Economic Globalization & Global Governance PDF

2.1: Economic Globalization Oil Price Objectives: Organization of the Petroleum Exporting Countries (OPEC) This module aims you to:...

2.1: Economic Globalization Oil Price Objectives: Organization of the Petroleum Exporting Countries (OPEC) This module aims you to: Ensures price stability in the world oil market, a. Understand the impacts of economic globalization; Obtains a stable revenue for oil-prodcuing nations, and b. Identify its pros and cons; and c. Ponder ipon measures that would address the negative effects of economic Provides a regular, reliable, efficient and economic supply to consuming globalization countries and fair return to investors in the oil industry Basically, OPEC decides the oil supply Economic Globalization It is the mobility across borders of goods and services, people, capital - Brent Crude – oil from north sea - 3 factors affecting oil price – supply, demand, and knowledge It is the process of integration of national economies and elimination Established in 1960, OPEC was initially composed of Iran, Iraq, Kuwait, of national economies and elimination of national economic borders Saudi Arabia and Venezuela Globalization has further deepend because of the following factors: Later on, the following countries joined OPEC: 1. Regional trading agreements 1. Libya (1962) 5. Gabon (1975) 2. Removal of restrictions to the flow of trade and investments 2. United Arab Emirates (1967 6. Angola (2007) - Ex. tax from other countries are cheaper 3. Algeria (1969) 7. Equatorial Guinea (2017) 3. Rapid technological changes 4. Nigeria (1971) 8. Congo (2018) - Ex. if you are a patron to online shopping. We are being invited/attracted to buy products online, much easier/convenient. Aside from OPEC, we are also highly dependent on oil imports. ○ Venezuela, Saudi Arabia and Iran possess half of the world’s 1.55 trillion barrels of prove oil reserves. In 2019, the world consumed 99.7 million barrels of oil per day according to the IEA. ○ Proven crude oil reserves (million barrels) 1 barrel = 42 gallons = 159 litres - Transnational corporations: What’s in Your Apple iPhone Discusses the diff parts of an iphone coming from diff parts of the world, assembled in one country Pre-COVID, Transnational Corporations (TNCs) are the key actors of the ○ Ten countries in the world produce 72 percent of the world’s oil. ○ The US is the world’s largest oil producer followed by Saudi Arabia and 20th Century Global Economu. They control supply chain operations in Russia. more than one country. Their business activities are done outside the country of origin (Greer and Singh, 2999) but their headquarters are in their own home countries. - Ex. Toyota – has factory in Santa Rosa, Laguna (ex of TNCs), TNCs have defined the new international division of labor 1. They search for raw materials 2. They find new markets for their products 3. They tap offshore sources of low-cost labor - Can result in wide child labor, neglect for workers, companies have problem with worker rallies for minimum wage. Sometimes gov things raised minimum wage will not attract investors to the country. ○ Russia is the world’s second highest exporter of crude oil, after Saudi Arabia. - Division of labor – assigning different processes to different person/groups In 2019, 48 countries bought Russian crude oil worth $123bn. How Economic Globalization is seen in the PH In the Philippines, we have Republic Act 8479 or the “Downstream Oil 1. Trade Openness Industry Deregulation Act of 1998” stating that the government will not – can purchase imported goods and products, availability of these interfere with the pricing, exportation and importation of oil products 2. Financial Openness – see this in TNCs investing in the country To address oil price hikes, the national government may opt to give out 3. Migration subsidies to the transport sector, or suspend oil taxes – we export human resources, OFWs, to other countries. Their remittances to their fams in the ph form part of the economu Actually, we are rich in energy resources. We have the Malampaya Gas Field (Palawan), Alegria (Cebu), and Liguasan Marsh (Cotabato, (Ideal) Impact of Economic Globalization Maguindanao, and Sultan Kudarat). Other unexplored sites are in Sulu 1. Economic Growth and Employement Sea, Celebes Sea, Reed Bank, and the disputed Kalayaan island Group. 2. Decline in Inflation But according to our national armed force, we cannot maximize our 3. Poverty Alleviation and Income Equality natural resources due to security challenges. - Connect oil price with food security - Food come from probinsya, delivery fee price hike due to oil price hike In Focus: COVID-19, oil price and our food situation What’s Going On? PH Economy and COVID-19 In the latest survey, more FIlipino families experienced involuntary PH’s Gross Domestic Product (GDP) growth rate dropped by 16.9% in hunger (not having anything to eat) in the 1st quarter of this year, the Q2 2020, the lowest since 1981. highest hunger (not having anything to eat) in the 1st quarter of this year, 2020 unemployment rate reached 10.3% or equivalent to 4.5M Filipinos the highest hunger incidence since May 2021 (Chi, 2024) without jobs OFW remittances fell only by 0/8% in 2020. This represents 9.2% of our Rice importation reduced last May 2023, compared to last