The Global Economy.pdf

THE GLOBAL ECONOMY The International Monetary Fund (IMF) regards “economic globalization‟ as a historical process representing the result of human innovation and technological progress. It is characterized by the increasing integration of economies around the world th...

THE GLOBAL ECONOMY The International Monetary Fund (IMF) regards “economic globalization‟ as a historical process representing the result of human innovation and technological progress. It is characterized by the increasing integration of economies around the world through the movement of goods, services, and capital across borders. These changes are the products of people, organizations, institutions, and technologies. As with all other processes of globalization, there is a qualitative and subjective element to this definition. United Nations defines economic globalization as the “increasing interdependence of world economies as a result of the growing scale of cross-border trade of commodities and services, flow of international capital and wide and rapid spread of technologies. It reflects the continuing expansion and mutual integration of market frontiers and is an irreversible trend for the economic development in the whole world at the turn of the millennium. The rapidly growing significance of information in all types of productive activities and marketization are the two major driving forces for economic globalization.” According to Dennis O. Flynn and Arturo Giraldez, global trade emerged when all heavily populated continents began to exchange products continuously - both with each other directly and indirectly via other continents - and did so in values sufficient to generate lasting impacts on a trading partner. The Manila galleon trade or commonly known as galleon trade is the first global trade to date. It is through this trade that the American continent was directly connected to Asian trading routes which conduit for the exchange of goods, people, and ideas between the East and the West. Given the complexity of the dynamic of global trade, conflicts between the trading countries may rise from time to time due to political and economic differences. One of the factors why countries in the past are at war and suffered economic downfall is due to unsettled trade conflicts as countries struggles to keep their track in the global trading. Economy of mostly all countries around the globe are intertwined since the start of economic globalization, this leads to the interdependent of each market. With this nature, if there exist discord even between two countries or is one country with bad economic condition could bring large impact to the global economy. You might now wonder how most of the countries around the globe are still in track of global trading despite of each other’s differences. Due to susceptibility of global economy, there are numerous global actors that facilitates economic globalization. Before delving deeper to the different roles of these global actors, it is important to note that these are the institutions and agencies acting at the global level who contributes to the processes of globalization especially in global politics (Madsel & Christensen, 2016). United Nations The United Nations is a diplomatic and political international organization with the intended purpose of maintaining international peace and security, develop friendly relations among nations, achieve international cooperation, and serve as a center for coordinating the actions of member nations. At its founding, the UN had 51 member states; as of 2024, it has 193 sovereign states, nearly all of the world's recognized sovereign states. Specialized Agencies 1. International Labor Organization is a United Nations agency dealing with labor problems, particularly international labor standards, social protection, and work opportunities for all. 2. Food and Agriculture Organization of the United Nations (FAO) a. A specialized agency of the United Nations that leads international efforts to defeat hunger b. Help eliminate hunger, food insecurity and malnutrition c. Reduce Rural Poverty d. Make agriculture, forestry, and fisheries more productive and sustainable e. Enable inclusive and efficient agricultural and food systems f. Increase the resilience of livelihoods to threats and crises 3. United Nations Educational, Scientific and Cultural Organization a. Contribute to peace and security by promoting international collaboration through educational, scientific, and cultural reforms to increase universal respect for justice, the rule of law, and human rights along with fundamental freedom. b. Contribute to building peace 4. World Health Organization a. Building a better, healthier future for people all over the world b. Concern about public health c. The prime concern is to eradicate and combat dangerous diseases like AIDS/HIV d. Make researches in medicines and vaccines to eliminate diseases and development of nutritious foods e. Responsible for World Health Report and Survey Other Specialized International Institutions 1. International Civil Aviation Organization (ICAO) to foster the planning and development of international air transport to ensure the safe and orderly growth of international civil aviation throughout the world. 2. International Maritime Organization (IMO) responsibility for the safety and security of shipping and the prevention of marine pollution by ships 3. International Telecommunication Union (ITU) a. Connecting all the world's people b. Global radio spectrum and satellite orbits, develop the technical standards that ensure networks and technologies seamlessly interconnect and strive to improve access to ICTs to underserved communities worldwide 4. Universal Postal Union (UPU) a. Ensure a truly universal network of up-to-date products and services  b. Sets the rules for international mail exchanges and makes recommendations to stimulate growth in mail, parcel and financial services volumes and improve quality of service for customers 5. World Meteorological Organization (WMO) a. A specialized agency of the United Nations for meteorology (weather and climate), operational hydrology and related geophysical sciences b. The UN system's authoritative voice on the state and behavior of the Earth's atmosphere, its interaction with the oceans, the climate it produces and the resulting distribution of water resources. 