Understanding Economic Globalization and Integration

Economic Globalization

• Driven by increased cross-border trade of commodities and services.

Economic Integration (EI)

• Functionally relates separate production operations to form a unified product or service.
• EI is made possible through innovations in transport, logistics, modernization of communications and transport systems.

Early Forms of Economic Expansion

• Early integration includes China trading in Asia.
• Globalization is an ongoing process since homo sapiens began migrating from Africa.
• Explorations in earlier times focused on spices, tea, gold, and precious metals.

Facilitators of Economic Integration

• International Economic Organizations like the IMF and World Bank are key
• The World Bank and the Organisation for Economic Co-operation and Development (OECD) are critical in developing and pushing for neoliberal policies.
• Trade development discussions help to foster Economic Integration.
• Examples of Regional Organizations that promote Economic integration include ASEAN and NAFTA.

G8 and G20

• Forum to discuss current economic and political problems, transferring ideas to national legislative regulations.

Multinational Companies (MNCs)

• They are main carriers of economic integration (EI).
• Central Banks are prime movers of EI.
• Global Civil Society drives EG (along with GCS)
• Global Civil Society is composed of individuals or groups protesting and seeking alternatives.
• Global Social Movements constitute a basis for an alternative to a new world order.
• Transnational Advocacy Networks promote causes, principled ideas, and norms and advocate for policy changes.

International Monetary Fund (IMF)

• Has 183 member countries
• Promotes international monetary cooperation and exchange stability.
• Fosters economic growth and high employment.
• Provides short-term financial assistance.

International Financial Institutions (IFIs)

• Examples include the World Bank and the European Bank for Reconstruction and Development (EDB).
• Provides loans for large-scale projects.

Transnational Corporations (TNCs)

• Enterprises engaging in activities adding value in more than one country.

World-Systems Theory

• Wallerstein explains how the core areas came to dominate the periphery.
• The world economy is a social system divided into core states, peripheral areas, and semi-peripheral areas.
• Peripherals are mostly locations where raw materials are sourced.
• Semi-peripherals process and distribute products to core areas.
• Core areas have major demand for goods and services.

Global Interstate System

• Institutional arrangement of governance addressing regional and globalized issues.

Market Integration

• Economies become more interdependent and connected in terms of commodity flows, including externalities and spillover effects.
• A market is interdependent with commodities.
• Integration is interconnected with spillover impacts and externalities.

International Financial Institutions (IFIs) Role

• IFI's provide support through loans and grants, providing technical advice designed to promote a countries economic and social development.

Structures of Globalization

• Include economic, political, and social aspects.
• Economic: Market Integration, Global Economy
• Political: Interstate system, Supra Governance
• Social: TNCs, Global Interstate system

Corporations

• Private institutions that produce goods and services for a vast, expanded market reach
• Includes TNCs and MNCs.

Two Kinds of Increasing Market Integration

• Horizontal Integration involves a firm gaining control of other firms performing marketing functions at the same level in the marketing sequence
• Vertical Integration refers to instances where one company owns the operations and products from one stage from with the supply chain.

Key Issues with International Financial Institutions (IFIs)

• Legitimacy
• Effectiveness
• Support conditionally
• Financial capacity for sustainability

World-Systems Theory

• The world is a core-periphery dichotomy.
• Developed by US sociologist Immanuel Wallerstein.
• Core countries are well developed and industrialized, produce goods and have a strong central government and large tax base.
• Periphery countries are least developed, export raw materials, are strongly influenced by core nations and have a weak government.

Dependency Theory

• Resources flow from the periphery of poor, underdeveloped states to a core of wealthy states resulting in:
• Poor states becoming impoverished.
• Rich states enriched by how poor states integrate into the world system

Regions within the World System

• Core Areas are technologically advanced and industrialized capitalist nations/regions.
• Periphery Areas are poor countries primarily subsisting by exporting primary products.
• Semi-Periphery Areas serve as periphery to core countries and core to the countries on the periphery.
• The G8 is considered interior to the core and superior to periphery

G8 Countries Include:

• France, Germany, Italy, UK, Japan, USA, Canada, and Russia.