year. Our GDP. biggest supplier of rice is Vietnam, followed by Myanmar. We also import - We’re very dependent on other countries on employing our OFWs from Thailand, Pakistan, India, China, and Japan In 2020, foreign direct investments (FDI) decreased to $6.5B from $8.7B The Thai Rice Exporters Association said that the Philippines may buy in 2019. more rice from Thailand this year due to the decrease in land use for Our debt increased to Php 10.3 T as of end-January 2021, according to growing season in Vietnam. the Bureau of Treasury. - Greater dept to keep economy afloat. To give programs to those affected by However, even Thailand is going decreased their land cultivation last covid 2023 due to “severe stress from climate change, unsustainable farm debts, and a lack of innovation” (Ghoshal, D., Wesshasartar, N., and Trade and investment have defnitely been afected by COVID-19. Kongkunakornkul, P., 2023) The big impact of COVID-19 among industries inevitably afects the individual. Did you know? A country’s economy is shaped by its political and social factors. In 2022, Thailand exported 7.7M tonnes of milled rice to countries across Middle East, Asia, and Africa  India is the world’s #1 rice exporter, followed by Thailand - Main: United Nations (di kasama cos di nabuo during bretton woods conference - key eevent that helped rebuild global economy) Addressing Food Insecurity Hunger can be resolved through balancing self-sufciency, or being able International Monetary Fund (IMF) to produce our own food; and importation. Established for global economic stabilization and to help in the Importing food from our neighboring Asian countries, specifcally Vietnam reconstruction of countries after the war and Thailand, provides consumers with afordable options. This is Main aim is to promote world economic stability and growth. possible because of our regional agreement as part of the ASEAN. Currently has 189 member countries Learning from Thailand’s experience, strengthening its agricultural Each member of IMF is assigned with a quota, based on its relative production does not only beneft the Thai people but the SEA region as position in the world economy. - provide loans to different countries to promote stability and growth well. If we strengthen our agricultural industry further, we are not only - Each member assigned with quota able to feed Filipinos, but we also become an asset in the region. - Should be a balance of self-sufficiency and importation Quota formula: Challenges to Economic Globalization Sum of the following Lack of social safety nets 50% Average of > GDP Favoring market expansion but social objectives are lagging 30% Openness Uneven distribution of its benefts resulting to increasing gap between the 15% Economic Variability rich and the poor 5% International Reserves Losing small and medium frms Unskilled workers cannot keep up Quotas are denominated in Special Drawing Rights (SDRs). Lack of political commitment and public support for rural development Quotas determine the fnancial and organizational relationship with IMF programs such as the: Brain drain 1. Maximum amount of fnancial resources a member is obliged to Climate change commit to IMF; 2. Voting power (one vote = SDR 100,000) Responding to the Challenges 3. Financing access Developing countries should be involved in crafting global economic rules. The United States has the largest quota with SDR 83 B. Tuvalu has the Governments should create more inclusive policies that will serve as smallest with SDR 2.5 M. safety nets to minimize negative efects of economic globalization The Philippines has SDR 2,042.9 M. Retrain workers to increase competitiveness. - Amt of quota country has determined by capacity to give or loan financial resources as an obligation to IMF Provide incentives for producers to increase their productivity. Form strong partnerships between the national government, private Response to COVID-19 sector and civil society. IMF has provided emergency fnancing to 102 of its member countries; Protect rights and well-being of migrant workers. and immediate debt service relief to 29 countries. It has also been providing technical assistance and policy advice to over Taking Action 160 countries on cash management, fnancial supervision, cybersecurity Marie Kondo, an Asian woman, is challenging excessive consumerism and economic governance. (capitalism) by promoting a minimalist lifestyle. IMF has launched its online learning channel in YouTube (IMF Institute - “If it doesn't bring you joy, throw it away” Learning Channel) that ofers short videos on key economic concepts. Prime Minister Jacinda Ardern is changing her political principles in In 2020, former Bangko Sentral ng Pilipinas (BSP) Governor Benjamin governing New Zealand Diokno said that we do not need to loan from IMF. - Mentioned that countries should not only focus on economic “As I said before, structural reforms and sound economic management development or gdp as a measure of econ dev or happiness or have helped the Philippines enter the COVID-19 crisis from a position of contentment. strength.” (Magtulis, P. “Fully paid since 2006, Philippines shuns IMF loan during pandemic”. 