Chapter 2 - The Structures of Globalization

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CONT.

-GLOBALIZATION

CHAPTER 2- - THE STRUCTURES OF GLOBALIZATION


LEARNING OUTCOMES:
At the end of the lesson, the students should be able to:
● Define economic globalization
● Identify the factors that facilitate economic globalization
● Define modern world system; and
● Articulate a stance on global economic integration

GLOBAL ECONOMY
Global economy is also referred to as world economy. It refers to international exchange of
goods and services that is expressed in monetary units of money. It may also mean as the free
movement of goods, capital, services, technology, and information.
In some context “global” or “international” economy is distinguished and measured separately
from national economies whole the “world economy” is simply an aggregate of the separate
country’s measurement.
World Economy is exclusively limited to human economic activity and is typically judged in
monetary terms. Typical examples are illegal drugs, and other black market goods which by any
standard are part of the world economy, but for which is by definition no legal market of any
kind.
GLOBAL ECONOMY OR ECONOMIC GLOBALIZATION is concerned on the globalization of
production, finance, markets, technology, organizational regimes, corporations and labor.
While economic globalization has been expanding since the emerged of trans-national trade, it
has grown at an increase in communication, and technological advances under the framework
of General Agreement on Tariffs and Trade (GATT) and World Health Organization (WHO) which
made countries gradually cut down trade barriers and open up their current accounts and
capital accounts.
MARKET INTEGRATION
Market integration exist when prices among different location or related goods follow the
same patterns over a long period of time Markets are integrated, when group of prices often
move proportionally to each other, and when this relation is very clear among different markets
. Hence, it could be concluded that market integration is an indicator that explains how much
different markets are related to each other
ROLE OF INTERNATIONAL FINANCIAL INSTITUTIONS IN THE CREATION OF GLOBAL ECONOMY
International financial Institution (IFIs) is characterized by more than on country and therefore
are subjects to international laws. Its owners or shareholders are generally national
governments, although other international institutions and other organizations occasionally
figure as shareholders. The most prominent IFIs are creations of multiple nations, although
some bilateral financial institutions (created by two countries) exist and are technically IFIs. The
best known IFIs were established after WWII to assist in the reconstruction of Europe and
provide mechanisms for international cooperation in managing global financial system.
Today the largest IFI is the (1)European Investment Bank with a Balance sheet size of 573
Billion Euro. This compares to the two components of the(2) World Bank and IBRD (asserts of
358 Billion dollars in 2014) and IDA (assets of 183 Billion dollars in 2014). For comparison, the
largest commercial banks each have assets of 2,000 to 3000 billion dollars (Source website).
THE INTERNATIONAL FINANCIAL INSTITUTIONS
1. The international Monetary Fund (IMF)
2. Multilateral Development Banks (MDBs) which include:
a. World Bank Group
b. African Development Bank
c. Asian Development Bank
d. Inter-African Development Bank
e. European Bank for Reconstruction and Development.

NOTE; The last four of these each focus on a single world region and thus, are often called
Regional Development Bank (RDB).
Global in scope are IMF and WB. They are also specialized agencies in the UN system but are
governed independently of it.
MEMBERSHIP COMPOSITION OF IFIs
1. Only sovereign countries are admitted as member owner,
2. Broad country membership to include borrowing and developing countries and
developed donor countries
3. Membership in regional development banks include countries around the world as
members (not limited to countries from the region). Has its own independent legal and
operation

MAIN OBJECTIVES
● IMF provides temporary financial assistance to member countries to help ease balance
of payment adjustments.
● MDBs provide financing for development to developing countries through:
a. Long term loans (with maturities of uo to 20 years) at interest rates way below
market rates. Funding comes from international capital markets and relend to
borrowing government in developing countries.
b. Very long-term loans (sometimes called credits with maturities of 30-40 years) at
interest rates below market rates. Funding loans come from direct contributions by
government in the donor countries.
c. Grant financing by some MDBs for technical assistance advisory service or project
preparation.

