Understanding Globalization

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

Globalization: Different Meaning

• Refers to time-space compressions.
• Inexorable integration of markets, transportation, and communication systems.
• Worldwide intensification of interactions along with increased money, people, goods, and ideas movement.

Theories of Globalization

• Time-space compression involves rapid communication and transportation technology innovation that transformed the way of thinking about space/time.
• Distance decay occurs when something stops from moving to another place, like buying online instead of going to a physical market.
• Flexible accumulation involves advances in transportation and communication, enabling companies to move production facilities and activities.
• Offshoring is a business process relocation from one country to another, examples are McDonald's, Jollibee, KFC, and Apple.
• Outsourcing is an agreement where a company contracts its internal activity to a different company, for example, BPO Companies.
• Increased migration involves the accelerated movement of people both within and between countries.
• OFWs go to other countries.
• Tourists go to a specific country.
• Migration is the movement of a person or people from one country, locality, or residence to settle in another.
• Uneven development involves associating globalization with rapid economic development and progress, though globalization has not brought equal benefits.
• Most of the time, Globalization benefits capitalist ownership and the elite.
• Capitalism is an economic system in which private actors own and control property by their interest, demand, and supply.
• World system theory (by Immanuel Wallerstein) states that globalization is essentially the expansion of the capitalist system around the globe.
• Capitalist System involves a political and economic system where trade, industries, and the economy are generally dominated by private ownership instead of being state-owned.
• The World System theory states that globalization is essentially the expansion of the capitalist system around the world.

Types of regions in world system theory:

• Core (Progressive countries/ 1st world) refers to advanced or highly developed countries that incorporate higher education, salaries, and more technology like Western Europe, Japan, USA, and Canada.
• Semiperiphery (2nd world country/progressing countries) acts as a defense zone between the core and periphery and has a mix of activities and institutions that exist there like China, Ireland, and Mexico.
• Periphery (Poor Country/ Third World) refers to less developed countries, with lower education, salaries, and technology such as the Philippines, Vietnam, Africa, South Sudan, and Malaysia.
• According to Goldfrank (2000), One focuses on labor-intensive production (Core), while the other focuses on capital-intensive production (Periphery).
• Modernization theory by (Rostow) includes stages of economic growth and modernization.
  • A. Traditional society (Limited Technology)
  • B. Pre-conditions for take-off (Commercial exploitation of agriculture and extractive industry)
  • C. Take-off (Developing Manufacturing Sector)
  • D. Drive to maturity (Development of wider industrial and commercial).
  • E. The age of mass consumption
• Manufacturing goes from raw materials to goods and products.

3 Stages of Modernization:

• Subsistence Farming/ Traditional Economy
• Industrial Revolution
• Modern/ High Technology Societies
• Westernization involves societies adopting Western culture in areas such as industry, technologies, politics, economics, lifestyle, laws, etc.
• Americanization refers to the importance by non-Americans of Products, images, technologies, practices, and behavior that are closely associated with Americans.
• Dependency theory by (Frank) is based on the periphery's dependence on the Core.
• The Core exploits resources in the periphery, resulting in the periphery depending on the Core as it imports the Core's finished products.
• According to Friedman, there are 6 dimensions of information arbitrage to see the globalization system in the best way.

6 Dimensional by Friedman:

• Politics
• Culture
• National Security
• Financial Markets
• Technology
• Environmentalism
• World polity theory responds to modernization theory.
• World culture theory agrees that world culture is new and important but is less homogenous than world polity.
• To explain world culture theory, globalization is the process of relativization.
• Emulation believes that globalization cannot create a common culture, where everyone has the same values and beliefs.
• Glocalization involves global, local, and globalization.
• Neoliberalism is a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills through strong private property rights, free markets, and free trade.
• Technology is part of globalization, always evolving and never regressive.
• Kenneth Waltz states that globalization is something quite new, underestimating the extent to which the present looks like the past.
• Trade is measured as one of the most important factors that started the cross-border relationship amount the nations.
• The Silk Road is an ancient trade routes network that connects the East and the West, Silk is common for trading. Silk is a fiber obtained from silkworms which can be woven into textiles.
• According to Thomas Friedman, there are 3 paces of globalization:
  • GLOBALIZATION 1.0 (1492-1800) is the Globalization of Countries.
  • GLOBALIZATION 2.0 (1800-2000) is the Globalization of Companies
  • GLOBALIZATION 4.0 (2000-Present) is the Globalization of Individuals.

