Global Economy PDF

The Global Economy Introduction The discussion about globalization focuses on its economic aspect, which involves increased integration of economic activities worldwide. According to Szentes (2003:69), this means extending economic projects and relations across borders, leading to interde...

The Global Economy Introduction The discussion about globalization focuses on its economic aspect, which involves increased integration of economic activities worldwide. According to Szentes (2003:69), this means extending economic projects and relations across borders, leading to interdependencies among countries. Economic globalization is more than just internationalization; it also involves integrating economic activities and processes (Dicken, 2004). This requires creating institutions to facilitate market integration on a global scale. Economic Globalization Most definitions of globalization emphasize its economic aspects, driven by increased cross-border trade of goods and services (Shangquan, 2000:1). This economic integration involves coordinating separate production operations globally, facilitated by advancements in transportation and communication (Shangquan, 2000; Steger, 2010; Al-Rodhan et al., 2006). Neoliberal principles, emphasizing market-driven economic activities with minimal government intervention, guide this process (Martin et al., 1997). Developed countries hold a dominant role in global industrial restructuring (Shangquan, 2000:3).  Global economic integration is not new; earlier explorations and empires, like the Roman Empire, facilitated intercontinental trade, serving as precursors to modern economic globalization (Gills and Thompson, 2006:1). Chinese and ancient Asian trade also contributed to early forms of economic expansion and integration. While earlier trade focused on high-value commodities like spices and precious metals, modern economic globalization is characterized by its widespread reach and influence of the private sector (Shangquan, 2000). Actors of Economic Globalization Actors of Economic Globalization Globalization involves various non-state actors driving economic globalization, including international economic organizations like the IMF, World Bank, and OECD, which promote neoliberal policies and facilitate trade discussions among countries (Shangquan, 2000:280).  Regional organizations like ASEAN and NAFTA promote regional agreements to enhance trade and cooperation (Shangquan, 2000:280).  Multinational companies (MNCs) play a significant role as carriers of economic globalization, with their numbers increasing over time (Shangquan, 2000:2; UNCTAD, 2007).  Central banks are also influential in leading economic development globally (Shangquan, 2000:280).  Additionally, the global civil society, including Transnational Advocacy Networks (TAN), contributes to economic globalization by advocating for policy changes and alternative approaches (Keane, 2003; Keck & Sikking, 1998:8- 9). International Monetary Fund The IMF is an international organization of 183 member countries to promote international monetary cooperation and exchange stability; to foster economic growth and high employment; and to provide short-term financial assistance to countries to help ease balance of payments adjustments (IMF, 2019). International Financial Institutions (IFIs) The generic name given to all financial institutions operating on an international level, ranging from development banks, such as the World Bank and the European Bank for Reconstruction and Development (EDB), and monetary authorities, such as the International Monetary Fund. These organizations give loans to governments for large- scale projects, restructuring and balance of payments on condition that they make specific changes that IFIs believe will boost economic growth (Shangquan, 2000). Transnational Corporations "Enterprise that engages in activities which add value (manufacturing. extraction, services, marketing, etc.) in more than one country (UCTC, 1991)." G8 and G 20 Group of nations that serve as an advisory organization that discuss current economic and political problems and transfer the ideas from the forum in national legislative regulations (Weiss, 2018) Global Civil Society Either composed of Individuals or groups of individuals disadvantaged by the effects of the globalization of the world economy, they protest and seek alternatives while on the other hand, global social movement constituting a basis for an alternative to a new world order (Gherghel, n.d.; Keane, 2003)  Modern World System The seminal work of Immanuel Wallerstein on the world-system theory (1974) is a critical reference in the theorization of globalization.  Modern World System For Wallerstein, a world system constitutes a social system composed of boundaries, structures, member groups, rules of legitimation, and coherence (Wallerstein, 2011). It is a way of understanding how countries and regions are connected through economics and power. World economy, according to Wallerstein (2011), is divided into core states and peripheral areas including semi-peripherals. Modern World System According to the world-system theory, the peripherals are mostly where production or raw materials are sourced out these are poorer, less developed nations that rely on core countries for trade. They often provide raw materials and cheap labor. Scenario: A company in Bangladesh manufactures clothing for a brand based in a core country like the U.S. Workers in Bangladesh are paid low wages to produce cheap goods, while the brand makes high profits by selling the products at higher prices in wealthier nations. Modern World System the semi-peripherals processed or distributed the products to the core areas-sites of major demands for goods and services (Wallerstein, 2011). These are in between, with developing economies. They have some power but still depend on the core countries. Scenario: India provides both tech services and labor. For example, some companies outsource customer service or software development to India. While India benefits from this, it still relies on core countries for the latest technologies and investments. Modern World System Core countries These are the wealthy, developed nations with strong economies. They control trade and have the most influence globally. Scenario: The U.S. designs and sells advanced technology products like iPhones. The research and development happen in the U.S., where high-paying jobs are created, and the final product is sold globally, generating profits for the core country. There are significant and meaningful movements of resources, products, people in different economies facilitated by modern transport and communication (Chase-Dunn, 2018). The modern world system shows how wealth and resources are unevenly distributed across the globe, creating a hierarchy of countries.