Globalization: Theories and Meaning

• Globalization is economic integration, policy transfer, knowledge transmission, and cultural stability across borders

Globalization: Different Meaning

• Time-space compression is globalization
• Globalization involves integrating markets, transportation, and communication
• Globalization intensifies global interactions and movement of money, people, goods, and ideas

Theories of Globalization

• Time Space Compression refers to rapid advancements in communication and transportation that changed perceptions of space and time
• Distance Decay describes when the interaction between two locales declines as the distance between them increases, such as online purchasing
• Flexible Accumulation is the ability of companies to move production globally due to advances in transportation and communication
• Offshoring involves relocating a business process to another country (e.g., McDonald's, Apple)
• Outsourcing is when a company contracts an internal activity to another company (e.g., BPO companies)
• Migration involves the accelerated movement of people within and between countries
• Examples of migration include Overseas Filipino Workers (OFWs) and tourists
• Migration is the movement of people from one place to another to settle
• Uneven development occurs when globalization doesn't provide equal benefits for all
• Often, globalization benefits capitalist ownership and the elite

World System Theory (by Immanuel Wallerstein)

• This theory frames globalization as the expansion of the capitalist system globally
• A Capitalist System is an economic setup where trade and industries are dominated by private ownership, not state control
• The theory asserts that globalization expands the capitalist system worldwide

Types of Regions in World System Theory

• Core nations are 1st-world progressives with high education, salaries, and technology (e.g., Western Europe, Japan, USA, Canada)
• Semi-periphery nations are 2nd world progressives acting as a buffer between core and periphery (e.g., China, Ireland, Mexico)
• Periphery nations are 3rd world, less developed, and have lower salaries and technology (e.g., Philippines, Vietnam, Africa, Malaysia)
• One focus, according to Goldfrank (2000), is on LABOR-INTENSIVE PRODUCTION (Core), and the other, on CAPITAL-INTENSIVE PRODUCTION (Periphery)

Modernization Theory (by Rostow)

• This theory describes stages of economic growth and modernization
• Traditional Society has limited technology
• Pre-Conditions for Take-Off involve commercial exploitation of agriculture and extractive industry
• Take-Off involves developing a manufacturing sector
• Drive to Maturity involves developing wider industrial and commercial sectors
• The Age of Mass Consumption focuses on manufacturing goods and products from raw materials

3 Stages of Modernization

• Subsistence farming/ traditional economy

• Industrial Revolution

• Modern/ High Technology Societies

• Westernization occurs when societies adopt Western culture (industry, tech, politics, economics, lifestyle, laws)

• Americanization refers to the importance of American products, images, technologies and practices by non-Americans

• Dependency theory (by Frank) is based on the periphery's dependence on the core

• Core nations exploit resources in the periphery, causing the periphery's dependence as they import finished products

Information Arbitrage (by Friedman)

• There are six dimensions of information arbitrage
• These dimensions help explain the globalization system: Politics, Culture, National Security, Financial Markets, Technology, and Environmentalism
• World Polity Theory responds to modernization theory
• World Culture Theory recognizes that world culture is new but not as homogeneous as world polity

Theories of Globalization

• Relativization is the process of globalization
• Emulation argues against a common global culture with uniform values and beliefs, while Glocalization can be broken down into Global, Local, & Globalization
• Neoliberalism suggests that entrepreneurial freedoms and private property rights best advance well-being
• Technology is always evolving as part of globalization
• According to Kenneth Waltz, globalization is new, but the present looks like the past
• Trade is a key factor establishing cross-border relationships

Silk Road

• Network connecting the East and the West
• Silk was the most traded product at that time

Thomas Friedman's 3 Paces of Globalization

• Globalization 1.0 (1492-1800) involves globalization of countries
• Globalization 2.0 (1800-2000) involves globalization of companies
• Globalization 4.0 (2000-Present) involves globalization of individuals
• The 20th century is known as the golden age of globalization
• The 1st Industrial Revolution happened in the United Kingdom
• The Industrial Revolution refers to British society's transformation between the mid-18th and mid-19th centuries

Comparing Globalization and Internationalization

• Globalization occurs when countries trading are part of GATT & WTO

• Internationalization occurs when countries trade but aren't part of GATT & WTO

• Mercantilism is an 18th-century economic theory where powerful countries had silver and gold

• Globalism drives globalization and helps us understand modern interconnections

• Economic growth and prosperity are benefits of globalization

• Manfred Steger presented the idea of market globalism as a rising political system

World War 2

• Marked changes in the world economy due to global organizations

Six Claims of Market Globalism (by Manfred Steger)

