10/12/24, 10:25 PM Module 1 - ORGANIZATION/STRUCTURE OF GLOBALIZATION | NEUVLE

Module 1 - ORGANIZATION/STRUCTURE OF GLOBALIZATION

Site: New Era University Virtual Learning Environment Printed by: Maxynne Rhae S. Diolola
Course: GECTCW-18/GECTCW-24 - The Contemporary World Date: Saturday, 12 October 2024, 10:25 PM
Module 1 - ORGANIZATION/STRUCTURE OF
Book:
GLOBALIZATION

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Table of contents

1. Introduction/Overview

2. Learning Outcomes

3. Lesson 1- Module 1

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1. Introduction/Overview

The purpose of this module is to make the globalization phenomenon visible. It indicates that reminders of how international organizations
have shifted their focus to a global scale are abundant in the daily press. News stories from both domestic and international sources usually
touch on topics including global trade, exchange rates, stock market winners and losers, currency volatility, and rising oil prices. Given that
everyone is involved in these global activities, it is evident that the world is no longer separated.

Examining the relationships between established and up-and-coming countries, assessing technological disruptions, and negotiating the
intricacies of a quickly changing international order are all necessary to comprehend the dynamics of the modern world. It is crucial to take into
account the historical background that has influenced the present as we negotiate its complexity.

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2. Learning Outcomes

Learning Outcomes

At the end of the module, the students are able to:

1. Define and explain what is globalization

2. Analyze the interrelated factors of globalization
3. Interpret how governments influence competitiveness
4. Explain why globalization is uneven based on the three ranking standards.

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3. Lesson 1- Module 1

1. Definitions of Globalization

a. In the academe under the new General Education Curriculum, the best scholarly definition
of globalization is provided by Manfred Steger (2014, p. 184). He described globalization as
“the expansion and intensification of social relations and consciousness across world-time and
across world-space. The first key word expansion may refer to the creation of the international
marketplace including the international cultural environment where education, social
institutions, material elements are connected and occur at different levels. On the other hand,
intensification refers to the expansion, stretching and acceleration of the networks of the
former.

b. In another view, globalization is defined as the process through which an increasingly

flow of ideas, people, goods and services, technology and capital leads to the integration of
economics and societies at a speed unprecedented in effect and outcomes (as cited by Danug &
Campanilla, 2004, p.81).

c. Anthropologist Arjun Appadurai (1996) argues that there are multiple globalizations and
it depends on what is being globalized. It could be an idea, material, and nonmaterial culture.
The globalization system which is aptly called the digital age has something to do with the
context, character, content and conduct of power and shaped up with the changing
configuration of power of the individuals, group of the individuals, associations, corporations,
institutions and the nation-state (Danug & Campanilla , p.83)

d. In the context of economics, it is defined as the recognition by organizations that

business must have a global, not local focus. It refers to a new perspective or attitude about
relationships with other people in other nations. Economically, it also refers to the
unprecedented scope, shape, number and complexity of business relationship conducted
across international boundaries. The phenomenon of globalization according to Stoner et al.
(1995) as cited by Abelos, et al. (2016) consists of three interrelated factors – proximity,
location and attitude.

1. 2. The Interrelated Factors as Discussed in the Three Facets of Globalization

Proximity

First, organizations now operate in much closer proximity than ever before to a greater
number and range of customers, competitors, suppliers, and government regulators. This
proximity, a function of the “shrinking globe,” is partly a matter of time, as today’s
telecommunications technology allows people around the world to share voice, video, and
facsimile information in minutes.

Location

Second, the location and integration of an organization’s operations across several

international boundaries is part of globalization.

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Attitude

Third, globalization refers to a new, open behavior about practicing management

internationally. This attitude combines a curiosity about the world outside one’s national
borders with a willingness to develop the capabilities for participating in the global economy.

1. 3. How Governments Influence Competitiveness

According to Young (1995 as cited by Abelos et.al, 2006), he concluded that both government and business need to place a higher priority
on international competitiveness. Among specific recommendations, he suggested that responsibility for formulating international trade policy
and encouraging exports (now fragmented among multiple government agencies) should be unified.

Global managers thus operate in a climate marked by more aggressive government efforts to influence how they run their organizations.
According to Porter (1990), those efforts have influenced global competitiveness.

With striking regularity, firms from one or two nations achieve disproportionate worldwide success in particular industries. Some national
governments seem more stimulating to advancement and progress than others.

Porter traces that success to a significant degree, to the economic climate institutions, and policies attributable to government actions.

1. 4. Globalization and Competitiveness

The term competitiveness is viewed as an idea that applies in a number of different settings. It refers to the relative standing of one
competitor against other competitors. Competitiveness is like the game of the musical chairs. There are finite numbers of places to sit, and
some are more desirable than others.

Measuring Globalization

There is no doubt we now live in a global market place. In scores of countries around the globe, the same products and services are
available to consumers and organizations. These range from McDonald’s restaurants to Sony electronic equipment to Nokia and Samsung
cellular phones. But ask the average of consumers where the global array of goods comes from and you will hear several answers that reflect
differing perceptions. Throughout the world, McDonald’s is the quintessential American fast-food restaurant, just as the Doc Martens is
synonymous with British youth culture. But for many other product, brands, and companies, the sense of identity with a particular country is
becoming blurred. Which brands are Japanese, or Americans, or German? Does a Big Mac taste the same everywhere in the world?

There are many alternatives on how to measure globalization per country in the world. The KOF Swiss Economic Institute offers a useful
ranking into three broad categories as follows:

Economic globalization measures long distance flow of goods, capital, and services as well as information and perception that company
market exchanges;

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Social globalization measures the spread of ideas, information, images and people.

Political globalization measures the diffusion of government policies in terms of the number of embassies and consulates in a country,
membership in international organization, likewise participation of a country in United Nations peace missions and similar advocates.

In general, most of the countries in higher ranking are affluent countries or the so called” Global North.” With the exception of Singapore,
which is situated geographically in the Global South, the rest are economically well-off. The statistics shows the top 36 nations (among the top
50 in the globalization index on the data constructed in 2015. The index is based on three dimensions or core sets of indicators namely
economic, social and political.

References:

References:

Abelos, A. et. al., (2018), The contemporary world, MUTYA Publishing

House Inc.

Claudio, L. & Abinales, P. (2018), The contemporary world, CE Publishing

https://www.scribd.com/document/394529123/THE-CONTEMPORARY-WORLD-pdf

Fernandez Jr., G. et. al., (2018), The contemporary world, MUTYA

Publishing House Inc.

https://www.researchgate.net/publication/331683123_Contemporary_World

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Module 2- MARKET GLOBALISM

Site: New Era University Virtual Learning Environment Printed by: Maxynne Rhae S. Diolola
Course: GECTCW-18/GECTCW-24 - The Contemporary World Date: Saturday, 12 October 2024, 10:25 PM
Book: Module 2- MARKET GLOBALISM

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Table of contents

1. Introduction/Overview

2. Learning Outcomes

3. Content
3.1. Lesson 1 Module 2
3.2. Lesson 2 Module 2
3.3. Lesson 3 Module 2
3.4. Lesson 4
3.5. Lesson 5 Module 2

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1. Introduction/Overview

This module aims to show how the world economy has changed profoundly since World War II (Drucker, 1986). Perhaps the most
fundamental change is the emergence of global markets; responding to new opportunities, global competitors have steadily displaced or
absorbed local ones. Concurrently, the integration of the world economy has increased significantly.

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2. Learning Outcomes

At the end of the module, the students are able to:

1. Describe and explain the development and changes in the world economy
2. Determine the three types of economic system

3. Explain the characteristics of the World Bank rankings

4. Examine the principles, ideas of market globalism

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3. Content

1. An overview and introduction of World Economy

2. Types and forms of Economic Systems

3. World Bank Four

4. The Six Core Claims of Market Globalism

5. International Economic Environment

References:

1. Books to read:

The Contemporary World, Abelos, A. et.al.,(2018), MUTYA Publishing

House Inc.

The Contemporary World, Fernandez Jr., G. et. al.,(2018), MUTYA

Publishing House Inc.

https://www.researchgate.net/publication/331683123_Contemporary_World

The Contemporary World, Claudio, L. & Abinales, P. (2018), CE

Publishing

https://www.scribd.com/document/394529123/THE-CONTEMPORARY-WORLD-pdf

https://college2425.neu.edu.ph/mod/book/tool/print/index.php?id=62941 5/15
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3.1. Lesson 1 Module 2

THE WORLD ECONOMY

Globalism refers to various systems with scope beyond the merely international. It is used by political scientists, such as Joseph Nye, to
describe "attempts to understand all the interconnections of the modern world—and to highlight patterns that underlie them." While primarily
associated with world-systems, it can be used to describe other global trends. The term is also used by opponents of globalization such as
populist movements.

The World Economy has changed profoundly since WWII (Drucker, 1986). Perhaps the most fundamental change is the emergence of
Global markets; responding to new opportunities, global competitors have steadily displaced or absorbed local ones. Concurrently, the
integration of the world economy has increased significantly.

Just 30 years ago, the world was far less integrated that it is today (Krugman, 1992). One of the evidences of the changes that have
taken place is the automobile industry. Cars with European nameplates such as Renault, Citroen, Peugeot, Morris, Volvo, Volkswagen, and
others were radically different from the American Chevrolet, Ford, or Plymouth and from Japanese models such as Toyota or Nissan. These
were local cars built by local companies, mostly destined for local or regional markets. Even today, global and regional auto companies make
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cars from their home markets that would not be marketable in North America, and vice versa. But it is also true today that the world car is a
reality for Toyota, Nissan, Honda, and Ford. Product changes reflect organizational changes as well. The world's largest automakers have, for
the most part, evolved into global companies. At Ford Motor Company, for example, the change is reflected in the Ford 2000 restructuring plan.
Ford 2000 represents a dramatic change in the way the company designs and manufactures cars and is just one example of the type of
changes that globalization has brought.

Within the past decade, there have been several remarkable changes in the world economy. Organizations stand a better chance of
achieving success when plans and strategies are based on the new realities of the changed world economy (Simon & Schuster, 1997).

× Capital movements rather than trade have become the driving force of the world economy.

× Production has become a source of generating employment.

× The world economy dominated the scene. Individual economies play a subordinating role.

× The 75-year struggle between capitalism and socialism is largely over.

The first change is the increased volume of capital movements. The dollar value of the world trade is greater than ever before. Trade in
goods and services are running at roughly $5.5 trillion per year. But the London Eurodollar market turns over $400 billion each working day.
Overall, foreign exchange transactions are trading at approximately $1.5 trillion per day worldwide—70 times the volume of world trade in
goods and services (Shapiro, 1995). Global capital movements far exceed the volume of global merchandise and service trade. Thus explains
the bizarre combination of U.S. trade deficits and a continually rising dollar during the first half of the 1980s. Previously, when a country run a
deficit on its trade accounts, its currency would depreciate in value. Today, it is capital movements and trade that determine currency value.

The second change concerns the relationship between productivity and employment. Productivity continues to grow even if
employment in manufacturing remains steady or had declined. Industrial countries such as the United States and United Kingdom have similar
pattern. United Kingdom, which had tried to maintain blue-collar employment in manufacturing, had lost both production and jobs for their
efforts. Manufacturing is not in decline—it is employment in manufacturing that is in decline.

The third major change is the emergence of the world economy as the dominant economic unit. Organizations that recognize this
change have the greatest chance of success. Those who do not are likely to experience decline and bankruptcy (in business) or overthrow (in
politics). The real secret of the economic success of Germany and Japan is that business leaders and policymakers focus on the world
economy and world markets. In fact the top priority for government and business in Japan and Germany has been their respective competitive
position in the world. In contrast, many other countries, even the United States, have focused on domestic objectives and priorities to the
exclusion of their global competitive position.

The last change is the end of the Cold War. The demise of communism as an economic and political system can be explained in a
specific manner: Communism is not an effective economic system. The overwhelming superior performance of the world's market economies
has given leaders in socialist countries little choice but to renounce their ideology. A key policy change in such countries has been the
abandonment of futile attempts to manage national economies with as with a single central plan. This policy change goes hand in hand with
governmental efforts to foster increased public participation in matters of state by introducing democratic reforms (Brauchli, 1996).

Books to read:

The Contemporary World, Abelos, A. et.al.,(2018), MUTYA Publishing

House Inc.

The Contemporary World, Fernandez Jr., G. et. al.,(2018), MUTYA

Publishing House Inc.

https://www.researchgate.net/publication/331683123_Contemporary_World

The Contemporary World, Claudio, L. & Abinales, P. (2018), CE

Publishing

https://www.scribd.com/document/394529123/THE-CONTEMPORARY-WORLD-pdf

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3.2. Lesson 2 Module 2

ECONOMIC SYSTEMS

There are three types of economic systems: capitalist, socialist, and mixed. This classification is based on the dominant method of
resource allocation: market allocation, command allocation, and mixed allocation respectively.

Market Allocation

A market allocation system relies on households and firms to allocate resources. Consumers decide what goods they desire, and firms
determine how much is made. The market system is an economic democracy where people have the option to buy according to their choice
and budget. The role of the state in a market economy is to promote competition and ensure consumer protection. North America, Western
Europe, and Japan are representative of predominantly market-oriented economies. That is the reason why these regions account for three-
quarters of world output as measured by Gross National Product or GNP.

Command Allocation

In a command allocation system, the country or nation has broad powers to serve the public interest on what is appropriate based on
their judgment. These powers include deciding which products to make and hot to make them. Consumers are free to spend their money on
what is available but government planners make decisions about what is produced, and therefore, what is available. A hallmark of such system
is government control of entire industries as well as individual enterprises. Because demand typically exceeds supply, the elements of the
marketing mix are not used as strategic variable (Golden, et al., 1995). There is little reliance on product differentiation, advertising, and
promotion; distribution is handled by the government to cut out "exploitation" by intermediaries. Three of the most populous countries in the
world: China, the former Soviet Union, and India—relied on command allocation systems for decades. All three countries are now engaged in
economic reforms directed in varying degrees shifting to market allocation systems.

Market reforms and nascent capitalism in many parts of the world are creating opportunities for large-scale investments by global
companies. Indeed, Coca-Cola returned to India in 1994, two decades after it was forced out by the government. A new law allowing 100
percent foreign ownership of enterprises helped pave the way. By contrast, Cuba stands as one of the last bastions of the command allocation
approach.

