Untitled Quiz

Module 2: The Structures of Globalization: The Global Economy

• Course name: The Contemporary World
• Instructor: Prof. Supriano D. Gatdula
• Part 1

Economic Globalization

• Refers to the increasing interdependence of global economies
• Driven by cross-border trade of goods and services
• Includes the flow of international capital
• Also includes the widespread adoption of technology

Examples of Economic Globalization

• Import and export of goods
• Trade agreements that reduce barriers
• Foreign companies operating in other markets

Internationalization

• Designing a product to be easily consumed across multiple countries

Localization

• Adapting and customizing a product to meet the specific needs of a particular market
• Factors to consider include language, culture, local standards and legal requirements

Globalization Example

• Reaching new markets by using English in web content
• Adapting content to regional languages
• Providing payment options for online purchases and global shipping

Economic Benefits of Globalization

• Increased choice for consumers
• Higher quality goods due to specialization
• Increased competition leading to lower prices
• Economies of scale due to larger markets
• Increased capital flows into developing economies
• Increased labor mobility across countries
• Improved international relations (incentive to avoid conflict)

Potential Economic Disadvantages of Globalization

• Possible monopolization of multi-national companies
• Structural unemployment from declining competitiveness
• Increased interdependence on supply chains
• Tax avoidance by companies

Challenges of Globalization

• Need for a legal presence in foreign markets
• Difficulty in testing markets in unfamiliar jurisdictions
• Complying with regulatory and legal requirements in foreign countries

Trade Protectionism and Trade Liberalization

• Trade Protectionism: Government policies restricting international trade to protect domestic industries
• Trade Liberalization: Removing or reducing trade barriers to encourage free exchange of goods between nations

Protectionism Benefits

• Better trade balance (more exports than imports)
• Protection of developing domestic markets
• More growth opportunities for local firms; allows them to compete

Protectionism Disadvantages

• Loss of economic efficiency for the country overall
• Reduced choice for consumers
• Potential for retaliation from other countries

Measures of Protectionism

• Tariffs (taxes on imported goods)
• Import quotas (limits on the amount imported)
• Protection of technologies, patents, and knowledge

Restrictions on Direct Foreign Investment (FIA)

• FIA Negative List A: Economic activities where foreign equity is restricted. The restrictions range from zero to 60% foreign equity.

• FIA Negative List B: Economic activities where foreign ownership is restricted to 40% due to security, defense, health, and moral considerations.

• Minimum investment amounts differ for businesses depending in the type of investment, activity, number of employees and other criteria.

• Domestic enterprises may have 100% ownership if certain minimum investment levels are met

Trade Liberalization Advantages

• Promotion of free trade without regulatory barriers
• Lower prices for consumers
• Increased efficiency and cheaper production for domestic firms
• Increased opportunity for service or manufacturing sector focus for a country
• Facilitated technology transfer
• Increased skilled workforce due to global exposure and brain expansion

Sustainable Development

• Development that meets the needs of the present without compromising the ability of future generations to meet their own needs
• The Sustainable Development Goals (SDGs) aim to transform the world by fighting poverty and inequality, protecting the planet and ensuring that all people enjoy health, justice and prosperity

Environmental Degradation

• Main factors include human activities (modern urbanization, industrialization, population growth) and natural events (floods, droughts, fires, etc.)
• Examples of degradation include land and soil degradation, water degradation, and atmospheric degradation.

Food Security

• Meeting everyone's nutritional needs now while ensuring future generation's future access to food
• The elements of food security include availability, access, utilization and stability of food supply

Global Income Inequality

• Unequal distribution of resources, opportunities, and power among individuals worldwide

How to Reduce Global Inequality

• Reduce political power disparities by making corporate boards, international conferences, and governments accountable to marginalized communities.
• Address inequalities in economic power by making it mandatory that billionaires and large corporations pay their fair share contributing to national treasury.
• Improve financial aid to local people and climate-vulnerable countries to strengthen resilience and tackle the climate crisis

Poverty

• Lacking access to financial resources and essential needs for human survival and adequate standard of living

Types of Poverty

• Absolute Poverty: A condition in which basic necessities like food, clothing, shelter and healthcare are missing. Measured by living below a poverty line set at an income level.
• Relative Poverty: A condition in which people lack resources to participate fully in society. Often measured by comparing the income of the poor with the wealthier population.
• Situational Poverty: Lack of resources at a particular time, often due to an unexpected event like a job loss or natural disaster.
• Generational Poverty: Poverty passed from one generation to another due to factors preventing upward social mobility such as poor education opportunities, discrimination and lack of access to resources and opportunities.
• Urban Poverty: Poverty specifically tied to living in an urban area, attributed to factors like lack of access to education, employment, poor housing, insufficient healthcare and sanitation systems
• Rural Poverty: Poverty faced in rural areas, usually stemming from a lack of resources, infrastructure, distance from urban areas and lack of opportunities such as education and employment

Causes of Poverty

• Lack of clean water and healthy food
• Lack of access to education
• Lack of access to healthcare
• Lack of employment opportunities
• Inadequate housing
• Discrimination
• Climate change

Multiplier Effect

• Proportionate amount of increase or decrease in final income resulting from an injection or withdrawal of capital.

Functions of Poverty

• Dirty work is done
• Poor provide services to middle to upper class in exchange for lower pay
• Provide jobs for other related occupations
• Buy goods other do not want, thus increasing the utility
• Justification for conventional forms- hard work/thrift to be identified from those who are not in poverty
• Participation in uninhibited activities among the population
• Rich adopting poor cultures
• Social hierarchy measurement rod
• Middle class economic upliftment, in the provision of goods, and services in slums
• Maintaining status quo and justifying aristocrats existence