3 Phases of Globalization

• Archaic Globalization existed during the Hellenistic Age
  • The Silk Road trade network was established.
  • The widespread use of the Phoenician Alphabet
  • The conquests of Alexander the Great
  • The rise of the Roman Empire and its expansion through trade and conquest
• Proto-Globalization
  • The discoveries of Columbus and Vasco de Gama and the subsequent expansion of European colonial Empires.
  • The establishment of trade networks in the Indian Ocean and the rise of the Maritime Silk Road.
  • The Industrial Revolution and the growth of the modern global economy.
  • The American Revolution and the spread of democratic ideals.
  • The Scramble for Africa and the partition of the continent by European colonial powers.
• Modern Globalization
  • The growth of the digital economy and the rise of the Internet.
  • The expansion of global trade and the growth of multinational corporations.
  • The globalization of finance and the rise of international capital markets.
  • The increasing interdependence of economies and the growth of international trade and investment.
  • The increasing cultural exchange and the spread of popular culture across borders.
• The 1st Industrial Revolution Happened in the United Kingdom.
• The Industrial Revolution refers to the far-reaching transformation of British Society that occurred between the mid-18th and mid-19th centuries. Globalization says we only can if the process of trading and connection of one country to another country is globalization if both countries are members of GATT (General Agreement on Tariffs and Trades) and WTO (World Trade Organization). Internationalization occurs when a country is trading products, services, ideas, and culture to other countries but is not part of GATT and WTO. Mercantilism- an economic theory in the 18th century where believed the most powerful and wealthy countries were those that had lots of silver and gold. Globalism is the driving force of globalization. It helps to understand the interconnections of the countries in the modern world.
• The benefit of globalization is unpacked in material terms such as economic growth and prosperity.
• Manfred Steger is an economist who introduced the idea of market globalism as a rising political system.
• World War 2 brought changes in the world economy due to the existence of different international economic organizations.

Six Claims of Market Globalism: by Manfred Steger

• Claim No. 1: Globalization is focused on the global integration and liberalization of markets.
  • A self-regulating market is the basis for a future global order
  • This core claim believes that globalization is about the victory of markets over governments.
• Claim No. 2: Globalization is irreversible and inevitable, as it will never because we are into advancement.
• Claim No. 3: No one is in charge of globalization.
  • Emphasizes the leaderless idea of globalization.
• Claim No. 4: Globalization benefits everyone.
• Claim No. 5: Globalization Furthers the Spread of Democracy in the World.
  • Is anchored in the neoliberal assertion that freedom, free markets, free trade, and democracy are synonymous terms.
• Claim No. 6: Globalization requires a war on terror.
  • According to Manfred Steger, The breeding ground of _global terrorists' is called the 'Non-Integrating Gap', or 'Gap'.
  • These are Thailand, Malaysia, the Philippines, Pakistan, Indonesia, Mexico, Greece, South Africa, Turkey, Morocco, and Brazil.
• Globalization is the process of world shrinkage, compression of time and space, the onset of the borderless world
• The Concept of world shrinkage
  • The faster traveling time from one place to another.
  • The increasing transportation and communication technology.
  • Certain places seem to be much closer to each other than they once were.
• Martin Khor - Globalization is the process of colonization.
• Free Market- People are free to compete, they are free to buy, own, and sell private properties, and they are free to become investors.
• Privatization - Transfer of ownership from the government to the private sector.

2 types of Economics:

• Microeconomics
• Macroeconomic

4 Types of Economy:

• Traditional Economy
  • Traditional Society
  • Doesn't have a lot of freedom
  • No room for innovation
• Command Economy

  • Central Authority makes economic decision

  • Central Authority answers all economic questions

  • Prices are not determined by demand and supply.

• Market Economy
  • Involve people and business
  • The government is hands-off when it comes to the economy
  • Supply and Demand rule the market
• Mixed Economy
  • Command economy/= and Market economy mixed.
  • Government participates in making economic decisions
• Globalization refers to the increasingly global relationships of culture, people, and economic activity.
• Internationalization is a process of trading countries that are not part of the World Trade Organization.
• Modern Age led to the origin of globalization.
• The Silk Road is a famous road that connects China to other countries in the west.
• The Islamic Period is the most important epoch in the history of globalization.
• China invented guns and paper.
• UNO- United Nations Organization
• WTO - World Trade Organization

Positive Impact of Globalization:

• Promotion of free commerce and trade.
• Abolition of various double taxes, tariffs, and capital controls.
• Reduction of transport cost and development of infrastructure.
• Creation of Global Corporations
• Blend of culture and tradition across the countries.

Topic 4: Market Globalism

Changes in the World Economy:

• The first change is the increased volume of capital movements.
• The second change concerns the Relationship between positivity and employment.
• The third major change is the emergence of the world economy as the dominant economic unit.
• The three basic economic questions are WHAT, HOW, and FOR WHOM.
• Economic System- Nation makes economic choices about how the nation will use resources to produce and distribute goods and services.

2 Types of Economic:

• Microeconomic focuses on the recent economic environment and the effect of location on business and performance.
• Macroeconomic focuses on the broader or spreader economic environment and the world economy as all in all.