Mixed Allocation

Mixed allocation stems on the principle that there is no "pure market or command allocation systems among the world's economies. It
means all market systems have a command sector and all command systems have a market sector which means they are mixed. The function
of the government in modern market economies varies widely. In Sweden, for example, where two-thirds of all expenditures are controlled by
government the economic system is more "command" than "market." The reverse is true in the United States. Similarly, farmers in most
socialist countries are traditionally permitted to offer part of their production in a free market. China has given considerable freedom to
businesses and individuals in the Guangdong province to operate within a market system. Still, China's private sector constitutes only 1 to 2
percent of national output (Goldstone, 1995, pp. 35-32).

Each year, the Washington D.C. - based Heritage Foundation compiles a survey of more than 150 countries ranked by degree of
economic freedom (See Table 2.1). A number of key variables are considered such as trade policy, taxation policy, government consumption of
economic output, monetary policy, capital flows and foreign investment, banking policy, wage and price controls, property rights, regulations,
and black market.

The rankings form a continuum from "free" to "repressed," with "mostly free" and mostly unfree in between. Hong Kong and Singapore
are ranked first and second in terms of economic freedom; Cuba, Laos, and North Korea are ranked lowest under repressed category.

There is a high correlation between the degree of economic freedom and the extent to which a nation's mixed economy is heavily market
oriented. However, the validity of the ranking has been subject to some debate. For example, author William Greider (1997) has observed that
the authoritarian state capitalism practiced in Singapore deprives the nation's citizens of free, a free press, and free assembly. Greider writes,
"Singaporeans are comfortably provided for by a harshly autocratic government that administers paranoid control over press and politics and
an effective welfare state that keeps everyone well housed and fed, but not free."

Books to read:

The Contemporary World, Abelos, A. et.al.,(2018), MUTYA Publishing

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House Inc.

The Contemporary World, Fernandez Jr., G. et. al.,(2018), MUTYA

Publishing House Inc.

https://www.researchgate.net/publication/331683123_Contemporary_World

The Contemporary World, Claudio, L. & Abinales, P. (2018), CE

Publishing

https://www.scribd.com/document/394529123/THE-CONTEMPORARY-WORLD-pdf

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3.3. Lesson 3 Module 2

WORLD BANK FOUR-CATEGORY SYSTEM

The World Bank has developed a four-category system of classification that uses per capita (GNP) as a base. Although the income
definition for each of the stages is arbitrary, countries within a given category generally have a number of characteristics in common. Thus, the
stages provide a useful basis for global market segmentation and target marketing.

LOW-INCOME COUNTRIES

Low-income countries have a GNP per capita of less than $766. The characteristics shared by countries at this income level are:

1. Limited industrialization and a high percentage of the population engaged in agriculture and subsistence farming
2. High birth rates
3. Low literacy rates
4. Heavy reliance on foreign aid
5. Political instability and unrest
6. Concentration in Africa south of the Sahara

Although more than 50 percent of the world's population is included in this economic category, many low-income countries represent
limited markets for products. There are exceptions such as the case of Bangladesh, where per capital GNP is slightly more than $249, a
growing garment industry has enjoyed very satisfactory performance in exports. The dollar value of finished clothing exports recently
surpassed that of jute, tea, and other agricultural exports. Although Bengalis have endured a succession of military coups and political killings,
in recent years the government has managed to make progress in its economic reform program. For John F. Burns (1997), the reforms will
enable Bangladesh to capitalize on its reputation for intellectual accomplishment and its track record for producing distinguished scholars,
scientists, and doctors.

Many low-income countries have such serious economic, social, and political problems that they represent very limited opportunities for
investment and operations. Some are low-income, no-growth countries such as Burundi and Rwanda that are beset by one disaster after
another. Others were once growing, relatively stable countries that have become divided by political struggles. The result is declining income
and often considerable danger to residents. As the 20th century draws to a close, Yugoslavia is a case in point, countries embroiled in civil wars
are dangerous areas; most companies find it risky hence they avoid them.

LOW-MIDDLE-INCOME COUNTRIES

Sometimes, countries that can be assigned to the lower income and lower-middle income categories are known collectively as less-
developed countries (LDCs). This is to indicate a contrast with developing (upper-middle-income) countries and developed (high-income)
countries. Lower-income countries are those with GNP per capita between $766 and $3,035. These countries are typically at relatively early
stages of industrialization. Factories supply a growing domestic market with such items as clothing, batteries, automobile tires, building
materials, and packaged foods. Consumer markets in these countries are expanding. Countries such as Belarus, Indonesia, and Turkey
represent an increasing competitive threat as they mobilize their relatively cheap—and often highly motivated—labor forces to serve target
markets in the rest if the world. The LDCs in the lower-middle-income category have a major competitive advantage in mature, standardized,
labor-intensive industries such as toy-making and textiles. Indonesia, the largest noncommunist country in Southeast Asia, is a good example
of an LDC on the move. The per capita GNP has risen from $250 in 1985 to more than $1,000 in 1997. Several factories produce athletic shoes
under contract for Nike.

UPPER-MIDDLE-INCOME COUNTRIES

These countries are also known as industrializing or developing countries with GNP per capita ranging from $3,036 to $9,385. In these
countries, the percentage of population engaged in agriculture drops sharply as people move to the industrial sector and the degree of
urbanization increases. Malaysia, Brazil, Chile, Hungary, and many other countries in this stage are rapidly industrializing. They have rising
wages and high rates of literacy and advanced education but significantly lower wage costs than the advanced countries. Innovative local
companies can become formidable competitors and help contribute to their nations' rapid, export-driven economic growth.

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Upper middle-income countries that achieve highest rates of economic growth are sometimes referred to collectively as newly
industrializing economies (NIEs). In Hungary and other upper-middle-income countries, scores of manufacturing companies have received ISO-
9000 certification for documenting compliance with recognized quality standards. The influx of technology, particularly the computer
revolution, creates startling balanced positions of the old and the new in these countries, In Brazil, for example, grocery distribution companies
use sophisticated logistics software to route their trucks; meanwhile, horse-drawn carts are still common sight on many roads.

HIGH-INCOME COUNTRIES

High-income countries are also known as advanced, developed, industrialized, or post-industrial countries. They have GNP per capita
above $9,386. With exception of a few oil-rich nations, the countries in this category reached their present income levels through a process of
sustained economic growth.

The United States, Sweden, Japan, United Kingdom, and other advanced, high-income countries are characterized with an orientation
toward the future and the importance of interpersonal relationship in the functioning of society. Product and market opportunities in a post-
industrial society are more heavily dependent on a new products and innovations than in industrial societies. Ownership levels for basic
products are extremely high.

South Korea occupies a unique position among the big emerging markets in that it is the only one of the 10 to have achieved the status
of a high-income country. The most industrialized BEM nation, South Korea is home to Samsung Electronics, LG Electronics, Goldstar, Daewoo,
Hyundai, KIA, and other well-known global enterprise. Per capita income doubled between 1985 and 1995. It now occupies one of the highest
GNP as of 2017.

Among the high-income countries, the United States, Japan, Germany, France, Britain, Canada, and Italy are known as the Group of Seven
(G-7). Finance ministers, central bankers, and heads of state from the seven nations have worked together for a quarter of a century in an effort
to steer the global economy in the direction of prosperity and to ensure monetary stability, whenever a global crises looms—from South
America debt crisis of the 1980s to Russia's transformation to a market economy in the 1990s—representatives from the G-7 nations gather
and try to coordinate policy.

Books to read:

The Contemporary World, Abelos, A. et.al.,(2018), MUTYA Publishing

House Inc.

The Contemporary World, Fernandez Jr., G. et. al.,(2018), MUTYA

Publishing House Inc.

https://www.researchgate.net/publication/331683123_Contemporary_World

The Contemporary World, Claudio, L. & Abinales, P. (2018), CE

Publishing

https://www.scribd.com/document/394529123/THE-CONTEMPORARY-WORLD-pdf

https://college2425.neu.edu.ph/mod/book/tool/print/index.php?id=62941 11/15
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3.4. Lesson 4

THE SIX CORE CLAIMS OF MARKET GLOBALISM

Globalization: Liberalization and Global Integration of Markets

The perspective of this first claim dwells on the vital functions of the free market, on its rationality and efficiency likewise on its alleged
ability to bring about greater social integration and material progress. This can only be realized in a democratic society that values and protects
individual freedom.

There are two established ideologies that play an important role in the market. The first is the libertarian variant of liberalism which is
often referred to as neo-liberalism. Neo-liberals see the importance of "free trade" although they are more inclined non the latter because the
attitude toward big business has a big impact on the intrusive government action as to policies and regulations.

This perspective seeks to establish the arguments on what globalization means by interlocking the two core concepts and linking them
to the adjacent ides of "liberty" and "integration". Globalization is about the triumph of market over governments. Both proponents and
opponents of globalization agree that the driving force today is markets which are inducing the role of government. On the other hand, in reality
the size of government has been shrinking relative to economy almost everywhere.

The driving idea behind globalization is free-market capitalism. This means the more you let market forces rule and the more you open
your economy to free trade and competition, the more efficient your economy will be. Hence, globalization means the spread of free market
capitalism to virtually every country in the world.

Market globalist view globalization in the following manner:

1. As a natural economic phenomenon whose essential qualities are the liberalization and integration of global markets
2. The reduction of governmental interference in the economy.

Privatization, free trade, and unfettered capital movements are portrayed as the best and most natural way for realizing individual liberty
and material progress in the world. Market globalists have been successful because they have persuaded the public that their neo-liberal
account of globalization represents an objective or at least neutral diagnosis rather than a direct contribution to the emergence of the very
conditions it conveys to analyze.

However, their economistic-objectivist representation of globalization detracts from the multi-dimensional character of the phenomenon.
Ecological, cultural, and political dimensions of globalization are discussed only as subordinate processes dependent on the movements of
global markets.

Globalization: Inevitable and Irreversible

The perspective of this first claim two is that globalization reflects the spread of irreversible market forces that make the global
integration of national economies inevitable.

The fact that market globalism is almost always intertwined with the deep belief in the ability of markets to use new technologies to
solve social problems far better than any alternative course. Quoting the former British Prime Minister Margaret Thatcher in the early 1980s,
who famously pronounced that 'there is no alternative', means that there is no longer existed theoretical and practical alternative to the
expansionist logic of the market. Further, she dared to post alternatives as foolishly relying on anachronistic, socialist fantasies that betrayed
their inability to cope with empirical reality.

Governments, political parties, and social movements had no choice but to 'adjust' to the inevitability of globalization. Their sole
remaining task is to coordinate and provide the necessary facilitation of the integration of national economies in the new global market. This
means that States and interstate systems should, therefore, serve to ensure the smooth working of players in the world market.

Frederick Smith (1999) CEO of FedEx Corporation states that globalization is irreversible. Globalization is inevitable and inexorable and it
is accelerating. Globalization is happening, it is going to happen, It does not matter whether you like it or not.

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In order to survive and prosper, market globalist must adapt to the discipline of the market so they could easily convince the people. As
such, the claim of inevitability serves a number of important political functions as follows:

1. It neutralized the challenges of alter-globalist opponents by depoliticizing the public discourse about globalization: Neo-liberal policies
are above politics because they simply carry out what is ordained by nature.

This view implies that instead of acting according to a set of choices, people merely fulfill world market laws that demand the elimination of
government controls.

1. There is nothing that can be done about the natural movement of economic and technological forces: political groups ought to comply
and make the best of an unalterable situation. Since the emergence of a world based on the primary of market values reflects the
dictates of history, resistance would be unnatural, irrational, and dangerous.

NOBODY IS IN CHARGE IF GLOBALIZATION

This perspective focuses on the classical liberal concept of the 'self-regulating market'. The semantic link between 'globalization-market'
and the adjacent idea of 'no leader' is simple. Globalization does not reflect the arbitrary agenda of a particular social class or group of the
undisturbed workings of the market indeed preordained a certain course of history.

Robert Hormats (1998) emphasized that the great beauty of globalization is that no one is in control. It is not controlled by any
individual, any government, and any institution, This is supported by Thomas Friedman's (1999) statement that the most basic truth about
globalization is no one is in charge and that the global market today is an Electronic Herd of often anonymous stock, bond and currency traders
and multinational investors.

The questions are: Is it really true that the liberalization and integration of global markets proceeds outside the realm of human choice?
Does globalization, therefore, absolve businesses and corporations from social responsibility?

GLOBALIZATION BENEFITS EVERYONE

The adjacent idea of 'benefits for everyone' is usually unpacked in material terms such as 'economic growth' and 'prosperity'. This
perspective is supported by the joint statement of powerful industrialized nations in 1996 G-7 Summit in Lyons, France:

Economic growth and progress in today's independent world is bound up with the process of globalization. Globalization provides great
opportunities for the future, not only for our countries, but for all others too. Its many positive aspects include an unprecedented expansion of
investment and trade; the opening up to international trade of the world's most populous regions and opportunities for more developing
countries to improve their standards of living; the increasingly rapid dissemination of information, technological innovation, and the
proliferation of skilled jobs.

As John Meehan (1997) puts it, 'episodic dislocations' such as mass unemployment and reduced social services might be 'necessary in
the short run', but,' in the long run,' they will give way to 'quantum leaps in productivity'. Hence, market globalist like Meehan justify the real
human cost of globalization as the short-term price of economic liberalization.

GLOBALIZATION FURTHERS THE SPREAD OF DEMOCRACY IN THE WORLD

This claim links 'globalization' and 'market' to the adjacent concept of 'democracy', which also plays a significant role in liberalism,
conservatism, and socialism. Freeden (1996) coined the world 'Thatcherism'. Globalists tend to treat freedom, free markets, free trade, and
democracy as synonymous terms.

The most obvious strategy by which neo-liberals generate popular support for the relationship of democracy and the market is by
discrediting traditionalism and socialism. The issue with socialism became a tougher case. In the late 1970s, socialism provided a powerful
critique of the elitist, class-based character of liberal democracy, which, in its view, revealed that a substantive form of democracy had not been
achieved in capitalist societies.

Francis Fukuyama (2000) asserted that there exists a 'clear correlation' between a country's level of economic development and
successful democracy. While globalization and capital development do not automatically produce democracies, 'the level of economic
development resulting from globalization is conducive to the creation of complex civil societies with a powerful middle class. It is this class
and societal structure that facilitates democracy.

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However, Fukuyama's argument lies on a limited definition of democracy that emphasizes formal procedures such as voting.

From the point of view of the critical political economists, the concept of polyarchy differs from the concept of 'popular democracy'
because the latter postulated democracy as both a process and a means to an end- a tool for developing political and economic power from
the hand of elite minorities to the masses. Whereas polyarchy represent an elitist and regimented model of 'low intensity' or 'formal' market
democracy. This means polyarchies not only limit democratic participation to voting in elections, but also require that those elected be
insulated from popular pressures in order for them to govern effectively.

