Globalization Notes PDF

-as a process takes into consideration the significant events that GLOBALIZATION involved several regional players in the past. -one of the most important understandings that are universally acceptable among the different scholars of globaliza...

-as a process takes into consideration the significant events that GLOBALIZATION involved several regional players in the past. -one of the most important understandings that are universally acceptable among the different scholars of globalization is impossibility of establishing a common definition about the phenomenon. -it remains elusive concept, implicit and undetermined at times which slowly skidding into a lake of full ambiguities and uncertainties. Martha C. E Van Der Bly (2005)- her scholarly works “Globalization: A Triumph of Ambiguity” – according to her “the promise of a universal definition about the concept of globalization is far from happening as the phenomenon perceived by some 1. David Held and Anthony McGrew (2003) – seminal paper “The discontented scholars as being indefinable loaded with adversarial Great Debate: An Introduction”. -According to them globalization narratives and discourses. pertains specifically to the expanding scale, growing magnitude, -she acknowledged that “globalization is quintessentially speeding up and deepening of the interregional flows and patterns ambiguous, thus creating an accumulation of confusion rather than of social interactions. an accumulation of knowledge. -It also highlights the transformation and development of social What is Globalization? organizations that provide the connections among the distant One Dimensional Approach - This concept limited the communities in many parts of the world. These changes in power interpretation of the phenomenon to the fabled dimension of relations-of the critical actors -create additional developments in “economics”. – the entire landscape of globalization. This approach to globalization centered on the integration and -expanding scale means-the interaction and exchanges is not expansion of the world economies into a more coherent process limited to particular or specific area rather it extends across that facilitates the transfer of goods and services from the borders, affecting societies and economic all around the world. - developed to developing countries of the world. growing magnitude-this may refer to global interaction increase, Multi-Dimensional Approach - This approach expanded the more international trade, migration, cultural exchanges and interpretation of the concept from economics to political, social, technological exchanges between regions. religious, technological environmental and cultural dimensions. – -Speeding Up-The rate at which this transaction occur accelerates, This approach assumed that the concept of globalization goes advancement of technology, transportation and communication. beyond the boundaries of the world economies and includes -deepening of Interregional Flows-means globalization foster instead the other important dimensions of globally integrated interconnectedness and dependence between the regions. society. Meaning actions on one part of the world can have significant in *While Some scholars push into arguments about the phenomenon another (globalization) whether it is an Empirical condition or a Process 2. Anthony Giddens (2003)- seminal paper “The Globalizing of (leading to a specific direction). Modernity” Empirical condition – globalization is perceived as an essential - He described the notion of globalization as “intensification of and tangible manifestations of the growing connectivity and worldwide social relations which connects distant localities in interdependence of the different countries of the world. such a way that local happenings are shaped by events occurring Process- globalization is perceived as a course of action that is many miles away and vice versa.” directed towards an outcome situation in the future according to This context focuses on the amplification of social relationships Van Der Bly. among different sets of people living in other local communities. The events occur in one particular community are presumed to governments that attempts to push or support the convergence of affect the people living in other distant communities, either in additional developments. positive or negative fashion. -dialectical process 3. Transformationalist- set the globalization at the middle of the - The idea of spreading developments, for example, is normally globalists and traditionalists. This perspective sees the concept as positive or beneficial to other communities. However, there are a process that introduces a number of significant changes in instances when developments are spread in a less effective or different dimensions. efficient manner that cause more harm than good to people living *Luke Martell (2007) provided a complementary discussion of the in other communities. concept in the seminal paper – “The Third Wave in Globalization This progression according to Giddens as the “dialectical Theory” process” that fits the push and pull relationship of various -He labels these 3 perspectives as “Waves of globalization” that communities in spreading the benefits of developments. swept the development of the contemporary world. 3. Manfred Stegger (2003)- scholarly book “Globalization: A Very APPROACHES TO GLOBALIZATION: Short Introduction” - his description of globalization looks at the concept of four characteristics, the terms -create, multiply, stretch and intensify-are used to characterize the manner by which social inter-dependencies and exchanges are carried out in the present time, -in moving towards global interaction. -The common barriers of time and space become less relevant as local communities learn how to compress these difficulties. -Today social activities in the global village are carried out in a more rapid phase and the distance-that used to separate global villages-is shrinking dramatically. Political and economic partnerships and other activities are concluded through newer means that were never available in the past several years. 1.World system model -discusses the growth and progress of capitalism which has engulfed almost all facets of development in Who Popularized the term Globalization? the past several decades. Professor Theodore Levitt’s-a Harvard Business School Professors – in his article entitled “The Globalization of Markets.” William Robinsons 2006 -reiterated the expanding process (Levitt, 1983) of capitalism, when it absorbed many of the existing mini -according to him globalization refers to the existence of free systems and world empires in the entire continent of Europe exchange of goods, services, culture, and even people, between and established a unified system. Such development and among countries. according to Robinson inspired several other people from 3 Perspective of Globalization other parts of the globe and brought them into a single *Patrick Hayden and El-Ojeili (2206) -book “Critical Theories of structure that came to be known as “capitalist world Globalization” system”. 1. Globalists- consider globalization as an inevitable social process that is certain to affect the different local communities. 2. Traditionalist- in contrast think of globalization as a myth rather than a significant event and contend that the phenomenon is no different with the other events that transpired in the past. -means Capitalist World Three Great Regions they perceive that globalization actually is not really happening in 1. Core -is a powerful country that include the Western Europe and the contemporary world. What was actually occurring in the Northern America as well as Japan. present time is the intensification of connections among several 2. Periphery – countries that are forcibly subordinated to the core. flows of goods and services among the different countries in the These countries are normally found in Latin America, Africa, Middle world East, and Eastern Europe. 3.Economic Policies- also pushed the process of globalization to 3. Semi-Periphery- includes he countries that come either from a new level. These economic policies enabled the movement of the core or periphery depending on the nature of changes that goods and service to flow freely beyond national boundaries. swept these countries.. 2. Global Culture Model -when countries migrate to into a culture that developed globally, they run the risk of alienating their respective indigenous cultures which have existed for a long time. 3. Global Society Model- Sklair noted that the scholars and other adherents of the global society model believe that the creation of global society is not impossible to happen in the modern time. This is made possible through the aid of science, technology, industry and values that continue to strive in order to build a “twentieth century world”. 4. Global Capitalist Model- this approach is closely related to world systems model. Leslie Sklair- argue that global capitalist is the current structure where the dominant international forces are actually operating, The creation of transnational corporations and the emergence of transnational practices. Drivers of Globalization 1.Political developments -considered the most complex drivers of globalization which polarized the countries in to first, second and third world. Such polarization continues until today -except for an understandable number of changes-and renders the third world as the most vulnerable among the three levels or type of countries. Andrew Heywood (2011) The rise of international institutions like the transnational corporations and non-governmental organization contributed significantly to the intensification of globalization. Likewise, the interdependence and interconnectedness of states inflated the process of globalization among different regions of the world. The emergence of issues like global warming, weapons of mass destruction, and internal terrorism forced several states to come together and discuss the possibility of global cooperation. Global governance exemplified by establishment of UN Organization, IMF, World Trade Organization and European Union. 