UNIT II – STRUCTURE OF Difference between Economic Globalization

GLOBALIZATION from Internationalization

Session 2.1 Global Economy - Economic globalization is a functional
integration between internationally
• Economic Globalization dispersed activities which means that it is a
- refers to the increasing interdependence of qualitative transformation rather than a
world economies as a result of the growing quantitative change while
scale of cross-border trade of commodities internationalization is an extension of
and services, flow of international capital economic activities between internationally
and wide and rapid spread of technologies.
dispersed activities.
- A historical process, the result of human
innovation and technological progress Session 2.2 Market Integration
Two Major Driving Forces for Economic • Market Integration
Globalization - refers to how easily two or more markets
can trade with each other. It occurs when
1. The rapid growing of information in all
prices among different locations or related
types of productive activities
goods follow similar patterns over a long
2. Marketization
period of time.
- A restructuring process that enables state
enterprises to operate as market-oriented Types of Market Integration
firms by changing the legal environment in
Horizontal Market Integration
which they operate and can be achieved
through reduction of state subsidies, - a firm or agency gains control over the other
organizational restructuring of management firms or agencies
such as corporatization, decentralization, Ex: Jollibee Food Corporation
and privatization.
Vertical Market Integration
Dimensions of Globalization
- A firm performs more than one activity in
1. The globalization of trade of goods and the sequence of the marketing process, thus
services reducing transport cost and number of
2. The globalization of financial and capital middlemen.
markets Ex: Agri-Business Firms
3. The globalization of technology and
communication Conglomeration
4. The globalization of production - A combination of agencies or agencies or
Origin of Economic Globalization activities not directly related to each other,
operates under a unified management.
- Economic globalization is a process that Ex: SM group of Companies owned by
creates an organic system of the world Henry Sy
economy.
16th Century Reasons for Market Integration
- Archaic Globalization - To remove transaction costs
Silk Road - Provide better signals for optimal generation
and consumption decisions
17th to 18th Century
- Improve security of supply
- Global economy exists only in trade and
BRICS Economies
exchange rather than production
- Brazil, Russia, India, China and South
19th Century
Africa (BRICS) is an acronym for the
- Modern form globalization is witnessed combined economies of Brazil, Russia,
- Growth in int. exchange of goods India, China and South Africa. BRIC,
accelerated without South Africa, was originally coined
in 2003 by Goldman Sachs, which
20th Century
speculates that by 2050 these four
- Global economy grew by an average of economies will be the most dominant.
nearly 4% per annum South Africa was added to the list on April
13, 2011 creating "BRICS" These five
countries were among the fastest growing
emerging markets as of 2011.
 - Further, Brazil, Russia, India and China Neoliberalism
(BRIC) refer to the idea that China and
- the intensification of the influence and
India will, by 2050, become the world's
dominance of capital. It is the elevation of
dominant suppliers of manufactured goods
capitalism as a mode of production into an
and services, respectively, while Brazil and
ethic, a set of political imperatives, and a
Russia will become similarly dominant as
cultural logic.
suppliers of raw materials. Due to lower
- It is a project to strengthen, restore, or, in
labor and production costs in these countries
some cases, constitute anew the power of
now including a fifth nation, South Africa,
economic elites.
many companies have also cited BRIC as a
- It emphasizes the significance of contractual
source of foreign expansion opportunity i.e.
relations in the marketplace.
promising economies in which to invest.
- It seeks to bring all human action into
Session 2.3 The Global Interstate System domain of
the market.
State
Economic Sovereignty
- a compulsory political organization with a
centralized government that maintains a - There are four different concepts of
monopoly of the legitimate use of force sovereignty
within a certain territory - Max Weber • International Legal Sovereignty
- states are independent political communities - It refers to the acceptance of a given state as
each of which possesses a government and a member of the international community
asserts sovereignty in relation to a particular • Westphalian Sovereignty
portion of the earth’ s surface and a - It is based on the principle that one
particular segment of the human population sovereign state should not interfere in
- Henry Bull the domestic arrangements of another
- A State is an independent, sovereign • Interdependence Sovereignty
government exercising control over a certain - It is the capacity and willingness to control
spatially defined and bounded area, whose flows of people, goods and capital into and
borders are usually clearly defined and out of the country
internationally recognized by other states. • Domestic Sovereignty
A Political Concept has Four Elements: - It is the capacity of a state to choose and
implement policies within the territory
• Sovereignty – considered as the chief
characteristics of a state Economic and Political Integration
• People • European Integration
• Territory - the process of industrial, political, legal,
• Government economic, social and cultural integration of
states wholly or partially in Europe.
Nation
European integration has primarily come
- A nation is a group of people who set about through the European Union and its
themselves as a cohesive and coherent unit policies
based on shared cultural or historical • European Union
criteria. - is an international organization comprising
- Historically constituted stable community of 28 European countries and governing
the people formed on the basis of the common economic, social, and security
common language, territory, economic life policies
and psychological make up manifested in a - In the early 21st century, EU expanded into
common culture. central and eastern Europe with the
- A union of masses of men bound together following members: Austria, Belgium,
specially by language and customs into Bulgaria, Croatia, Cyprus, Czech Republic,
common civilization which gives them the Denmark, Estonia, Finland, France,
sense of unity, therefore, a nation is a Germany, Greece, Hungary, Ireland, Italy,
culturally homogenous social group. - Latvia, Lithuania, Luxembourg, Malta, the
Bluntschilli Cultural and psychological body Netherlands, Poland, Portugal, Romania,
Slovakia, Slovenia, Spain, Sweden, and the
United Kingdom
 • Economic Integration Economic Union
- a process and a means by which a group of
- The trading bloc that has both a common
countries strives to increase their level of
market between members, and a common
welfare. It is an arrangement between
trade policy towards non-members, although
different regions that often includes the
members are free to pursue independent
reduction or elimination of trade barriers,
macro-economic policies.
and the coordination of monetary and fiscal
- It requires coordinated monetary and fiscal
policies. Reducing costs for both consumers
policies as well as labor market, regional
and producers and increasing trade between
development, transportation and industrial
the countries involved in the agreement are
policies. In economic union the use of a
the aims of economic integration
common currency and a unified monetary
7 Stages of Economic Integration policy is considered. The best example of
Economic union is the European Union
1. Preferential trading area (PTA) (EU).
2. Free trade area
Economic & Monetary Union
3. Customs union - a key stage towards complete integration
4. Common market - involves a single economic market, a
common trade policy, a single currency
5. Economic union and a common monetary policy.
6. Economic and monetary union Complete Economic Integration
7. Complete economic integration - the final stage of economic integration in
Preferential Trade Areas (PTA’s) which member states completely forego
independence of both monetary and fiscal
- happens when there’s an agreement on policies. States that participate in complete
reducing or eliminating tariff (tax or duty to economic integration have no control of
be paid on a particular class of imports or economic policy including economic trade
exports) barriers on selected goods imported rules. There is full monetary union where
from other members of countries within the regulations regarding labor and capital are
geographical region or areas. Agreement can shared between member states and this
either be bilateral (between two countries), includes a single currency.
or multi-lateral (several countries).
Political Integration
Free Trade Areas (FTA’s)
- refers to the integration of components
- are created when two or more countries in a within political systems
region agree to reduce or eliminate barriers - the integration of political systems with
to trade on all goods coming from other economic, social, and other human systems;
members. - the political processes by which social,
example: NAFTA economic, and political systems become
Custom Union integrated.