Voting in this sense helps to obscure the conditions of inequality reflected in existing asymmetrical power relations in society. Formal
elections actually provide the important function of legitimizing the rule of dominant elites, hence, making it more difficult for popular
movements to challenge the rule of elites.

The claim that globalization furthers the spread of democracy in the world is largely based on a narrow, formal procedural understanding
of 'democracy'. In short, Neo-liberal economic globalization and the strategic promotions of polyarchic regimes in the Third World are two sides
of the same ideological coin. They represent the systematic prerequisites for the legitimation of a full-blown world market.

GLOBAL REQUIRES WAR ON TERROR

Finally, claim 6 is the neo-conservative commitment to 'American values' of freedom, security, and free markets. This is supported by
Robert Kaplan (2003) in his statement that "you also have to have military and economic power behind it, or else your ideas cannot spread'.
This final claim combines the idea of economic globalization with openly militaristic and nationalistic ideas associated with the American-led
global War on Terror. The logic here is if global terror were no longer a major issue, it would disappear without causing market globalism to
collapse. Hence, this last and final claim is a contingent one and less important than the five previous claims.

Books to read:

The Contemporary World, Abelos, A. et.al.,(2018), MUTYA Publishing

House Inc.

The Contemporary World, Fernandez Jr., G. et. al.,(2018), MUTYA

Publishing House Inc.

https://www.researchgate.net/publication/331683123_Contemporary_World

The Contemporary World, Claudio, L. & Abinales, P. (2018), CE

Publishing

https://www.scribd.com/document/394529123/THE-CONTEMPORARY-WORLD-pdf

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3.5. Lesson 5 Module 2

THE INTERNATIONAL ECONOMIC ENVIRONMENT

Economic experts predict that sometime early in the next century, Asia will eclipse North America as the world's most powerful region. The
region outpaced the growth of the world's 24 leading industrial economies by more than six times in 1993, having grown at least four times as
fast each year in the 1990s. How can Asia grow at an average 7 percent (with some economies growing even faster, such as in China at 12
percent) when Europe, Japan, and the United States are growing at an average of only 2 percent? The answer lies in a blend of ingredients that
include the region's traditional capacity at exporting; its rapid emergence as a market unto itself, and its resulting attraction to foreign investors.

A conservative assumption is that fully one billion Asians—not much less than the entire population of North America, South America,
and Europe—will be living in households with some consumer-spending power which means they can but at least basic goods such as color
televisions, refrigerators, and motorbikes. Perhaps, 400 million of these consumers will have disposable incomes, at least equal to the rich-
world average in 1993, to spend on houses, cars, computers, holidays, healthcare, and education. If this happens, immense investments will be
needed to make it possible: power plants roads, and airports among other things. Japan's Long-Term Credit Bank puts these investment needs
at $1 trillion over the next decade.

Many marketers have had to adjust their thinking about Asia. Not long ago, companies such as Hewlett-Packard viewed Asia as a region
with a large supply of labor but little potential for anything else. Today, Hewlett-Packard maintains a workforce of 13,000 throughout Asia and
had sales of $2 billion in 1992 about one-eighth of the corporate total.

The assessment of a foreign-based market environment should start with evaluation of economic variable relating to the size and nature
of the markets. Table 2.3 illustrates the size of the global market. The products and services are mostly produced by the Group of Ten (United
States, Britain, France, Germany, Japan, Italy, Canada, Sweden, Netherlands and Belgium).

Books to read:

The Contemporary World, Abelos, A. et.al.,(2018), MUTYA Publishing

House Inc.

The Contemporary World, Fernandez Jr., G. et. al.,(2018), MUTYA

Publishing House Inc.

https://www.researchgate.net/publication/331683123_Contemporary_World

The Contemporary World, Claudio, L. & Abinales, P. (2018), CE

Publishing

https://www.scribd.com/document/394529123/THE-CONTEMPORARY-WORLD-pdf

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Module 3- GOVERNMENTS AND CITIZENS IN A GLOBALLY

INTERCONNECTED WORLD OF STATES

Site: New Era University Virtual Learning Environment Printed by: Maxynne Rhae S. Diolola
Course: GECTCW-18/GECTCW-24 - The Contemporary World Date: Saturday, 12 October 2024, 10:26 PM
Module 3- GOVERNMENTS AND CITIZENS IN A GLOBALLY
Book:
INTERCONNECTED WORLD OF STATES

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Table of contents

1. Introduction/Overview

2. Learning Outcomes

3. Content
3.1. Lesson 1 Module 3

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1. Introduction/Overview

This module aims to discuss the formation of a state which is the highest expression of a political act of men conforming to promote
their common interest, advance their common welfare, secure their collective rights, optimize their available common resources, promote their
common heritage, and harness their common potentials for the general well-being of the citizens (De Leon and De Leon Jr. 2014, p.6)

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2. Learning Outcomes

Course Learning Outcomes

1. Distinguish nation from state

2. Identify the elements of the state
3. Examine the political, legal, and regulatory environments of global states
4. Discuss the impact of political risks on governments
5. Categorize Common law, Civil law, and Islamic law
6. Explain the principles and concepts of bribery and corruption.

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3. Content

1. State

2. The Political, Legal and Regulatory Environments among States

3. Political Risk

4. International Law

References:

1. Books to read:

The Contemporary World, Abelos, A. et.al.,(2018), MUTYA Publishing

House Inc.

The Contemporary World, Fernandez Jr., G. et. al.,(2018), MUTYA

Publishing House Inc.

https://www.researchgate.net/publication/331683123_Contemporary_World

The Contemporary World, Claudio, L. & Abinales, P. (2018), CE

Publishing

https://www.scribd.com/document/394529123/THE-CONTEMPORARY-WORLD-pdf

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3.1. Lesson 1 Module 3

WHAT IS A STATE?

A state is a community of persons, more or less numerous, occupying a definite territory, possessing an organized government, and
enjoying independence from external control.

It is dwelled by people permanently occupying a fixed territory and bound by common-law habits and customs into one body, exercising
through the medium of an organized government, independent sovereignty and control over all persons and things within its boundaries,
capable of waging war, making peace and entering into international relations with other communities

https://www.youtube.com/watch?v=GtcicQY49AQ&t=4s

Nation and State

Under international law, state is not equivalent to nation. Nation is defined as people or aggregation of men, existing in the form of an
organized society, usually inhabiting a distinct portion of the earth, speaking the same language, using the same customs, possessing historic
continuity, and distinguished from other groups, like by their racial origin and characteristics, and generally, but not necessarily, living under the
same government and sovereignty (Danung and Campanilla, 2004)

State is more of a political concept while nation is racial or ethnical. However, state and nation are often used interchangeably. To further
explain, a state has four essential elements to consider.

Four Essential Elements of the State

1. People. This is the entire body of those citizens of a state who are invested with political
power for political purposes (Black’s Law Dictionary, 6th edition). It is necessary to the existence
of the state. There can be no functionaries to govern and no subjects to be governed without the
people. The number should be neither too small nor too large. It should be large, enough to be
well governed (Martin, 1984). It must be sufficient and number to maintain and perpetuate itself.
A casual gathering of individuals by chance, a group of bandits or a society of pirates does not
constitute people as an element of state (Aruego, 1975; De Leon and De Leon Jr., 2014).

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2. Territory. It is a geographical area under the jurisdiction of another country or sovereign power
or state (Black’s Law Dictionary, 6th edition). It must be a fixed territory which the inhabitants
occupy. Nomadic tribes, who travel from place to place, may not establish a state since they are
not occupying a fixed territory. A state must have a territory sufficient in extent to provide for its
maintenance and growth (Aruego, 1975; De Leon and De Leon Jr., 2014). There are five modes
by which a state can acquire a territory. These are by discovery and occupation, prescription,
secession, subjugation and annexation and accretion.

Discovery and Occupation. A state may acquire a territory by discovering a continent, an

island or land with no inhabitants or occupied by uncivilized inhabitants, and thereafter,
occupying it by placing it under its political administration. Discovery without subsequent
occupation is not sufficient to acquire a territory. There is effective occupation when the
following are met:

1. That the parties occupying the territory must have been authorized by the state for which
they are acting;
2. That the state must by formal act evidence its intention to acquire sovereignty over the
new territory; and
3. That it must be established within a reasonable time after discovery.(Public International
Law).

The following lands can be the subjects of discovery and occupation: (1) uninhabited lands, (2)
lands inhabited by uncivilized persons, and (3) lands discovered by a state but which it failed to
occupy for unreasonable length of time.

Prescription. It is the mode of acquiring a territory through continuous and undisputed

exercise of sovereignty over it during such period as is necessary to create under the
influence of historical development the general conviction that the present condition of
things is in conformity with international order (Public International Law). Note that the
length of time required for the acquisition of territory by prescription is not definite,
although some authorities consider a period of fifty years as sufficient.
Secession. It is the assignment, transfer, or yielding up of territory by one state or
government to another. Secession may be in the form of sale or donation. For example, for
20 million dollars, the Spanish government on December 10, 1898 ceded the Philippine
archipelago to the United States of America through the Treaty of Paris.
Subjugation and Annexation. It is a mode of acquiring a territory belonging to a state of by
occupation and conquest made by another state in the course of war and by annexation at
the end of the war. Conquest gives the conqueror inchoate title that may be converted into
a full title after annexation are also called involuntary secession.
Accretion. It is another mode of acquiring territory by addition of portions of soil, either
artificial such as the reclamation area in Manila Bay, or natural by gradual deposition
through the operation of natural causes such as the waves of the ocean.

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3. Government. Government is the totality of authorities which rule a society by prescribing and
carrying out fundamental rules which regulate the freedom of its members. It is composed of
the executive, legislative, judiciary, and administrators with corresponding roles in administering
the affairs of the state (De Leon and De Leon Jr., 2014, p.9).

Kinds of Government

1. De jure or legitimate government. This is established according to the constitution, and

lawfully entitled to recognition and supremacy and administration of the nation, but which
is actually cut off from power or control. It is a government deemed lawful or deemed
rightful of just, but which, nevertheless, has been supplanted or displaced (Black’s Legal
Dictionary, 6th edition)
2. De facto or illegitimate government. A government that maintains itself by a display of
force against the will of the rightful legal government and is successful, at least
temporarily, in overturning the institutions of the rightful government by setting its own in
lieu thereof.

There are three kinds of de facto government:

1. Government by Revolutions is a government established by the inhabitants who rise in

revolt against and depose the legitimate regime.
2. Government by Secession is a government established by the inhabitants of a state who
secede there from without overthrowing its government.
3. Government by Occupation is a government established in the course of war by the
invading forces of one belligerent country in the territory of another belligerent country, the
government of which is also displaced.

4. Sovereignty. It is the supreme, absolute and uncontrollable power by which an

independent state is governed. It is the paramount control of the constitution and the
frame of government and its administration De Leon and De Leon Jr., 2014,9)

There are two kinds of sovereignty: internal and external. Internal sovereignty is the
power to control and direct the internal affairs of a country such as the authority to
enact, execute, and apply laws. Under international laws, internal sovereignty is not a
factor in determining whether an entity is a state.

External sovereignty is the power of an independent state to control and direct its
external affairs such as the authority to enter into treaties with other states, to wage
war, and to receive and send diplomatic missions.

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Module 4- GLOBALIZATION OF ECONOMIC RELATIONS

Site: New Era University Virtual Learning Environment Printed by: Maxynne Rhae S. Diolola
Course: GECTCW-18/GECTCW-24 - The Contemporary World Date: Saturday, 12 October 2024, 10:26 PM
Book: Module 4- GLOBALIZATION OF ECONOMIC RELATIONS

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Table of contents

1. Introduction/Overview

2. Learning Outcomes

3. Module 4 Lesson 1-INTERCONNECTED DIMENSIONS OF ECONOMIC GLOBALIZATION

4. Content:

5. Module 4 Lesson 2-PREFERENTIAL TRADE AGREEMENTS

6. Module 4 Lesson 3- PREFERENTIAL TRADE AGREEMENTS PART 2

7. Module 4 Lesson 4-THE BRETTON WOOD SYSTEM, DEVELOPING COUNTRIES, INTERNATIONAL TRADE AND MACDONALDIZATION OF
SOCIETY

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1. Introduction/Overview

INTRODUCTION/OVERVIEW

ECONOMIC GLOBALIZATION is a historical process, the result of human innovation and technological progress. It may also refer to the
increasing integration of economies around the world, particularly through the movements of goods, services, and capital across borders.
Economic globalization is one of the three main dimensions of globalization commonly found in countries, academic literature, with the two
others being political globalization and cultural globalization, as well as the general term of globalization. Economic globalization refers to the
widespread international movement of goods, capital, services, technology and information. It is the increasing economic integration and
interdependence of national, regional, and local economies across the world through an intensification of cross-border movement of goods,
services, technologies and capital. Economic globalization primarily comprises the globalization of production, finance, markets, technology,
organizational regimes, institutions, corporations, and labor.

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2. Learning Outcomes

Learning Outcomes:

At the end of the module, the students should be able to:

1. Define economic globalization

2. Distinguish globalization from internationalization
3. Explain the important function of World Trade Organization
4. Discuss the different kinds of trades
5. Explain the importance of regional trade organizations and its implication to the member countries; and
6. Assess the situation of the developing countries in terms of their international trades.

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3. Module 4 Lesson 1-INTERCONNECTED DIMENSIONS OF ECONOMIC

GLOBALIZATION

The Globalization of Trade of Goods and Services

When a country exports more than imports, it runs a trade surplus. The opposite is Trade Deficit. The large trade deficit in the middle and
the late 1980s sparked political controversy that still persist today. For hundreds of years, industries in the U.S. have petitioned governments
for protection and societies have debated the pros and cons of free and open trade. For the last century, the principal argument against
protection has been the theory of comparative advantage, the advantage in the production of goods enjoyed by one country over another when
that good can be produced at lower cost in terms of other goods than it could be in the other country.

The Globalization of financial and Capital Markets

A country enjoys an absolute advantage over another country in the production of good if it uses fewer resources compared to other
country.

The trade barriers also called obstacles to trade-take in many forms. The three most common are tariffs, (tax on imports) export subsidies,
(government payments made to domestic firms to encourage exports) and quotas (limit on the quantity of imports).

The Globalization of Technology and Communication

In part technology transfer and communication have become part of manpower training in most agricultural countries. This is so because
of the belief that human resources are the ultimate determinant of economic advance.

The Globalization of Production

Production is the process which inputs are combined and transformed into output. The output can be produced by the number of several
techniques. In choosing the most appropriate technology, firms can choose the one that maximize the cost of production. For a firm, an
economy with plentiful supply of inexpensive labor but not much capital, the optimal method of production will involve labor-intensive
techniques.