6. World Intellectual Property Organization (WIPO) a. Intellectual property (IP) refers to creations of the mind, such as inventions, literary and artistic works, designs, and symbols, names, and images used in commerce, e.g. patents, copyright, and trademarks b. Lead the development of a balanced and effective international intellectual property (IP) system that enables innovation and creativity for the benefit of all 7. International Fund for Agricultural Development (IFAD) a. Invest in rural people, empowering them to increase their food security, improve the nutrition of their families and increase their incomes b. Building resilience, expand their businesses and take charge of their development 8. United Nations Industrial Development Organization (UNIDO) a. The specialized agency of the United Nations that promotes industrial development for poverty reduction, inclusive globalization, and environmental sustainability 9. World Tourism Organization (UNWTO) a. Responsible for the promotion of responsible, sustainable, and universally accessible tourism b. Leading international organization in the field of tourism, which promotes tourism as driver of economic growth, inclusive development, and environmental sustainability and offers leadership and support to the sector in advancing knowledge and tourism policies worldwide. https://www.google.com/url?sa=i&url=https%3A%2F%2Fbusinessmirror.com.ph OTHER GLOBAL ACTORS Multinational Corporation (MNC) In economic globalization, companies seek the greatest possibility of efficient and maximized profits that will involve many regions and localities to global production. Many believe that the new technology will allow the intense movement of information, goods, services and people can create an environment of new economy -- increasing the networks in global production, free trade and capital. The interconnectedness of various components of production, where the stages in production takes place in different location depends on the favorable conditions such as cheap labor, raw material, skilled labor and market consumer. It is a business organization whose activities are located in more than two countries and is the organizational firm that defines foreign direct investment. This firm consists of a country location where it is incorporated and established branches or subsidiaries in foreign countries (A.A Lazarus, 2001 p10197). The International Monetary Fund (IMF) The International Monetary Fund, founded at the Bretton Woods Conference 1944, is the official organization for securing international monetary cooperation. It has done useful work in various fields, such as research and the publication of statistics and the tendering of monetary advice to less-developed countries. It has also conducted valuable consultations with the more developed countries. North Atlantic Treaty Organization (NATO) NATO is based on the North Atlantic Treaty, which provides the organization a framework. The treaty provides that an armed attack against one or more of NATO‟s member nations shall be considered an attack against them all. It is headquartered in Brussels, Belgium. The organization was formed in 1949. Many countries joined NATO -- even Iceland which is the only member without a military force. The organization was originally formed out of the fear that the Soviet Union would ally military with Eastern European nations i.e. the Warsaw Pact, and thus become a threat to Western Europe and the United States. Global Financial Institutions Associated with World Trade The World Trade Organization, the International Monetary Fund, and the World Bank are the three institutions that underwrite the basic rules and regulations of economic, monetary, and trade relations between countries. Many developing nations have loosened trade rules under pressure from the IMF and the World Bank. World Trade Organization (WTO) It is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to ensure that trade flows as smoothly, predictably and freely as possible. It has many roles: it operates a global system of trade rules, it acts as a forum for negotiating trade agreements, it settles trade disputes between its members and it supports the needs of developing countries. Also, it regulates international trade's deals with the rule of trade between nations. Ensures the trade will flow smoothly, predictably and freely as possible. Acts as a forum in negotiation trade agreements. World Bank It is a financial institution that extends financial assistance through loans to countries interested. It was founded by the United Nations Monetary and Financial Conference or the Bretton Woods Conference. World Bank Group International Bank Reconstruction and Development (IBRD) 1s an international financial institution that offers loan to middle-income countries willing to improve their economy 1. International Development Association (IDA) its primary purpose is to provide loans to developing countries to reduce inequalities and improve people's conditions and the country's economic growth. 2. International Finance Corporation (IFC) providing loans for private sectors in developing countries to create markets that open up opportunities for all  3. Multilateral Investment Guarantee Agency (MIGA) promotes foreign direct investment (FDI) into developing countries to help support economic growth, reduce poverty, and improve people's lives 4. International Centre for Settlement of Investment Disputes (ICSID) is an international organization of investors for investment treaties and laws and contracts. 