Contemporary World MODULE 1
Contemporary World MODULE 1
Lesson 2. The Global Economy, focuses on the process of making the world economy an integral element of
a whole. Also, it elaborates on the important players of economic globalization.
Lesson 3. Market Integration covers the position of international financial institutions in global market
integration.
Lesson 4. The Global Interstate System, the discussion tackles the consequences of globalization on
governments and institutions that govern nation-state relations.
This section introduces the learners to the concepts of globalization as a process, condition, and ideology. It
also explores the political scientists’, economists’, and culture and communication experts’ definition of
globalization.
Is Globalization a Phenomenon?
When the world was surprised by the birth of information technology, societies became more eager to
adopt the trends of the market. People across the globe showed interest to be part of a community where
connections and linkages are available. When the World Trade Organizations (WTO) was formed,
economies responded quickly showing interest in this global network of countries. The same thing for Nokia
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when is successfully penetrated the worldwide market through offering the most innovative cellular phones,
millions of people were caught by this technological breakthrough. When the Asia financial crisis hit some
countries in the region, economists, and governments became more wary and keep in managing the
domestic and international flows of money.
The world is in state of complexities and uncertainties. Small and big institutions and communities are
affected at a higher scale by these complex phenomena. No can accurately predict what the world would be
like in the next 10 or 20 year. One thing is sure: globalization is a phenomenon. It is something that is
difficult to understand. Reich (1988) says that it is term whose meaning is obscure. Schottle (1995) states
that “globalization stands for quite a large public spread across the world as one of the defining terms of the
20th century social consciousness.” The term is often distinguished more by what is not, rather than by what
it is. Rosenau (1996) recognizes such a tendency when he states that
Globalization is not the same as globalism, which points our aspirations for an end state of affairs
wherein values are shared by or pertinent to all the world’s five billion people, their environment,
their roles as citizens, consumers and producers with an interest in collective action designed to
solve common problems. Nor it is universalism-values that embrace all humanity.
For McGrew (1990), globalization is described as something that is comprised of multiple sameness and
interconnectedness that go beyond the nation-states. It is a process in which individuals and organizations
in on part of the world are affected by the activities, affairs, and convictions on another part of the globe.
Also, Cerny (1997) defines it as a cluster of economic and political frameworks and procedures deriving
from the changing marks of the interests and assets that comprise the foundation of the international
political economy-specifically, the expanding structural differences of those interests and assets.
Steger (2014) defines ideology as a system of widely shared ideas, patterned beliefs, guiding norms and
values, and ideals accepted as truth by some groups. An ideology is defined by core claims. Since
globalization has core claims; hence, it is ideology. Steger (2014b) uses the term globalism to mean
globalization as an ideology. He then identifies five core claims of globalism.
First globalization is about the liberation and global integration of markets; second, it is inevitable
and irreversibly; third, nobody is in charge of globalization; fourth, globalization benefits everyone;
and fifth, it furthers the spread of democracy.
On the first decade of the 21 st century, some scholars argued that globalization is a process. For some, it is
a condition while others describe it as an ideology. Freeden (2003) posits that globalization denoted a range
of processes nesting under one rather unwieldy epithet. In part, its conceptual difficulty to handle or control
arises from the fact that global flows occur in physical and mental dimensions. Appadurai (1996) proposed
five dimensions of global cultural flow, namely: ‘ethnoscapes,’ ‘technoscape,’
‘mediascapes,’financescapes,’and ‘ideoscapes.’ These landscapes are created due to movements of
people, technologies, information through media, money and commodities and political ideas.
Globalization is also defined depending on someone else’s expertise, experience and perspective. For a
political scientist, globalization serves as a challenge to nation-states. The strengthening of regional blocks
lie EU, ASEAN, and UN is gaining a stable ground. For an economist, globalization means increase of free
trade, speed of trade, global economic organization, and regional trade blocks. The expansion of free trade
allows governments not to restrict the importation of products nor impede the export local products.