GLOBALIZATION AND INTERNATIONALIZATION

Dicken (2004) to distinguish Globalization from internationalization, the former is functional integration between internally dispersed
activities while the latter is about extension of economic activities of nation states across borders. Reich (1991) agrees that globalization
transforms the national economy into a global one because for him, there will be no national products or technologies, no national
corporations, no national industries. On the other hand, hyper globalist Ohame (1995) declared that states ceased to exist as primary economic
organization units in the wake of global market.

On the contrary, Boyer & Drache (1996) admit that globalization is reducing the role of the nation state as an effective manager of the national
economy. Milner and Keohane (1996) supports the previous notions. They admit that the national economic policies and the structure of
domestic institutions of states are not uniformly influence by globalization.

According to Gereffi (1999), this move induced to develop the concept of global commodity chains; an idea that reflects upon the increasing
importance of global buyers in a world of dispersed production.

THE WORLD TRADE ORGANIZATION AND GATT

GATT is a treaty among 123 nations whose governments agreed, at least in principle, to promote trade among members. It was based on Three
principles: equal, nondiscriminatory trade treatment; the reduction of tariffs by multi-lateral negotiation and elimination of import quotas.

The successor to GATT, the World Trade Organization (WTO), came in January 1, 1995. One of its major tasks was to allow 76 member

signatories to have binding market access commitments in banking, securities and insurance.

The agreement resulted in lower prices for businesses and consumers, especially in Asia and Europe, where tariffs had been relatively high
(Cooper & Bahree)

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4. Content:

INTERCONNECTED DIMENSIONS OF ECONOMIC GLOBALIZATION

The Globalization of Trade of Goods and Services

The Globalization of financial and Capital Markets

The Globalization of Technology and Communication

The Globalization of Production

GLOBALIZATION AND INTERNATIONALIZATION

THE WORLD TRADE ORGANIZATION AND GATT

PREFERENTIAL TRADE AGREEMENTS

Free Trade Areas

Customs Union

Custom Market

North American Free Trade Agreement (NAFTA)

Andean Community

Asia Pacific

Association of Southeast Asian Nations (ASEAN)

The European Union

The Middle East

ECONOMIC COOPERATION OF WEST AFRICAN STATES

Economic Community of West African States

South African Development Community

ORGANIZATION OF THE PETROLEUM EXPORTING COUNTRIES (OPEC)

THE BRETTON WOODS SYSTEM

DEVELOPING COUNTRIES AND INTERNATIONALTRADE

6 (SIX) IMPORTANT FACTS ABOUT INTERNATIONAL TRADE

THE MCDONALDIZATION OF SOCIETY

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5. Module 4 Lesson 2-PREFERENTIAL TRADE AGREEMENTS

PREFERENTIAL TRADE AGREEMENTS

Historically, when countries entered into preference agreements they notified the GATT. Between 1947 and 1992, there were 85 agreements
that were notified while 77 new agreements have been added since 1992. Strictly speaking, few of the trade agreements fully conform with
GATT requirements, although none was disallowed, Only Japan, Hong Kong, and South Korea among the WTO members have not signed
preferential trade agreement.

Free Trade Areas

(FTA) is formed when two or more countries agree to abolish all internal barriers to trade among themselves. Countries who belong to the free
trade area can do and maintain independent trade policies with respect to non-FTA countries. A system of certificate of origin is used to avoid
trade diversion in favor of low-tariff members. This discourages importing goods into the member country with the lower tariff for
transshipment to countries within the area with higher external tariffs. The European Economic area is an example of FTA which includes 27
nation European Union.

Customs Union

This represents the logical evolution of a free trade area. In addition to eliminating internal barriers to trade, members of a custom union
establish common external barriers. The arrangement called for elimination of tariffs each year to the cost of European goods imported each
year. A type of trade bloc which is composed of a free trade area with a common external tariff. Customs unions are established through trade
pacts where the participant countries set up common external trade policy. Common competition policy is also helpful to avoid competition
deficiency. Purposes for establishing a customs union normally include increasing economic efficiency and establishing closer political and
cultural ties between the member countries.

Custom Market

It is the next step in the spectrum of economic integration. In addition to the removal of internal barriers to trade and the
establishments of common external barriers, the common market allows for free movements of factors of production.

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North American Free Trade Agreement (NAFTA)

The North American Free Trade Agreement (NAFTA) is a pact eliminating most trade barriers between the U.S., Canada, and Mexico
that went into effect on January 1, 1994. Some of its provisions were implemented immediately; others were staggered over the following 15
years.

Andean Community

Andean Community, Spanish Comunidad Andina (CAN), formerly (1969–97) Andean Group, South American organization founded to
encourage industrial, agricultural, social, and trade cooperation. Formed in 1969 by the Cartagena Agreement, the group originally consisted of
Bolivia, Colombia, Ecuador, Peru, and Chile; Venezuela joined in 1973 but withdrew in 2006, and Chile withdrew in 1977. Peru suspended its
membership in 1992 but resumed it in 1997. CAN’s headquarters are in Lima, Peru.

CAN’s Andean Integration System consists of several institutions, all of which seek to facilitate integration. They include the Andean
Presidential Council, an organization of the presidents of member countries that coordinates integration efforts; the Commission of the
Andean Community, which is CAN’s primary policy-making institution; the Andean Parliament, comprising members of national legislatures,
though it was scheduled to become a directly elected parliament early in the 21st century; the five-member Court of Justice of the Andean
Community, which interprets CAN laws to ensure that they are uniformly applied in each country; the Latin American Reserve Fund, which seeks
to harmonize monetary and fiscal policies; the Andean Development Corporation, which encourages trade and investment; and various
business and labor advisory councils. Many of CAN’s goals, such as the establishment of a custom union and the development of ambitious
industrial programs, had not been realized when the organization ratified the Quito Protocol in 1987, which aimed to strengthen the
organization’s institutions and reaffirmed its members’ commitment to closer economic relations. In the 1990s CAN attempted, with mixed
success, to achieve a level of economic integration among its members similar to that of the European Union.

In 1993 a free trade zone was created for Bolivia, Colombia, Ecuador, and Venezuela. That year the Andean Group also began negotiations to
harmonize its customs policy and reached an agreement in 1994 on a common external tariff that covered 90 percent of imports. CAN later
endorsed an accord between Colombia, Venezuela, and Mexico to phase out tariffs and began developing a framework to define a joint foreign
policy in 1998. In the same year, negotiations with Mercusor (the Southern Common Market)—a South American regional economic
organization composed of Argentina, Brazil, Paraguay, and Uruguay—resulted in an agreement to establish a free-trade zone from Mexico to
Argentina. Following extensive negotiations, the free-trade zone went into effect on July 1, 2004.

Asia Pacific

The Asia-Pacific region refers to the regions of East or Northeast Asia, Southeast Asia. The region accounted for approximately 1/3 of
global income since 1997. Japan as a member country generates an astounding 14 percent of the world’s GNP!

https://apcss.org/about/ap-countries/

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6. Module 4 Lesson 3- PREFERENTIAL TRADE AGREEMENTS PART 2

Association of Southeast Asian Nations (ASEAN)

ASEAN is the Flagship preferential agreement in the Asia Pacific area. The Association of Southeast Asian Nations (ASEAN) was formed
in 1967 by Indonesia, Malaysia, the Philippines, Singapore, and Thailand to promote political and economic cooperation and regional stability.
Brunei joined in 1984, shortly after its independence from the United Kingdom, and Vietnam joined ASEAN as its seventh member in 1995. Laos
and Burma were admitted into full membership in July 1997 as ASEAN celebrated its 30th anniversary. Cambodia became ASEAN’s tenth
member in 1999.

The ASEAN Declaration in 1967, considered ASEAN’s founding document, formalized the principles of peace and cooperation to which ASEAN
is dedicated. The ASEAN Charter entered into force on 15 December 2008. With the entry into force of the ASEAN Charter, ASEAN established
its legal identity as an international organization and took a major step in its community-building process.

The ASEAN Community is comprised of three pillars, the Political-Security Community, Economic Community and Socio-Cultural Community.
Each pillar has its own Blueprint approved at the summit level, and, together with the Initiative for ASEAN Integration (IAI) Strategic Framework
and IAI Work Plan Phase II (2009-2015), they form the Roadmap for and ASEAN Community 2009-2015. ASEAN commands far greater
influence on Asia-Pacific trade, political, and security issues than its members could achieve individually. This has driven ASEAN’s community
building efforts. This work is based largely on consultation, consensus, and cooperation.

U.S. relations with ASEAN have been excellent since its inception. The United States became a Dialogue Partner country of ASEAN in 1977.
Dialogue partners meet regularly with ASEAN at the working and senior levels to guide the development of our regional relations. In July 2009,
Secretary Clinton signed the Treaty of Amity and Cooperation in Southeast Asia (TAC) which has greatly enhanced U.S. political relations with
ASEAN.

Every year following the ASEAN Ministerial Meeting, ASEAN holds its Post-Ministerial Conference (PMC) to which the Secretary of State is
invited. In 1994, ASEAN took the lead in establishing the ASEAN Regional Forum (ARF), which now has 27 members and meets each year at the
ministerial level just after the PMC.

THE EUROPEAN UNION

European Union (EU), international organization comprising 27 European countries and governing common economic, social, and
security policies. Originally confined to western Europe, the EU undertook a robust expansion into central and eastern Europe in the early 21st
century. The EU’s members are The EU-28 is the abbreviation of European Union (EU) which consists a group of 28 countries (Belgium,
Bulgaria, Czech Republic, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg,
Hungary, Malta, Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland, Sweden. The United Kingdom, which had been a
founding member of the EU, left the organization in 2020. The EU was created by the Maastricht Treaty, which entered into force on November
1, 1993. The treaty was designed to enhance European political and economic integration by creating a single currency (the euro), a unified
foreign and security policy, and common citizenship rights and by advancing cooperation in the areas of immigration, asylum, and judicial
affairs. The EU was awarded the Nobel Prize for Peace in 2012, in recognition of the organization’s efforts to promote peace and democracy in
Europe.

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THE MIDDLE EAST

Middle East, the lands around the southern and eastern shores of the Mediterranean Sea, encompassing at least the Arabian
Peninsula and, by some definitions, Iran, North Africa, and sometimes beyond. The central part of this general area was formerly called the
Near East, a name given to it by some of the first modern Western geographers and historians, who tended to divide what they called the Orient
into three regions. Near East applied to the region nearest Europe, extending from the Mediterranean Sea to the Persian Gulf; Middle East, from
the Persian Gulf to Southeast Asia; and Far East, those regions facing the Pacific Ocean. The member countries include: Bahrain, Iran, Iraq,
Israel, Jordan, Kuwait, Syria, UAE, Lebanon, Oman, Qatar, Saudi Arabia and Yemen.

Although the countries listed above are the most commonly included in the term "Middle East," various interpretations include additional
countries. Armenia, Azerbaijan, and Georgia are sometimes included due to their location in the Southern Caucus region bordering Turkey as
well as Azerbaijan's majority Muslim population. The Middle East, especially when used by the American government, is used interchangeable
with the "Muslim World" and tends to include Afghanistan and Pakistan.

ECONOMIC COOPERATION OF WEST AFRICAN STATES

Economic Community of West African States (ECOWAS), African organization established by the Treaty of Lagos in May 1975 to
promote economic trade, cooperation, and self-reliance. The organization seeks to harmonize agricultural policies and to facilitate the free
movement of peoples, services, and capital between members. The member countries are: Benin, Gambia, Ghana, Guinea, Guinea, Liberia, Mali,
Mauritana, Niger, Nigeria, Senegal, Sierra Leone, Togo.

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South African Development Community

The Southern African Development Coordinating Conference (SADCC), established on 1 April 1980 was the precursor of the Southern
African Development Community (SADC). The SADCC was transformed into the SADC on 17 August 1992 in Windhoek, Namibia where the
SADC Treaty was adopted, redefining the basis of cooperation among Member States from a loose association into a legally binding
arrangement. The main objectives of SADC are to achieve development, peace and security, and economic growth, to alleviate poverty, enhance
the standard and quality of life of the peoples of Southern Africa, and support the socially disadvantaged through regional integration, built on
democratic principles and equitable and sustainable development. Member countries include: Angola, Botswana, Comoros, Democratic
Republic of Congo, Eswatini, Lesoto, Madagascar, Malawi, Mauritus, Mozambique, Namibia, Seychelles, South Africa, Tanzania, Zambia and
Zimbabwe.

ORGANIZATION OF THE PETROLEUM EXPORTING COUNTRIES (OPEC)

The Organization of the Petroleum Exporting Countries is an intergovernmental organization of 14 nations, founded on 14 September
1960 in Baghdad by the first five members, and headquartered since 1965 in Vienna, Austria. As of September 2018, the then 14 member
countries accounted for an estimated 44 percent of global oil production and 81.5 percent of the world's "proven" oil reserves, giving OPEC a
major influence on global oil prices that were previously determined by the so-called "Seven Sisters" grouping of multinational oil companies.

OPEC is founded as the result of a meeting that took place in the Iraqi capital of Baghdad, attended by the five founding members of
the organization. Member countries are: (Saudi Arabia, Iran, Iraq, United Arab Emirates, Kuwait, Venezuela, Nigeria, Libya, Algeria, Angola,
Qatar, and Ecuador.)

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7. Module 4 Lesson 4-THE BRETTON WOOD SYSTEM, DEVELOPING

COUNTRIES, INTERNATIONAL TRADE AND MACDONALDIZATION OF
SOCIETY

THE BRETTON WOODS SYSTEM

The Bretton Woods system of monetary management established the rules for commercial and financial relations among the United
States, Canada, Western European countries, Australia, and Japan after the 1944 Bretton Woods Agreement. The Bretton Woods system was
the first example of a fully negotiated monetary order intended to govern monetary relations among independent states. The chief features of
the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained its external exchange rates within 1
percent by tying its currency to gold and the ability of the IMF to bridge temporary imbalances of payments. Also, there was a need to address
the lack of cooperation among other countries and to prevent competitive devaluation of the currencies as well.

The International Monetary Fund (IMF) was expected to safeguard the smooth functioning of the gold-exchange standard by providing
short-term financial assistance in case of temporary balance of payment difficulties.

DEVELOPING COUNTRIES AND INTERNATIONALTRADE

The United Nations Conference on Trade and Development (UNCTAD) was established in 1964 as a permanent intergovernmental
body.

UNCTAD is the part of the UN Secretariat dealing with trade, investment, and development issues. The organization's goals are to: "maximize
the trade, investment and development opportunities of developing countries and assist them in their efforts to integrate into the world
economy on an equitable basis". UNCTAD was established by the UN General Assembly in 1964 and it reports to the UN General Assembly and
ECOSOC.