Purpose of the G8 meeting:

• To hold annual meetings to foster consensus on global issues like economic growth, crisis management, global security, energy, and terrorism.
• Presidents and Prime Ministers, along with finance and foreign ministers, participate in discussing international issues
• Small states are excluded from important talks concerning the global economy and international security.

G20

• Emerged between 1975 and 1999 to provide major industrial powers a place to address economic concerns.
• Accounts for more than 85% of global economic output, 75% of global exports, and comprises 80% of the world's population.
• It is a forum that brings industrialized and developing countries together to stabilize the international economy and financial stability.
• Discussions address major global issues bilaterally and multilaterally.
• Responded with lackluster effectiveness to the COVID-19 pandemic
• Key participants of the G20 include: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, UK, US and Spain.

G7

• A smaller group of advanced democracies focusing on larger emerging markets.
• Aims to take up a relatively greater share of the world's economy.

Interstate System

• A system of unequally powerful and competing states.
• No single state can impose control on all others.

Global Interstate System

• Institutional arrangement of governance addressing regional or globalized issues beyond the scope of a nation-state.

Internationalism

• Promotes political, economic, and cultural cooperation between nations.
• Acknowledges diversity and multiculturalism.

Globalism

• Ideology based on the belief that the flow of people, goods and information should be free across national borders.
• Focuses more on the economic aspects of exchanges among countries and society.

History of Globalization

• 16th-18th Century: Modern capitalist world economy flourished
• 1914: Globalization had the first big interruption where trade and immigration decreased
• From the Second World War to the late 1990s, the establishment of enabling architecture occurred. This architecture enables modern international economic practices
• Expansion of MNCs across the globe. With enabling policies that improved communication and transport
• Trade liberalization and Free flow of capital in the world resulted in political changes like the fall of the Berlin Wall

International treaties

• Serve as drives for this large scale global movement. Ex: telegraph union in 1865, universal postal union in 1874

International Organizations Governance

• Organizations like UNESCO contribute to peace and security.
• ICAO (International Civil Aviation Organization) regulates international air transport.
• ILO (International Labor Organization) deals with labor problems and international labor standards.
• FAO (Food and Agriculture Organization) leads international efforts to defeat hunger, eliminate food insecurity and increase resilience of livelihoods and food.
• WHO(World Health Organization) researches in medicines and vaccines

Negative Effects of Globalization

• Local governments want foreign investors, so they convert agricultural land into industrial zones.
• Farmers will be displaced by agriculture production.
• Global corporations demand lower taxes, lower wages, and economic policies

Global Governance

• Collective efforts to identify and address global problems that extend beyond the reach of individual states.
• Capacity within the international system to provide governance-like services and public goods in the absence of a world government.

End of the Cold War

• Headed towards a centralized governmental form that is less regulated
• Created the age of multipolar and anti-hegemony

UN General Assembly (1st branch)

• The UN’s main decision-making and representative assembly.
• Responsible for upholding the principles of the UN through policies and recommendations.
• Composed of all member states
• Headed by a president elected by the member states

UN Security Council (2nd branch)

• Authorizes the deployment of UN member states’ militaries.
• Can mandate a ceasefire during conflicts.
• Imposes penalties on countries that do not comply with given mandates.
• Composed of 5 permanent members and 10 rotating member states.

International Court of Justice (3rd branch)

• Can settle legal disputes between states and give opinions, mostly advisory, on legal questions brought to it by UN organizations and agencies.

Economic and Social Council (4th branch)

• Assists the UN General Assembly in promoting economic and social development as well as the cooperation of member states.

The Secretariat (5th branch)

• Headed by the Secretary-General.
• Provides studies, information, and other data when needed by other UN branches for their meetings.

Explore economic globalization, driven by cross-border trade and economic integration. Learn about early forms of economic expansion, international economic organizations such as IMF and World Bank, and the role of regional organizations in promoting economic integration.