HISTORY OF GLOBAL MARKET INTEGRATION IN THE 20TH CENTURY


Labor market integration occurred between 1882 and 1936 in an area of ASIA STRETCHING
FROM South India to Southern China and encompassing the three Southeast Asian countries
Burma, Malaysia and Thailand.
By1880s steamships had already largely replaced sailing vessels for transport within Asia as well
as within Asia to western markets and shipping fares had begun to fall sharply.
Also sharply underway was the mass migration of Indian and Chinese workers principally from
the labor abundant areas of Madras in India and the provinces of Kwangtong (Guangdong) and
Fukien (Fujian) in Southern China to land abundant but labor-scarce parts of Asia. Chief among
the immigrant receiving countries were Burma, Malaya and Thailand (Siam). In Southeast Asia.
Indian and Chinese labor inflows to these countries instituted the bulk of the two of three main
late 19th and early 20th century global migration movements, the other being European
immigration to the New World. Immigration to Southeast Asia was almost was almost entirely
in response to its growing demand for workers which in turn derived rapidly expanding
demand in core industrial countries for Southeast Asian exports. . In 1983 studies by Latham
and Neal and in 1985-1989 by Brandt established the development of an integrated Asian rice
market beginning in the latter part of the 19th century.
GLOBAL CORPORATION
A global corporation is one that operates in more than one country. According to Michael
Porter, he define global business is one that maintain a strong headquarters in one country but
has investments in multiple foreign locations. Such investment may involve direct investments
in foreign assets, such as manufacturing facilities or sales offices. The headquarters generally is
its home country, though some moves to more favorable regulatory or taxation locations over
time.
In the world of finance and investment a global corporation is one that has significant
investments and facilities in multiple countries but lacks a dominant headquarter. Global
Corporation are governed by the laws of the country where they are incorporated. A global
business connects its talents, resources and opportunities across political boundaries. Because
a global corporation is more invested in its overseas locations, it can be more sensitive to local
opportunities- and also more vulnerable to threats.
GLOBAL INTERSTATE SYSTEM
WORLD-SYSTEMS ARE DEFINED BY THE EXISTENCE OF A DIVISION OF LABOR. The modern
world-system has a multi-state political structure (the interstate system) and therefore its
division of labor is international division of labor. In the modern world system the division of
labor consists of three zones according to the prevalence of profitable industries or activities:
(core, semi periphery and periphery. Countries tend to fall into one or another of these
interdependent zones core countries, semi-periphery countries and the periphery countries.
Resources are redistributed from the underdeveloped typically raw materials –exporting poor
part of the world (periphery) to developed industrialized core.
GLOBAL GOVERNANCE
Global governance is sometimes referred to as world governance. Global is a movement
towards political cooperation among transnational actors, negotiating responses to problems
that affect more than one state or region. Institutions of global governance (UN, International
Criminal Court (ICC) the world Bank (WB), etc. tend to have limited or demarcated power to
enforce compliance. The modern question of world governance exists in the context of
globalization and globalizing regimes of power politically, economically and culturally
Global governance may mean may mean the process of designating laws, rules or regulations
intended for global scale. Global governance is not a singular system. There is no” world
government” but the many different regimes of global governance do have commonalities.
EFFECT OF GLOBALIZATION GOVERNANCE
According to the disciplining hypothesis, globalization restraints government by inducing
increased budgetary pressures. As a consequence government may attempt to curtail the
welfare state which is often seen as a drag on international competitiveness. , by reducing
especially their expenditures on transfers and subsidies. . This globalization induced welfare
state retrenchment is potentially mitigated by citizens’ preferences to be compensated for the
risks of globalization (compensation hypothesis).
WORLD SYSTEMS
World system deals with inter regional and transnational division of labor which divides the
world into core countries, semi-periphery and periphery countries. Core countries-focus on
higher skills, capital intensive production and the rest of the world focuses on low skill, labor
intensive production and extraction of raw materials.
WORLD SYSTEM THEORY
This theory is also known as world-systems analysis or would system perspectives. World
system theory is a multidisciplinary, macro-scale approach to world history and social change
which emphasizes the world-system (and not nation states) as the primary (but not exclusive)
unit of social analysis.
INTERNATIONALISM VS. GLOBALIZATION
INTERNATIONALIZATION- refers to the increasing importance of international trade,
international relations, treaties, alliances, etc. International means between and among
countries. The basic unit remains the nation, even as relations among nations become
increasingly necessary and important.
GLOBALIZATION- it refers to global economic integration of many formerly national economies
into one global economy mainly by free trade and free capital mobility, but also very easy or
uncontrolled migration. It is the effective erasure of national boundaries for economic
purposes.
CONTEMPORARY GLOBAL GOVERNANCE
Global governance or world governance is a movement towards political cooperation among
transnational actors, aimed at negotiating responses to problem that affect more than one
state or region.
INSTITUTION OF GLOBAL GOVERNANCE
1. UNITED NATIONS (UN)- Main Functions of the UN is to maintain peace and security for
all its member states. The UN does not have its own military but it has peace keeping
force which are supplied by the member states. On approval of the UN Security Council,
these peace keepers a often sent to regions where armed conflict has recently ended to
discourage combatants from resuming fighting. In 1988, the peacekeeping force won a
Nobel Peace Prize for its actions.
The UN aims to protect human rights and provide humanitarian assistance when
needed. It plays an integral part in social and economic development through the UN
Development Program. This is the largest source of technical grant assistance in the
world.