• Globalization focuses on global integration and market liberalization
• A self-regulating market would be the foundation of a global order
• Globalization stands for markets over governments
• Globalization is irreversible and will continuously advance Globalization is nobody's singular responsibility
• Globalization benefits everyone in the "long run"
• Globalization furthers democracy
• Freedom, free markets, free trade, and democracy are synonymous terms Terrorism requires globalization, with the gap between integrating and non-integrating countries being called the "Non-Integrating Gap" (Thailand, Malaysia, Philippines, Pakistan, Indonesia, Mexico, Greece, South Africa, Turkey, Morocco and Brazil)
• Globalization shrinks the world
• Globalization compresses time and space
• Increasing communications and transportation technology

World Shrinkage

• Globalization is the onset of a borderless world
• The faster traveling time from one place to another
• Places seem closer than they once were
• According to Martin Khor, globalization is colonization

Free Market

• Allows people to compete
• Allows people to buy, own, and sell private properties
• Allows people to become investors
• Privatization is the transfer of ownership from the government to the private sector

Types of Economics

• Microeconomics
• Macroeconomics

Types of Economies

• Traditional economies are dictated by tradition and provide less freedom and innovation
• Command economies involve a central authority making economic decisions
• Market economies have involved people and don't have any government intervention
• Supply and demand rules the market in these types of economies
• Markets with some government intervention consistute Mixed economies
• The world doesn't have pure market economies

Topic 3: History of Globalization

• Globalization refers to the increasing global relationships of culture, people, and economic activity
• Internationalization involves trading for countries separate from WTO
• Modern Age led to the origin of globalization
• Silk Road connected China to other countries in the West
• Islamic Period is an important epoch in globalization history
• China invented guns and paper
• UNO, also known as United Nations Organization
• WTO, also known as World Trade Organization

Positive impacts of Globalization

• Commerce and trade are promoted
• Double taxes and tariffs are abolished
• Costs for transportation are reduced
• Corporations are created
• Culture and tradition across the coutnries are blends

Three basic economic questions

• WHAT?

• HOW?

• FOR WHOM?

• Economic systems determine how nations utilize resources

• There are two main ecnonomic divisions, namely

• Microeconomics, which focuses on business and location

• Macroeconomics, which focuses on the global world and economy

• 4 Types of economies can be broken down into: -1. Traditional Economy

• No Innovation -2. Command Economy

• Authority answers all -3. Market Economy

• Supply and demand rule the market -4. Mixed Economy

• Government participates and can be a command or a market economy

• The global economy involves economic interdependence between the most influential countries

• Economic globalization requires innovation and technological progress

• Global stratification describes the status of a specific coutnry given global standards

First typology of globalization

• First world
• Second World
• Third World

Replacements for globalization

• Developed
• Developing
• Undevelped

Most common typology

• High income
• Middle income
• Low income
• International trade is economic trade between coutnries
• For Example TCL TV from China, H&M from Vietnam are common examples of companies that operate globally
• Mercantilism prevents trade, where coutnries aim to do everything themselves
• Specialization involves one coutnry that trades only one product
• FDI, is a category of investment when somebody invests abroad
• Capital market flow determines the flow capital in a coutnry
• Migration involves the movement of people from one place to another
• Diffusion helps move technology

Market Integration

• Firms inside a market eludicate interconnection
• Two types of firm are horizontal and vertically integrated

Horizontal Integration

• Focuses on expansion in an operation
• Has firms with mergers that make a new identity
• Or acquisitions that involve purchasing from another company
• For example islacom or globe
• Focuses on expanding the company
• Involves 3 man types
• backward integrations (when one develops their supply chain)
• Forward integration (When companies take ownership of those that sell the sell the companies products
• And balanced integration involves backward and forward
• Conglomeration (when multiple businesses form together.
• Benefits include:
• Diversification
• In revenue
• Economies of scale
• Cross-selling
• Flexibility
• Diverse employees
• Downsides include
• Investment Prospects
• Financial Reporting
• Loss of Business Freedom
• Mismatch in Business Value
• Bureaucracy
• The Phillipines in on the 28 Signatory in the UN charter
• Commissions are in charge of debate and making laws
• The World Bank is owned by 188 coutnries

Acronyms

• ECA for Africa located in Addis Ababa.
• ECE for Europe located in switzerland
• ECLAC for latin America in chile
• Escap for asia in thailand
• escwa for for western asia

IMO- International Maritime Organization

ITU- International Telecommunication Union

UPU- Universal Postal Union

IFAD- International Fund for Agricultural Development