2. Technological innovations -according to the World Trade Organization produced the most significant contributions to the process of globalization. The inventions of several technologies in the communication and transportation sectors contributed to the INTRODUCTION TO GLOBALIZATION and the removal of trade barriers deepen the economic interactions (Reference book: The Contemporary World by: The Contemporary World of several states in the global community. This is further Authors: Joliver L. Lobo;melvin N. Ambida;Niño P. maliban; Michael Mesinas complemented by the movement of capitals that promotes the Reviewer: Vannessa D. Umali Editor: Andres R Delos Santos) rapid investments of transnational companies in different parts of Globalization-is a global movement towards integration of the the world. The proliferation of several international economic economy, finance, commerce and communication. Globalization institutions likewise intensifies the economic connection of the means opening up local and nationalistic perspective to a broader different states in the contemporary world. view of an interconnected and interdependent world with free THE GLOBAL ECONOMIC ORDER transfers of capital goods and services across national boarders Mercantilism is an economic theory and policy that seeks to Some analysts speculate that globalization has blurred countries increase a country's wealth and power through trade. economic distinction, creating a borderless world in decision Mercantilism is an economic policy that aims to maximize a making without reference to national boundaries. country's exports and minimize its imports. England Spain France Kenichi Ohmae- claims that “national borders have effectively and Portugal move to improved their own national economies, disappeared and together with them, the economic logic that first mercantilism became an essential element in bringing more made them useful demarcation lines”. wealth, gold silver and other precious raw materials-to their lands It is a mega phenomenon that shapes the trends today. Its influence from other territories that were previously unknown. in economic sphere is the most visible. Theses European countries took advantage of other territories and 3 WAYS TO DETERMINE GLOBALIZATION- made them as the source of their incomes and the destination of First- it can be described as factors of production intensification, their manufactured products. This system of trade evidently worked facilitated by modern means of transport and communication. well in the interest of the European countries which saw their Second- in a way that events in one part of the world have economy and militaries vastly improved. These countries enjoyed immediate effects on distant locations, globalization can also be tremendous advantages in this trade by imposing restrictions on defined as a compression of time and space. the products that were coming from other territories. On the Third approach- is to understand globalization as a material power contrary, they exported their products to other territories without historical structure. necessary limitations. THREE THEORIES OF GLOBALIZATION Governments use protectionist measures to shield their own 1.The World Economy Theory (or Hyperglobalism) businesses, workers, and economies from the pressures of 2.The Regional Bloc Theory (or Global Skepticism) international markets. Key Tools of Protectionism: 3. The Third Way Theory (Transformationalism) 1. Tariffs: Taxes imposed on imported goods, making them more ECONOMIC GLOBALIZATION expensive and less competitive compared to domestically (Reference Book: The Contemporary World: Looking Through the Lens of Globalization by: produced goods. Carmelo Rico S. Bihasa) 2. Quotas: Limits on the quantity of certain goods that can be Economic Globalization refers to the international mobility of imported, preventing an oversupply of foreign products in the individuals, capital, technology, goods, and services. domestic market. MANFRED STEGER- according to him is a process that refers to the 3. Subsidies: Financial support given to domestic industries to help “intensification and stretching of economic connection across the them compete with foreign businesses. This can include direct globe “ payments or tax breaks. The intensification of economic connections in this context is 4. Import Bans: Certain foreign goods may be entirely banned to achieved according to Steger through the globalization of trade and protect a particular sector or due to safety concerns. finance as well as the establishment of powerful economic 5. Regulations and Standards: Imposing strict rules on products institutions. The movement of goods and services across the globe (like health and safety standards) that foreign goods must meet, making it harder or more expensive for foreign companies to enter The amount of money in circulation is directly tied to the gold the market. reserves a country holds. If the country’s gold reserves increase The Corn Laws were a series of trade policies introduced in Britain (through mining, trade, or other means), it can print more money. during the early 19th century (1815–1846) that imposed But if reserves are depleted, it must reduce the money supply. restrictions and tariffs on imported grain (referred to as "corn" in After the World 1 the international monetary was in incomplete Britain, which included wheat, oats, and barley). disarray as the major countries in Europe failed to revert to gold These laws were designed to protect British landowners and standard. The exchange rate according to Isaac Igwe (2018) floated domestic agriculture from cheaper foreign imports, especially after until the Genoa Conference in 1922 that recommended the the Napoleonic Wars. Gold Exchange Standard as replacement to the previous Key Aspects of the Corn Laws: international monetary system. 1. High Tariffs on Grain Imports: The Corn Laws placed high tariffs The gold exchange standard maintained the circulation of the on imported grain to make foreign grain more expensive, ensuring gold but the currencies of several countries were pegged to major that domestic grain producers (mainly large landowners) could sell currency approved by the consenting parties. This monetary their products at higher prices within the UK. system allowed countries to maintain bot gold and major 2. Price Control: The laws effectively maintained high domestic currency as reserves during the interwar period. (example grain prices by discouraging cheaper imports from countries like dollar and pound) The international monetary system continued the United States and Russia. Imported grain would only be allowed until the Second World War but was inundated by number of global into the country without tariffs when the price of domestic grain issues such as Great Depression of 1929. reached a certain high level. New International Monetary System-Emergence of 3. Protectionism for Landowners: The laws were seen as a way to protect the interests of large British landowners, who dominated New Global Economic Order Parliament at the time. These landowners relied on high grain prices The new global economic order that existed immediately after the to maintain their wealth and economic power. Historical Context: Second World War. Sensing the instability of the situation, the The Corn Laws were introduced in 1815, following the end of the United States of America together with Great Britain directed their Napoleonic Wars. During the wars, Britain had to rely on its own prominent economists to find ways on how the new global agriculture since European imports were restricted. After the war, economic order should be pursued. with European grain becoming more available and cheaper, British Harry Dexter White and John Maynard Keynes-came up landowners feared that their profits would be undermined by with their respective ideas on how the possible repeat of the cheaper foreign competition. previous economic depression in 1929 can be avoided. GOLD STANDARD Their innovative ideas according to Kamran Dadkhah 2009 The Gold Standard is a monetary system in which a country's culminated in the Bretton Woods Conference in 1944 that saw the currency or paper money has a value directly linked to gold. participation of other brilliant economists in laying the groundwork Under this system, countries agree to convert currency into a for the new global economic order. certain amount of gold, and the value of their currency is fixed to a Bretton Woods Conference 1944- discouraged the protectionist specific quantity of gold, making the currency stable and backed by stance of several countries during the interwar period, -it a tangible asset. recommended instead the practice of international trade that The Gold Standard works by linking a country's currency directly to supported the adoption of liberal economic policies. -it proposed a fixed amount of gold. This means that every unit of money in the creation of an international monetary system comparable to the circulation (like dollars or