Economic Globalization Topic 2 PDF

THE CONTEMPORARY WORLD Cagayan State University Carig Campus TOPIC 2: ECONOMIC GLOBALIZATION Objectives: After completion of the topic, students will be able to: a. Define economic globalization; b. Define the modern world system c. Identify the three level hierarchy of the...

THE CONTEMPORARY WORLD Cagayan State University Carig Campus TOPIC 2: ECONOMIC GLOBALIZATION Objectives: After completion of the topic, students will be able to: a. Define economic globalization; b. Define the modern world system c. Identify the three level hierarchy of the modern world capitalist world-economy; and d. Articulate a stance on global economic integration. What is Economic Globalization? Internation Monetary Fund (IMF) – regards “economic globalization” as a historical process representing the result of human innovation and technological progress. It refers to the growing globalization of economies , particularly through cross-border movement of commodities, services and capital. It also refers to cross-border mobility of people (labor), and knowledge (technology). Gao Shangquan (Chinese economist) – economic globalization is the increasing integration and 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 technology. (2000) Manfred Steger- intensification and stretching of economic interrelations across the globe. (2005) THE GLOBAL ECONOMY- “world economy” = economy that exist all over the world, regarding all economies as a single massive entity. - globalization of production, finance, markets, technology, corporations, and labor. Globalization of Production – the process involving the fragmentation and decentralization of production processes, with different stages of production being carried out in various countries or regions based on comparative advantages, cost considerations, and market dynamics. iPhone Production: Inside Apple’s INSANE iPhone 13 Factory! (youtube.com) Globalization of Technology - the process by which technological innovations, knowledge, and expertise spread and are adopted across national borders, leading to increased interconnectedness and integration of technology-related economic activities on a global scale. Globalization of Finance – refers to the flow of capital and corporate investments, and currencies, among countries. Globalization of Markets – refers to the integration and merging of distinct markets into a single market. Globalization of Labor - involves the movement of workers across national borders, the outsourcing of jobs to foreign countries, and the internationalization of labor markets. Globalization of Corporations- process by which companies expand their operations, markets, and influence beyond national borders to operate on a global scale. THE CONTEMPORARY WORLD Cagayan State University Carig Campus In the recent decades, as a result of increased global movements of economies, economic globalization ushered in an unprecedented spike in global growth rates. The IMF reported that the Global per Capita GDP rose over five folds in the second half of the 20th century, creating large Asian economies like Japan, China, Korea, Hongkong, and Singapore. However, economic globalization remains as uneven process, with some countries, corporations, and individuals benefiting a lot more than others. THE MODERN WORLD SYSTEM World Systems Theory – posits that there is a world economic system in which some countries benefit while others are exploited. - Developed by sociologist Immanuel Wallerstein, the theory suggests that the way a country is integrated into the capitalist world system determines how economic development takes place in that country. THE THREE-LEVEL HIERARCHY OF THE MODERN CAPITALIST WORLD SYSTEM - According to Wallerstein, the world economic system is divided into a hierarchy of three types of countries: core, semi-peripheral, and peripheral. THE CONTEMPORARY WORLD Cagayan State University Carig Campus A. CORE – areas that dominate, exploit, and benefit the most in the capitalist world-economy. They have high levels of industrialization and urbanization. They own most of the world’s capital and technology and have great control over world trade. E.g. U.S, Japan, Germany B. Semi periphery - are less developed than core nations. They often serve as important manufacturing hubs or emerging markets and serve as buffers between the core and peripheral countries. E.g. India, China, South Korea, Taiwan, Indonesia, Mexico, Iran, Brazil, South Africa, Nigeria. C. Periphery – areas that are dependent on core countries for capital and are less industrialized and urbanized. Peripheral countries are usually agrarian, have low literacy rates and lack consistent Internet access. They provide raw materials to the core countries and are heavily exploited. They lack strong central governments or were controlled by other states. E.g. many countries in Africa The international division of exploitation is defined not by state borders but by the economic division of the world. There are three things necessary for the rise of the capitalist world-economy. These are geographic expansion, worldwide division of labor and core state’s development. Why are countries being pulled towards this system? Can the countries resist to be a part of it? Ritzer, 2010-310 explained: “The pressure for incorporation into the world-economy comes not from the nations being incorporated but rather from the need of the world-economy to expand its boundaries, a need which was itself the outcome of the pressures internal to the world economy.” In maintaining a good balance between maintaining state powers and being part of the modern world- system, states must be strong enough to protect their own economies from external threats. However, this strength of theirs which comes from, perhaps, their external sovereignty should not be too much for them to be able to stand on their own and refuse to act in accordance with the demands of the capitalist world-economy. It is a matter of striking a balance between the state’s power and the pressures of the global economy. Application: Accomplish the worksheets attached.