GLOBAL ECONOMY Flashcards by Dorothy Grace Accad

Refers to the expansion and
intensification of social
relations and consciousness
across world time and world
space (Steger,2013).

Globalization

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Multidimensional phenomenon

Globalization

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But the economic dimension is
one of the major driving forces

Globalization

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A historical process

Economic Globalization

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Increasing integration of economies around the world through the movement of goods, services, and capital across borders.

Economic Globalization

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Transportation and Communication
Revolution

Economic Globalization

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Attributes the growing scale of cross-border trade commodities and services, flow of international capital, wide and rapid spread of technology
(Shangquan, 2000)

Economic Globalization

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A process making the world
economy an “organic system” by extending transnational economic processes and relations to more and more
countries and by deepening the economic interdependence among them (Szentes, 2003).

Economic Globalization

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Refers to the increasing integration of economies around the world, particularly
through the movement of goods, services, and capital across borders. INTERNATIONAL MONETARY FUND (IMF,2008)

Economic Globalization

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globalization began since Homo sapiens began from migrating from the African continent to
populate the rest of the world

Grills and Thompson

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considered the Silk Road (Asia, Europe, Africa)the best example for archaic globalization 5,000
years ago.

Frank and Grills

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considered the discovery of America by Christopher Columbus in 1492 and the discovery of the direct sea route to India by Vasco de Gama in 1498 as the two(2) greatest achievements
of human history

Adam Smith

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the discovery of America by

Christopher Columbus in 1492

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discovery of the direct sea route to India by

Vasco de Gama in 1498

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spread to Continental Europe
and North America

British Industrial Revolution

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economic nationalism and monopolized trade such as the British (1600) and the Dutch
(1602) East India Companies

17th – 19th century

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golden age of globalization
because of:
* Relative peace
* Free – trade
* Financial and economic stability

20th century transport revolution

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The globalization of trade of goods and services

Attributes of Economic Globalization

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The globalization of technology and communication

Attributes of Economic Globalization

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The globalization of production

Attributes of Economic Globalization

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The globalization of financial and capital markets

Attributes of Economic Globalization

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 Established in 1995
 Eases trade among countries
 “ensures that trade flows as smoothly, predictably, and
freely as possible”

World Trade Organization(WTO)

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World Trade Organization(WTO)
Emergence of China as a major supplier and exporter
of manufactured goods.
Increasing number of business process outsourcing
(BPO)companies in Philippines.

Globalization of Trade of Goods and Services

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Emphasizes that various transactions and interactivities that transpire instantly due to the internet and communication technology.

Globalization of Technology and
Communication

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It is best illustrated by the existence of multinational corporations (MNCs) and transnational corporations(TNCs).

Globalization of Production

Nation States Global Corporations International Financial Institutions

The Actors of economic globalization

states ceased as primary economic organization

hyperglobalists

state that the role of nation-states as manager of the national economy is being refined by globalization.

Boyer and Drache (1996)

claim that nation – states have lost an important element of economic sovereignty.

Neo - Liberals

“Buy Taiwan, hold Italy and sell France” He compared countries to individual stocks.

Thomas Friedman

The major players of global economy are the

transnational corporations or TNCs.

company that operates in multiple countries, with each of these operations being relatively independent.

Multinational companies (MNCs)

a company that operates across multiple countries, but unlike an MNC, it does not have a single strong headquarters that controls its global operations. Instead, It have a more decentralized management structure, with decision-making powers distributed across various regions.

Transnational companies(TNCs)

constantly evolving as a result of outsourcing activity.

Transnational companies(TNCs)

We live in an ___ of outsourcing

age

Firms are subcontracting an expanding set of activities. Some have become ____ manufacturers, owning designs for so many products but making almost nothing themselves.

virtual

An international monetary system that established rules for commercial and financial relations among the major industrial states after World War II.

Bretton Woods System

established in 1994 at New Hampshire, USA, where the United Nations Monetary and Financial Conference was held in July 1944.

Bretton Woods Institutions

Bretton Woods adopted. Various currencies were fixed to the US dollar until 1971.(fixed exchange rate system)

gold - dollar exchange standard

led to the creation of the IMF, which was established to monitor exchange rates and lend reserve currencies to nations facing balance-of-payments deficits.

Bretton Woods Conference

International Bank for Reconstruction and Development (IBRD) - Bretton Woods

now part of the World Bank Group.

the system faced increasing pressure due to imbalances in the global economy, particularly the growing U.S. balance of payments deficits and the accumulation of U.S. dollars in foreign central banks.

Challenge: Bretton Woods System

In 1971, President Richard Nixon announced that the U.S. would no longer exchange dollars for gold, effectively ending the Bretton Woods System. This move led to the transition to a system of floating exchange rates, where currency values are determined by market forces.

End of the Gold Standard: Bretton Woods System

Who announced in 1971 that U.S. would no longer exchange dollars for gold, effectively ending the Bretton Woods System.

President Richard Nixon

1. The creation of IMF and the World Bank 2. Set the stage for the development of the modern international monetary system and the rise of global financial markets.

Legacy: Bretton Woods System

Globalization allows a worldwide distribution of incomes.

Impact of Economic Globalization

Economic globalization reduces poverty (World Bank,2002).

Impact of Economic Globalization

Globalization creates mutual dependence between developing and developed countries (Arrighi, 2005).

Impact of Economic Globalization

The sources of goods and services are exploited.

DIVIDES THE WORLD

Economic globalization does not benefit all nations (World Bank, 2002)

DIVIDES THE WORLD

Since these economically poor nation-states depend on industrialized countries for employment and income, these industrialized countries compensate their labor with cheap cost.

One might observe that the sources of goods and services are exploited.

There is an uneven experience among nations. Workers in TNCs are paid less compared to their counterparts in the companies' home countries. This shows how cheap labor is in the Philippines.

Economic globalization does not benefit all nations (World Bank, 2002).

Capitalism under economic globalization creates INEQUALITY.

The World System Analysis

Capitalism under economic globalization creates _______

INEQUALITY

1000, 1 : 1 1500 , 1: 2 1820, 1 : 3 1871, 1: 5 WW I, 1: 9 1950, 1: 15

ratio of the richest region’s GDP per capita to the poorest

1000

1 : 1

1500

1: 2

1820

1 : 3

1871

1: 5

WW I

1: 9

1950

1: 15

not influenced uniformly by economic globalization.

Nation –states

The competitiveness of an economy and the impact of economic globalization depend on the capacity of the nation - state for political intervention in order to regulate the

TNCs, IGOs and other market players.

The competitiveness of an economy and the impact of economic globalization depend on the

capacity of the nation - state for political intervention