pounds) could, in theory, be previous one. exchanged for a specific amount of gold held by the This proposal resulted to the adoption of a universal currency where government. other countries are pegged at a specific value. THE BRETTON WOOD SYSTEM- The succeeding international Where the loans were eventually extended by the bank to the monetary system emerged as the result of the Bretton Woods developing countries of the South which paved the way to the rise Conference of 1944, that marked the return of international of “Foreign Debt”. community to gold exchange standard. Compared with the previous gold exchange standard -this was spearheaded by the US 3. GATT or General Agreement on Tariffs and Trades - Three years with Great Britain. According to Cohn (2012) the architects of the after the Bretton Woods Conference the General Agreement on Bretton Wood System planned and created the gold exchange Tariffs and Trade (GATT) was signed by the countries which openly standard which the value of the different national currencies was supported the implementations of international Trade. pegged to the gold or the US dollar as the currency. The gold or US It is an agreement that was implemented to reduce tariffs and non- dollar was held as the international reserves of several tariff barriers on goods. countries that may be released to correct the problems of -The agreement was established to prevent the practice of imbalance payments. protectionism that prevailed among several countries during the -perhaps the most significant idea that was approved in the Bretton interwar period. Woods Conference was the establishment of the crucial economic -Reduction of tariffs and non-tariff barriers on goods that were institutions. These economic institutions were missing during the included as part of the international trade. interwar period and their absence made it difficult to maintain a A few years later, the agreement shows its limitations which stable monetary system. encouraged a number of countries to question its viability. IMF-International Monetary Fund 1. The agreement was in jeopardy as several countries adopted GATT- General Agreement on Tariff and Trade later the nontariff barriers in protecting their respective local replaced by WTO-World Trade Organizations. manufacturers. WB-World Bank or IBRD – International Bank of 2. The failure to include the textile and agriculture as well as Reconstruction and Development the ineffective dispute settlement, according to Cohn aggravated 1. IMF or International Monetary Fund- is one of the international the growing complexity of the agreement. economic organizations that were established primarily to stabilize The agreement was soon replaced by the World trade the exchange rate system in the international community. Organization WTO-that assumed different personality compared -this institution was similarly was tasked to provide short term to its predecessor. loans to the member -countries who found themselves at the WTO (World Trade Organization) -in one scholarly book, “The middle of the balance of payments problems. WTO at Twenty: Challenges and Achievement”, identify it accomplishment in the past 20 years. 2. WB World Bank or IBRD International bank for Reconstruction 1. Increased number of its members from 23-61. and Development-is another international economic organization 2. The inclusion of Russia, China, and Saudi Arabia provided a that was established after the Bretton. The bank was created to big push to the organization in expanding the process of complement function of the other economic organization by international trade across the globe. providing long term loans to its member countries that needed the 3. Inclusion of several developing countries in recent years. essential resource to rehabilitate their devastated economies. 4. Lowering the trade barriers is considered as the most -Mandated by its member countries to provide necessary funds to important achievement of the organization in the past 20 years. a number of countries that needed the costly post war reconstruction. OTHER INSTITUTIONS ESTABLISHED THROUGH THE -World Bank was given thew authority to provide long term loans to COOPERATION OF COUNTRIES SITUATED IN DIFFERENT a number of devastated countries in Europe until they were able to REGIONS. recover. 1.OECD or Organization for Economic Cooperation and Development -select group developed countries created this institution in 1961 with clear objective of improving the happens within the context of international finance that highlights international economy through consultations and adoption of the flow of capitals among the different countries engaged in sound economic policies. The institution provides the avenue by several economic activities. which member countries can discuss successful experiences in Developed countries are the most active participants compared responding to persistent international economic problems. -Similarly, then institution act as a forum where member countries with the developing countries. can be encouraged to consider critical policies on how domestic Their unlimited access to resources allows them to facilitate the practices can be improved. transfer pf capitals to other countries that are in need of additional 2.ADB or Asian Development Bank -Compared to other resources. developments banks, the Asian Development bank operated on the Prior to Bretton Woods Institutions, the capital flows only to limited regional level and concentrates its resources to several developing number countries that were in constant communication with one countries in the Asia Pacific region. another. -This institution was established in 1966through the relentless effort of the Tokyo Study Group led by Kaoru Ohashi, Makoto SCHMUKLER- noted that the smooth flow of capitals among Watanabe and Takeshi Watanabe. developed and developing countries is not all safe. There is always -The group believed that the development requirements in the Asia the threat of a financial crisis that may occur at any given time Pacific Region were too much and that it was not possible on the due to the inherent instability of the international financial part of the World Bank to satisfy them all. system. How it can be avoided remains an enormous challenge to most of the contemporary economists. 3.AIIB-Asia Infrastructure Investment Bank-is the latest iteration Some economist believe that a financial crisis is a regular threat to of the international economic institution in the early years of the international finance and that’s occurrence is almost impossible to 21st century. Supported by China, the institution was established in prediction the international community.\ 2015 to provide the developing countries with the alternative 1. Other economists think that financial crisis is a real means of financing their respective national economies. possibility that can be avoided through the rationality of several The establishment of the institution unfortunately is observed as economic actors. detrimental to the operations of the existing international 2. Still other economists believe that financial crisis is driven development banks- WB and ADB. by some economic speculations that can be avoided through the maintenance of sound and sensible economic behavior. INTERNATIONAL FINANCE AND GLOBALIZATION All these perspectives however were challenged by Hyman Minsky Unlike International Trade, the practice of international finance in who commented that -a financial crisis follows discernible and the years after the First World War was not able to receive full predictable course of actions. -according to Minsky a financial complement of attention until the condition started to change crisis normally originates from an external shock of economy that when a considerable number of countries remove the existing comes in the form of a broad and intensive phenomenon. The capital restrictions and permitted the continues movement of external shock influences the profitability of a critical economic capitals across national boundaries. The financial revolution of the sector and brings more investments until it reaches its peak. 1970s provided an important opportunity for the international Japan, Germany and France-believe that the flows of capitals to finance to be recognized in the international community. should be constantly checked and regulated by international International Finance – “system within which people, businesses, community. governments, and other groups interact in the global economy. United States-believe that the flow of capital should remain Specifically, the concept describes and explains the flows of unrestricted and free from any form of government intervention. payments that occur among several countries.” by Hendrik Van This difference between the US and its economic partners resulted Den Berg (2016) to the discussion of the issue in the meeting of the Group of Seven This definition explains how a particular country interacts with countries on February 1999. Their representative agreed to the other countries in the international community. Their interaction creation of: Financial Stability Forum-meets twice a year to discuss the issues Here's an overview of its causes, developments, and related to the stability of the international financial systems. In April consequences: 2009 this was replaced by the Financial Stability Board, that assumed the same role in promoting the financial stability of the Causes international community. 