19 May 2020. PhilStar) Greta Thunberg challenges world leaders to take action against climate change. The World Bank Formerly known as the International Bank for Reconstruction and Economic Globalization Affecting our Personal Lives Development (IBRD)\ One study concludes that young adults are marrying and having Main goals are to establish a framework on world economic governance children later in life than previous generations. A female respondent and also to help in the reconstruction after World War II. says that before settling down, she wanted to gain more fnancial security, to travel and to explore diferent careers. World Trade Organization Median age of marriage has risen to 27.4 and 29.5 for women and men Originally known as the General Agreement on Tarifs and Trade (GATT) respectively in 2017, compared to 20.8 (women) and 23 (men) in 1970. It deals with the global rules of trade, with the main function of ensuring In 2017, according to the Philippine Statistics Authority (PSA), median that trade fows as smoothly, predictably and freely as possible. age of brides is at 27, while 29 for grooms. It promotes trade liberalization among member countries. 2.2 Global Governance (Structures of Globalization) Response to COVID-19 The World Bank has already lent the Philippines with the following Global Governance amount: Regulation of interdependent relations in the absence of overarching April 10 = $500 M to support urgent needs political authority. It encompasses instituitons, policies, norms and April 23 = $100 M for healthcare May 28 = $500 M to mitigate impact of COVID-19 pandemic on poor and vulnerable procedures and initiatives through which states and their citizens try to households, and to provide fnancial relief to small and medium enterprises bring more predictability, stability and order to their responses to August 15 = $1.9 B worth of projects in support of the Build, Build, Build program transnational challenges *Just for 2020, we loaned a total of $1.2 B. Management of international cooperation among transnational actors (nation states, transnational corporations, etc) aimed at facilitating For 2021, the World Bank loaned $500 M financing to purchase and solutions to global problems afecting more than one state or region distribute vaccines and to strengthen the country’s health systems. Initially, its main goal is to avoid incidence of another world war. Before President Rodrigo Duterte stepped down from his ofce, the - Managing relationships bet and among transnational actors World Bank has approved the country’s loan of $178.1 M to improve - Not just country/state govs, kabilang companies and corporations the state of nutrition in the country - Among humanitarian orgs/non gov During the Bretton Woods Conference after World War II, three PH Pandemic Loans institutions were established to help in rebuilding the global economy In 2020, our total number of loans for addressing COVID-19 is $7.76 B. 1. International Monetary Fund ○ Asian Development Bank = $2.6 B 2. The World Bank ○ World Bank = $1.3 B 3. World Trade Organization ○ China’s Asian Infrastructure Investment Bank (AIIB) = $750 B - 3 main international orgs established to help global governance ○ Japan International Cooperation Agency (JICA) = $458.9 M ○ Agence Francaise de Développement (AFD) = $275.7 M As of 8 April 2021: In Focus: UN responses to the pressing issues of the world Loans for vaccines ($1.2 B or Php 58.5 B) ○ $500 M (World Bank) UN’s pandemic assistance to the PH ○ $400 M (Asian Development Bank) ○ $300 M (Asian Infrastructure Investment Bank) In 2020, the United Nations mobilized an estimated amount of Php 1.4B Loans for Budgetary Support and Project Loan Financing ($15.47 B, to be paid to assist our country in our fght against COVID-19. until 2049; This amount is a combination of in-kind and technical support for the Grants ($26.74 M) Philippines. ○ $18.74 M (Government of Japan) 60% of the activities were implemented nationwide; 20% for the ○ $8 M (Asian Development Bank) Bangsamoro Autonomous Region in Muslim Mindanao (BARMM); and the other percentage for other regions in the Philippines. Dissecting ‘Civil War’ Following the damages created by the Avengers in Lagos, Nigeria (Avengers: Age of Ultron), the United Nations proposed the Sokovia Accords that would regulate and UN helps Myanmar limit the group. The military coup in Myanmar, which started in 2021, has displaced Steve Rogers (Captain America) is opposed to the treaty, while Tony Stark (Iron more than a million people in the country. The execution of opposition Man) is ready to cooperate with the government. leaders and violence towards civilians have brought economic turmoil in Ethical dilemma: abide by the UN’s policy or act against it. Myanmar, worsening the poverty situation. The Government and Kingdom of Belgium donated $500,000 to the UN The United Nations Food and Agriculture Organization (FAO) to provide agricultural Its Charter was signed in June 1945 in San Francisco led by Britain, assistance to 2,000 households (10,000 individuals) in Myanmar. China, the Soviet Union and the United States. Interventions include provision of cash assistance, and vegetable It is the primary organization working on international cooperation, peace production packages. and security. Few of its objectives that can be found in the pledges of its Charter is to UN on Russia-Ukraine War end the scourge of war and regain the faith in fundamental human rights. The United Nations General Assembly called out the Russian Federation Based on its Charter, it has six principal organs: to withdraw its military forces from Ukraine. An overwhelming 141 out of 1. General Assembly (formed by 193 member countries) 146 voted against Russia’s invasion to Ukraine. 