Economic Dimension of Globalization THE GLOBAL ECONOMY The Global economy alludes to different financial exercises among various nations with either negative or beneficial outcomes. The idea of a world economy is identified with regular day to day existence dependent on the interconnected idea of the different countries around the world. Exchange interrelations are noteworthy pointers of the worldwide economy. Thus, the growth of globalization of the world's economies to a great extent is dependent on the advancement of science and technology. Notwithstanding the drawbacks, globalization is still changing the world, Socially, it has encouraged the trading of thoughts and societies, adding to a world view wherein individuals are progressively open and lenient of each other. Globalizations means: - establishment “global village” (media, facebook has connected the world) - “shrinking world’ (breaking boundaries) - cultural imperialism (Better Culture) - borderless world - adoption of other cultures (KPOP) Economic Globalization The International Monetary Fund (IMF) regards “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. These changes are the products of people, organizations, institutions, and technologies. As with all other processes of globalization, there is a qualitative and subjective element to this definition. According to the United Nations (as cited by Shangquan, 2000), economic globalization refers to the increasing interdependence of world economies 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. It reflects the continuing expansion and mutual integration of market frontiers, and is an irreversible trend for the economic development in the whole world at the tum of the millennium, International Trade The conclusion of World War II signaled the beginning of trade facilitation around the globe. Economies set rules and guidelines for international trade which led to the formation of General Agreement on Tariffs and Trade (GATT). These trade rules were developed through series of rounds or meetings of member ‘economies. Intemational Trade (IT) is the process and system when goods, commodities, services cross national economy, and boundaries in exchange for money or goods of another country (Balam and Veseth, 2008). Global trade has grown dramatically since the post-cold war era as a result of increasing demand of goods and services of countries. This global norm is a reflection of growing practice of intermationalizing and globalizing local products and services. ‘Three Perspectives on International Trade + Economic LiberalsDavid Ricardo and Adam Smith were known critics of late-eighteenth century on the abuses of mercantilism in England. Their liberal ideas and contribution in understanding global trade are still relevant until today. For Ricardo, his influential work Law of Comparative Advantage explains that free trade efficiency is attainable if two countries can produce more goods and trade products separately. The advantage of this theory in international trade is deriving from the principle of specialization and division of labor (Nau, 2009). Countries have different resources and talents; they are better in performing in that economic activity than other economic activities + Mercantilism An economic theory emerged from about 1500-1800. This period was the emerging eras of nations-states and the formation of more central governments. This system flourished due to the following reasons: + Higher export than import. + Export less high valued product and import less high valued product + The benefits of colonial powers. + Structuralists The earliest wave of mercantilism was described as classical imperialism. The drive of European countries to explore and colonize underdeveloped countries originated from the aggressive mercantilist behavior of European economies. This idea was extended to the practice of modem capitalist-imperialist approach by countries and economies that have the immense resource through the use of hard power over developing and less developed countries. The Modern World System (MWS) theory developed by Immanuel Wallerstein, explains the contact of economies between core, semi peripheral, and peripheral countries in the world. The core states have the absolute advantage over the other through unequal exchange and extraction of raw materials from periphery and semi-periphery. Thus, the economic globalization and market integration of the 21 st century are extensions of the same economic motives of imperial powers of the nineteenth and twentieth centuries (Balaam and Veseth, 2008) The Bretton Woods Institutions (IMF-WB) Lichauco (1988) noted that “these were conceived by USA because of its fear that after the war, nations, particularly those from Western Europe, would continue the protectionist practices that marked their policies before the war. America’s post-war problem was overproduction; so, it became imperative that countries do not place obstacles to her exports, The post-war economic order had to be reorganized and reconstructed on the basis of free trade. ‘Steger (2003) explained that the International Monetary Fund (IMF) was created to administer the international monetary system. The International Bank for Reconstruction and Development, later known as the World Bank (WB), was initially designed to provide loans for Europe's postwar reconstruction, In practice, Lichauco(ise8) observed that both institutions would provide the finance Capital of which the post-war world be in desperate need, on condition that the loan recipients kept their foreign exchange and import policies “essentially free from restrictions.” Tariffs would be tolerated, but definitely not import controls and controls on foreign exchange transactions. The elimination of tariff was entrusted to the General Agreement of Tariff and Trade (now World Trade Organization [WTO}).World Trade Organization (WTO). Steger (2003) noted that “the General Agreement on Tariffs and Trade was established in 1947 as a global trade organization charged with fashioning and enforcing multilateral trade agreements. In 1995, the World Trade Organization was founded as the successor organization to GATT. Madeley (2003) added that the WTO is an organization that furthers liberalization to the chief benefit of those who stand to gain most from liberalization — in practice the TNCs. The WTO is both a forum for trade liberalization and a judge on those who transgress, exercising considerable and direct power through its dispute settlement mechanism. Ibon Databank and Research Center (2005) reported that, ‘a decade after the founding of the WTO, agriculture subsidies in deve while elimination of quantitative restrictions and tariff cuts around the world have facilitated a dramatic increase in dumping of commodities by agribusiness TNCs. Hundreds of billions are paid out by rich countries for agricultural support, while underdeveloped countries are prohibited from protecting their agricultural sectors at all Three Features of Economic Globalization: 1. The internationalization of trade and finance. Its key components include the deregulation of interest rates, the removal of credit controls, and the privatization of government-owned banks and financial institutions. (Steger, 2003), 2. The power of transnational corporations. These corporations control much of the world's investment capital, technology, and access to international markets. These TNCs benefited from the IMF-WB's promotion of deregulation, privatization and liberalization. These TNCs amass so much wealth by: (a) merger and acquisition — mergers generally take place between equals whereas acquisitions involve buying existing firms. After acquisition, corporations often break up the newly acquired firms, reduce the workforce and indulge in various malpractices to cur competition; (b) transfer pricing — the price charged by one associate of a corporation on another associate of the same corporation (Goodman &Tujan, 2002), OF company that is based in a high-tax country will buy goods at a higher price from a sister company that is based in a low-tax country, transferring the profits eamed from the high-tax country to the low-tax country to evade paying a high tax. 3. The enhanced role of international economic institutions. The IMF, the World Bank, and the WTO enjoy the privileged position of making and enforcing the rules of a global economy that is sustained by significant power differentials between the global North and South. AS pointed out above, the IMF and the World Bank emerged from the Bretton Woods system. (Steger, 2008)REFERENCES Balam, D and Vesseth, M. (2008), Introduction to International Political Economy, 4th ed. Pearson Prentice Hall, Pearson Education, Inc. De Ocampo, F., Ramos, B., Llomora, R,Macaraeg, A., David, M.A. (2018), Introduction to Contemporary World. St. Andrew Publishing House. Claudio, L., Abinales, P. (2018), The Contemporary World. C & E Publishing, Inc., Shangquan, G. (2000). Economic Globalization:Trends, risks and risk prevention. CPD background paper no.1. United Nations Development Policy and Analysis Division. Nau, H. (2009). Perspectives on International Relations: Power, Institutions, and Ideas. 2 nd edition. Washington DC: CQ Press Sage Publishing. 2009