on society is the Economy. It is the
social institution that organizes all production, consumption, and trade of goods in the society and
it is composed of people.

Economic System Sectors:

1. Primary Sector –extracts raw materials from natural environments.
2. Secondary Sector –gains the raw materials and transforms them into manufactured goods.
3. Tertiary Sector –involves services rather than goods.

International Financial Institutions

“When the American economy sneezes, the rest of the world catches a cold.”
The strength of a more powerful economy brings greater effect on other countries. In the
same manner, crises on weaker economies have less effect on other countries. Although
countries are heavily affected by the gains and crises in the world economy, the organizations
that they consist also contribute to these events.

A. The Bretton Woods System

The major economies in the world had suffered because of World War I, the Great
Depression in the 1930s, and World War II. Because of the fear of the recurrence of lack of
cooperation among nation-states, political instability, and economic turmoil, reduction of
barriers to trade and free flow of money among nations became the focus to restructure the
world economy and ensure global financial stability. These consists the background for the
establishment of the Bretton Woods System.

Five Key Elements of Bretton Woods System

1. Expression of currency in terms of gold or gold value to establish a par value.
2. Official monetary authority in each country (a central bank or its equivalent) would
agree to exchange its own currency for those of other countries at the established
exchange rates, plus or minus a one-percent margin.
3. The establishment of overseer for the exchange rates; thus International Monetary
Fund (IMF) was founded.
4. Eliminating restrictions on the currencies of member states in the international trade.

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 5. U.S. dollar became the global currency.
B. The General Agreement on Tariffs and Trade (GATT) and the World Trade
Organization (WTO)

The General Agreement on Tariffs and Trade (GATT) was established in 1947. It is a
forum for the meeting of representative from 23 member countries. It focused on trade
goods through multinational trade agreements conducted in many “rounds” of negotiation.

The World Trade Organization (WTO) headquarters is located in Geneva. Switzerland

with 152 member states as of 2008. It is an independent multilateral organization that
became responsible for trade in services, non-tariffs-related barriers to trade, and other
broader areas of trade liberalization.

C. The International Monetary Fund (IMF) and The World Bank

IMF and the World Bank were founded after the World War II. Their establishment was
mainly because of peace advocacy after the war. These institutions aimed to help the
economic stability of the world. Both of them are basically banks, but instead of being
started by individuals like regular banks, they were started by countries.

IMF and the World Bank were designed to complement each other. The IMF’s main
goal was to help countries which were in trouble at the time and who could not obtain
money by any means. It served as a lender or a last resort for countries which needed
financial assistance. The World Bank, in comparison, had a long-term approach. Its main
goals revolved around then eradication of poverty and it funded specific projects that
helped them reach their goals, especially in poor countries.

D. The Organization for Economic Cooperation and Development (OECD), The

Organization of Petroleum Exporting Countries (OPEC), and the European Union
(EU)

Organization for Economic Cooperation and Development (OECD) –the most

encompassing club of the richest countries in the world with 35 member states as of 2016.
It is highly influential, despite the group having little formal power. This emanates from the
member countries’ resources and economic power.

The Organization of Petroleum Exporting Countries (OPEC) was formed because

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 member countries wanted to increase the price of oil, which in the past had a relatively low
price and had failed in keeping up with inflation. Member countries are: Saudi Arabia, Iraq,
Kuwait, Iran, Venezuela, United Arab Emirates, Algeria, Libya, Qatar, Nigeria, and
Indonesia.

The European Union (EU) is made up of 28 member states. Most members in the
Eurozone adopted the euro as basic currency but some Western European nations like the
Great Britain, Sweden, and Denmark did not. Critics argue that the euro increased the
prices in Eurozone and resulted in depressed economic growth rates, like in Greece, Spain,
and Portugal. The policies of the European Central Bank are considered to be a significant
contributor in these situations.

E. North American Free Trade Agreement (NAFTA)

North American Free Trade Agreement (NAFTA) is a trade pact between the United
States, Mexico, and Canada created on January 1, 1994 when Mexico joined the two other
nations. It was first created in 1989 with only Canada and the United States as trading
partners. NAFTA helps in developing and expanding world trade by broadening
international cooperation. It also aims to increase cooperation for improving working
conditions in North America by reducing barriers to trade as it expands the market of the
three countries.

The creation of NAFTA has caused manufacturing jobs from developed nations
(Canada or the US.) to transfer to less developed nations (Mexico) in order to reduce the
cost of their products. In Mexico, producer prices dropped and some two million farmers
were forced to leave their farms.

The free trade, however, gave a modest impact on US GDP. One can argue that
NAFTA was to blame for job losses and wage stagnation in the US because competition
from Mexican firms had forced many US firms to relocate to Mexico. This is because
developing nations have less government regulations and cheaper labor. This is called
outsourcing.

Generally, NAFTA has its positive and negative consequences. It lowered prices by
removing tariffs, opened up new opportunities for small-and medium-sized businesses to
establish a name for itself, quadrupled trade between the three countries, and create five
million US jobs. Some of the negative effects, include excessive pollution, loss of more than

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 682,000 manufacturing jobs, exploitation of workers in Mexico, and moving Mexican
farmers out of business.

ACTIVITY #11
(To be submitted on _____________, 2020)

Discussion Points and Exercise Questions

Direction: Read and understand this module. Provide what is being asked. Write your answer in a
1 whole sheet of yellow pad paper. Answers should have at least 5 sentences. Follow the rubric
below as your guide. (10 points each)

1. “When the American economy sneezes, the rest of the world catches a cold.” Explain.

2. What do you think is the advantages and disadvantages of establishing International

Financial Institutions?

3. How can these International Financial Institutions help the less developed countries?

Rubric:
Level Description
Outstanding Well written and very organized. Excellent grammar mechanics.
(9-10 points) Clear and concise. Demonstrate a thorough understanding of the topic.
Good Writes fairly clear. Good grammar mechanics.
(7-8 points) Good presentation and organization. Sufficient effort and detail.
Fair Minimal effort. Good grammar mechanics.
(6 points) Fair presentation. Few supporting details.
Poor Somewhat unclear. Shows little effort. Poor grammar mechanics.
(4-5 points) Confusing and choppy, incomplete sentences. No organization of thoughts.
Very Poor Lacking effort. Very poor grammar mechanics.
(1-3 points) Very unclear. Limited attempt. Does not address topic.

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 End of eleventh week
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