1. Oil Price Shocks: The oil crises of the 1970s led to a significant increase in oil prices, which affected economies GLOBAL ECONOMIC INSTABILITY worldwide. Oil-exporting countries accumulated large amounts of capital, leading to a surge in lending to 1.GREAT DEPRESSION OF 1929- developing countries. considered by economists as the worst economic recession that 2. Rapid Borrowing: Many Latin American countries, transpired in the 20th century. encouraged by banks' eagerness to lend, borrowed heavily 1. Its effects were devastating and forced the American to finance development projects, infrastructure, and import economy to undergo deep recession beyond the goods. expectation of its economists. 3. Rising Interest Rates: In the late 1970s and early 1980s, the 2. The economics of US slowed down. U.S. Federal Reserve raised interest rates to combat 3. Production of goods and services was halted, consumer inflation. This made it more expensive for countries with spending declined, unemployment rate increased, and dollar-denominated debt to service their loans. inflation rate rose up. 4. Economic Mismanagement: Many countries faced issues of poor governance, corruption, and economic President Roosevelt responded through its famous “New Deal” mismanagement, which exacerbated their financial program that introduces a series of recovery measures to vulnerabilities. resuscitate the American economy. 5. Global Recession: The early 1980s saw a global economic 2.OIL PRICE SHOCK OF 1973 slowdown, leading to decreased demand for exports from The Yom Kippur War- On October 6, 1973, Egypt and Syria attacked Latin American countries, further straining their economies. Israel, and the United States supported Israel in response. Key Events The oil embargo-In response to the U.S. support of Israel, Arab oil- 1. Mexico's Default (1982): The crisis became apparent in producing countries, members of the Organization of the Petroleum 1982 when Mexico announced it could no longer service its Exporting Countries (OPEC), imposed an oil embargo on the United debt, leading to a wave of defaults by other countries. This States on October 19, 1973. The embargo included production cuts triggered a broader crisis in Latin America. and a ban on oil exports to nations supporting Israel. 2. Formation of the Baker Plan: In response, the U.S. Treasury The price increase-The price of oil nearly quadrupled by the end of Secretary James Baker proposed a plan in 1985 to assist the embargo in March 1974, from $3 per barrel to nearly $12 per countries in restructuring their debts. It aimed to stabilize barrel. the economies by extending new loans, but the plan had The economic impact-The embargo and the higher oil prices left limited success. economic damage throughout the U.S. and globally, and 3. Washington Consensus: By the late 1980s, the "Washington economists believe it was one of several factors that led to high Consensus" emerged as a set of economic policy prescriptions inflation and stagnation during the 1970s. aimed at addressing the issues caused by the crisis. This included austerity measures, structural adjustment programs, and a shift towards free-market policies. 3.DEBT CRISIS OF THE 1980S 4. ASIAN FINANCIAL CRISIS OF 1997 The Debt Crisis of the 1980s, also known as the Latin American - The Asian Financial Crisis of 1997 was a financial meltdown that Debt Crisis, was a financial crisis that primarily affected several affected several East and Southeast Asian economies. It resulted in Latin American countries, as well as some others around the world. widespread currency devaluations, economic contraction, and a including Indonesia, South Korea, and Thailand, in exchange loss of investor confidence, marking a significant turning point for for implementing austerity measures, economic reforms, the region. and structural adjustments. Causes 4. Political and Social Upheaval: The economic crisis led to 1. Excessive Foreign Borrowing: Many Asian countries, political instability in several countries, most notably in particularly Thailand, Indonesia, and South Korea, had Indonesia, where President Suharto was forced to resign borrowed heavily in foreign currencies, especially U.S. after 31 years in power. dollars. This foreign debt created vulnerabilities to currency fluctuations. 5.GLOBAL FINANCIAL CRISIS OF 2007- 2. Fixed Exchange Rate Systems: Several countries maintained The Global Financial Crisis (GFC) of 2007–2008, also referred to as fixed or semi-fixed exchange rates tied to the U.S. dollar. As the Great Recession, was one of the most severe worldwide the dollar appreciated in the mid-1990s, their currencies economic downturns since the Great Depression of the 1930s. The became overvalued, reducing export competitiveness and crisis originated in the U.S. housing market and quickly spread increasing the difficulty of servicing foreign debts. across the globe, leading to widespread economic damage, 3. Speculative Investment and Asset Bubbles: In the lead-up to financial institution failures, and mass unemployment. Here’s an the crisis, many Asian economies, particularly in real estate overview: and stock markets, saw a surge in speculative investments. Causes This led to inflated asset prices and created economic 1. Subprime Mortgage Crisis: The root cause of the GFC lay in imbalances. the U.S. housing market, where banks and mortgage lenders 4. Weak Financial Institutions: Many banks and financial offered home loans to borrowers with poor credit histories institutions in the region had weak regulatory oversight and (subprime borrowers). These loans were riskier and more were heavily exposed to risky lending practices, particularly likely to default. in the real estate sector. This made them vulnerable when 2. Housing Bubble: In the early 2000s, housing prices in the asset prices collapsed. U.S. rose dramatically, fueled by easy access to credit, 5. Contagion Effect: Once the crisis began in one country, it speculative investments, and government policies spread rapidly across the region. Investor panic and capital encouraging homeownership. Many believed house prices flight led to currency devaluations and economic turmoil would continue to rise indefinitely, creating a housing across multiple countries. bubble. Key Events 3. Securitization and Derivatives: Banks bundled these risky 1. Collapse of the Thai Baht (July 1997): The crisis began in subprime mortgages into financial products called Thailand when the government was forced to float the baht mortgage-backed securities (MBS) and collateralized debt after being unable to support its fixed exchange rate. The obligations (CDOs), which were sold to investors worldwide. currency plummeted, and this marked the beginning of the These securities were complex, opaque, and often regional crisis. The country’s large foreign debt exacerbated incorrectly rated as low-risk by credit rating agencies. the collapse. 4. Leverage and Risky Financial Practices: Financial 2. Spread to Other Economies: The crisis quickly spread to institutions used high levels of leverage (borrowing) to invest other countries, including Indonesia, South Korea, Malaysia, in MBS and other risky assets. This made them highly and the Philippines. Currencies in these countries sharply vulnerable if the value of those assets dropped. The lack of devalued, stock markets crashed, and their economies regulation and oversight of these financial instruments went into recession. contributed to widespread risk-taking. 3. International Monetary Fund (IMF) Interventions: The IMF 5. Lax Regulatory Environment: The financial industry provided large bailout packages to affected countries, operated in a deregulated environment, with minimal  oversight on risky lending and investment practices. This GLOBAL NORTH AND GLOBAL SOUTH was partly due to the belief that markets were self-regulating The Royal Geographical Society briefly described the concept as and that financial innovation, like securitization, spread risk the difference between the countries of the global north and global efficiently. south in terms of their accumulated wealth and levels of 6. Failure of Financial Institutions: As homeowners began development. defaulting on their loans, the value of MBS and CDOs Thus, some countries in the contemporary world are labelled as plummeted. Financial institutions that were heavily invested more “economically developed” while others are “less in these assets, such as Lehman Brothers, faced massive economically developed”. losses. The distinction between the global north and global south was Key Events underscored by the Brandt Commission -argued that the countries 1. Housing Market Crash (2007): Home prices peaked in 2006 situated in the Northen hemisphere were basically developed and began to fall in 2007. As house values dropped, many compared to the countries in the southern hemisphere. homeowners, especially those with subprime mortgages, The Brandt Commission popularized the “Brandt Line” that found themselves owing more on their mortgages than their metaphorically classified the world between the global north and homes were worth (negative equity). This led to widespread global south. defaults and foreclosures. Global North 2. Collapse of Bear Stearns (March 2008): Bear Stearns, a 1. the more advanced and developed hemisphere in the world major U.S. investment bank, faced a liquidity crisis due to its even after the collapse of the Cold War in 1991. exposure to subprime mortgages. It was rescued by the 2. Composed of influential countries that have dominated the Federal Reserve and sold to JPMorgan Chase at a fraction of flow of goods, services, and capitals in the past 2 centuries. its former value, signaling deep trouble in the financial 3. Share the same political and economic institutions that system. work seamlessly to create workable economic policies. 