2. Security Council (formed by 15 member countries) 3. Economic and Social Council (ECOSOC) Since the February 2022 attack on Ukraine, the United Nations has been 4. Trusteeship Council (operates only when necessary) doing initiatives to end the war. 5. International Court of Justice Last 01 August 2022, the shipment of the Ukrainian grain, bound for 6. Secretariat Lebanon, left for the first time since the war broke in February 26. The United Nations brokered this deal, with Turkey and representatives from UN Sec. Gen. Guterres, former Portuguese Prime Minister, has been re-elected as Russia and Ukraine in July, to address the global food shortage. the 9th Secretary General for another fve years (2022 - 2026). He served his frst term as the UN Secretary-General from 2017 - 2021. His immediate predecessors, Kof Annan from Ghana and Ban Ki-Moon from South Korea, who also held two Challenges to Global Governance terms as Secretary General of the UN. A UN Secretary-General is expected to Sovereignty - confict between national sovereignty and the need to do represent the United Nations, and to act as a Chief Administrative Ofcer taking care international collective action. of the concerns of the UN organs. The current system is not equipped to manage the growing economic integration and interdependence among countries. The UN Secretary Council The structures and rules are unbalanced. Developing countries have to Its 15 members are composed of the fve permanent members namely abide by the rules and efects of global governance but they have little the United States, Britain, China, France and Russia and the other 10 space to infuence them. are elected for a two-year term representing diferent regions of the world. Reforming Global Governance It has the authority to impose sanctions on member countries and 1. Recognize diversities of countries, their respective contexts and their authorize military intervention. The Permanent Five or P5 has the main needs power to do these. 2. Principle of Subsidiarity believes that national governments should The P5 has the power as well to choose the Secretary General through resolve their problems at their level frst before escalating to the a secret ballot who serves for a maximum of two fve-year terms. international community. 3. In decision-making, international organizations should promote The following are the current 10 non-permanent members of the UNSC inclusiveness, transparency and accountability. elected by the General Assembly: 4. Global or international decisions should be coherent, and simple, so 1. Algeria (2025) 6. Mozambique (2024) countries would be able to execute these easily. 2. Ecuador (2024) 7. Republic of Korea (2025) 3. Guyana (2025) 8. Sierra Leone (2025) 5. Responsible Sovereignty believes that the international community 4. Japan (2024) 9. Slovenia (2025) should recognize the sovereignty of the countries or the states; and the 5. Malta (2024) 10. Switzerland (2024) countries or the states should also be responsible in using their sovereignty. FOOTNOTES 1 The Presidency of the Council is held by each of the members in turn for one month, Analysis on Structures of Globalization following the English alphabetical order of the Member States names. For October 2020, COVID-19, the confict between countries, and other global issues, the Russian Federation is the current Security Council President. highlighted the high interdependence of countries around the world. 2 The Philippines was elected as part of the UN Security Council in 1957-1958 (Carlos P. This increased interdependence should keep our national government Garcia), 1963-1964 and 1980-1981 (Ferdinand Marcos) and 2003-2005 (Gloria on their toes - to fnd ways on how to minimize its potential risks. Macapagal-Arroyo). Economic growth is not enough to determine a country’s development. Figures or numbers should refect how they impact welfare or well-being UN Specialized Agencies of individuals. Independent international organizations coordinating their work with the United Nations through negotiated agreements. Being part of global governance has its own advantages and disadvantages. It is up to nation-states how to maximize the benefts of global governance. The key to real development is close cooperation and coordination of the international institutions and nation-states. “COVID-19 has taught us that health is the basis of wealth, that global health is no longer defned by Western nations and must also be guided by Africa and Asia, and that international solidarity is an essential response and a superior approach to isolationism. We may emerge from this with a healthier respect for the environment and our common humanity” –Kickbush, I. et.al., 2020 UN Funds and Programmes “No one country can solve this crisis alone. We must act together. A solution could be Distinctly diferent from specialized agencies as they have their own focused found, and it would be found much quicker if the world works together.” mandate (ex. SDGs) – German Chancellor Angela Merkel in her video message during the 18 May 2020 World Health Assembly