GE 5 Reviewer PDF: Globalization, World Economy, Free Trade

GE 5 REVIEWER Stage 4 (1920 - 1927) - great state powers crystallize & world wide L1: Definition of Globalization organization and institution develop. M...

GE 5 REVIEWER Stage 4 (1920 - 1927) - great state powers crystallize & world wide L1: Definition of Globalization organization and institution develop. Merriam Webster 2021 Stage 5 (started at end of 20th century) - the act of globalizing - intensification of regionalization & integration - state of being globalized & development of global - strong development of multinational corporations. economy - free trade, free flow of capital, cheaper foreign labor markets. First Globalization Era Juneja (no date) First stage lasts until end of 1920 and beginning of 1930 Further explains globalization in his two key points: - free movement of goods, services and people across Second stage begin after 1930 lasting until Second the world in seamless & integrated manner world war - increasing interconnectedness and integration of economies Types of Globalization Globalization is grounded by the theory of comparative Economic Globalization advantage- countries that are good producing particular - unification and integration of international financial good are better off exporting it to countries less efficient. markets - multinational corporations that have significant History of Globalization influence on international markets Steger et al. (2023) Political Globalization - economists and sociologists initiated exploration of - international trade and commerce globalization in 1960 & 1970. Historians did not engage - institutions that implement these policies- national until 1990. government & international institution such as - since ancient times, humans sought distant places to International Monetary Fund and World Trade Org. settle, produce, & exchange goods - improvements in technology and transpo. Cultural Globalization - 19th century did globalization take off. -social factors that cause cultures to converge- increased ease in communication & transportation brought about World War 1 by technology. July 28 1914- November 11 1918 L2. Introduction to Study of Globalization World War 2 September 1 1939 - September 2 1945 Effects of Globalization ( aim of studying globalization to understand differences Cold War and similarities of diff. culture & to understand how we March 12 1947 - December 3 1989 are connected and separated from the world) (ideological and political rivalry between US and USSR)  More goods at lower prices  Scaled up businesses Evolution of Globalization - Eriksen 2020  Better quality and variety  Innovation Stage 1 (1400 - 1750)  Job Churn - primary stage  Decline in gap between rich and poor globally, but - geographic discoveries, colonization & appearance of wider inequality with United States transcontinental trading exchange Advantages Stage 2 (1750 - 1880)  An open economy spur fast innovation with fresh - incipient stage ideas from abroad -formation of unitary states, development of trading  Consequently promotes economic growth, create relations & signing of first agreements jobs, make companies more competitive and lower prices for consumer Stage 3 (1880 - 1925)  Productivity grows more quickly when countries - stage of development produce goods & services - which they have - manufactured production developed, means of comparative advantageous transport evolved, international trading & population migration intensified & multinational organization took shape Disadvantage Focus Resource Economic growth,  Exploitation to underdeveloped countries allocation, pricing inflation,  Widening of rich- poor gap and production - unemployment &  Harmful effects on small industries and small individual level national income business Key factors Supply & demand, Monetary policy, consumer fiscal policy, What is global economy? behavior , market international trade - interconnected worldwide economic activities- take structures place between multiple countries. Economic - Helps business in - Guides - can have either positive or negative impact Importance decision making government policy (pricing, on national issues Global economy characteristics: production) like inflation & unemployment 1. Globalization: process of integrating national and -Assist regional economies, societies, & cultures thru: understanding -Provides insights - Global trade networks consumer for stable - Communication systems preference & economic growth - Immigration demand errands & international - Transportation trade management. Example Pricing strategy for Analyzing GDP Impact of Globalization: applications single company or trends or inflation - Emergence of the global economy industry rates at national - Increased cohesion of domestic economies level - Enhanced economic performance- national & regional levels Global economy function: Driven by international transactions 2. International Trade: outcome of globalization  Key role of transaction: Ensure continuity of involving exchange of goods & services global economy  Primary component: International trade between  Key benefits: Promotes specialization in products countries where countries have comparative advantage Types of products traded:  Agricultural goods (fruits and foods)  Comparative Advantage: Economic theory stating  Natural resources (oil) that countries can produce goods & services at  Industrial and defense product (weapons) lower opportunity cost than trade partners L1. What is Global Economy 3. International Finance: key feature, rapid transfer of - main caused of these effect is economics- production money between countries and exchange of goods & services  Currency exchange rates: value of one currency 1. Free trade: excellent method for countries to compared to other exchange goods & services. It allows countries to specialize in production of those good- they have  Monetary policy: strategies used by governments comparative advantage. or central banks- control money supply & interest rate 2. Movement of labor: Increased migration of labor force- advantageous for recipient countries & workers 4. Global investment: investment strategy that is not -high employment- workers look job in other countries constrained by geographical boundaries. - reduce geographical inequality  Global investment mainly takes place via foreign 3. Increased economies of scale: specialization of direct investment (FDI) goods production in most countries - lower average costs & lower price for customers Economic