3. Lehman Brothers Bankruptcy (September 2008): Lehman 4. Hold considerable influence over some developing Brothers, one of the largest investment banks in the U.S., countries that can be related to their past colonial experience. filed for bankruptcy after failing to secure a government 5. Enjoy higher gross domestic product and per capita income. bailout. Its collapse was a critical moment in the crisis and Global South triggered panic in financial markets globally. 1. The collapse of Cold War resulted in the disintegration of the 4. Global Financial Meltdown: After Lehman’s failure, credit Second World countries and their eventual integration with the markets froze as banks became unwilling to lend to one developing countries of the Third World. another, fearing further collapses. This lack of liquidity 2. The countries of global south according to Harris, Moore, caused a cascade of financial institution failures or near- and Schmitz 2009 are unquestionably poor and are not capable of failures, leading to a broader economic collapse. influencing a number of major policy decisions in the international 5. Bailouts and Government Interventions: In response, community. governments and central banks around the world 3. Exhibits an array of differences in culture and means of implemented emergency measures to stabilize the financial understanding the process of globalization. system. The U.S. government enacted the Troubled Asset 4. According to Nour Dados and Raewyn Connell 2012, refers Relief Program (TARP), injecting $700 billion into the essentially to the regions of Latin America, Asia. financial sector to prevent further collapses. Central banks also slashed interest rates and implemented quantitative easing to support the economy. access to resources allows them to facilitate the transfer pf capitals GLOBAL ECONOMIC INSTABILITY to other countries that are in need of additional resources. 1.GREAT DEPRESSION OF 1929- Prior to Bretton Woods Institutions, the capital flows only to limited considered by economists as the worst economic recession that number countries that were in constant communication with one transpired in the 20th century. another. 1.Its effects were devastating and forced the American economy to SCHMUKLER- noted that the smooth flow of capitals among undergo deep recession beyond the expectation of its economists. developed and developing countries is not all safe. There is always 2. The economics of US slowed down. the threat of a financial crisis that may occur at any given time 3.Production of goods and services was halted, consumer due to the inherent instability of the international financial spending declined, unemployment rate increased, and inflation system. How it can be avoided remains an enormous challenge to rate rose up. most of the contemporary economists. 3. Some economist believe that a financial crisis is a regular President Roosevelt responded through its famous “New Deal” threat to international finance and that’s occurrence is almost program that introduces a series of recovery measures to impossible to prediction the international community.\ resuscitate the American economy. 4. Other economists think that financial crisis is a real possibility that can be avoided through the rationality of several 2.OIL PRICE SHOCK OF 1973 economic actors. The Yom Kippur War- On October 6, 1973, Egypt and Syria attacked 5. Still other economists believe that financial crisis is driven Israel, and the United States supported Israel in response. by some economic speculations that can be avoided through the The oil embargo-In response to the U.S. support of Israel, Arab oil- maintenance of sound and sensible economic behavior. producing countries, members of the Organization of the Petroleum All these perspectives however were challenged by Hyman Minsky Exporting Countries (OPEC), imposed an oil embargo on the United who commented that -a financial crisis follows discernible and States on October 19, 1973. The embargo included production cuts predictable course of actions. -according to Minsky a financial and a ban on oil exports to nations supporting Israel. crisis normally originates from an external shock of economy that The price increase-The price of oil nearly quadrupled by the end of comes in the form of a broad and intensive phenomenon. The the embargo in March 1974, from $3 per barrel to nearly $12 per external shock influences the profitability of a critical economic barrel. sector and brings more investments until it reaches its peak. The economic impact-The embargo and the higher oil prices left Japan, Germany and France-believe that the flows of capitals to economic damage throughout the U.S. and globally, and should be constantly checked and regulated by international economists believe it was one of several factors that led to high community. inflation and stagnation during the 1970s. United States-believe that the flow of capital should remain unrestricted and free from any form of government intervention. 3.DEBT CRISIS OF THE 1980S This difference between the US and its economic partners resulted The Debt Crisis of the 1980s, also known as the Latin American to the discussion of the issue in the meeting of the Group of Seven Debt Crisis, was a financial crisis that primarily affected several countries on February 1999. Their representative agreed to the Latin American countries, as well as some others around the world. creation of: Here's an overview of its causes, developments, and Financial Stability Forum-meets twice a year to discuss the issues consequences: related to the stability of the international financial systems. In April 2009 this was replaced by the Financial Stability Board, that Causes assumed the same role in promoting the financial stability of the 6. Oil Price Shocks: The oil crises of the 1970s led to a international community. significant increase in oil prices, which affected economies worldwide. Oil-exporting countries accumulated large  amounts of capital, leading to a surge in lending to dollars. This foreign debt created vulnerabilities to currency developing countries. fluctuations. 7. Rapid Borrowing: Many Latin American countries, 7. Fixed Exchange Rate Systems: Several countries maintained encouraged by banks' eagerness to lend, borrowed heavily fixed or semi-fixed exchange rates tied to the U.S. dollar. As to finance development projects, infrastructure, and import the dollar appreciated in the mid-1990s, their currencies goods. became overvalued, reducing export competitiveness and 8. Rising Interest Rates: In the late 1970s and early 1980s, the increasing the difficulty of servicing foreign debts. U.S. Federal Reserve raised interest rates to combat 8. Speculative Investment and Asset Bubbles: In the lead-up to inflation. This made it more expensive for countries with the crisis, many Asian economies, particularly in real estate dollar-denominated debt to service their loans. and stock markets, saw a surge in speculative investments. 9. Economic Mismanagement: Many countries faced issues of This led to inflated asset prices and created economic poor governance, corruption, and economic imbalances. mismanagement, which exacerbated their financial 9. Weak Financial Institutions: Many banks and financial vulnerabilities. institutions in the region had weak regulatory oversight and 10. Global Recession: The early 1980s saw a global economic were heavily exposed to risky lending practices, particularly slowdown, leading to decreased demand for exports from in the real estate sector. This made them vulnerable when Latin American countries, further straining their economies. asset prices collapsed. Key Events 10. Contagion Effect: Once the crisis began in one country, it 3. Mexico's Default (1982): The crisis became apparent in spread rapidly across the region. Investor panic and capital 1982 when Mexico announced it could no longer service its flight led to currency devaluations and economic turmoil debt, leading to a wave of defaults by other countries. This across multiple countries. triggered a broader crisis in Latin America. Key Events 4. Formation of the Baker Plan: In response, the U.S. Treasury 5. Collapse of the Thai Baht (July 1997): The crisis began in Secretary James Baker proposed a plan in 1985 to assist Thailand when the government was forced to float the baht countries in restructuring their debts. It aimed to stabilize after being unable to support its fixed exchange rate. The the economies by extending new loans, but the plan had currency plummeted, and this marked the beginning of the limited success. regional crisis. The country’s large foreign debt exacerbated 3. Washington Consensus: By the late 1980s, the "Washington the collapse. Consensus" emerged as a set of economic policy prescriptions 6. Spread to Other Economies: The crisis quickly spread to aimed at addressing the issues caused by the crisis. This included other countries, including Indonesia, South Korea, Malaysia, austerity measures, structural adjustment programs, and a shift and the Philippines. Currencies in these countries sharply towards free-market policies. devalued, stock markets crashed, and their economies 4. ASIAN FINANCIAL CRISIS OF 1997 went into recession. - The Asian Financial Crisis of 1997 was a financial meltdown that 7. International Monetary Fund (IMF) Interventions: The IMF affected several East and Southeast Asian economies. It resulted in provided large bailout packages to affected countries, widespread currency devaluations, economic contraction, and a including Indonesia, South Korea, and Thailand, in exchange loss of investor confidence, marking a significant turning point for for implementing austerity measures, economic reforms, the region. and structural adjustments. Causes 8. Political and Social Upheaval: The economic crisis led to 6. Excessive Foreign Borrowing: Many Asian countries, political instability in several countries, most notably in particularly Thailand, Indonesia, and South Korea, had Indonesia, where President Suharto was forced to resign borrowed heavily in foreign currencies, especially U.S. after 31 years in power.  