Lesson 1 GLOBALIZATION

• Globalization - a growing interdependence of the world's economies, cultures, and populations, brought about by cross-border trade in goods and services, technology, and flows of investment, people, and information (Peterson Institute for International Economics, 2021).
• Globalization - describe the increasing connectedness and interdependence of world cultures and economies (National Geographic).
• Globalization - is a process of expanding various sociocultural and socio-ecological processes from national to international and transcultural level (Al-Rodhan, 2006)
• Globalization - focus on the economic and trade dimensions of the concept. However, one needs to look at the sociopolitical and sociocultural aspects of globalization (Steger, 2003; Hebron and Stack, 2016; Vadlamannati, 2015)
• Globalization - is mainly conceptualized as intensified transference or exchange of things across existing boundaries (Bartelson, 2000).
• Globalization - is primarily an economic process, the drive toward integration of economies throughout the world. This is achieved through trading and financial flows across countries’ borders (IMF, 2000).
• Globalization - Intensified, interdependence, interconnectedness of countries across existing boundaries in economy, cultural, population, ecological, industrial, informational, and financial dimensions
• dimension of globalization includes economic, financial, ecological, informational, industrial, cultural, political
• Global connectedness Index (GCI) - measurement of flows and interconnections of a country to other global players through exchanges in trade, capital, people, and information (Altman et al, 2018)
• GCI 2018 - Netherlands is the world's most globally connected country
• GCI 2018 - Europe is the most highly globally connected CONTINENT
• GCI 2018 - Economies in Southeast Asia like Cambodia, Malaysia, Singapore, and Vietnam have exceeded expectations for global connectivity, particularly in trade flow

  However, 20% of the global economic output of the countries is exported from the home countries and 3% live outside the their countries, the material and social flows are more within and between countries rather than on a global level.
• FACTORS DRIVING GLOBALIZATION

  1. Reduction of trade barriers- In 1947, richer countries banded together to reduce taxes on imports or tariffs under the General Agreement on Tariffs and Trade (GATT), which was later transformed to the World Trade Organization (WTO) in 1994 (Koopman & Hancock, 2019)
• FACTORS DRIVING GLOBALIZATION

  2. Infrastructural investments - such as on modernization of transportation systems, and modern telecommunications (Amparo, 2020).
• DIFFERENT VIEWS ABOUT GLOBALIZATION

  • Positive - on the level of employment and balance of trade (Kriesler and Neville, 2016).
  • Negative - the inequity among countries and between the rich and the poor.
• IMPORTANT ASPECTS OF GLOBALIZATION (IMF, 2000)

  1. Trading - international trading, exchange and deals between countries enabled by international fiscal payments where private banks and central banks of particular nations plays important roles
• IMPORTANT ASPECTS OF GLOBALIZATION (IMF, 2000)

  1. Trading - Global trading concerns importation and exportation. Increase in world trade from 1971 to 1999, biggest increase seen in the export of manufactured goods. However, export of primary commodities such as food and raw materials produced by poor countries declined
• IMPORTANT ASPECTS OF GLOBALIZATION (IMF, 2000)

  2. Capital Movement - one manifestation of capital movement is foreign investment
• IMPORTANT ASPECTS OF GLOBALIZATION (IMF, 2000)

  Capital Movement

  a)Commercial loans - money lent to foreign businesses or governments
• IMPORTANT ASPECTS OF GLOBALIZATION (IMF, 2000)

  Capital Movement

  b) Official flows - refer to development aid or money granted by rich countries to developing nations
• IMPORTANT ASPECTS OF GLOBALIZATION (IMF, 2000)

  Capital Movement

  c) Foreign direct investment - refers to buying or putting up a firm in a foreign country or contributing to the enhancement of existing firm (Levin Institute, n.d.). Transnational corporations, businesses that operate in more than one country, primarily undertake foreign direct investment.
• IMPORTANT ASPECTS OF GLOBALIZATION (IMF, 2000)

  3) Movement of People - People can migrate to other countries in search of better employment opportunities
• ASSUMPTIONS BEHIND THE PURSUIT OF GLOBALIZATION (Ferrer, 2020)

  1. Rapid economic growth will lead to development

  CRITIQUES TO THE ASSUMTIONS

  • Achieving both material needs and broader social objectives;
  • Social and economic justice and equity;
  • Self-reliance;
  • Welfare, adequate provision of basic services; and
  • Equitable distribution of opportunities
• ASSUMPTIONS BEHIND THE PURSUIT OF GLOBALIZATION (Ferrer, 2020)

  2. Trading will bring prosperity

  CRITIQUES TO THE ASSUMTIONS

  • Trading benefit "some" more than others
• ASSUMPTIONS BEHIND THE PURSUIT OF GLOBALIZATION (Ferrer, 2020)

  3. Poor countries will benefit from borrowed funds

  CRITIQUES TO THE ASSUMTIONS

  • Borrowing of poor countries are coupled with conditions (SAPs), which make countries compromise spending for social services and welfare.
• ASSUMPTIONS BEHIND THE PURSUIT OF GLOBALIZATION (Ferrer, 2020)

  1. Poor countries need to catch up with rich countries by implementing economic policies toward economic integration.

  CRITIQUES TO THE ASSUMTIONS

  • It will be difficult for poor countries to catch up because they are caught in unequal exchanges and underdevelopment
• ASSUMPTIONS BEHIND THE PURSUIT OF GLOBALIZATION (Ferrer, 2020)

  3. Removal of tariffs, quota can ease global trading and will lead to economic integration (toward prosperity).

  CRITIQUES TO THE ASSUMTIONS

  • Reduction of tariffs in the Philippines since the 1980s led to unfair competition of local industries with imports.
  • Industries direly affected negatively by tariff cuts
  • One of the industry worst hit was the textile industry , down to less than 10 firms from 200 firms in 1970s.
  • Reduction of tariffs led to the death of several domestic industries (Bello, 2009). resulted in massive unemployment
• INSTITUTIONS AND ACTORS SHAPING ECONOMIC GLOBALIZATION

  • International Financial and Trade Institutions
  • Transnational Corporations (International Business)
  • United Nations agencies
  • Regional Organizations such as the ASEAN
• INSTITUTIONS AND ACTORS SHAPING ECONOMIC GLOBALIZATION

  International Financial and Trade Institutions

  1. World Bank
  2. Facilitates investment of capital for member countries
  3. Fund large-scale projects by loan
  4. Implement the Structural Adjustment Policies (SAPs) for countries borrowing from WB. SAPs are programs imposed on poor countries
• INSTITUTIONS AND ACTORS SHAPING ECONOMIC GLOBALIZATION

  International Financial and Trade Institutions

  2. International Monetary Fund (IMF)

  • Provide short-term emergency loans
  • help bring enormous flow of foreign money through loans and speculative investments
• INSTITUTIONS AND ACTORS SHAPING ECONOMIC GLOBALIZATION

  International Financial and Trade Institutions

  3. World Trade Organization

  • Create rules for global trade and investment
  • aim to reduce tariff
  • create agreements for member countries regarding multilateral policies
  • Encourage countries to deregulate economies