Global Economy

• ECONOMIC GLOBALIZATION

  • is the economic mixing and interdependence of economies across the world through an escalation of cross-cultural movement of goods, Services, technologies, and wealth.
• CAPITAL FLIGHT

  • The large-scale departure of companies, assets, and wealth from a country due to economic instability or the opportunity for cheaper production.
• MAJOR DRIVERS OF GLOBALIZATION

  a.) technological innovation

  b.) transport system

  c.) social and political reforms
• Market Globalization

  • the decline in barriers to selling in countries other than the home country.
• Production Globalization

  • is the sourcing of materials and services from other countries to gain advantage from price differences in different nations.
• GLOBALIZATION OF BUSINESS

  • Obvious change in businesses
• ECONOMIC INTEGRATION

  • Involves agreements between countries to permit, to Varying degrees, the flow of capital, labor, goods, and Services across their respective international borders.
• TYPES OF ECONOMIC INTEGRATION

  1. FREE TRADE AGREEMENTS - are agreements entered into between countries regarding Specific trade issues, such as reduction of tariffs (a type of tax on imported or exported goods and services) and quotas (non- tariff barriers between countries) that limit imports.
• TYPES OF ECONOMIC INTEGRATION

  2. FREE TRADE AREA- eliminates barriers to trade among the members such as tariffs and quotas.
• TYPES OF ECONOMIC INTEGRATION

  3. CUSTOMS UNION- is formed by countries that not only eliminate trade barriers between the members but also have a unified trade policy with countries outside of the union.
• TYPES OF ECONOMIC INTEGRATION

  4. COMMON MARKET- has all of the characteristics of a customs union but also eliminates barriers to the movement of capital, labor, and technology
• TYPES OF ECONOMIC INTEGRATION

  5. ECONOMIC UNION- the highest level of economic integration. Members of an economic union must be able to maintain consistency with monetary policy, fiscal policy, and tax policy. An economic union also uses a common currency. It Should be noted that an economic union requires that member States give up a significant amount of their independent Sovereignty.