OTHER FUNCTIONS OF UN
● Investigate any dispute which might lead to international friction.
● To recommend method of adjusting such disputes or the terms of settlement.
● To formulate plans for the establishment of a system to regulate armaments
● To determine the existence of threat to the peace or act of aggression and to
recommend what action should be taken.
● To call on members to apply economic sanctions and other measures not involving
these of force to prevent or stop aggression
● .to take military action against an aggression
● To recommend the admission of new member
● To recommend to the General Assembly the appointment of the Secretary general and
together with the Assembly, to elect judges of the International Court of Justice.

ROLE OF UN TODAY AND THE FUTURE-


it has establish what it calls its Millennium Development goals. Most of its members states and
various international organizations have all agreed to achieve these goals relating to reducing
poverty, child mortality, fighting diseases and epidemics and developing a global partnership in
terms of international development
THE UN GENERAL ASSEMBLY.
The UN eneral Assembly was established in 1945 under the UN Charter. The GA occupies a
central position as the chief deliberative, policymaking and representative organ od the UN. It
provides a unique forum for multilateral discussion of the full spectrum of international issues
covered by the Charter. . Setting of standard and codification of international law is also the
main concern of the GA. The Assembly meets in regular session intensively from September to
December each year and thereafter as required.
FUNCTIONS AND POWER OF THE UN GA
● Consider and make recommendations on the general principles of cooperation for
maintaining international peace and security, including disarmaments;
● Discuss any question relating to international peace and security and except, where a
dispute or situation is currently being discussed by rhe Security Council make
recommendations on it;
● Initiate studies and make recommendations to promote international political
cooperation.
● Make recommendations for peaceful settlement of any situation that might impair
friendly relations among nations;
● Receive and consider reports from the Security Council and other UN organs;
● Consider and approve the UN budget and establish the financial assessments of the
member states;
● Elect the non-permanent members of the Security Council and the members of other
UN councils and organs and on the recommendation of the Security Council appoints
the Secretary General.
MEMBERSHIP TO THE UN
As of 2018 almost every fully recognized independent stateds are medmbedr states in the UN .
As outlined in thre UN Charter, rto become a member of the UN a state must accept peace and
all obligations outlined in the charter and willing to carry out any action to satisfy those
obligations. The final decision on fhe admission to he UN is carried ouf by the General Assembly
after recommendation by the Security Council.
2. INTERNATIONAL CRIMINAL COURT (ICC)
3. WORLD BANK

. LEARNING ACTIVITIES:
A.
1. Assignment-Research for the different institutions that govern international relations
2. Powers and function of International criminal Court and World Bank as Institution of
Global Governance
B. Define the following terms according to your understanding
a. Economic Globalization
b. Modern World System
c. Economic Integration
d. Global Economic Integration
e. Global Interstate System.
C. BRUSH UP
1. Differentiate global economy from world economy.
2. What is the importance of international financial institutions to countries of the
world?
3. Why do countries want to become member of the UN Organization?
4. What is the significance of Global Corporation?
D. REACT
1. Globalization restraints government by inducing increased budgetary pressure,
2. Core countries focus on higher skills, capital intensive production, and rest of the
world focuses on low sills, labor intensive production and extraction of raw
materials.
3. Globalization is the effective erasure of boundaries for economic purposes
E. IMAGE CREATION- Create an image ofd the following aspects and describe your image.
Place your creation in a box.
1. Global Interstate System
2. Global corporation
3. Global Governance
4. Global Economy
F. ESSAY
Consisting of 150-300 words, write an essay on the Topic “ Iam a Global Citizen”. The
best three essay will bd read in the class.
G. REFLECTION FIGURE
Use the same reflection figure in chapter I

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