Contemporary World

• Market Integration


  The process of integrating national markets into a global marketplace
• International Financial Institutions


  • Bretton Woods System
  • International Monetary Fund
  • World Bank Group
  • General Agreement on Tariffs and Trade
  • World Trade Organization
• Bretton Woods System


  A global monetary system established in 1944 to manage the global economy
• International Monetary Fund


  • Influenced by John Maynard Keynes
  • Created in 1944
  • Consists of 189 member countries
  • Based in Washington, D.C.
  • Aims to promote global economic growth and financial stability
  • Its activities are monitoring, capacity building, and lending
  • Structural adjustments programs are required when granting loans
  • Decisions are done by most powerful countries having the most voting power
• World Bank Group


  • Goals: End extreme poverty and promote shared prosperity
  • Provides assistance to countries affected by WWI
  • Created after the Bretton Wood Agreements
  • Five international organizations: IBRD, IFC, MIGA, ICSID, IDA
  • Provides grants to the poorest countries in fields like human development, agriculture, rural development, environmental protection, infrastructure, industrial construction, and governance
• General Agreement on Tariffs and Trade (GATT)


  • Twenty-three nations signed the legal agreement in Geneva in 1947 and it took effect in 1948
  • To eliminate all restrictions on the use of its currency for international trade
  • Promoting of reducing or eliminating trade barriers such as tariffs and quotas in the international trade
• World Trade Organization (WTO)

  • Has 164 members and 23 observer governments
  • Created in 1995
  • Main function is to ensure smooth, predictable, and free trade flows as possible
  • Biased towards rich and multinational corporations
  • Helps producers of goods and services, exporters, and importers conduct their business
  • Responsible in widening the social gap between rich and poor
• Attributes of Global Corporations

  • Tax cut
  • Broader market base
  • Cheaper labor
  • Threat to local business
  • Potential abuse of workers
  • Job creation
  • Loss of jobs
• Globalization


  Economic interdependence, including the global flow of goods, services, capital, and technology; the emergence of international organizations, global governance mechanisms, and the development of new forms of global cooperation to address common challenges; promotion of time-space compression; political and institutional changes; technological advancement; cultural exchange; risk and uncertainty
• Deterritorialization


  Breaking down of national borders
• Cultural hybridization


  Globalization is not about the imposition of a single global culture but rather the coexistence and interaction of diverse cultural elements
• Why study globalization?


  • Economic significance
  • Cultural exchange
  • Environmental consequences
  • Political interactions
  • Technological advancements
  • Academic and career opportunities
• Three perspectives on globalization

  • Transformationalist
  • Skeptic (Traditionalist)
  • Hyperglobalist
• The opening of the Suez Canal paved the way for European people to trade with the Asians


  1869
• The Galleon trade implemented by the Spaniards intensified the transfer of goods from one country to another


  Unspecified
• Mercantilism


  The ideology that motivated countries to search for islands rich in natural resources, particularly gold, as the more gold a country has, the more powerful it is
• Economic globalization


  The free movement of goods, capital, services, technology, and information, resulting in increasing economic integration and interdependence of national, regional, and local economies around the world
• Key players/actors in globalization

  • International non-governmental organizations
  • Supranational organizations
  • Intergovernmental organizations
  • Large manufacturing corporations (multinationals and transnationals)
• Multinational corporation (MNC)


  An entity that owns and controls production of goods or services in one or more countries aside from their home country, with an international identity and a centralized management system
• Transnational corporation (TNC)


  A commercial enterprise that operates substantial facilities and does business in more than one country, without considering any particular country its national home, and giving decision-making, research and development, and marketing powers to each individual foreign market
• Differences between multinational and transnational corporations

  • Multinational companies own a home company and its subsidiaries, have a centralized management system, and face barriers in decision-making
  • Transnational companies do not have subsidiaries but many companies, do not have a centralized management system, and are able to gain more interest in local markets since they maintain their own systems
• Roles of multinational corporations in the economy

  • Promotion of foreign investment
  • Technology transfer
  • Promotion of exports
  • Investment in infrastructure
• Roles of transnational corporations in the economy

  • New opportunities to attract resources as they enter foreign markets
  • Transfer of technology and management experience
  • Organize production and coordination
• Roles of large international banks

  • Financial stability
  • Translations of business practices
  • Transfer of funds
• Top 20 international banks in the world 2020

  • Industrial and Commercial Bank of China
  • China Construction Bank
  • Agricultural Bank of China
  • Bank of China Ltd.
  • JPMorgan Chase
  • HSBC Holdings plc
  • Mitsubishi
  • Bank of America
  • BNP Paribas
  • Credit Agricole
  • Citigroup
  • Japan Post Bank
  • Wells Fargo
  • Sumitomo Mitsui Financial Group
  • Mizuho Financial Group
  • Banco Santander
  • Deutsche Bank
  • Societe Generale
  • Groupe BPCE France
  • Barclays Plc. England
• Core


  Powerful, wealthy, and highly independent of outside control regions that dominate the capitalist world economy and exploit the rest of the system
• Periphery


  Areas that lack strong central governments, are controlled by other states, export raw materials to the core, rely on coercive labor practices, and are heavily exploited
• Semi-periphery


  Nations that serve as buffers, either exploiting or exploited
• External areas


  Regions that maintain their own economic systems and remain outside of the modern world economy, with internal trade given significance
• Global economic integration


  The process or arrangement between regions to reduce or eliminate trade barriers and coordinate monetary and fiscal policies to increase trade among the countries involved
• Factors promoting the growth of economic globalization

  • Regional integration
  • Trade liberalization
  • Foreign direct investment
  • Privatization
  • Deregulation
• Regional integration


  The practice of two or more countries sitting, meeting, and discussing together to overcome economic crises and promote development
• Trade liberalization


  The free flow of trade between countries around the world, with the removal of trade barriers such as tariffs and taxes on goods and services
• Foreign direct investment


  When a foreign firm or individual establishes business operations or acquires business assets, including establishing ownership and controlling interest in a company in another country
• Privatization


  The government allowing private companies to compete in the industry and enterprise, including turning ownership of a state-owned corporation to a private individual or corporation
• Deregulation


  The removal of regulatory barriers in doing business, allowing more competition from others but still dominated by a few players
• Reduction of trade barriers for economic development would benefit all humankind
• State should only provide an enabling environment for businesses to thrive, and multinational enterprises should have less government policy restrictions to have more free access to investment and production in the national and local units
• Economic globalization was never aimed to help the citizens of the developing world, and the International Monetary Fund, World Bank, and World Trade Organization are all instruments of exploitation in the hands of the elite states of the advanced developed countries