in these assets, such as Lehman Brothers, faced massive 5.GLOBAL FINANCIAL CRISIS OF 2007- losses. The Global Financial Crisis (GFC) of 2007–2008, also referred to as Key Events the Great Recession, was one of the most severe worldwide 6. Housing Market Crash (2007): Home prices peaked in 2006 economic downturns since the Great Depression of the 1930s. The and began to fall in 2007. As house values dropped, many crisis originated in the U.S. housing market and quickly spread homeowners, especially those with subprime mortgages, across the globe, leading to widespread economic damage, found themselves owing more on their mortgages than their financial institution failures, and mass unemployment. Here’s an homes were worth (negative equity). This led to widespread overview: defaults and foreclosures. Causes 7. Collapse of Bear Stearns (March 2008): Bear Stearns, a 7. Subprime Mortgage Crisis: The root cause of the GFC lay in major U.S. investment bank, faced a liquidity crisis due to its the U.S. housing market, where banks and mortgage lenders exposure to subprime mortgages. It was rescued by the offered home loans to borrowers with poor credit histories Federal Reserve and sold to JPMorgan Chase at a fraction of (subprime borrowers). These loans were riskier and more its former value, signaling deep trouble in the financial likely to default. system. 8. Housing Bubble: In the early 2000s, housing prices in the 8. Lehman Brothers Bankruptcy (September 2008): Lehman U.S. rose dramatically, fueled by easy access to credit, Brothers, one of the largest investment banks in the U.S., speculative investments, and government policies filed for bankruptcy after failing to secure a government encouraging homeownership. Many believed house prices bailout. Its collapse was a critical moment in the crisis and would continue to rise indefinitely, creating a housing triggered panic in financial markets globally. bubble. 9. Global Financial Meltdown: After Lehman’s failure, credit 9. Securitization and Derivatives: Banks bundled these risky markets froze as banks became unwilling to lend to one subprime mortgages into financial products called another, fearing further collapses. This lack of liquidity mortgage-backed securities (MBS) and collateralized debt caused a cascade of financial institution failures or near- obligations (CDOs), which were sold to investors worldwide. failures, leading to a broader economic collapse. These securities were complex, opaque, and often 10. Bailouts and Government Interventions: In response, incorrectly rated as low-risk by credit rating agencies. governments and central banks around the world 10. Leverage and Risky Financial Practices: Financial implemented emergency measures to stabilize the financial institutions used high levels of leverage (borrowing) to invest system. The U.S. government enacted the Troubled Asset in MBS and other risky assets. This made them highly Relief Program (TARP), injecting $700 billion into the vulnerable if the value of those assets dropped. The lack of financial sector to prevent further collapses. Central banks regulation and oversight of these financial instruments also slashed interest rates and implemented quantitative contributed to widespread risk-taking. easing to support the economy. 11. Lax Regulatory Environment: The financial industry operated in a deregulated environment, with minimal oversight on risky lending and investment practices. This GLOBAL NORTH AND GLOBAL SOUTH (Reference Book: The Contemporary World: Looking Through the Lens of Globalization by: was partly due to the belief that markets were self-regulating Carmelo Rico S. Bihasa) and that financial innovation, like securitization, spread risk efficiently. The Royal Geographical Society briefly described the concept as 12. Failure of Financial Institutions: As homeowners began the difference between the countries of the global north and global defaulting on their loans, the value of MBS and CDOs south in terms of their accumulated wealth and levels of plummeted. Financial institutions that were heavily invested development. Thus, some countries in the contemporary world are labelled as more “economically developed” while others are “less economically developed”. The distinction between the global north and global south was TYPES OF MARKET INTEGRATION underscored by the Brandt Commission -argued that the countries 1.HORIZONTAL INTEGRATION -is a competitive strategy than situated in the Northen hemisphere were basically developed can create economies of scale, increase market power over compared to the countries in the southern hemisphere. distributors and suppliers, increase product differentiation, and The Brandt Commission popularized the “Brandt Line” that help businesses expand their market or enter new markets. By metaphorically classified the world between the global north and merging two companies, they may be able to generate more global south. revenue than they could have done independently. However, when Global North horizontal mergers succeed, especially if they reduce competition, 6. the more advanced and developed hemisphere in the world it is often at the expense of consumers. even after the collapse of the Cold War in 1991. In simple words Horizontal integration is a strategic move where 7. Composed of influential countries that have dominated the a company acquires or merges with a competitor to expand its flow of goods, services, and capitals in the past 2 centuries. presence in an industry. 8. Share the same political and economic institutions that This can lead to: work seamlessly to create workable economic policies. Increased market share and power, Reduced competition, 9. Hold considerable influence over some developing Increased revenue, and sharing institutional knowledge. A merger countries that can be related to their past colonial experience. is joining two firms into one. 10. Enjoy higher gross domestic product and per capita income. Mergers typically involve companies of the same size. Thus, these Global South two moves of horizontal integration are regarded as acquisitions. 5. The collapse of Cold War resulted in the disintegration of the Their financial results are often very disappointing despite the Second World countries and their eventual integration with the potential benefits of mergers and acquisitions, developing countries of the Third World. One study found the over 60 percent of mergers and acquisition 6. The countries of global south according to Harris, Moore, erode shareholder wealth while less than one out of six increases and Schmitz 2009 are unquestionably poor and are not capable of shareholder wealth. influencing a number of major policy decisions in the international Example – Disney Acquired Pixar in 2006 and Marvel Entertainment community. and Lucasfilm in other acquisitions. Facebook Merged with 7. Exhibits an array of differences in culture and means of Instagram in 2012 to grow its revenue and attract more users understanding the process of globalization. Coca-Cola Acquired many juice brands around the world to gain 8. According to Nour Dados and Raewyn Connell 2012, refers expertise and production assets essentially to the regions of Latin America, Asia. Exxon Mobil Merged in 1998, combining the first and second largest energy corporations in the United States Kraft Foods and Heinz Merged in 2015 to create one of the largest MARKET INTEGRATION food companies in the world Integration shows the company’s market relationship. The extent 2. VERTICAL INTEGRATION- a strategy that a company of integration affects the company’s behavior and thus their involved in new portions of the value chain. marketing efficacy. This approach may be desirable if the suppliers or buyers of a Kohls and Uhl have defined market integration as a process that company have gained too much power over the company and use refers to corporate expansion by consolidating additional their ability to earn more profit at the expense of the company. By marketing functions and activities within a single management acquiring the supplier or buyer executives can reduce or eliminate framework. the leverage the supplier or buyer has over the company, considering vertical integration alongside the five-force model of different services or are involved in various business sectors merge. Porter, it is highlighted that such movements can create more this type of conglomerate merger can happen when two similar significant potential for profit. Companies can pursue vertical firms decide to unite to spread better across the market. integration alone, such as when Apple opened stores bearing their brand or through a merger or acquisition, such as when eBay THE GLOBAL INTERSTATE SYSTEM purchased PayPal. Today, oil companies are one of the most Globalization-is a process of economic exchange in the globe that vertically integrated firms. removes the barriers of the flow of the goods, services, capital, and a. Backward