The primary objective of UNCTAD is to formulate policies relating to all aspects of development including trade, aid, transport, finance and
technology. The conference ordinarily meets once in four years; the permanent secretariat is in Geneva.

One of the principal achievements of UNCTAD (1964) has been to conceive and implement the Generalize System of Preferences (GSP). It was
argued in UNCTAD that to promote exports of manufactured goods from developing countries, it would be necessary to offer special tariff
concessions to such exports. Accepting this argument, the developed countries formulated the GSP scheme under which manufacturers'
exports and import of some agricultural goods from the developing countries enter duty-free or at reduced rates in the developed countries.
Since imports of such items from other developed countries are subject to the normal rates of duties, imports of the same items from
developing countries would enjoy a competitive advantage.

The creation of UNCTAD in 1964 was based on concerns of developing countries over the international market, multi-national corporations, and
great disparity between developed nations and developing nations. The United Nations Conference on Trade and Development was established
to provide a forum where the developing countries could discuss the problems relating to their economic development. The organization grew
from the view that existing institutions like GATT (now replaced by the WTO), the (IMF), and World Bank were not properly organized to handle
the particular problems of developing countries. Later, in the 1970s and 1980s, UNCTAD was closely associated with the idea of a New
International Economic Order (NIEO).

The first UNCTAD conference took place in Geneva in 1964, the second in New Delhi in 1968, the third in Santiago in 1972, fourth in Nairobi in
1976, the fifth in Manila in 1979, the sixth in Belgrade in 1983, the seventh in Geneva in 1987, the eighth in Cartagena in 1992, the ninth at
Johannesburg (South Africa) in 1996, the tenth in Bangkok (Thailand) in 2000, the eleventh in Sao Paulo (Brazil) in 2004, the twelfth in Accra in
2008, the thirteenth in Doha (Qatar) in 2012 and the fourteenth in Nairobi (Kenya) in 2016.

Currently, UNCTAD has 195 member states and is headquartered in Geneva, Switzerland. UNCTAD has 400 staff members and a bi-annual
(2010–2011) regular budget of $138 million in core expenditures and $72 million in extra-budgetary technical assistance funds. It is a member
of the UN Development Group. There are non-governmental organizations participating in the activities of UNCTAD.

The Uruguay Round was the 8th round of multilateral trade negotiations conducted within the framework of the General Agreement on
Tariffs and Trade, spanning from 1986 to 1993 and embracing 123 countries as "contracting parties". The Round led to the creation of the
World Trade Organization, with GATT remaining as an integral part of the WTO agreements. The broad mandate of the Round had been to

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extend GATT trade rules to areas previously exempted as too difficult to liberalize and increasingly important new areas previously not
included. The Round came into effect in 1995 with deadlines ending in 2000 under the administrative direction of the newly created World
Trade Organization.

Hertele, et al. (1998)

https://unctad.org/en/Pages/aboutus.aspx

https://unctad.org/en/docs/tdngolistd12_en.pdf

6 (SIX) IMPORTANT FACTS ABOUT INTERNATIONAL TRADE

The world’s most impressive ports are in cities marked by trade. Although Geneva does not even have a port for container ships, it is still a
global hub for trade. The World Trade Organization (WTO), the International Trade Centre (ITC) and the United Nations Conference on Trade and
Development (UNCTAD) are at the core of this hub. But there are a number of other international organizations that work on trade-related
issues including the United Nations Economic Commission for Europe (UNECE), the South Centre and the International Labor Organization
(ILO) that are anchored in Geneva.

Furthermore, with over 400 trading companies, Geneva is also a big trading hub for commodities. It accounts for roughly on third of world
trading in oil, rice and cereals and for about half of the global coffee and sugar trade.

Our daily lives are highly influenced by trade yet we hardly think about it. Did you know that...

1) Less tariffs means greater trade. Over the past 20 years, an average tariff reduction of 15% helped to quadruple trade worldwide! That has
not only helped to boost local economies but also to increase the global standards for health, security and environment, which in turn increase
average life expectancy.

2)There is no need for trade wars. The WTO has handled over 500 trade disputes in the last two decades. This resolves conflicts and reduces
trade tensions, so that trade can flow more freely and easily, which also increases your country’s exports.

3) Trade brings prices down. Trade liberalizing measures increased more than 60% in recent years, which has helped to bring down the prices
of imports. This translates into spending less on our purchases.

4) More trade means more choices. The WTO now has 161 member countries, which account for about 98% of world trade! So, the more
countries get included in global trade, the greater your choice of products is when we go shopping (and the more economic growth will be
stimulated)!

5) Innovation fuels trade. Patent applications rose by 9% in 2013. They help extend trade and will eventually find their way into our
smartphones, cars, houses or gadget which don’t even exist today.

6)Trade fights poverty. By increasing their share in world trade, least developed countries (LDCs) reduced poverty (defined as people living with
less than 1,25 USD a day) from 65% of the population in 1990 to 45% in 2010! This contributed to the inclusion of more and more people into
the riches of world trade, not only cutting living costs, but also raising living standards globally.

It’s important to note that trade is not always the solution to poverty or fragile economies but it can help boost local economies, increase
employment and bring people together. Like ships that get loaded and unloaded, we can look at Geneva as a global trade hub that discharges
old trade policies and replaces them with new ones so we have an updated trading system that works for all. Have a look at our infographic
that gives a snapshot of the impact Geneva has on trade.

THE MCDONALDIZATION OF SOCIETY

(Ritzer 1993) refers to the increasing presence of the fast food business model in common social institutions. This business model includes
efficiency (the division of labor), predictability, calculability, and control (monitoring). For example, in your average chain grocery store, people at
the register check out customers while stockers keep the shelves full of goods and deli workers slice meats and cheese to order (efficiency).
Whenever you enter a store within that grocery chain, you receive the same type of goods, see the same store organization, and find the same
brands at the same prices (predictability). You will find that goods are sold by the pound, so that you can weigh your fruit and vegetable
purchase rather than simply guessing at the price for that bag of onions, while the employees use a timecard to calculate their hours and
receive overtime pay (calculability). Finally, you will notice that all store employees are wearing a uniform (and usually a name tag) so that they
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can be easily identified. There are security cameras to monitor the store, and some parts of the store, such as the stockroom, are generally
considered off-limits to customers (control). While McDonaldization has resulted in improved profits and an increased availability of various
goods and services to more people worldwide, it has also reduced the variety of goods available in the marketplace while rendering available
products uniform, generic, and bland. Think of the difference between a mass-produced shoe and one made by a local cobbler, between a
chicken from a family-owned farm and a corporate grower, or between a cup of coffee from the local diner and one from Starbucks.

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Module 5- THE RISE OF GLOBAL CORPORATION

Site: New Era University Virtual Learning Environment Printed by: Maxynne Rhae S. Diolola
Course: GECTCW-18/GECTCW-24 - The Contemporary World Date: Saturday, 12 October 2024, 10:26 PM
Book: Module 5- THE RISE OF GLOBAL CORPORATION

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Table of contents

1. Introduction/Overview

2. Learning Outcomes

3. Content

4. Module 5 Lesson 1 PRESENCE IN KEY GLOBAL MARKETS COMPETITIVE STRATEGY OF GLOBAL CORPORATIONS

5. Module 5 Lesson 2- GLOBALIZATION DRIVERS AND FUNCTIONS OF GLOBAL CORPORATIONS

6. Module 5 Lesson 3- MAJOR CONCERS OF GLOBAL MANAGERS AND CHALLENGES OF GLOBALIZATION

7. MODULE 5 ASSIGNMENT 1

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1. Introduction/Overview

Introduction/Overview

A global corporation, also known as a global company, is coined from the base term ‘global’, which means all around the world. It makes sense to assume that a
global company is a company that does business all over the world. There aren’t many companies in the world that can boast of having a business presence in
every major country. Actually, they probably can be numbered on the fingers of both hands. The global company definition, therefore, should be a little more
lenient to accommodate this fact, which would enable more companies to call themselves global companies. Really, a global company is any company that
operates in at least a country other than the country where it originated. Realistically, expanding to even just one additional country is a lot of work and is
therefore a great achievement. If you are operating in one country, selling your products around the world and shipping them to customers in countries in Europe
while you’re in the United States, that doesn’t necessarily mean you’re a global company. It takes more than that to earn the name a global company.

To be a global company, you need to introduce not only your products, but also your company to people who live in another country. You need to conduct
significant research to figure out which country is your best choice for expansion and how to introduce yourself. Probably, you'll have to send some of your
employees to that country to speak with people face-to-face and to experience that country on a first-hand basis, before you decide whether the country is right
for your company. Once you expand to another country and establish yourself successfully, it's only natural that you will want to try an additional country, and
another, and yet another. That is how global companies have started, and now they have a massive list of countries in which they do business.

https://2012books.lardbucket.org/books/global-strategy/s04-04-industry-globalization-
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2. Learning Outcomes

LEARNING OUTCOMES:

At the end of the module, the students are able to:

1. Explain the impact of dealing business with the triad;

2. Identify the competitive strategies of global corporations;
3. Discuss the idea of globalization drivers;
4. Explain how global corporation functions;
5. Identify what constitutes a global corporation;
6. Explain the role of international financial institution in the creation of global economy; and
7. Determine the challenges of global corporation

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3. Content

PRESENCE IN KEY GLOBAL MARKETS

COMPETITIVE STRATEGY OF GLOBAL CORPORATIONS

Cost Leadership

Differentiation Strategy

Cost Focus Strategy

Differentiation Focus Strategy

GLOBALIZATION DRIVERS

Market Drivers

Cost Globalization Drivers

Competitive Drivers

Government Drivers

FUNCTIONS OF GLOBAL CORPORATIONS

Financing in the Internal Capital Market

Managing Risk globally

Global Capital Budgeting

MAJOR CONCERS OF GLOBAL MANAGERS

Procurement Issues

Timing Issues

Production Issues

CHALLENGES OF GLOBALIZATION

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4. Module 5 Lesson 1 PRESENCE IN KEY GLOBAL MARKETS COMPETITIVE

STRATEGY OF GLOBAL CORPORATIONS

PRESENCE IN KEY GLOBAL MARKETS

The United states, Japan and Western Europe account for about half of the world’s total consumption. They share certain important economic and
demographic conditions such as high income levels, and high GNP values. It has been argued by Ohmae, 1990 that a firm cannot truly compete on a global scale
if it is not present in this “triad.”

If a firm does not have operations in all three areas of the triad, it may not be able to achieve maximum economies of scale. Furthermore, since the three areas
are often the source of technological and product innovations, a firm not present in all triad areas would have difficulty keeping abreast of developments in its
industry. Finally, since the triad accounts for one-half of the world’s consumers, presence in the triad is necessary. Therefore, some business people have
suggested that to remain competitive, multinationals must pursue a “triad strategy.” Of course, there are other arguments about key global markets. For example,
china, with a billion people, a rapidly growing economy, and poorly serves customers, is seen by some as a key market in the future.

COMPETITIVE STRATEGY OF GLOBAL CORPORATIONS

Cost Leadership

Cost leadership is a tough strategy for small businesses to implement, because it requires a long-term commitment to selling your products and services at a
cheap price. The challenge, however, is that you also have to produce these products and services at a low cost, otherwise, you lose your profit margin. Large
businesses that can make their products cheaply and sell them at a discount while still generating a profit, can drive competitors out of the market by
consistently offering the lowest prices.

Differentiation Strategy

Identifying an attribute or characteristic that makes your product or service unique is the driving factor in a differentiation strategy. For example, a company that
produces dental drills that make no sound could market itself to dentists as a silent drill that helps reduce the fear that patients have when they hear that drill
sound. If your business is able to differentiate its products or services in the minds of buyers, it can reap the rewards of higher sales volume based on the
perceived value, which your business offers, but your competitors do not.

Cost Focus Strategy

A cost focus strategy is similar to a cost leadership strategy, but the major difference is that in a cost focus strategy your business targets a very specific
segment of the market and offers that market the lowest prices available. For example, a company that sells energy drinks could target a city that has a high
percentage of people that compete in extreme sports and sell those drinks at a much lower price than its competitors could. The fact that this segment of the
market is much more likely to buy energy drinks is a major factor in the company deciding that lowering its prices would be advantageous.

Differentiation Focus Strategy

Like the cost focus strategy, the differentiation focus strategy targets a very specific segment of a market, but rather than offering the lowest prices to the buyers
in that market, a business offers something unique that competitors aren’t offering. For example, a boutique that sells clothes for people that are four feet tall or
shorter would be pursuing a differentiation focus strategy by catering to a very narrow and unique segment of the clothing market. Instead of spending money
on making clothes for everyone, the boutique would be able to focus on designing clothes that are only suited for very short buyers.

https://www.bing.com/search?
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5. Module 5 Lesson 2- GLOBALIZATION DRIVERS AND FUNCTIONS OF GLOBAL

CORPORATIONS

GLOBALIZATION DRIVERS

Market Drivers

One aspect of globalization is the steady convergence of customer needs. As customers in different parts of the world increasingly demand similar products and
services, opportunities for scale arise through the marketing of more or less standardized offerings. How common needs, tastes, and preferences will vary
greatly by product and depend on such factors as the importance of cultural variables, disposable incomes, and the degree of homogeneity of the conditions in
which the product is consumed or used. This applies to consumer as well as industrial products and services. Coca-Cola offers similar but not identical products
around the world. McDonald’s, while adapting to local tastes and preferences, has standardized many elements of its operations. Software, oil products, and
accounting services increasingly look alike no matter where they are purchased. The key to exploiting such opportunities for scale lies in understanding which
elements of the product or service can be standardized without sacrificing responsiveness to local preferences and conditions.

Global customers have emerged as needs continue to converge. Large corporations such as DuPont, Boeing, or GE demand the same level of quality in the
products and services they buy no matter where in the world they are procured. In many industries, global distribution channels are emerging to satisfy an
increasingly global customer base, further causing a convergence of needs. Finally, as consumption patterns become more homogeneous, global branding and
marketing will become increasingly important to global success.

Cost Globalization Drivers

The globalization of customer needs and the opportunities for scale and standardization it brings will fundamentally alter the economics of many industries.
Economies of scale and scope, experience effects, and exploiting differences in factor costs for product development, manufacturing, and sourcing in different
parts of the world will assume a greater importance as determinants of global strategy. At bottom is a simple fact: a single market will no longer be large enough
to support a competitive strategy on a global scale in many industries.

Global scale and scope economics are already having far-reaching effects. On the one hand, the more the new economies of scale and scope shape the
strategies of incumbents in global industries, the harder it will be for new entrants to develop an effective competitive threat. Thus, barriers to entry in such
industries will get higher. At the same time, the rivalry within such industries is likely to increase, reflecting the broadening scope of competition among
interdependent national and regional markets and the fact that true differentiation in such a competitive environment may be harder to achieve.

