THE CONTEMPORARY WORLD MODULE 3

GEC 13- The Global Economy

This module is designed for you to analyze the global economy.

In Module 2, you scrutinized globalization under the lens of its

origin, competing concepts, philosophies, and processes. As much as
globalization is integrated in our contemporary world, the extent of
the how’s and why’s it affects our life is a complicated debate for
scholars. While majority adhere to the homogeneity globalization
brings across nations, there are also those who contend that
heterogeneity exists through glocalization. In the midst of
contradicting views, scholars whether they belong to rejectionists,
skeptics, or modifiers point of view, recognize the presence of
economic, political and cultural processes involved in globalization.

In this module, we shall focus our lens into the first process
involved in globalization: the economic process. We shall look into the
interconnectedness of different economic activities among countries.
Varied economic activities that take place among countries not only
cause the flow of goods and services, but also the movement of
people which contain the global economy.

Objectives:

At the end of the module, you are expected to:

1. Define economic globalization

2. Identify the factors that facilitate economic globalization
3. Define the modern world system
 4. Articulate a stance on global economic integration

LESSON 1 ECONOMIC GLOBALIZATION

Before we start, let us first have a

game! Can you guess the product logo
being shown below and tell what country
the product or brand originated from?

1. 2.

3. 4.

5. 6.

7. 8.
Defining Economic Globalization
Trade is the oldest and most important economic nexus among nations. Indeed, trade along with
war has been central to the evolution of international relations.
- Robert Gilpin

No generation has had the opportunity, as we now have, to build a global economy that leaves no-
one behind. It is a wonderful opportunity, but also a profound responsibility.
- Bill Clinton

As we had discussed in the first module, globalization involves

the "broadening and deepening of interdependence among
peoples and states" (Cohn, 2011. It leads to an extension of
geographic linkages, encompassing societies and states and
deepens interaction among them such that policies and events of
one state also affect distant ones.

Economic globalization Note the Basic:

refers to the increasing
interdependence of world ✓ Economics is a social science
concerned with the production,
economies because of the distribution, and consumption of
growing scale of cross-border goods and services.
trade of commodities and
✓ It studies how individuals, businesses,
services, flow of international governments, and nations make
capital and wide and rapid choices about how to allocate
spread of technologies. It reflects resources.

the continuing expansion and ✓ Two major types of economics are

mutual integration of market microeconomics, which focuses on
frontiers and is an irreversible the behavior of individual
consumers and producers, and
trend for the economic macroeconomics, which examine
development in the whole world overall economies on a regional,
at the turn of the millennium. The national, or international scale.

rapid growing significance of ✓ The principle of economics is that

information in all types of human beings have unlimited wants
productive activities and and occupy a world of limited
means.
marketization are the two major
driving forces for economic ✓ The concepts of efficiency and
globalization. In other words, the productivity are held vital by
economists. Increased productivity
fast globalization of the world’s and a more efficient use of
economies in recent years is resources, they argue, could lead to
largely based on the rapid a higher standard of living.

development of science and

technologies, has resulted from the environment in which market
economic system has been fast spreading throughout the world, and
has developed on the basis of increasing cross-border division of labor
that has been penetrating down to the level of production chains
within enterprises of different countries.

Szentes (2003) defines economic

globalization as "a process making the
world economy an "organic system”
by extending transnational economic
processes and economic relations to
more and more countries and by
deepening the economic
interdependencies among them” For
example, in the earlier activity where I
asked you to identify the logo or
brands and the country of their origin,
it does not mean that those products
were exclusively produced in the country of its origin. Brands or
trademarks may be registered exclusively to a country, but it does not
necessarily mean that everything that makes up the product is
confined to that country alone. It involves different raw materials and
labor across the globe to make up that product. It is just like the saying
that “NO MAN IS AN ISLAND,” no country or economy is self-sufficient
enough not to need a raw material or service from another country or
economy.

It takes the WORLD TO MAKE THIS PRODUCT.

Let us talk about a product that you use every day,

CELLPHONE. There exists a lot of cellphones in the market of varying
specifications, performance, and price. Of course, the higher the
quality and exclusivity it offers, the higher the price it demands. You
are most likely familiar with Samsung as manufactured by South
Korea, Huawei in China and of course, Apple iPhone from America.
Cellphone users are not only divided in the software war between
Android and IOS but also very particular of the country of origin of the
gadget they are using. Individuals and governments nowadays are
becoming more particular as to where the products they are
patronizing come from. There are efforts to boycott and ban certain
brands due to their country of origin while priority is given to another
due to various economic, cultural, and political reasons.