4 types of economy:

• Traditional economy is completely dictated by tradition, doesn't have a lot of freedom, has no room for innovation, and has less stress.
• Command Economy uses firms and households to act in self-interest to determine how to allocate resources, what goods get produced, and who buys the goods
  • There is no government intervention in a pure market economy.
  • "Laissez-faire” means “free hand economy"
• Market Economy uses a large part that is controlled by a centralized power and can create a healthy supply of its resources and rewards its people with affordable prices.
• Mixed Economy is the combination of the command and market economy.
• The Global Economy is an economic interdependence established between the most influential countries that drives the worldwide economic environment.
• Economic Globalization is the result of human innovation and technological progress. Global Stratification talks about the status level of a specific country in the global standards.
• First Typology:
  • First World
  • Second World
  • Third World
• Replacement Typology:
  • Developed
  • Developing
  • Undeveloped
• Popular Typology:

  • Wealthy or High-income

  • Middle-income

  • Poor or low-income

• International Trade is economic transactions between countries
  • TCL TV- from China.
  • H&M from Vietnam.
• Mercantilism formed barriers to international trade where countries aimed to produce everything on their own.
• Specialization is the focus product of one country considered a primary export product.
• Foreign Direct Investment (FDI) is a category of cross-border investment in which an investor resident in one economy establishes a lasting interest in and a significant degree of influence over an enterprise resident.
• Capital Market Flow refers to the movement of capital (money investment) from one country to another because of investment flows.
• Migration is the movement of people from one country to another.
• Diffusion of Technology is considered a major facilitator and driving force in the globalization process.
• Market Integration elucidates the interconnection among firms within a market ecosystem.
• Horizontal Integration is a growth strategy that focuses on the expansion of operation of a company.

2 Main Types of Horizontal Integration:

• Mergers- Two or more companies combine to make a new identity.
• Acquisitions- One company purchases another company. examples are : Jollibee Foods Corporation, Globe, and Islacom

2 Types of Vertical Integration

• This is a business strategy that focuses on a company expanding

3 main types of Vertical Integration:

• Backward Integration- Companies acquire or develop ownership of businesses that supply them with materials or parts used in their production.
• Forward Integration- When companies take ownership of businesses that sell the company's products.
• Balanced Integration- Involves integrating backward and forward integration.
• Conglomeration involves several different businesses that form one corporate group.

Benefits of Conglomerate:

• Diversification
• Increased Revenue
• Economies of Scale
• Cross-selling Opportunities
• Flexibility
• Diverse Employees

Disadvantages of Conglomeration:

• Investment Prospects
• Financial Reporting
• Loss of Business Freedom
• Mismatch in Business Value
• Bureaucracy
• Free Trade formed between two or more nations that permits the unlimited import or export of goods or services between partner nations.
• Tariffs is a type of trade barrier imposed by countries to raise the relative price of imported products. It comes in the form of taxes or duties.
• Embargo serves as a powerful tool to impose a comprehensive ban on trade, investment, and economic activities, targeting a particular country or group of countries
• Economic Sanctions are measures by one or a group of countries against another country, typically for political reasons.
• Free Trade Area - Philippine agreements with other countries reduce internal trade barriers and retain external trade policies.

Topic 6: The Global Interstate System

4 Elements of State:

• People
• Government
• Sovereignty
• Territory
• The interstate system involves unequally powerful and competing states, with no state capable of imposing control on all others.
• Neoliberalism involves the intensification of the influence and dominance of capital.
• Economic sovereignty is the power of national governments to make decisions independently of those made by other governments.

Effect of Globalization in Local Government:

• Property Values
• Jobs and Opportunities
• Community Exposure
• UN- United Nations

  • It has 92 member states.

  • Created and named by Franklin Roosevelt on January 1, 1942.

  • Seen as the facilitator of governance and is headquartered in New York.

• ESCAP- Economic and Social Commission for Asia and the Pacific. The Philippines is the 28th Signatory by the United Nations Charter.
• Regional Commissions are a group of officials in different countries that instruct, debate, and are charged with making laws, rights, and etc.
• The World Bank is an international development organization owned by 187 countries.

ACRONYMS:

• ECA- Economic Commission For Africa

  • Located in Addis, Ababa, Ethiopia

• ECE- Economic Commission For Europe

  • Located in Geneva, Switzerland

• ECLAC- Economic Commission For Latin American and The Caribbean

  • Located in Santiago, Chile

• ESCAP-Economic and Social Commission for Asia and The Pacific

  • Located in Bangkok, Thailand

• ESCWA- Economic and Social Commission for Western Asia

  • Beirut, Lebanon

• IBRD- International Bank Reconstruction And Development

• IFC- International Finance Corporation

• MIGA- Multilateral Investment Guarantee Agency

• IMF- International Monitory Fund

• WTO- World Trade Organizations

• WHO- World Health Organizations

• ILO- International Labor Organization

• FAO- Food and Agriculture Organization of the United Nations

• UNESCO- United Nations Educational, Scientific and Cultural Organization

• UNICEF- United Nations Children's Fund

• ICAO- International Civil Aviation Organization

• IMO- International Maritime Organization

• ITU-International Telecommunication Union

• UPU- Universal Postal Union

• IFAD- International Fund for Agricultural Development