5. The International Monetary Fund (IMF) is an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. Its primary purpose is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other. Also, ensure the stability of the international monetary system. It does so in three ways keeping track of the global economy and the economies of member countries, lending to countries with balance of payments difficulties, and giving practical help to members. The Organization for Economic Cooperation and Development (OECD), the Organization of Petroleum Exporting Countries (OPEC), and the European Union (EU) The most encompassing club of the richest countries in the world is the Organization for Economic Cooperation and Development (OECD) with 35 member states as of 2016, with Latvia as its latest member. It is highly influential, despite the group having little formal power. This emanates from the member countries‟ resources and economic power. In 1960, the Organization of Petroleum Exporting Countries (OPEC) was originally comprised of Saudi Arabia, lraq, Kuwait, Iran, and Venezuela. They are still part of the major exporters of oil in the world today. OPEC was formed because member countries wanted to increase the price of oil, which in the past had a relatively low price and had failed to keep up with inflation. Today, the United Arab Emirates, Algeria, Libya, Qatar, Nigeria, and Indonesia are also included as members. The European Union (EU) is made up of 28 member states. Most members in the Eurozone adopted the euro as basic currency but some Western European nations like the Great Britain, Sweden, and Denmark did not. Critics argue that the euro increased the prices in Eurozones and resulted in depressed economic growth rates, like in Greece, Spain, and Portugal. The policies of the European Central Bank are considered to be a significant contributor in these situations. North American Free Trade Agreement (NAFTA) now United States-Mexico-Canada Agreement (USMCA) The North American Free Trade Agreement (NAFTA) is a trade pact between the United States, Mexico, and Canada created on January 1, 1994, when Mexico joined the two other nations. It was first created in 1989 with only Canada and the United States as trading partners, but it was replaced by USMCA on July 1, 2020. The agreement creates a more balanced environment for trade, supports high-paying jobs for Americans, and grows the North American economy. Overall, the so-called global actors have significantly contributed to the economic globalization we are currently witnessing. As the topic of the global economy varies across different fields, no single academic discipline can fully encompass it. Gereffi has proposed that the global economy can be examined from various perspectives. First is at the macro level which includes the international organizations and regimes that establish rules and norms for the global community. The World Bank, the International Monetary Fund, the World Trade Organization, and the International Labor Organization are the existing international organizations that make impact to the economy of the world. The regional integration schemes like the European Union and the North American Free Trade Agreement are also part of these organizations. Since these regimes blend both the rules and resources, they substantiate the widest parameters within which the global economy operates. Next is the meso level in which it is believed that the building blocks for the global economy are the countries and firms. The global economy is seen as the arena in which countries compete in different product markets. The last is at the micro level. There is a growing literature on the resistance to globalization by consumer groups, activists, and transnational social movements. Therborn (2000) expressed, “There are many theories related to economic sociology incorporate the global economy in their frameworks, but they differ in the degree to which it is conceptualized as a system that shapes the behavior and motivation of actors inside it, or as an arena where nationally determined actors meet, interact, and influence each other.” One theory that provides a comprehensive explanation for this phenomenon is the Modern World System (MWS) theory developed by Immanuel Wallerstein. It describes the economic interactions between core, semi-peripheral, and peripheral countries in the world. In this system, core states have a significant advantage over others through unequal exchange and the extraction of raw materials from the periphery and semi-periphery. Essentially, the world systems theory suggests that, despite the ever-changing nature of the global economy, countries can generally be classified into three groups: the core, the periphery, and the semi-periphery. The core countries exert control and exploit those on the periphery, with capital flowing mainly from core countries to peripheral countries. In essence, this theory proposes that wealthier countries benefit from and exploit the citizens of other countries. Thus, the economic globalization and market integration of the 21st century are extensions of the same economic motives of imperial powers of the nineteenth and twentieth centuries (Balaam and Veseth, 2008). The modern world-system perspective offers a comprehensive framework for comprehending the complex relationships between states in the global economy. This perspective sees the world as a unified, interconnected economic system where the interactions between states are influenced by their position within a global hierarchy. References: Mendoza, Cheryl C. et al. 2019. “Worktext in The Contemporary World.” Nieme Publishing House Co. Ltd https://www.wto.org/english/thewto_e/thewto_e.htm https://www.imf.org/en/About https://www.worldbank.org/en/about/what-we-do Nau, H. (2009). Perspectives on International Relations: Power, Institutions, and Ideas. 2nd edition. Washington DC: CQ Press Sage Publishing. 2009 De Ocampo, F., Ramos, B., Llomora, R.,Macaraeg, A., David, M.A. (2018), Introduction to Contemporary World. St. Andrew Publishing House. Claudio, L., Abinales, P. (2018),The Contemporary World. C & E Publishing, Inc.