- Removal of tariff barriers between members, Theories of European Integration

together with the acceptance of a common Neo-functionalism
or unified external tariff against non-
members is involved in the Custom Union. - This theory focuses on the supranational
institutions of the EU of which the main
Common Market driving forces of integration are interest
- One major step towards economic group activity at the European and national
integration levels, political party activity, and the role of
- The extension of free trade from just governments and supranational institutions.
tangible goods, to include all economic - The European integration is mostly seen as
resources which means that all barriers are an upper class-driven process - driven by
eliminated to allow the free movement of national and international political and
goods, services, capital, and labor, including economic upper crusts.
removal of tariffs and reduced non- tariff - It is a theory of regional integration,
barriers is the key feature of a common building on the work of Ernst B. Haas, an
market. American political scientist and Leon
Lindberg, also an American political
scientist
 - Jean Monnet's approach to European Multi-Level Governance (MLG)
integration, which aimed at integrating - This is a new theory of European
individual sectors in hopes of achieving integration. Writers Liesbet Hooghe and
spill-over effects. Gary Marks defined MLG as dispersion of
- The core of neo-functionalism is the use of authority across multiple levels of political
the concept ‘spill–over’, situations when an governance.
initial decision by governments to place a
Transnational Activism in States
certain sector under the authority of central
institutions creates pressures to extend the • Transnational Activism
authority of the institutions into neighboring - can be defined as the mobilization of
areas of policy, such as currency exchange collective claims by actors located in more
rates, taxation, and wages than one country and/or addressing more
- This core claim meant that European than one national government and/or
integration is self-sustaining: ‘spill-over international governmental organization or
triggers the economic and political another international actor
dynamics, driving further cooperation - It also refers to the coordinated
international campaigns on the part of
Intergovernmentalism
networks of activists against international
- This theory provides a conceptual actors, other states, or international
explanation of the European integration institutions
process. The main concept of the • Social Movement
Intergovernmentalism is emphasizing on - Is a type of group action. It refers to the
the role of national states in the European organizational structures and strategies
integration; in another words it argues that that may empower oppressed populations
"European integration is driven by the to mount effective challenges and resists the
interest and actions of nation states" more powerful and advantaged elites.
- This theory was suggested by Stanley - They are large, sometimes informal,
Hoffmann. The theory proposed the Logic groupings of individuals or organizations
of Diversity, which set limits to the degree which focus on specific political or social
which the ‘spill-over’ process can limit the issues. They carry out, resist, or undo a
freedom of action of the governments...the social change. They provide a way of social
logic of diversity implies that on vital issues, change from the bottom within nations
losses are not compensated by gains on
other issues Global Justice Movement