Importing and exporting are done in just millisecond through technology and the internet. There is also the
intense establishment of economic organizations such as the International Monetary Fund (IMF), World
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Bank (WB), World Trade Organizations (WTO), International Labor Organization (ILO), European Free
Trade Area (EFTA), Mercuser, a customs union among Brazil, Argentina, Uruguay, Paraguay, and
Valenzuela, ASEAN Free Trade Area (AFTA, and Trans-Pacific Partnership.
Furthermore, for culture and communications experts, globalization refers to the concept of a global village.
Through globalization, the world has become a borderless world. Communication technology makes the
world shrink. More so, globalization is referred to as “cultured imperialism” it is the conviction that there is a
“better” culture. Some cultures see other cultures as superior to theirs, forming inferior or non-dominant
cultures. In cultural globalization, therefore, the spread of popular culture (e.g., music, art, literature, fashion,
lifestyle, etc.) flows from dominant to non- dominant culture (e.g., from developed to developing nations).
One objective working definition is “Globalization refers to the expansion and intensification of social
relations and consciousness across world-time and world-space.” From this definition, four attributes of
globalization can be drawn.
Economics Politics
Individuals
And Environment
Institutions
1. Creation and Multiplication – The current modernization involves creation and multiplication of
social networks and cultural activities thus, breaking the traditional norms and practices in the
political, economic, and cultural realms of most communities.
2. Expansion and Stretching - Second, globalization is very evident in the expansion and stretching of
social operation and connections. This reflected on how the financial markets and trading operate
around the globe. The formation of economic organizations like WTO, ASEAN Economic
Community, World Economic Forum, and EU brought light to the expansion of local economies to
the other parts of the world.
3. Intensification and Acceleration- Third, globalization involves intensification and acceleration of
human activities. It describes how the process of the world and individual connection works. The
digital age as part of the Fourth industrial Revolution is considerably the fitting from of its structure.
Consumer markets and consumerism continue to rule in this postmodern era where the farthest
have the access to reach the central portion of global events.
4. Consciousness and Awareness- Fourth. As noted by Roland Robertson, globalization involves the
human consciousness and awareness. People, as the primary actors of globalization are the
frontlines as reflected in their experiences. The human consciousness is critical on how they impact
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the growing outcomes and markers of globalization. Their daily actions such as global
interdependence provide large-scale implications to the norms and practices of the borderless
world.
Globalization may be defined and conceptualized from different lenses, but an interdisciplinary definition is
necessary. Some scholars consider it as a process, a condition, or an ideology. Experts from different
fields of social sciences also define globalization based on their specialization or expertise. But a working
definition has to encompass all definitions of and notions about globalization.
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Instructions: Answer the following questions.
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2. Based on the lesson 1 discussion, is globalization a process, a condition, or an ideology? Explain your
choice. (5pts)
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Economics Politics
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This section introduces the learners to the economy in the global scale. It discusses the concept of
different economic system used by countries that are parts of the economic globalization and the important
actors that facilitate the interdependence of the world economies. This also explains the relevance of
economic system that deals on issues concerning the function of international trade, its benefits and
damages. Part of this lesson is also identifying and Analyzing the roles and functions of the most influential
and biggest international economic organizations in the world like IMF and World Bank.
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INTENTED LEARNING OUTCOMES
At the end of this lesson, you should be able to:
The interconnected of world economy is the forefront marker of globalization. The meeting point of
developed and developing economies as well as the emergence of economic institutions and organizations
make everything easier and faster to hold transactions globally. The global economy is highly
interdependent. Global exchanges of commodities create an opportunity to more sustainable and equipped
economy while pose risk to the emerging and less performing country. Top gainers and developed
economies in the world are those that have the sufficiency of resources to compete with other most powerful
economies. They somehow control and dictate the movement of global demand, investment, and flow of
technologies worldwide.
Economic Systems The global economy of most countries is classified into three categories: market,
command and mixed economies. In countries where democracy prevails, its economic system usually under
the freedom, choice and decisions of its citizens. While countries that are under the control of a single
political party and authority, its system could be under the practice of command economy.