Let us take the case of the

Apple iPhone. There is a loyal
segment of consumers who prefer
this phone “Designed by Apple in
California.” There is the impression
that this is exclusively from the US
and stands out from the rest
because of its country of origin. But do you know that it takes almost
the whole world to make an iPhone? Apple outsources hundreds of
thousands of manufacturing jobs to countries like Mongolia, China,
Korea, Taiwan and now, India (the latest iPhone SE 2020). While Apple
designs and sells the iPhone, it does not manufacture its components
in the US. Instead, Apple uses manufacturers from around the world to
deliver individual parts such as the camera, screen, battery, etc.
Based from various websites ( I have shared several internet inks in the
Google Classroom which you can check for further information),
below are just examples of the global economic relationship of Apple
for the different parts of its products:
• Accelerometer: Bosch Sensortech, based in Germany with locations in the U.S., China, South Korea,
Japan, and Taiwan
• Audio chips: Cirrus Logic, based in the U.S. with locations in the U.K., China, South Korea, Taiwan,
Japan, and Singapore
• Battery: Samsung, based in South Korea with locations in 80 countries
• Battery: Sunwoda Electronic, based in China
• Camera: Qualcomm, based in the U.S. with locations in Australia, Brazil, China, India, Indonesia, Japan,
South Korea, and more than a dozen locations through Europe and Latin America
• Camera: Sony, based in Japan with locations in dozens of countries
• Chips for 3G/4G/LTE networking: Qualcomm
• Compass: AKM Semiconductor, based in Japan with locations in the U.S., France, England, China, South
Korea, and Taiwan
• Glass screen: Corning, based in the U.S., with locations in Australia, Belgium, Brazil, China, Denmark,
France, Germany, Hong Kong, India, Israel, Italy, Japan, South Korea, Malaysia, Mexico, Philippines,
Poland, Russia, Singapore, South Africa, Spain, Taiwan, The Netherlands, Turkey, the U.K., and the
United Arab Emirates
• Gyroscope: STMicroelectronics. Based in Switzerland, with locations in 35 countries
• Flash memory: Toshiba, based in Japan with locations in over 50 countries
• Flash memory: Samsung
• LCD screen: Sharp, based in Japan with locations in 13 countries
• LCD screen: LG, based in South Korea with locations in Poland and China
• A-series processor: Samsung
• A-series processor: TSMC, based in Taiwan with locations in China, Singapore, and the U.S.
• Touch ID: TSMC
• Touch ID: Xintec. Based in Taiwan.
• Touch-screen controller: Broadcom, based in the U.S. with locations in Israel, Greece, the U.K., the
Netherlands, Belgium, France, India, China, Taiwan, Singapore, and South Korea
 • Wi-Fi chip: Murata, based in the U.S. with locations in Japan, Mexico, Brazil, Canada, China, Taiwan,
South Korea, Thailand, Malaysia, Philippines, India, Vietnam, The Netherlands, Spain, the U.K.,
Germany, Hungary, France, Italy, and Finland

So, you should see by now that the different parts are sourced
from different manufacturers across the globe, but they will be
assembled by these two companies: Foxconn and Pegatron. Those
Taiwanese firms manage iPhone production and ensure the
completed phones are delivered on time based on the quality
standards Apple demands. The latest addition to the partners of
Apple is India where higher market demand has started. Once
ready, the units are delivered to the US for final sorting and rerouting
to their intended market.

What has just been discussed in an illustration of how the global

economy works. While the Apple iPhone may be known as that
Phone designed in California (USA), the unit is not exclusively
American made, it bears the IMPRINT OF THE WORLD: the best
material components and labor from different countries put
together to be known as Apple.

Do not get the impression of being biased towards Apple iPhone.

It is used as an example because there is the misconception by a
big majority that it is exclusively US made but now, you realize the
misconception. The same can be said not only for the different
cellphone brands but also for different products as well. In the quest
for having the best quality that the trademark has to offer, they go
beyond their own resources, they cross other boundaries and
economies to come up with a specific product component. There
is the INTERCONECTEDNESS of materials and services as well as
needs. With every product released in the market, do not forget
where its raw materials came from and the labor force that
contributed to its production. Appreciate not only the product but
also the different economic activities that goes with it. For all you
know, it may have taken a lot of hands laboring for that device you
are holding. Everything is interconnected and interdependent, that
is the global economy. For every material, component or service,
there are people across the globe whose livelihood depend on it.
 Track the Product Research
To further enhance your appreciation as to
how economic globalization works, you will
do a Track the Product Research for products
sold in the Philippines. Identify a particular
product sold here in the Philippines and track
its country of origin, where the raw materials
are sourced out, the technology involved in their production and
extent of their dissemination.

Notes:
https://cdn1.vectorstock.com/i/1000x1000/20/90/global-economy-business-chart-and-trade-success-vector-
22452090.jpg

https://businessmirror.com.ph/wp-content/uploads/2018/07/global-economy.jpg

https://encrypted-
bn0.gstatic.com/images?q=tbn%3AANd9GcTBRgB3dg7dGkby6WluWGRpOuGIkNTqWuaNjw&usqp=CAU

https://www.un.org/en/development/desa/policy/cdp/cdp_background_papers/bp2000_1.pdf

https://www.entrepreneur.com/article/228315

https://www.phonearena.com/news/apple-assembles-iphone11-in-india_id126175

https://financesonline.com/how-iphone-is-made/

https://www.lifewire.com/where-is-the-iphone-made-1999503 where is the iphone made

https://encrypted-tbn0.gstatic.com/images?q=tbn%3AANd9GcTo0PZtZaabR0RSwqN-58bQw1UTJ9gGY092Q&usqp=CAU