Competitive Drivers
Industry characteristics—such as the degree to which total industry sales are made up by export or import volume, the diversity of competitors in terms of their
national origin, the extent to which major players have globalized their operations and created an interdependence between their competitive strategies in
different parts of the world—also affect the globalization potential of an industry. High levels of trade, competitive diversity, and interdependence increase the
potential for industry globalization. Industry evolution plays a role, too. As the underlying characteristics of the industry change, competitors will respond to
enhance and preserve their competitive advantage. Sometimes, this causes industry globalization to accelerate. At other times, as in the case of the worldwide
major appliance industry, the globalization process may be reversed.

Government Drivers
Government globalization drivers—such as the presence or absence of favorable trade policies, technical standards, policies and regulations, and government
operated or subsidized competitors or customers—affect all other elements of a global strategy and are therefore important in shaping the global competitive
environment in an industry. In the past, multinationals almost exclusively relied on governments to negotiate the rules of global competition. Today, however, this
is changing. As the politics and economics of global competition become more closely intertwined, multinational companies are beginning to pay greater
attention to the so-called nonmarket dimensions of their global strategies aimed at shaping the global competitive environment to their advantage (see the
following section). This broadening of the scope of global strategy reflects a subtle but real change in the balance of power between national governments and
multinational corporations and is likely to have important consequences for how differences in policies and regulations affecting global competitiveness will be
settled in the years to come.

https://2012books.lardbucket.org/books/global-strategy/s04-04-industry-globalization-
drivers.html#:~:text=2.4%20Industry%20Globalization%20Drivers%201%20Market%20Drivers.%20One,3%20Competitive%20Drivers.%20...%204%20Government%20D

FUNCTIONS OF GLOBAL CORPORATIONS

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Financing in the Internal Capital Market

Institutional differences across a company’s operations allow plenty of scope for creating value through wise financing decisions. Because interest is typically
deductible, a CFO can significantly reduce a group’s overall tax bill by borrowing disproportionately in countries with high tax rates and lending the excess cash
to operations in countries with lower rates. CFOs can also exploit tax differences by carefully timing and sizing the flows of profits from subsidiaries to the
parent. However, tax is not the only relevant variable: Disparities in creditors’ rights around the world result in differences in borrowing costs. As a consequence,
many global firms borrow in certain foreign jurisdictions or at home and then lend to their subsidiaries.

Multinational firms can also exploit their internal capital markets in order to gain a competitive advantage in countries when financing for local firms becomes
very expensive. When the Far East experienced a currency crisis in the 1990s, for example, and companies in the region were struggling to raise capital, a
number of U.S. and European multinationals decided to increase financing to their local subsidiaries. This move allowed them to win both market share and
political capital with local governments, who interpreted the increased financing as a gesture of solidarity.

But the global CFO needs to be aware of the downside of getting strategic about financing in these ways. Saddling the managers of subsidiaries with debt can
cloud their profit performance, affecting how they are perceived within the larger organization and thereby limiting their professional opportunities. Similar
considerations should temper companies’ policies about the repatriation of profits. For U.S. companies, tax incentives dictate lumpy and irregular profit transfers
to the parent. But many firms choose to maintain smooth flows of profits from subsidiaries to the parent because the requirement to disgorge cash makes it
harder for managers to inflate their performance through fancy accounting. Finally, letting managers rely too much on easy financing from home saps their
autonomy and spirit of enterprise, which is why many firms require subsidiaries to borrow locally, often at disadvantageous rates.

Managing Risk globally

The existence of an internal capital market also broadens a firm’s risk-management options. For example, instead of managing all currency exposures through
the financial market, global firms can offset natural currency exposures through their worldwide operations. Let’s say a European subsidiary purchases local
components and sells a finished product to the Japanese market. Such operations create a long position in the yen or a short position in the euro. That is, those
operations will become stronger if the yen appreciates and weaker if the euro appreciates. This exposure could be managed, in part, by offsetting exposures
elsewhere in the group or by having the parent borrow in yen so that movements in the yen asset would be cancelled by movements in the yen liability.

Given this potential for minimizing risk, it might seem perverse that many multinationals let local subsidiaries and regions manage their risks separately. General
Motors is a case in point. Even though its treasury function is widely regarded as one of the strongest pools of talent within the company—and one of the best
corporate treasury functions worldwide—GM’s hedging policy requires each geographic region to hedge its exposures independently, thereby vitiating the
benefits of a strong, centralized treasury. Why duplicate so many hedging decisions? Because forcing a business’s hedging decisions to correspond to its
geographic footprint gives GM more-accurate measurements of the performance of the individual business unit and of the managers running it.

In a related vein, companies often limit—in arbitrary and puzzling ways—their considerable expertise in managing currency exposures. Many firms require finance
managers to follow “passive” policies, which they apply in a rote manner. For example, GM actively measures various exposures but then requires 50% of them to
be hedged with a prescribed ratio of futures and options. Firms adhere to these passive strategies because they limit the degree to which financial managers can
undertake positions for accounting or speculative reasons. So although functioning in the global environment calls for considerable financial expertise,
organizational strategy requires that expertise to be constrained so that financial incentives don’t overwhelm operating ones.

Global Capital Budgeting

In addition to exploiting the de facto internal financial market to mediate between their operations and the external financial markets, CFOs can add a lot of value
by getting smarter about valuing investment opportunities. When energy giant AES began to develop global operations, in the early 1990s, managers applied the
same hurdle rate to dividends from around the world that they used for domestic power projects, despite the different business and country risks they faced.
That approach made risky international investments look a lot more attractive than they really were.

The company’s subsequent attempts to improve its capital-investment decision process illustrate the organizational challenges CFOs face as they move from
domestic to foreign markets. In order to improve the quality of valuations, AES required managers to incorporate sovereign spreads into their discount rates.
Sovereign spreads measure the difference between the rates at which two countries can borrow in the same currency, and they are widely tacked on to discount
rates in order to adjust for country risk. Although this method created the semblance of tremendous precision, it came with some curious incentives, particularly
for managers charged with securing deals in emerging markets. Knowing that their projects would face very high discount rates, managers forecasted inflated
cash flows to compensate. For manager’s keen to complete transactions, as some at AES were, excessive penalties and precision can result in a less robust
process. In extreme cases, the gaming that takes place in a formalized process can undermine the company’s strategy. Consider Asahi Glass, one of the first
Japanese corporations to rigorously implement Economic Value Added systems worldwide in order to increase capital efficiency. Asahi set country-specific
discount rates based on typical risk measures, including sovereign spreads. The result, however, was that managers overinvested in Japan (because of very low
discount rates) and underinvested in emerging markets (because of very high ones). Once again, adopting a narrowly financial approach led to an outcome
directly at odds with the company’s strategic objectives. In response, Asahi made a series of adjustments to reconcile its initial, purely financial approach to
discount rates with its broader organizational goals.

The moral of these stories is that formal methods of valuation and capital budgeting—which work quite well in a domestic context, where the variables are well
understood—must be refined as companies globalize. Firms need to make sure that their finance professionals actively discuss potential risks with the country
managers who best understand them.

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https://hbr.org/2008/07/the-finance-function-in-a-global-corporation

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6. Module 5 Lesson 3- MAJOR CONCERS OF GLOBAL MANAGERS AND

CHALLENGES OF GLOBALIZATION

MAJOR CONCERS OF GLOBAL MANAGERS

There are three primary issues that concern global managers: procurement, production, and delivery. Procurement, involves decisions about the source,
timing, and means of obtaining needed inputs. Production involves the location, type and coordination of facilities, as well as total quality management. Delivery
involves getting the finished product to the customer and logistical networks as they apply to the entire operational system.

Procurement Issues

Managers have to select the best source for their inputs, decide on the most effective means of obtaining them, and determine the right timing in
acquiring them. The global manager needs to adjust this objective in the light of the constraints of different political and cultural environment. We consider two
major issues that managers face relative to obtaining inputs and supplies of these inputs (Mendenhall et.al., 2021.)

Timing Issues

Timing of shipment and receipt of supplies are also important considerations. This essentially an inventory and stock issue, companies can choose to
maintain varying quantities of needed inputs. The trade-offs are among shipping costs, carrying costs, and the risks of being out of stock of needed items. These
are issues faced by all companies.

Production Issues

Production involves the location, type and coordination of facilities, as well as total quality management and coordinating facilities.

CHALLENGES OF GLOBALIZATION

Globalization poses four major challenges that will have to be addressed by governments, civil society, and other policy actors.

One is to ensure that the benefits of globalization extend to all countries. That will certainly not happen automatically.
The second is to deal with the fear that globalization leads to instability, which is particularly marked in the developing world.
The third challenge is to address the very real fear in the industrial world that increased global competition will lead inexorably to a race to the bottom in
wages, labor rights, employment practices, and the environment.
And finally, globalization and all of the complicated problems related to it must not be used as excuses to avoid searching for new ways to cooperate in the
overall interest of countries and people.

https://www.carnegiecouncil.org/publications/archive/dialogue/1_11/relevance_social/588

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7. MODULE 5 ASSIGNMENT 1

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Module 6- GLOBAL POLITICS, GOVERNANCE, AND THE

GLOBALIZATION IN THE ASIA-PACIFIC AND SOUTH ASIA

Site: New Era University Virtual Learning Environment Printed by: Maxynne Rhae S. Diolola
Course: GECTCW-18/GECTCW-24 - The Contemporary World Date: Saturday, 12 October 2024, 10:27 PM
Module 6- GLOBAL POLITICS, GOVERNANCE, AND THE
Book:
GLOBALIZATION IN THE ASIA-PACIFIC AND SOUTH ASIA

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Table of contents

1. Introduction/Overview

2. Learning Outcomes

3. Content

4. Lesson 1 THE GLOBAL NORTH-SOUTH DIVIDE

5. Lesson 2- GLOBAL INEQUALITY AND THE FUTURE

6. Lesson 3- THE ASIA-PACIFIC REGION

7. Lesson 4- THE REGION AS MORE OF AN AUTONOMOUS AGENT SERVING AS AN ENGINE FOR GLOBALIZATION

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1. Introduction/Overview

Introduction:
GLOBAL interconnectedness accordingly is woven into the fabric of everyday life as it is visible to those observant. There are Starbucks
branches in Melbourne, Manila, New York, and New Delhi. These branches have similar structure, menus, and perhaps ambiance. This
sameness represents the cultural homogenization that is being argued and criticized by those individuals associated with globalization. This
module will introduce the students into the present political set-up and governance of both the Global South and Global North. This refers to the
growth of the worldwide political system, both in size and complexity. That system includes national governments, their governmental and
intergovernmental organization as well as government-independent elements of global civil society such as international non-governmental
organizations and social movement organizations.

One of the key aspects of the political globalization is the declining importance of the nation-state and the rise of other actors on the political
scene. The creation and existence of global corporations and the United Nations are classic examples of political globalization.

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2. Learning Outcomes

LEARNING OUTCOMES:

At the end of the Module, student will be able to:

1. Discuss the distinction of the global south and the global north;

2. Explain the success and failures of the global divides;

3. Differentiate regionalization from globalization; and

4. Research on the factors leading to a greater integration of the Asian region.

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3. Content

THE GLOBAL SOUTH

GLOBAL INEQUALITY

AND THE FUTURE

REASONS ON ANALYZING STATES AND INTERSTATES INEQUALITIES

COLONIALISM: HOW GLOBAL SOUTH RESPONDED

THE ASIA-PACIFIC REGION

THE ANTI-GLOBAL IMPULSE: REGIONAL ALTERNATIVES TO GLOBALIZATION

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4. Lesson 1 THE GLOBAL NORTH-SOUTH DIVIDE

The environment where these global corporations are located will tell the difference of how globalization affects people by geography.
In Manila and New Delhi, upon leaving the café, you will see children begging on the streets, sidewalk vendors selling street foods, bag
snatchers (common sight in Metro Manila) and other vagabonds looking for their victims.

Walk a little distance, take a ride, and you will see the kind of transportation available in the city of Metro Manila and India as well as some
Southeast Asian countries. The façade of newly built condominiums, big shopping malls, corporate buildings will seemingly attract you at first,
but at the background are shantytowns where houses are built from discard plywood and galvanized iron sheets. Of course, they have poor
sanitation, inadequate comfort rooms, the creeks are filled with garbage and overflowing with foul odor emanating in the entire neighborhood.
Children in their dirty clothes are happily running, playing unmindful of what is happening around. Some of them are child laborers, and their
parents either unemployed or if lucky are employed in the informal sector as construction worker, casual janitor, cleaners and yes, prostitutes.
Their security and safety is also under question. During the months of March to May, most of the fire that struck Metro Manila usually occur
from those shanties and squatter areas. This is because of faulty wiring, overloading due to the use of jumper and unattended candle lights.
Sometimes they are lured by crook politicians during election campaigns promising their security but that remain as a promise because big
time businessman will soon claim the entire area and these poor fellows have to fight the law enforcers against what they call “illegal
dismantling” of their shanties. They seek sometimes the assistance of the NGOs, the Commission on Human Rights (CHR) but to no avail. They
are always under threat of being evicted or having their shanties demolished to make way for a large commercial development, which will
service the city’s middle class.

These scenarios of people living in shanty like those in New Delhi, India and Metro Manila is very unlikely in New York. There are poor
people in Harlem as well as in other places in the United States, but they do not have many child laborers. Hence, there is something more
glaring about poverty in the global south, and the north/south divide relative to globalization. This divide tells us that globalization is indeed had
created inequality.

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5. Lesson 2- GLOBAL INEQUALITY AND THE FUTURE

All societies past and present are characterized by differentiation, a process in which people are set apart for differential treatment by
virtue of their statuses, roles, and other social characteristics. The process of social differentiation does not require that people evaluate
certain roles and activities as being more important than others. Nevertheless, social differentiation sets the stage for social inequality, which
is a condition in which people have unequal access to wealth, power, and prestige. This description fits most of the citizens in the global south.

The nearly 200 nations in the world are part of a global social hierarchy in which some have much greater wealth, power and prestige
than others. Today, the welfare and life chances of billions of people depend not only on where they fit in their nation’s class system, but also
where their nation ranks in the global system of stratification.

Based on factors such as Gross Domestic Product (GDP) per capita, import-export ratios, quality of life, and the relative strength of
military and state institutions, the nations of the world can be divided into three major strata: the core, the semi-periphery, and the periphery. As
with class divisions, boundaries among nation-states in each of the strata are “semi-

permeable”- they can be crossed, but with difficulty (Beeghly, 1989). (“The Structure of Social Stratification. Needham Heights: Mass. Allyn &
Bacon.