Market Economy- decision making of private individuals is a determinant of a pure market economy.
Economic freedom to purchase and sell products, services, and properties is a key characteristic of an
economy under the will and interest of the individuals. Market economy promotes competition among
businesses and firms. They usually compete for the quality and price of their products. This allows
consumers to enjoy their economic freedom to choose products. Innovation is also an advantage of this
system which encourages competing producers to make and develop items that will provide comfort and
satisfaction to the market.
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Command Economy- a central planning body handles the entire decision makingin the operations of
an economy. The quality and quantity of goods and services produced in the market is based on the
decision of the government. Production quantity is dictated, consumer behavior is directed, and market
operation is controlled by a single authority. The objective of command system is to mobilize resources for
the common good of the public and for the interest of the nation. Private individuals have no say in the
economic operation as this includes the abolition of private ownership. Opposition to this system states that
there is the total absence of economic competition and innovation.
Mixed Economy- market driven economies like United States, Great Britain, and France had
experienced mixed economic system. This practice is a combination of market and command system of
economic planning and decision making. Some sectors are under the direction of the private individuals
while other aspects of the economy are left within the interest and guidance of the government. There are
times that the state has to take over the ownership and operation of a particular troubled private firm for the
purpose of maintaining the interest of the nation.
International Trade (IT) Is the process and system when goods, commodities, services cross national
economy, and boundaries in exchange for money or goods of another country. Global trade has grown
dramatically since the post-cold war era as a result of increasing demand of goods and services of
countries. This global norm is a reflection of growing practice of internationalizing and globalizing local
products and services.
Trade Theories There are two types of trade theories explaining international trade.
Descriptive Theory- it deals with the natural order and movement of trade. It describes the pattern of trade
under the idea of laissez faire, a French term means “leave alone”. It refers to the notion that individuals are
the best economic agents to solve the problems through invisible hand rather than the government policies.
Descriptive theory addresses the questions of which product to trade, how much product to offer and
produce, and which country to trade in the absence of government restrictions.
Perspective Theory- this prescribes whether government, an important economic institution, should
interfere and restrict with the movement of goods and services. This theory views government to have
participation in deciding which countries to alter the amount, composition and direction of goods. The
pressing question describing descriptive theory is “Should the government control trade?”
1. Economic Liberals- explain the importance of free trade and the role of individual’s preference in
choosing economic activity. It includes making decision and choices on comparing the costs of
products to be produced and traded, the availability of the product, and the efficiency of producing
and buying the products.
2. Mercantilists- is an economic theory emerged from about 1500-1800. This period was the emerging
eras of nation-states and the formation of more central governments. Mercantilism was adopted to
increase and sustain the colonial power and its authority to direct and control the economic activity
of the colony.
3. Structuralists- the earliest wave if mercantilism was described as classical imperialism. The drive of
European countries to explore and colonized underdeveloped countries originated from the
aggressive mercantilist behavior of European economies. This idea was extended to the practice of
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modern capitalist-imperialist approach by countries and economies that have immense resource
through the use of hard power over developing and less developed countries.
The Modern Word System (MWS) explains the contact of economies between core, semi peripheral, and
peripheral countries world. The core states have the absolute advantage over the other through unequal
exchange and extraction of raw materials from peripheral and semiperiphery. This system as part of the
structure of global capitalism, involves exploitation, and transformation in some ways.
World Trade Organization the American government initiated the structuring of global economy through the
establishment of multilateral trade negotiations under General Agreement on Tariffs and Trade (GATT). This
became the main umbrella responsible for the economic liberalization around the world. In 1995, GATT was
replaced and succeeded by World Trade Organization (WTO) with 151 members as of 2008 and accounts
for 90% of the world’s trade. WTO has the following functions:
As the most powerful trade institution in the world, WTO has various weaknesses and criticisms. It voting is
by consensus, making its decisions political. It operates on one country-one vote, and not on the quota
system or based on the economic size of the country’s and its share in the world’s trade. Its trade dispute is
highly politicized and disappointing to members which led to threatening their withdrawal from the
organization because of unfavorable decisions affecting their economies. In some occasions, WTO was
criticized of manipulating and interfering state sovereignty of its members especially when decisions do not
favor their welfare and economic interest.