Liberal Intergovernmentalism - describes the loose collection of individuals

and groups often referred to as a
- This a dominant political theory developed “movement of movements”, who advocate
by Andrew Moravsik in 1993 to explain fair trade rules and are negative to current
European integration. Application of institutions of global economics such as the
rational institutionalism to the field of World Trade Organization
European integration is the aim of this - The movement is often labeled the anti-
theory globalization movement by the main stream
- Moravcsik stated that 'state-society media. Those involved, frequently deny that
relations—the relationship of state to the they are anti-globalization, insisting that
domestic and transnational social context in they support the globalization of
which they are embedded--have a communication and people and oppose
fundamental impact on state behavior in only the global expansion of corporate
world politics and that the universal power
condition of world politics is globalization.
- Liberal inter-govermentalists stated that the
bargaining power of member states is New Transnational Activism
important in the pursuit of integration, and
package deals and side payments also occur - is as multifaceted as the internationalism.
in the process of making deals. Although globalization and global neo-
liberalism are frames around which many
New Institutionalism activists mobilize, the protests and
- This theory emphasized the importance of organizations are not the product of a
institutions in the process of European global imaginary but of domestically
integration. Its three key strands are: rooted activists who are the connective
rational choice, sociological and tissue of the global and the local, working
historical. as activators, brokers and advocates for
claims both domestic and international
Session 2.4 Contemporary Global Governance 4. Providing a forum for bringing countries
together to
Global Governance
5. meet the UN's purposes and goals
• Global Governance or World Governance There were five stages or main gaps meet by UN
- a product of neo-liberal paradigm shifts in in the 21st century. These are knowledge, norms,
international political and economic policy, institutions and compliance. A critical hole
relations in any of the five stages can cause efforts at
- It is a movement towards political problem solving to collapse.
integration of transnational actors aimed
at negotiating responses to problems that Globalization’s Impact on States
affect more than one state.
Factors which lead to the increase and acceleration
- It tends to involve institutionalization.
of movement of people, information, commodities
• Institutions of Global Governance
and capital:
- United Nations
- International Criminal Court 1. Lifting of trade barriers
- The World Bank 2. Liberalization of world capital markets
• understood as the sum of laws, norms, 3. Swift technological progress (information
policies, and institutions that define, technology, transportation and
constitute, and mediate trans-border communication)
relations between states, cultures, citizens,
Problems afflicting the world today which are
intergovernmental and non-governmental
increasingly transnational in nature -- those that
organizations, and the market.
cannot be solved at the national level or State to
• viewed as the sum of governance processes State negotiations:
operating in the absence of world
government. Both the international 1. Poverty
organizations (lOs) and the United Nations 2. Environmental Pollution
(UN) being the only universal membership 3. Economic crisis
and general-purpose international 4. Organized crime and terrorism
organization, are essential to the
Effects of greater economic and social
understanding of contemporary
interdependence to national decision-making
global governance
processes:
• The two types of International
Organizations are those with universal 1. It calls for a transfer of decisions to the
membership and those with limited international level.
membership. 2. It requires many decisions to be transferred
- Examples of IOs with universal membership to local levels of government due to an
include: UN, Bretton Woods institutions and increase in the demand for participation.
World Trade Organization (WTO).
Decision making processes in globalization is
- Limited membership includes European
complex as it takes place in various levels such as
Union (EU) and the North Atlantic Treaty
sub-national, national, and global which lead to
Organization (NATO)
the growth of a multi-layered system of
Rules and Function of the United Nations governance. The following are guaranteed by
nation-State: internal and external security, law
- As an intergovernmental organization, the United established, national welfare systems funding,
Nation is tasked to promote international co- structures provided for popular representation,
operation and to create and maintain public accountability instituted, and framework for
international order. It is the largest, most familiar, economic and social activities built
most internationally represented and most powerful
intergovernmental organization in the world. The following can be guaranteed only by the States
through independent courts:
Four Main Purposes of the UN Charter
1. Respect for human rights and justice
- A written grant by a country's legislative or 2. Promote the national welfare
sovereign power, by which an institution 3. Protect the general
such as a company, college, or city is created
and its rights and privileges defined

1. Maintaining worldwide peace and security

2. Developing relations among nations
3. Fostering cooperation between nations in
order to solve economic, social, cultural, or
humanitarian international problems