Structures of Globalization

• Globalization

  • Advances in technology have made the growth of transport and communication networks possible.
  • Among other things, this means that people and countries can exchange information and goods more quickly and in a less complicated way.
• The Structures of Globalization

  • Global Economy
  • Marketing Integration
  • The Global Interstate System
  • Contemporary Global GovernanceContemporary
• Global Economy

  • is an economic interdependence established between the most influential countries that drives the worldwide economic environment.
  • It is also the aggregate economic output, movement and influence of all countries.
• Global Actors

  • International migrants transfer significant amounts of money through remittances to lower-income relatives.
• Characteristics of Global Economy

  1. Globalization

  • describes a process by which national and regional economies, societies, and cultures have become integrated through the global network of trade, communication, immigration, and transportation.
• 2. International Trade

  • It refers to the exchange of goods and services between different countries, and it has also helped countries to specialise in products which they have a comparative advantage in.
• 3. International finance

  • consists of topics like currency exchange rates and monetary policy.
• 4. Global investment

  • This refers to an investment strategy that is not constrained by geographical boundaries.
• Characteristics of Global economy:

  1. Globalization
  2. International Trade
  3. International finance
  4. Global investment
• How does the global economy work?

  • The functioning of the global economy can be explained through one word—transactions.
• How does the global economy work?

  Such transactions have a number of benefits including:

  • Providing a foundation for worldwide economic growth, with the international economy set to grow by 4% in 2019 (source: World Trade Organisation);
  • Encouraging competitiveness between countries in various markets;
• Benefits of Transactions:

  • Raising productivity and efficiency across countries;
  • Helping in the development of underdeveloped countries by
  • allowing them to import capital goods (machinery and industrial raw materials) and export primary goods (natural resources and raw materials).
• Trade

  • countries trade with each other when, on their own, they do not have the resources, or capacity to satisfy their own needs and wants.
  • By developing and exploiting their domestic scarce resources, countries can produce a surplus, and trade this for the resources they need.
• Two different Economies in Economic Globalization:
• Global Commodity Chain

  • It is a process used by firms to gather resources, transform them into goods or commodities and finally, distributes them to consumers.
  • It is a series of links connecting the many places of production and distribution and resulting in a commodity that is then exchanged on the world market.
• The Modern World System

  1. United Nation (UN)
  2. World Trade Organization (WTO)
  3. International Monetary Fund (IMF)
  4. The World Bank
  5. Multinational Corporation
• Global Economy

  • interactions of the influential/core countries
  • largest influences to trend in the world market
  • making the transactions smooth
  • Ex. oil market, stocks
• Aggregate Economic Output

  • involvement of other countries
  • GNP/GDP (Gross National Income) measures
• GNP (Gross National Product)

  • total market values of a nationality/country
• GDP (Gross Domestic Product)

  • even if you're a foreigner, your income is included
• IGO (Intergovernment organization)

  • creating twenties/agreements to work on issues
  • work together for benefits
• NGO's

  • profit, advocacy groups, free
  • doesn't matter if they will profit or not (charity)
  • output will be their income
• Businesses - BPO's, stocks, investments
• Migrants (OFW's)

  • workers that stayed in a specific country
• Transactions - how the global economy works
• Benefits of Transactions

  • worldwide economic growth
  • encouraging competitiveness (improvement of products)
  • raising productivity and efficiency
  • helping in the development of underdeveloped countries by capital goods
• Factors of Transactions:

  1. Trade/Trading
  2. Foreign Competition
• Trading

  • occurs because of needs and wants, however resources are limited (not always available)
  • import/export
  • Disadvantage: can cause another World War III
• Foreign Competition (conflict)

  • countries avoid this
• Two different Economies in Economic Globalization

  1. Protectionism/Trade Protection
  2. Domino Effect
• Protectionism/Trade Protection

  • foreign competition
  • our purchasing power become low (decline of the economic activity)
• Domino Effect

  • more purchase = more income
• To prevent foreign competition:

  Trade barriers:

  • Tariff (taxes)
  • Embargo (illegal products)
  • Quota
• Subsidy - we can't import products without through customs
• Trade Liberalization

  • reducting trade barriers
  • countries promote trading process
• Free Trade (Laissez Faire)

  • agreement between government to reduce trade barriers
  • offering between countries
  • the government doesn't control the market, only protects the participants
• Trade Bloc (Regional Trade Bloc)

  • 2 or more countries that are close to each other
• NAFTA (North American Free Trade Agreement) - Mexico, US, Canada (one location)
• EU - European country
• ASEAN - PH, Thailand, Myanmar, Vietnam (Southeast Asia)