Nations that comprise the core are similar to the upper classes and that they receive disproportionate share of the world’s wealth and
surplus production. The core nations are concentrated in the global north namely United States, Germany, France, Australia, United Kingdom,
the Scandinavia, and all others with advance industrial or post industrial economies. While Singapore, South Korea, and Japan are
geographically located in the global south, but they are part of the core because of their economic status and GNP per capita. The core nations
are also the primary base of the world’s banks and investment firms and of 300 or so giant transnational corporations whose combined assets
comprise “roughly a quarter of the productive assets in the world “(Barnet and Cavanaugh, 1994). (American demographics. Belmont, California)

The semi-periphery nations such as Saudi Arabia, Brazil, and Taiwan, are comparable to the middle class. They are moving towards
industrialization and a diversified economy, and their moderately strong governments give them a share of the surplus and some leverage in
their dealings with the core nations (Chirot, 1997). (State of the World. New York: Random House)

The periphery nations, including Haiti, Bangladesh, and Ethiopia resemble the lower and working classes. They are poor and powerless
and derive minimal benefits from their participation in the world economy. Today, Transnational corporations such as Exxon, Siemens, and
Toyota are the key players in the global economy. They provide poor countries with scarce capital, new technology, management skills, and
products that are essential for rapid growth (Sowell, 2003). Although transnationals do reinvest some profits locally, a large share of the profits
goes to the core nations. At the same time, land that could have been used to meet people’s subsistence need is diverted from domestic use to
the production of agricultural exports. Because of intensive advertisements that are invested by the core’s companies such as baby formula,
cigarettes, and softdrinks, new and costlier needs are created that only core nations can fulfill (Kerbo, 2001). (World Economy. Baltimore: John
Hopkins University Press.)

Table 6.1 lists the gross domestic product per capita income (2017 IMF/World Bank) data of representative nations in the core,

Table 6.1 Income and wealth: The World Perspective. 2017

Nation GNP (In Per capita

Billions of Income (in
Dollars Thousand
Dollars

Core Category

Australia 59,655 53,799.9

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Canada 48,466 45,032.1

France 44,934 38,476.7

Germany 50,842 44,469.9

Japan 40,849 38,428.1

Sweden 51,264 53,442

United 44,177 39,720.4

Kingdom

United States 62,152 59,531.7

Semi-Periphery Category

Argentina 20,787 14,402

Brazil 15,500 9,821.4

Colombia 14,552 6,301.6

El Salvador 8,900 3,889.3

Iran 20,000 5,415.2

Iraq 17,000 5,165.7

Mexico 18,149 8,902.8

Periphery Category

Afghanistan 1,900 585.9

Bangladesh 4,200 1,516.5

Chad 2,400 699.9

Ethiopia 2,100 709

India 7,200 1,939.6

Nicaragua 5,800 2,221.8

Nigeria 5,900 1,968.6

Sudan 4,600 2,898.5

Source: IMF/World Bank

the semi-periphery, and the periphery. The data shows that there is an enormous disparity between nations at the top of the global stratification
system and nations such as Ethiopia and Chad at the bottom. The global divides of North and South is literally illustrated by the income and
wealth.

Such disparities in wealth and income have dramatic effects on people’s life chances in both core and periphery nations. Many people
I Bangladesh, Ethiopia, and other periphery nations must try to subsist, educate their children, and remain healthy on annual income of less
than 3,000, under the added burden of extreme environmental and political instability.

REASONS ON ANALYZING STATES AND INTERSTATES INEQUALITIES

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1. The decolonization process produced states, now recognized as sovereign under the system of international law promoted by the United
Nations. The likelihood of being poor is higher for people who live in states now considered associated with the global south in regions
like Asia, Africa, and the Middle East. Most of these countries were colonized and they are inadequately represented in global
organizations and the various international banks.
2. Solutions to problems produced by globalization are largely forwarded and articulated on a state level. The state remains the main
mechanism for social transfers, making it the strongest vehicle for social redistribution. Bello (2006) (2006. “The Multiple Crises of Global
Capitalism” In Deglobalization: Ideas for a New World Economy, pp. 1-31. Quezon City: Ateneo de Manila University Press) contends that
development in the global south must begin by “drawing most of a country’s financial resources for development from within rather than
becoming dependent on foreign investments and foreign financial markets”. Responding to issues such as global warming requires
global approaches. States are empowered to regulate firms working within their borders. The global environmental crisis is a reflection of
interstate inequality.
3. Even phenomena largely considered transnational are the results of state policies. Acts of deterrioialization such as labor migration
need to be placed in the context of the state. The case of Filipino OFWs is a good example. The remittances sent by the workers’ abroad
boost the domestic economy and the state economic growth is highly reliant on the remittance which is worth billions of dollars annually.
In this sense, transnational global spheres are already pre-figured by the policies of state authorities.

Finally, the state will continue to be an important unit of analysis despite the deterritorializing effects of globalization. This is very evident in the
context of the global south because an economically activist state is a necessary response to forces such as international financial institutions,
and foreign state power-none of which the citizens in the global south can easily influence (Claudio & Abinales, 2018) (The Contemporary
World. C&E Publishing, Quezon City Philippines).

COLONIALISM: HOW GLOBAL SOUTH RESPONDED

How have the peoples of the global south today responded to colonialism and other linear visions of modernity? The following are some of
the variations (in different degrees).

Solidarity. The notion of solidarity among colonized states was present from the beginning of anti-colonialism. Such solidarities would
serve as the foundation for contemporary conceptions of the global south, Anderson (2007) (Under Three Flags: Anarchism and the anti-colonial
imagination. London: Verso) has shown that resistance against Spanish colonialism in Latin America and the Philippines benefitted from the
increased interaction of political dissidents amidst an early phase of globalization in the 19th century, a globalization that allowed for the
spreading of anarchist and anti-colonial ideas.

Socialist Internationalism. The Socialist International (the union of socialist parties, which is now called the social democrats) paved the
way for theories that examined the world economic system in the light of exploitive interactions between core and peripheral economies.
According to Lenin, he mainstreamed that many activists and scholars would use to discuss the Third World underdevelopment in the 20th
century. Lenin through Comintern organized in 1920 the Congress of the Peoples of the East in Caucasian town of Baku to forge ties with
nationalist elites and radical peasants in their fight against colonialism (Priest land 2009). (The Red Flag: Communism and the making of the
modern world. London and New York: Allen Lane/Penguin Books). Nevertheless, it paved the way for sustained alliances between Western
Communists and anti-colonial nationalist.

Decolonization. The end of the Second World War was the high point of decolonization. The creation of the United Nations in 1945 paved
the way for granting independence of over 80 ex colonies countries (United Nation 2011). International Law ceased to formally divide the world
into civilized and uncivilized nations. The enshrinement of the principles of self-determination, postcolonial nationalisms could justify their
causes within the range of international law.

The Emergence of the Third World Countries. It consisted of non-aligned countries, charting a middle way between the first and the second
worlds. The founding moment for this non-aligned movement was the Asia-African conference held in the Bandung in Indonesia (also known as
Bandung Conference) in 1955. This conference brought together delegates from 29 Asian and African countries to forge economic and cultural
cooperation amidst fears of newly emergent forms of colonialism. Though the delegates were politically diverse, their common aims were
articulated early on. In Sukarno’s view, what united the countries of the Third World was not for a common identity or culture, but it began as
common resistance to new forms of colonialism. The following were some of the issues tackled:

Delegates from Pakistan, Thailand, Lebanon, Ceylon (now Sri Lanka) and the Philippines objected to the repressive policies of the USSR
against Eastern European states and China’s against Indochina (now Vietnam) and Taiwan (Espiritu, 2006) (“To carry water on both
shoulders”: Carlos P. Romulo, An American empire, and the meanings of Bandung. Radical History Review (95): 173, 90.

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Delegates became a generalized condemnation of the aggression of powerful states directed at weaker ones. Concomitant to this was a
discussion of what is meant for Third World countries to be free.
The initial configuration of the conference became a vehicle for the main streaming of human rights.

Today, the old language of Third Worldism is no longer tenable. On a narrow empirical level, a tripartite (First World, Second World and Third
World) would no longer exist. The fall of the Berlin Wall dividing Germany ended the Cold War and paved the way for the withering of the
Second World. Even remnants of the Communist bloc like Fidel Castro’s Cuba no longer occupy positions of prominence in struggles against
neo-colonialism. More importantly, the involvement of the Third World countries in the developmental practices of the First World has
weakened the coherence of the Third Worldist attempts to sketch alternatives to Western capitalism, (Berger, 2004) (After The third world?
History, destiny and the fate of third worldism. The World Quarterly 25 (1): 9-13.) argues that by the late 2070’s successful capitalist
development in East Asia had displaced Third Worldist idea that the hierarchical character of the world economy was holding back of the Third
World. The same took place in Latin American states, through their oligarchic states, become complicit in neo liberalism (Cardoso & Falleto,
1979). (Dependency and development in Latin America. Berkeley: Los Angeles: University of California Press.)

The Emergence of Conservative Anti-Western Nationalism and Regionalism. Country like Malaysia reveal how criticisms of neo-colonialism
may turn reactionary (Berger, 2004). For Dirlik (2004), this hints at the fact that Third Worldism is implicated in a greater project of global
modernism. (Berger, 2004) explicates the idea below:

I take the view that the notion of a Third World, even in a limited or reinvented form, intellectually and conceptually bankrupt, while politically
Third Worldism has already lost any relevance or legitimacy it once had. Challenging neoliberal globalization and post-cold war capitalism
means moving beyond territorial politics of nation-states- a politics to which the Third Worldism is inextricably connected.

Berger (2004) then argues that even a reconceptualization of the third World as a global south, if it remains embedded in “territorial politics”,
will suffer the same political pitfalls.

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6. Lesson 3- THE ASIA-PACIFIC REGION

In addition to difference in language and culture, the variation among states and peoples in this region is enormous. Some of the World’s most
economically developed states are included in this region such as Japan, South Korea, Singapore, and Taiwan. On the contrary, it includes the
highly impoverished countries such as Cambodia, Laos, and Nepal. It includes the largest and most populous states on the globe such as
China and India with over a billion people each and some of the world’s smallest such as Maldives and Bhutan. The countries in this region also
vary widely according to geography, political systems, historical experience, and broad demographic characteristics. The region makes up
nearly a third of the world’s land mass and two-thirds of the global population. As of this writing, the combined economies of the region now
generate the largest share of the global GDP at 35%, compared with Europe (28%) and North America (23%) (Asian Development Bank, 2012).
The 2001 ADB reported that it also accounts for just over a third of the total world exports of merchandise goods up from a quarter.

However, despite the economic growth, there are still millions of people affected by poverty, hunger, HIV/AIDS, gender equality and
other socio-economic problems in the region.

Why global Powers are focused on Asia-Pacific and South Asia

1. Asia-Pacific and South Asia had emerged over the past decade as a new political force in the world. This due to the robust economic
growth in China and India and the strategic implications this brings to regional and global players.
2. Japan still remains a relevant through declining force in the region and the world, and other countries including the Koreas, Indonesia,
Vietnam, and Pakistan all have economic and strategic relevance in today’s global system. The United States has implemented a foreign
policy shift dubbed as the “Pacific Pivot” committing more resources and attention to the region. Former Secretary of the State Hillary
Clinton called this shift from the “Atlantic Century” to the “Pacific Century”. She notes:

"The Asia-Pacific has become a key driver of politics. Stretching from the Indian subcontinent to the western shores of the Americas, the region
spans two oceans - the Pacific and the Indian- that are increasingly linked by shipping and strategy. It boosts almost half of the world’s population.
It includes many of the key engines of the global economy, as well as the largest emitters of greenhouse gases. It is home to several of our key
allies and important emerging powers like China, India, and Indonesia" (Clinton, 2011).

Effects of Globalization in the Region

The External Phenomenon. From this perspective, globalization can be understood as a process that transforms the Asia-Pacific and
South Asia. On the one hand, it can be seen as a force for good signs for bringing economic development, political progress, and social and
cultural diversity to the region. Others see the darker effects of globalization including its role in economic underdevelopment and the uprooting
of local tradition and culture.

The following are the manifestations and assertions of externalist view:

* Historical narratives account of the Western “arrival” to the Asia-Pacific and South Asia. According to this view, the technologically and
industrially more advanced Western powers found their way to the region and alternatively prodded and muscled their way to political and
economic dominance. Western superiority at the time existed for a variety of reasons, ranging from environmental and ecological advantage to
other social, political, and/or cultural characteristics (Diamond, 1998). (Guns, Gems, and Steel. The fates of human societies. New York: WW
Norton & Co.)

* The “first globalization” brought by the colonialism from 1500s brought enormous, often devastating changes such as the deep implications
for domestic political structures in many local indigenous polities. A good example of this was the Portuguese invasion of Melaka in 1511 and
the subsequent fall of the sultanate, which shifted political and economic dynamics in Melaka and beyond. Another is the arrival of Ferdinand
Magellan in the Visayan region of the Philippines in 1521 marking the beginning of extended Spanish colonial rule in over 400 years. The Dutch
followed in the 17th century and slowly strengthened their position in the Dutch East Indies. The British also consolidated their powers in South
Asia, Burma, and the Malay Peninsula while the French eventually took control of Indo-china into the late 19th century.

* By the 19th and 20th centuries, movements for nationalism and independence emerged in many parts of the world including the Asia-Pacific
and South Asia. These movements were also products of the increasingly globalized world. Scholars argue that the roots of national identity lie
in the rise of Western industrialization and capitalism. Anderson (2007) (Under three flags: Anarchism and the anti-colonial imagination. London:
Verso.) highlights the global experiences of nationalist leaders such as Jose Rizal who came to imagine himself as Filipino after being
influenced by life in Spain and elsewhere. He also highlights how was the idea of nationalism gained stream, it became modular and spread to
other part of the globe. (Anderson 199).

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* World War II marks another way in which the region comes to be at once integrated and influenced by external forces. The rise of Japan and
the outbreak of war in the Pacific theater after the bombing of Pearl Harbor marked the beginning of the end of Japan’s own imperial
domination in the region. After the war, the region became mired in the emerging politics of the Cold War. After WWII, concerns about political
instability, faltering economic reform, and the rise of the Communist China all pushed the United States and their occupation to stress Japan’s
economic growth and its incorporation into the world economy (Ikenberry, 2007) (Elements of social justice. New York: Cambridge University
Press).