Vertical Integration-involves a company labor. It is more on a free flow of the wealth to all nations involved. moving back or upstream along with the value chain and entering Global Interstate System-is an organized institutions that governs the business of a supplier, if executives are concerned that a international relations for mutual benefit. supplier has too much power over their firms, some firms use this 1. Benefits of UN trough to Globalization - the one who coined the strategy. Ford Motor Company created subsidiaries in early days of name of the United Nation was the former president of the United the automotive business providing vital inputs to vehicles such as States. President Franklin D. Roosevelt that is now being used in the rubber glass and metal. Declaration of the United Nations. b. Forward Vertical Integration-involves a company moving further down the value chain to enter the business of a purchaser. There were only 26 nations representatives pledge their Amazon, the company that defines the online trade world, is now governments to. entering the physical retail world experimenting with standalone 1. To use its full resources military or economic against automated Kindle Kiosk vending machines at selected airports and those members of the Tripartite Pact and its adherence with which shopping malls. such government is at war. The devices in addition to Kindle e readers and cover sell everything 2. To cooperate with the government signatory hereto and from $379 Kindle Fire HDX to a $20 kindle Power fast adapter. Every not to make a separate armistice or peace with the enemies. time a Kindle item is sold through a Kindle Kiosk, the company Selected Institutions Associated with World Trade makes a little more profit than it would if the same thing were sold by a retailer like Indigo Chapters. A. World Bank - Is a financial institution that extends financial Further vertical integration can also be useful to neutralize buyers’ assistance through loans to countries interested. effects. Because they buy thousands of cars, rental car agencies It was founded by the United Nations Monetary and Financial can insist on low prices for the vehicles they from automakers. Conference or the Bretton Woods Conference. 3.A CONGLOMERATE INTEGRATION- is a fusion of companies involved in completely unrelated business activities. 1. IDA (International Development Association) - its primary There are two kinds of mergers of conglomerates: pure and mixed. purpose is to provide loans to developing countries to reduce Pure mergers of conglomerates involve companies with nothing in inequalities and improve people’s conditions and the country’s common, while diverse mergers of conglomerates involve economic growth. companies looking for product extensions or market extensions. Fusions occur when two companies that offer different services or 2. IFC (International Finance Corporation) - providing loans for are involved in various business sectors merge. this type of private sectors in developing countries to create markets that open conglomerate merger can happen when two similar firms decide to up opportunities for all. unite to spread better across the market. Diversification can 3. MIGA (Multilateral Investment Guarantee Agency) - promotes sometimes be a decline for individual businesses because they can foreign direct investment into developing countries to help support spread in too many areas. An example f this is if one conglomerate economic growth, reduce poverty and improve people’s lives. that is involved in the merger has an excessive fortification over the other conglomerate. Fusions occur when two companies that offer 4. ICSID (International Centre for Settlement of Investment cultural reforms to increase universal respect for justice, the rule of Disputes) - is an international organization of investors for law and human rights along with fundamental freedom. investment treaties and laws and contracts. b. contributes to building peace 5. IMF (International Monetary Fund) - ensure the stability of the 4. World Health Organization - international monetary system. It does so in three ways; keeping a. building a better, healthier future for people all over the track of the global economy and the economies of member world. countries, lending to countries with balance of payments b. concern about public heath difficulties; and giving practical help to members. c. the prime concern is to eradicate and combat dangerous diseases like AIDS/HIV B. World Trade Organization-It regulates international trade’s deal d. makes researches in medicines and vaccines to eliminate with the rule of trade between nations. Ensures the trade will flow diseases and development of nutritious foods smoothly, predictably, and freely as possible. Acts as a forum in e. responsible for World Health Report and Survey. negotiation trade agreements. OTHER SPECIALIZED INTERNATIONAL INSTITUTIONS C. Organization for Economic Cooperation and Development - It 1. International Civil Aviation Organization - to foster the planning consist of 35 member countries. Stimulate economic progress and and development of international transport to ensure the safe and world trade. Providing a platform to compare policy experiences, orderly growth of international civil aviation throughout the world. seeking answer to common problems, identify good practices and coordinate domestic and international policies of its members. 2. International Maritime Organization - responsibility for the safety and security of shipping and the prevention of marine SPECIALIZED AGENTS pollution by ships. 1.International labor Organization-is a United Nation Agency dealing with labor problems, particularly international labor 3. International Telecommunication Union – standards, social protection and work opportunities for all. a. connecting all the worlds people. b. global radio spectrum and satellite orbits, develop the 2. Food and Agriculture Organization of the United Nations (FAO) technical standards that ensure networks and technologies a. A specialized agency of the Unites States that leads seamlessly interconnect and strive to improve access to ICTs to international efforts to defeat hunger. undeserved communities worldwide. b. Help eliminate hunger, food security and malnutrition. c. reduces rural poverty 4. Universal Postal Union - d. makes agriculture, forestry and fisheries more productive a. ensures a truly universal network of up-to-date products and sustainable. and services. e. enables inclusive and efficient agricultural and food b. sets the rules for international mail exchanges and makes systems. recommendations to stimulate growth in mail, parcel and financial f. Increase the resilience of livelihoods to threats and crises. services volumes and improves quality of service for customers. 3. United Nations Educational, Scientific and Cultural 5. World Meteorological Organization Organizational. - a. A specialized agency of the UN for meteorology (weather a. Contribute to peace and security by promoting ad climate) operational hydrology and related geophysical international collaboration through educational, scientific and sciences.  b. The UN system’s authorities voice on the state and Hurrell 2012, there is now a shift in terms of global power that led behaviors of the Earth’s atmosphere, its interaction with oceans the not only to a diffusion of power, but also to diffusion of principles, climate it produces and the resulting distribution of water preferences, ideas and values, with implications for global resources. governance. On the other hand, Western powers themselves are very critical of international cooperation for not harnessing 6. World Intellectual Property Organization emerging powers, making statements such as: “China is failing to a. Intellectual property (IP) refers to creations of the mind, be part of the solution, “India is an obstructionist” and “Iran is a such as inventions; literary and artistic works designs and symbols rouge state.” names and images used in commerce, e.g. patents, copyrights and 3 Factors drive transformation in global security. The first trademarks. is the quantity and complexity of conflicts dealt with by b. Lead the development of a balanced and effective international organizations. The second is the increased functional international intellectual property system that enables innovations and normative ambition of the international community. and creativity for the benefit of all. The Model of Global Governance- 7. International Fund for Agricultural Development – The system of governance should have its governing body with a. invests in rural people, empowering them to increase their political power and authority to impose and ultimately can control food security, improve the nutrition of their families and increase its people. their incomes. In a globalized world the concept of governance is being used to b. Building resilience, expand their businesses and take describe the regulation of if interdependent relations in the charge of their development. absence of overarching political authority, such as in the international system. Global Governance is the management of global processes in the 8. United Nations Industrial Development Organizations absence of any form of global government. However the creation of a. The specialized agency of the United Nations that United Nations and the World Trade Organization issues promotes industrial development for poverty reduction inclusive concerning world problem and the like, these two organizations can globalization and environmental sustainability. help in the system to regulate the increasing problem that nations in the world can be affected. 