Importance Aspect Microeconomics Macroeconomics 4. Increased investment: easier for countries to attract Definition Study of individual Study of entire short- term & long- term investment. economic units like economy household, firm, including national industries. & global economic trends Factors affecting global economy Free Trade Issue - Natural Resources - Technology - Infrastracture - Law  Right-wing economic positions generally advocate - Population for free trade, minimal government intervention, - Labor open markets, and global economic competition. - Human capital  Economically left-wing parties often support protectionist policies, trade regulations to protect L2. Market Integration local industries, safeguard workers ' rights, and - focus on challenges related to market integration economic equity. - investigates obstacles- agriculture, education, health, environment, etc. Right-wing economic parties: -Advocate for free trade. Chen J. et al (2022) -Emphasize minimal government intervention. - unrestricted circulation of goods, services, & -Support open markets and global economic competition. production - equalization of prices for goods & capital. - separate markets or economic entities become Left-wing economic parties: interconnected & function as unified or single market -Favor protectionist policies. - can occur at various level- regional, national, -Support trade regulations to protect local industries. international -Prioritize safeguarding workers ' rights and promoting economic equity. Worlds Major Free Trade Markets  North American Free Trade Agreement (NAFTA) World Bank  Association of Southeast Asian Nations Free Trade -Multinational financial institution established at the end Areas ( AFTA) of World War II (1944)  Southern Common Market ( MERCOSUR) -help provide long-term capital  Common Market of Eastern and Southern Africa -provides much of planning and financing (COMESA) Here are not free trade areas yet union - assist in the reconstruction and development of and partnership agreements territories of members  European Union (EU) -promote private foreign investment  Trans- Pacific partnership -promote the long-range balanced growth  Trans atlantic Trade and Investment Partnership - - conduct its operations - effect of international not yet ratified investment -assist in bringing about a smooth transition - wartime to Examples: peacetime economy North American Free Trade Agreement (NAFTA): Different sectors of World Bank - signed by Canada, Mexico, United States - eliminate tariffs and other barriers to trade and International Bank for Reconstruction and investment among the member countries. Development (IBRD) - set up 1945 (along with IMF) European Union (EU) Single Market: -owned by governments of 151 countries - allows for the free movement of goods, services, -provides funds to borrower- borrowing fund in world capital, and people among member states, capital market - economic integration and cooperation. International Development Association (IDA) Association of Southeast Asian Nations Free Trade - 1960, part of World Bank Group- provide financial Area (AFTA) support to LDCs -members countries were Brunei, Indonesia, Malaysia, -137 member countries (all members of IBRD r free to Philippines, Singapore, Thailand, Vietnam, Laos, join IDA) Myanmar and Cambodia. - funds from subscription- developed members & earnings of IBRD Trans-Pacific Partnership (TPP) - trade agreement among 12 Pacific Rim countries: International Finance Corporation (IFC) Australia, Brunei, Canada, Chile, Japan, Malaysia, - 1956 Mexico, New Zealand, Peru, Singapore and Vietnam. - 133 countries (legally separate from IBRD) - liberalize trade and investment flows across the Asia- Main responsibilities Pacific region. -provide risk capital -encourage development of local capital - stimulate international flow of capital International Monetary Fund (IMF) 1. Agenda- setting -cooperative institution 182 countries voluntarily joined - ongoing process- transfer their interest to be the - policies & activities guided by charter - Article of interest of public policymakers Agreement. - lend money for condition that they undertake economic 2. Policy making reforms -deliberate system of guidelines - guide decisions & - no effective authority over domestic economic policies achieve rational outcome - statement of intent implemented as procedure or L3. Global Interstate System protocol Claudio and Abinales (2022) 3. Implementation and Enforcement International relations: study of relationship between -carrying out public policy countries - proper execution of compliance with laws, regulations, Internalization: deepening interactions between and standard, social norms among states 4. Evaluation, monitoring, adjudication Attributes of Today’s Global System - settlement of international disputes- international law by international tribunals Importance of International relations: significant part of globalization, state & government - global processes The 3 Gaps in Global Governance Claudio and Abinales (2022) Jurisdictional Gap: -growing need for global governance in areas like health, 4 key attributes- contemporary world politics but no authority with the power to take decisive action (WHO, 2019). 1. The countries or the states that govern themselves 2. Interaction of the countries with each other thru Incentive Gap: diplomacy -disparity exists between need for international 3. International organization that facilitate these cooperation & motivation to pursue it. interactions -Globalization is helping close this gap by encouraging 4. Own operations of international organizations. collaboration among countries. L4.Contemporary Global Governance Participation Gap: - refers to norms, rules, laws shaping global system -International cooperation - involves governments, with civil society groups marginalized in policy making. Rules: Activity standards Norms: Expectations for normal & reasonable behavior Laws: Obligations & duties for signatories Complexity: differences in interpretation, engagement, enforcement. Impact affects human rights protection Global Governance in 21st Century - read module and familiarize Nature of Global Governance - singular system; no “world government” - comprised diff. regimes with commonalities Transition in Sovereignty - shift from classical sovereignty to liberal international sovereignty Weiss (2019) Stages of Global Governance 1. Agenda- setting 2. Policy making 3. Implementation and enforcement 4. Evaluation, monitoring, adjucation