Lesson 2 GLOBAL ECONOMY

• IMF 2023 sees the world economy growing 5.3% or when adjusted for inflation 3.8%. Largest contributing countries includes U.S.A, China, India, Russia
• Economic Globalization - the expansion of national economies, the global market driven by modern technologies and institutional set ups that promote faster and easier flow of goods and capital (Sugden and Wilson, 2005)
• Economic Globalization - includes greater integration of economic activities, products, and systems across the world.
• Economic Globalization - extends economic projects and relations transnationally and promotes economic interdependencies among different countries.
• Economic Globalization - goes beyond internationalization. It involves integration of functions and processes of economic activities (Dickens, 2004).
• Economic Globalization - economic integration requires NOT just having an international consumer or exporting goods from one country to another, but also involves creating institutions for market integration and globalization (Amparo, 2020)
• Economic Integration - a process of combining or increasing the interconnectivity of national economies to the regional or global economies (Clark et al., 2018).
• Economic Integration - the separate production operations are functionally related to each other and form a unified product or service.
• ECONOMIC INTEGRATION INNOVATIONS

  • Transport logistics
  • Modernization of communication
  • Transport Systems
  • Policies Supporting Integration of Different Process along the globe
  • other factors,
• Economic Integration history - The voyages of earlier explorers including the formation of empire (i.e., Roman empire) were critical in intercontinental trade and were also a precursor of modern economic globalization
• Economic Integration history - Chinese, and even earlier, trades in Asia also serve as first-forms of economic expansion and later integration.
• Economic Integration history - “globalization processes” have been ongoing ever since Homo sapiens began migrating from the African continent ultimately to populate the rest of the world.” focus on a relatively smaller target of commodities of high value like spices, tea, gold, or other precious metals. (Gill and Thompson, 2006)
• Economic Integration history - The difference now is the extent and reach of economic globalization, restructuring of economic systems, and the dominant influence of the private sector in the global economy (Shangquan, 2000).
• Global economy - Denotes that the economies of various countries are more interconnected from extraction, production, distribution, consumption, to disposal of goods and services (Carfi and Schiliro, 2018)
• ACTORS THAT FACILITATE ECONOMIC GLOBALIZATION

  Non-state actors

  • International economic organizations
  • private sector led by multinational companies
  • Central banks
  • civil society
• Non-state actors

  International economic organizations - critical in developing and pushing for neoliberal policies among different countries. They also help facilitate trade and development discussions among various states.

  1. International monetary fund (IMF)
  2. world bank
  3. Organization for Economic cooperation and development (OECD)
• Non-state actors

  Regional Organization - promote regional agreements and standards that facilitate better trade and exchange of knowledge, human resource, and regional cooperation. The Group of 8 (G8) and G20 are advisory organizations that discuss current economic and political problems and transfer the ideas from the groups’ forum to national legislative regulations (Shangquan, 2000)

  1. Association of Southeast Asian Nations (ASEAN)
  2. North American Free Trade Agreement (NAFTA)
• International Monetary Fund - compose of 183 countries aims to

  • promote international monetary cooperation and exchange stability
  • foster economic growth and high employment
  • provide short-term financial assistance to assist countries ease balance of payments adjustments
• Multinational Companies (MNCs) - the main carriers of economic globalizations (Shangquan, 2000). Started to emerge during WW2 when US industrial production increased by 44% (Strange, 1996)
• Central banks - prime movers of economic globalization. considered one of the most powerful institutions in the world economy since they can lead economic development, and some authors contend that central bank governors are more influential in their own national economy than some politicians (Shangquan, 2000)
• Central banks

  • Independent national authority
  • conducts monetary policy, regulates banks, provides financial services
  • stabilizing the nation's currency, low unemployment and prevent inflation
  • governed by a board made up of its member banks
• Global Civil Society - mark in global development arena particularly during the UN Conference on Environment and Development in 1992 (Keane, 2003).
• Global Civil Society - seen as either composed of individuals or group of individuals disadvantaged by the effects of the globalization of the world economy, they protest and seek alternatives while on the other hand, global social movement constituting a basis for an alternative to a new world order (Gherghel, n.d.)
• MODERN WORLD SYSTEM THEORY - of Wallerstein (1974), which posited that the global economy is divided into the core, semi-periphery, and periphery.
• MODERN WORLD SYSTEM THEORY

  CORE - center of economic activities where most of the population lives and economic institutions are based.
• MODERN WORLD SYSTEM THEORY

  Semi-Periphery - serve as distributors or add value to the raw materials by processing them for the core areas (Amparo, 2020)
• MODERN WORLD SYSTEM THEORY

  Periphery - majority of the raw materials and productions are done or sourced out