*Economic globalization and liberalism brought no doubt broad regional effects as well. In developing countries such as Thailand, Indonesia
and Vietnam, there has been an increase in informal employment, such as self-employment, family workers, and informal enterprise that 18% of
its workers are underemployed while in Indonesia, nearly a quarter of all workers are either unemployed or involuntary underemployed (Lee,
Shangheaon, and Eyraud, 2008) (Power and privilege. New York: McGraw Hill). These workers do not have legal contracts and even in places
where they do, observers have raised serious concerns about working conditions and safety issues at factories that manufacture goods for
Western companies (Yardley, 2012) (The state and the life course in the United States. New York: Basic Books.)

*Politics too is contributory to globalization. Proponents often argue that liberal and democratic political values should be interpreted as
universal and not exclusively as Western. In the region, the past three decades have witnessed a substantial fall in authoritarian regime with a
corresponding rise in democratic regimes. This has been attributed to a number of factors, including rising middle classes, a more globally
connected world, and the end of the Cold War (Huntington, 1991). (New Socialist’ revolution. California: Wadsworth.) The fall of Suharto had
been in power for over 30 years. When the Asian Financial crisis brought the country’s economy to its knees, large scale protests, the flight of
capital, and the lack of international support led Suharto to step down in May 1998. The financial crisis showed how deeply integrated the
economy was in the global financial system. The demands made by the international financial institutions demonstrated the growing clout of
these global bodies (Robinson and Hadiz, 2006). (The reckoning. Cambridge: Mass.) Further, the absence of international support for Suharto,
who had been a Staunch anti-communist ally for decades, illustrated the lack of concern the United States and the West had for the communist
threat in Asia. In this way, the increasingly globalized world had come to weaken Suharto’s position and ultimately laid the foundation of his
ouster.

*finally, one of the most prevalent critiques of globalization has been its effects on “culture.” Critics argue that globalization is leading to
cultural homogenization and the destruction of cultural diversity. The most prominent idea that globalization is a form of cultural
Westernization is summed up in the term “McWorld” (Barber 2003). (The code of the streets. Cleveland: Ohio.) The number of McDonald’s
stores in Asia has grown dramatically over the last several decades. As of January 2018, it operates 36,000 stores in 101 countries.
Furthermore, many domestic fast food chains are also popping up throughout Asia to compete with Western brands, including Jollibee from
the Philippines, California Fried Chicken (CFC) in Indonesia, MOS Burger in Japan, Jumbo King in India and so on. There has also been a rapid
expansion of supermarkets in the region. The share of supermarkets in the processed/packaged food retail food market in 2001 was 33% in
Southeast Asia and 63% in East Asia (Pingali, 2007). (“What about the overclass? Public Interest (Fall) No. 145:38-43.

*While much of the McDonaldization thesis has revolved around food, it has also referred to changing tastes in areas such as music, clothing,
television, and film. In this light, McDonaldization might also be referred to as “MTV-ization” or “Hollywoodization.” The point here is that
Western and particularly American cultural trends have spread globally and increasingly marginalized the way in which local cultural practices
are expressed (Banks,1997).

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7. Lesson 4- THE REGION AS MORE OF AN AUTONOMOUS AGENT SERVING

AS AN ENGINE FOR GLOBALIZATION

This view shows important ways in which the region is also influencing and transforming the nature of globalization itself. Historically, many
scholars now argue that the early history of Asia led the global economy only “falling behind” from the 18th century. ((Reid, 1988) notes that the
Europeans did not create the spice trade. The Thriving spice trade in the region and beyond what drew the European powers to the region.
Circumnavigating the globe was a means to find cheaper and faster ways to bring these goods back to Europe. Spices were already making
their way to various part of the globe, but the Europeans were interested in cutting out the middleman.

The following are some of the postulates and arguments:

Some argued that Asia, not the West, was the central global force in the early modern world economy. It was the site of the world’s most
important trade routes and in some places more technologically advanced than the West in key areas such as science and medicine.
China had a historically unprecedented maritime fleet in the early 15th century under Admiral Zeng Ho which travelled within the region
and as far as Africa (Levathes, 1997). The rise of Europe in the 18th century came only after the colonial powers extracted silver from the
colonies and pried their way into the Asian markets. In that perspective, the re-emergence of Asia today is seen as a restoration of its
traditional dominant position in the global economy (Frank,1998).
Colonization too has come under a new view recently as scholars have argued that colonies in the Asia-Pacific and South Asia and
elsewhere influenced the West as much as vice versa. (Stoler, 2006) argues that the colonies were often “laboratories of Modernity”
where “innovation in political form, and social imaginary, and in what defined the modern self, were not European exports but traveled as
often the other way around”. In the Philippines, colonial policing in the American colony ca be understood as a social experiment that
transform both the Philippine polity as well as the US national security state. Practices and technologies such as counter- insurgency,
surveillance, and torture were developed and perfected in the colonial Philippines before making their way to the core (McCoy and
Scarano, 2009). In the field of medicine and public health, American scientists and physicians in the Philippines brought back colonial
bureaucratic practices and identities to urban health departments in the United States in the early 20th century (Anderson, 2006).
In the post-colonial era, the assertion that the Asia-Pacific and South Asia are mere beneficiaries (or victims) of globalization is even less
tenable. The Japanese development after the end of WWII and the rise of the Cold War helped bring Japan into the global economy. What
this means is the extent to which Japanese development in the 1950s, 1960s, and 1970s actually shaped and in many ways globalized
key parts of the world economy. Japan as a resource poor nation-state embarked on a massive project to procure raw materials such as
coal and iron to unprecedented economies of scale, allowing them to gain a competitive edge in the global manufacturing market for
these materials but also globalized shipping and procurement patterns which influenced other sectors as well. Furthermore, as Japan’s
competitive advantage became visible, other countries modeled their practices on theirs, further deepening the globalized patterns of
procurement and trade blazed by the Japanese. Electronics such as AKAI, Toshiba, Technics, Pioneer, JVC, and Sony found their way into
the international markets.
China can be seen as pursuing similar pattern of development today. It is one of the world’s largest importers of basic raw materials such
as iron and has surpassed Japan, the United States, and Europe in steel production. The simple scale of China’s development is shaping
and furthering globalization. In terms of its low wage labor and supply chain management, China has also had an enormous impact on
the availability and consumption of goods around the globe (Nolan, 2004).
China at this point now surpassed the World Bank in lending to developing countries. The China Development Bank and the China Export
Import Bank signed loans of at least US$ 110 billion to other developing country governments and companies in 2009 and 2010,
surpassing the US$ 100.3 billion from mid-2008 to mid-2010 by the International Foreign institutions (Dyer, Anderlini and Sender, 2011).
The implications here are political as well as economic. Grants and loans made by states can often have economic and political strings
attached as the Japanese experience has shown (Islam, 1991). (“The politics of mass society. New York: Free Press.)
India, while varying considerably with China in terms of political and economic systems, has opened up and emphasized an export-
oriented strategy. Textiles and other low wage sectors have been a key part of the economy, but high value exports such as software
development have also been highly successful. It is also playing a key role in global service provision (call center) as trends in
outsourcing and off-shoring increase (Dossani & Kenney, 2007). (“Hinduism in India. Chicago: John Knox Press.)
India and China, among others in the region such as Indonesia, the Philippines and Sri Lanka, have also become a major source of
international migrant labor, which is also one of the fundamental characteristics of the era of globalization. This includes the migration of
highly skilled labor into the high tech industry based in Silicon Valley, which includes disproportionate number of immigrants from India
and China. Of equal prominence is the flow of domestic workers to other places in the region, or to the Middle East, Europe, and the
United States. Much of this migration has received international attention because it is often undocumented and working conditions can
be poor, even deadly. Women constitute a large majority of many countries’ migrant pool including those from Indonesia (79%), the
Philippines (71 %), and Sri Lanka (66%) (Kee, Yoshimatu and Osaki, 2010).
Remittances from migrants have also become a core source of income for many of the region’s economies. In the Philippines,
remittances are now equal to 11 percent of the entire economy (The Economist, 2010). In 2007 and up to this date, India, China, and the

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Philippines were three of the top four recipient states of migrant remittances totaling US$ 70 billion (The other country was Mexico) (Kee,
Yoshimatu and Osaki, 2010). (“Losing ground: American social policy. New York: Basic Books.) In other words, the region is both the
source and recipient of the influences of the massive globalization of migration.
The rise of regional trade arrangements is another broad trend in the region. This regionalism can be interpreted either as a kind of
bulwark to globalization or as compatible and even pushing forward the process of global economic integration. Proponents view that
regionalism can promote learning, assuage domestic audiences to the benefits of free trade, and form the institutional framework to
scale up from regional cooperation to global cooperation (Lee and Park, 2005). (“Mother India. New York: Harcourt, Brace.) Thus,
regionalism can act as a springboard for globalization.
Open regionalism is embodied by Asia-Pacific Economic Cooperation or APEC. Formed in 1989, it includes 21 member economies along
the Pacific Rim including East Asian and Southeast Asian states but also Russia, Peru, Chile, the United States and Canada. APEC has
faced significant challenges in the wake of 1997 Asian Financial Crisis and the more recent global economic crisis. However, it continues
to push for a vision of global cooperation that is consistent with and advances globalization.
Finally, the broad area of culture and globalization in the region is to consider. ? The region is the source of a wide variety of cultural
phenomena that has also spread outward to the West and to the rest of the world. “Hello Kitty” created in Japan has become a massive
global success. Anime and other entertainment products from Japan has become a regional and global phenomenon including Pokémon,
Mario Brothers, Astroboy and Power Rangers, among others. This is to be understood as the spread of kawaii or cute culture, or what have
some called Pink Globalization (Yano, 2009). Martial Arts movies from Hong Kong have penetrated the world market. The rise of Korean
Pop or K-Wave has been a regional and global rise that includes the spread of Korean Dramas and music. The smash hit of Gangnam
Style by Korean Pop star PSY is an example. It became viral when it was released in 2012 in You Tube, topping music charts in over two
dozen countries including France, Germany, Poland, Mexico, Australia, Norway, and Lebanon and subsequently won Best Video at the
MTV Europe Music Awards.

Globalization has not been a one-way street. The region is generative of many aspects of the globalization process. This can be seen both
historically and more recently and across a broad variety of domains from the economy to political structures of culture.

THE ANTI-GLOBAL IMPULSE: REGIONAL ALTERNATIVES TO GLOBALIZATION

The final paradigm to understanding the relationship of Asia-Pacific and South Asia to globalization is as a regional alternative to globalization.
The arguments from this perspective see the region as a source of resistance to globalization or to global or to Western powers. The following
are the postulates and reasons:

The Japanese colonialism in the 1930’s and 1940’s. Japan’s colonization of the region and the building of a supposed Easy Asian Co-
Prosperity Sphere merely replicated imperial relationships in East and Southeast Asia wit new masters. However, it was also arguably a
push back against Western Imperialism. The propaganda used during that period centered on the idea of ‘Asia for Asiatics’ and the need
to ‘liberate’ the region from Europe. The “Sphere” referred initially to Japan, China, and Manchukuo. Upon the outbreak of WWII, Japan
also looked beyond Northeast Asia to South and Southeast Asia. The members of the Sphere included Japan, Manchukuo, Mangjiang,
(Outer Mongolia), The People’s Republic of China, State of Burma, the Republic of the Philippines, Empire of Vietnam, Kingdom of
Kampuchea, Kingdom of Laos, Azad Hind, Kingdom of Thailand (Beasley, 2000). (“These mean streets. New York. Signet) The greater
East Asia Conference held in November 1943 headed by Japan’s General Tojo declared that Asia had a “Spiritual Essence” that opposed
the “Materialistic civilization of the West” (Beasley, 2000). On the contrary, the failure of the Co-Prosperity Sphere was a result not only of
Japan’s lost in WWII, but also the overt racism of Japan itself towards its supposed co-members. It soon became clear that the Sphere
was for Japanese interests only often at the expense of the interests of the fellow members. Despite of its failure, the notion of an Asian
region that serves as a kind of opposition to globalization and Western imperialism manifests itself in different ways at present.
The proponents of Asian values such as then-Prince Minister Mohamad Mahathir of Malaysia argued that Asia has culturally distinct
characteristics that make it different from Western liberal democracies. The Asian way is to reach consensus on national goals within the
democratic framework, to take the middle path, the Confucian Chung Yung, or the Islamic, awsatuha; to exercise tolerance and sensitivity
towards others (Langlois, 2001). (“Success at a huge personal cost.” Wall Street Journal B1, B6. This is contrasts with Western values
where “every individual can do what he/she likes, free from any restraint by governments and individuals soon decide that they should
break every rule and code governing their society” (Langlois, 2001). Individual rights, political Liberalism, and democracy are Western
concepts, which are antithetical to Asian tradition. The leaders of these states justified their authoritarian regimes based on Asian values.
The lens of regional arrangements is another way the region serves as an alternative to globalization. The East Asia Economic Caucus
(EABC) is an example. The EABC which was floated as early as 1990, then more precisely an APEC without Western states, were ASIAN,
China, South Korea, and Japan. The United States strongly objected the idea while Japan saw the exclusion of the US as a threat to their
strategic partnership and effectively vetoed the idea. Today’s ASEAN plus 3 (APT), which includes China, South Korea, and Japan, is seen
as a successor to the EAEC, through it is not seen as the radical alternative of the earlier version because it is embedded in a slew of
other institutional arrangements.

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The emergence of regional terror networks, such as Jemaah Islamiyah or JI. The origins and the extensiveness of JI are murky, but its
main operations have been in Indonesia with apparent links in Malaysia, the Philippines and Thailand among others. JI is in famous for
the 2001 Bali bombings which took place in a night club in the resort town of Kuta and killed more than 200 people, mostly Australian and
other foreign nationals (ICG, 2000). The alleged goals of JI are territorial and also regionalist, namely to create an Islamic state of
Indonesia followed by a Pan-Islamic caliphate incorporating Malaysia, Singapore, Brunei, and the southern Philippines. The notion of
regionalism here is narrower than Asia-Pacific and South Asia and ultimately, the vision of the caliphate is to expand from a regional to a
global structure. The point here is that JI articulated an alternative vision of political and social organization in the region, and one that
clashes directly with the paradigm of globalization (ICG, 2002).

The local movement within the region is the final way to think about the region as an alternative to globalization. The movements are not
exclusive to the Asia-Pacific and South Asia region, but they are characteristic of trends there vis-à-vis the process of globalization with respect
to the emphasis on dis- engagement from globalization. For example, the village of Santi Suk in Thailand created their own currency following
the Asian financial crisis that struck the region in Thailand (Hookway, 2009). The currency is called bia loosely translated as “merit” and
operates through a “central bank” located in the village. The currency can be used to purchase various commodities but cannot be used outside
of participating villages and cannot be exchanged for Thailand’s national currency, the baht.

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