Contemporary World Module 1

• Why study Globalization?

  • Avoid Parochialism
  • Learn more about society
  • Broader Perspective of how people globally relate with each other
  • Globalization is inherently inter-disciplinary
  • To answer the question, “Are we global citizens? Or are we in the process of becoming “global citizens?”
• parochialism - a limited or narrow outlook, especially focused on a local area; narrow-mindedness.
• Globalization - A process of forging international political, economic, religious, and socio-cultural interconnections
• Different lenses in the study of the Nature of Globalization

  • Political Science
  • Economics
  • Culture and Communication
• Globalization According to Political Lens

  According to political scientists:

  • challenge to the nation-state
  • Emergence of International and Multinational corporations which influence people
  • Emergence of regional blocks and global political norms
• Globalization According to the Economic Lens

  • Increased free trade
  • Speed of trade (HFT) High-Frequency Trading - milliseconds to trade shares
  • Global economic organizations (WTO)
  • Multinational and transnational corporations, as well as regional economic blocks
• Multinational Corporations vs. Transnational Corporations

  Multination Corporations

  • have operations in more than one country.

  Transnational Corporation

  • also have operations in more than one country, but typically focuses on a single market.
• Globalization in the Culture and Communication Lens

  Globalization is:

  • seems to be shrinking the world
  • Global Village
  • Cultural imperialism
• Global Village - the world considered as a single community linked by telecommunications
• Cultural Imperialism - the exercise of domination in cultural relationships in which the values, practices, and meanings of a powerful foreign culture are imposed upon one or more native cultures.
• For Manfred Steger, Globalization refers to the expansion and intensification of social relations and consciousness across world-time and world-space.
• Affected by globalization: Businesses, the people, the Government, the Culture, and even education.
• Two types of Economies

  1. Protectionism
  2. Trade Liberalization
• Protectionism - protecting one's country from foreign competition by creating trade barriers. Government policies restrict international trade to help domestic industries.
• Trade Liberalization - reducing or removing trade barriers to make international trade easier between countries.
• Examples of trade barriers are tariffs (duties and surcharges), and nontariff barriers (licensing rules and qoutas)
• Tariff - A tax imposed by one country on the goods and services imported from another country to influence it, raise revenues, or protect competitive advantages.
• Free Trade Agreement - A pact between two or more nations to reduce barriers to imports and exports among them.
• Outsourcing - Manufacturing jobs transfer from developed nations to developing nations to reduce the cost of production.
• Internationalization - extension of economic activities of nation-states across borders.
• Economic Globalization - Functional integration between internationally dispersed economic activities.
• What is Internationalization?

  process of increasing the enterprise of a certain local company in the international market.
• What is the focus of internationalization?

  The expansion of the client base of a local business in the global or international market.
• What are the results of internationalization?

  Results include increasing the influence of the enterprise of a local market and influencing globalization.
• What is Globalization?

  The process of integration of local markets into one global market.
• What is the focus of Globalization?

  The exchange of products and services from the interaction of local markets in one global market.
• What are the results of Globalization?

  Results include decrease of global market trade barriers, emergence of free and open markets, mobility of free trade capital, increased and uncontrollable migration, decline of local cultures and identities and negative effect on the small local business.
• Money - A system of value that facilitates the exchange of goods in an economy.
• International Monetary System (IMS)

  • refers to the sets of internationally agreed rules, conventions, customs, and organizations that facilitate international payments.
  • Facilitates cross-border transactions, especially trade and investments.
  • More than just money or currencies; also reflects economic power and interests
• Stages in International Monetary System

  1. Bimetallism: before 1875
  2. Classical Gold Standard: 1875 - 1914
  3. Interwar Period: 1915 - 1944
  4. Bretton Woods System: 1945 - 1972
  5. The Flexible Exchange Rate Regime: 1973 - present
• Bimetallism - A monetary system in which a government recognizes coins composed of both gold and/or silver as legal tender.
• What is the name of your instructor?

  Jim Rhodel Amigo
• Gresham's Law - by Sir Thomas Gresham

  A principle that states that "bad money drives out good". The least valuable metal would tend to circulate. The bad money is naturally spent first and the good money is kept or hoarded, thus disappearing from circulation.
• Classical Gold Standard - A monetary system in which a currency or paper money has a value directly linked to certain quantities of gold.
• 3 rules of Classical Gold Standard

  The exchange rate between currencies use to remain fixed.

  1. Only gold to be used for international payments.
  2. Two way convertibility between gold and currency at a fixed rate.
  3. Free export/import of gold.
• Interwar Period

  • private trade and financial transactions were suspended.
  • Gold exports were banned.
  • different inflation rates.
• Interwar Period Collapse

  1. Recessions and banking crises
  2. Leadership vacuum in the international regime.
  3. Absence of policy cooperation
• Bretton Woods System - an agreement under which gold was the basis for the US dollar and other currencies were pegged to the US dollar's value.
• International Bank for Reconstruction and Development (IBRD)

  • Makeup World Bank (along with IDA)
  • Responsible for post-war reconstruction
  • Provides financing, policy advice, and technical assistance to governments of developing countries.
• International Monetary Fund (IMF)

  • Promote international financial cooperation and bolster international trade.
  • Monitors and manages exchange rates between currencies.
  • Also lend funds to countries.