9. World Tourism Organization The term global governance, therefore, is a descriptive term, a. Responsible for the promotion of responsible, recognizing the issue and referring to concrete cooperative problem sustainable and universal accessible tourism. solving arrangements. b. Leading international organization in the field of tourism, Thus, global governance can be considered to be the complex of which promotes tourism as a diver of economic growth, inclusive formal and informal institutions, mechanisms, relationship, and development, and environmental sustainability and offers processes between and among states, markets, citizens and leadership and support to the sector in advancing knowledge and organization both inter and nongovernmental, through which tourism policies worldwide. collective interests on the global plane are articulated, rights and obligations are established. THE CONTEMPORARY GLOBAL GOVERNANCE At this point, global security is in a state of instability and United Nations Global Impact- this organization is the world’s great uncertainty. The global and regional security arrangements largest voluntary corporate responsibility initiative brings together and times compete and overlap. Since 1990, Western companies, national and international agencies, trades unions and comprehensive and Cooperative security dominated in the globe. other labor organizations and various organs of civil society to US control as to safety just prevailed in early 2000s. According to support universal environmental, protection, human rights and social principles. Participation is entirely voluntary and there is no influence. The collapse of the previous trade talk in Geneva enforcement of the principles by an outside regulatory body. confirmed the end to more than a century of West -Dominated Companies adhere to these practices both because they make global economic order, economic sense and because their stakeholders including their (EU and US urged China and India to lower their tariffs on industrial shareholders, are concerned with these issues and this provides a goods from the West in exchange for European and American tariff mechanism whereby they can monitor the compliance of and subsidy cuts on agricultural products. But when China and companies. India demanded the rights to raise tariff on major imported cash crops such as cotton, sugar and rice the EU and US opposed this as Origin of Global Governance- The operation of governing the this will undermine the interests of their farmers. Dries Lesage- international sovereign body is a collective effort of all nations conceptualize multipolarity as “an international distribution of states for political sociological economic and cultural stability power in which three or more great powers possess extensive because there is no government for the world. capabilities,” He highlights 3 preconditions for effective governance in a Inevitable Criticisms of Global Governance- The WHO multipolar world points out some arguments that critics make, namely that Critics 1.respecting national sovereignty argue that global governance mechanisms support the neo liberal 2. reducing the development gap between the North and ideology of globalization and reduce the role of the state to that of South an adjusting body for the implementation of international policies. 3.Accomodating the interests of developing countries in Some argue that as a result the interest of the poorest people and global economic institutions. nations will be ignored unless they have a direct impact on the global economy. Since many Europeans countries are losing their dominance in global politics, the early 21st Century has witnessed a gradual EXPECTED GAPS IN GLOBAL GOVERNANCE transition towards a post Western World. In particular, the emerging Thakur & Weiss 2015 argue that there are five particular gaps in markets in East Asia and Latin America, as well as the oil rich global governance. They as follows: countries of the Middle East, have created regional institutions to (research for these gaps meaning) challenge the global governance is complete without mentioning 1. Knowledge gaps China Russia India and Japan. 2. Normative gaps 3. Policy gaps The Global Governance of Migration – Global governance is 4. Institutional gaps rapidly emerging in the area of international migration. 5. Compliance gaps Migration, by definition affects more than one state. One states immigration or emigration policies will inherently exert externalities MULTIPOLARITY VS NEW DISCOURSE ON GLOBAL on another state, and it is beyond the scope of any one country to GOVERNANCE address migration in isolation. After the end of the Cold War, the World becomes a less centralized Not all states share the same vision of global migration governance, form of governance. During this period there were many emerging nor are they adopting the same institutional strategies. powers such as China, Russia and Brazil which formed regional Migration is important to study precisely because different alliances to create a multipolar and anti-hegemonic order. countries have distinctively different priorities and these affect their institutional interests and strategies. Fareed Zakaira - refers to this development as the beginning of the Consequently, there is still no coherent global migration regime “Post American world” in which the United States retreats and the or UN migration organization. rest of the world advances in economic power and political Notable exception is strongly institutionalized multilateral enhanced by a forum and a secretariat structure t the multilateral cooperation on refugees, through the United Nation High level. Commissioner for Refugees (UNHCR) and the 1951 Refugee Third – greater accountability and inclusion is possible in a system Convention (Betts et al. 2012) For both irregular migration and with proliferation of governance mechanisms at the regional and labor migration, bilateral levels There is potential to promote governance based on the International Organization for Migration (IOM) - a body that the subsidiary, but it must pursue the inclusion of all states exists outside the UN system-provides a range of services to states significantly affected by policy externalities. to support managed migration, however its role is primarily as an implementing organization. In other areas such as irregular The Government and the State in the Global migration and labor, migration states predominantly act Governance in the 21st Century unilaterally, develop bilateral or regional cooperation, or use Today, global governance has a new challenge the rise of global informal networks referred to as regional consultative processes south and a shift of global power towards emerging economies. (RCP) 2006- China in particular has become more visible, China and other UNHLMD (United Nations convened a High-Level Dialogue on emerging economies have forged deeper and stronger economic Migration and Development-to explore prospects for improved relations with neighbors and across the developing world. They the cooperation on migration. The dialogue has led to the creation have rapidly expanded their global markets and production. As of GFMD (Global Forum on Migration and Development, an they rely more on global markets access, they will increasingly annual informal, multilateral dialogue outside the UN system that require global rules to protect that access. has taken place annually since 2007. Global Health Governance The Rise of Developing Economies in Global First – countries are choosing to cooperate at different levels Discussions of Finance including regional and global. Coherent global health governance - the East Asia’s 1997 financial crisis exposed global financial needs to be pluralist, considering diverse forms of cooperation. governance as outdated, the G7 which for years was the informal Second- there is a key role for multilateral institutions, first among steering group of the IMF in a crisis, realized that it needed to them is WHO as the chief coordinator and director of cooperations consult more broadly. in global health. To play this role, the agency needs to be perceived -Today Canada and US created the G20 with finance officials from as independent and neutral. It requires strengthening. just over 20 of the world’s largest economies. Third-global health governance must be accountable to the people -The 2008 financial crisis accelerated shifts that began after 1997 across the world that it claims to serve. financial crisis. Brazil, China, India, and Russin Federation were call upon to provide emergency backstop line of credit to the IMF. In turn The Three Governance Principles Apply to Migration in Several they acquired a veto over the use of the lines. Today, after decades Ways of wrangling over tiny changes in relative voting power, emerging First -pluralism is crucial. Effective migration governance is not economies have won significant advancements in governance. inevitably or exclusively multilateral. The appropriate level and China is set to become the third most powerful shareholder and scope depending on the type of migration and the externalities now has a deputy managing director at the IMF. -The world Banks’ involved. The challenge is to ensure that there is coherence across chief economist is Chinese, and China has become an essential the emerging RCPs. Overarching coordination mechanisms are contributor to the International Development Association. needed to connect regional and inter regional networks and