World Bank Officially called the international Bank for Reconstruction and Development
(IBRD), or World Bank is an international agency with 189 member-countries operating 130 countries
worldwide. Formed by Bretton Woods’s agreement in 1944 to finance the reconstruction of wartorn
countries brought by the devastation of World War II. World Bank is composed of four associated agencies:
1. International Development Association (IDA). This agency focuses on poor and third world
economies in the world by providing financial assistance and loan program.
2. International Finance Corporation (IFC)
3. Multilateral Investment Guarantee Agency (MIGA)
4. International Settlement Centre of Investment Disputes (ISCID)
Nau (2009) elaborated he following criticisms raised by members of some NGOs and civil society on the
operation of World Bank.
1. Its function is limited only to poverty which has some similarities with IMF.
2. It concentrates to macro scale projects where micro and small projects affecting the lives of
communities are excluded and not given proper attention.
3. The organization fails to address the global problem of inequality.
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4. Rampant case of corruption in the organization.
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5. Employees and staff are overpaid; salaries are higher than a banker’s pay.
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Why Countries Engage in International Trade?
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- Uses of Excess Capacity in Demand - Cheaper Supplies
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- Cost Reduction and Increase of Profit - Addition to Product Line
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- Reduction of Risk - Foreign Policy
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Activity 2: The Influences of Economic Globalization
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Name: __________ ________________________________ Date: _______________
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Instructor: _______________________________________
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Instructions:
i Dress the human outline with the apparel and accessories that you are currently wearing. Draw at least 10
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LESSON 3: MARKET
This lesson examines how the global market becomes coherent through global corporations and
international financial and economic institutions. Part also of this lesson is the history of the global market
will be discussed by looking at the different economic revolutions. The growth and dynamics of multinational
corporations that are emerging in today’s world economy will also be examined.
1. explain the role of international financial institutions in the creation of a global economy ;
2. discuss the factors leading the formation of economic integration and corporation; and
3. infer the attributes of global corporations.
After the Second World War, almost all countries around the world faced the great challenge of bringing
their feet back on the ground. As a substitute to the successful League of Nations, the United Nations (UN)
was established on October 24, 1945. Primarily, it was tasked to promote international cooperation and to
restore international order. Earlier in 1944 at the Monetary and Financial Conference in Bretton Woods, New
Hamsphire (US), the first government-sponsored international financial institutions were established- the
World Bank (WB)and the International Monetary Fund (IMF). There are two types of international financial
institutions: intergovernmental and private. The WB is an intergovernmental institution. It aim is to end
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extreme poverty and promote shared prosperity in a sustainable way (worldbank.org). There are five
organizations that belong to the WB Group, namely, the International Bank of
Reconstruction and Development, International Development Association, International Financial
Corporation, Multilateral Investment Guarantee Agency, and International Center of Settlement and
Investment Disputes. These organizations facilitate the granting of loans and financial assistance to
developing countries. The IMF, also an intergovernmental institution, works to foster global monetary
cooperation, secure financial stability, facilitate international trade, and more (imf.org/en/About). Like the
WB. It also grants financial assistance and loans to developing countries.
There are also private international financial institutions such as Citigroup and Merrill Lycnh. Citigroup is
an American multinational investment banking and financial corporation. It is the fourth largest bank in the
US (citigroup.com). On the other hand, Merrill Lycnh is the wealth management around the world.
Investment can be in the form of foreign direct investments, stocks, or financial loans.
Both intergovernmental and private financial institutions help facilitate the functionality of a global
economy by lending money to their member states and global corporations.
Iwan (2012) identifies the differences among international, multinational, transnational, and global
companies:
• International companies- are importers and exporters with no investments outside their home
countries.
• Multinational companies- (MNCs) have investments in other countries, but do not have a
coordinated product offering in each country. They are more focused on adapting their products and
services to each individual local market.
• Global companies- have investments and are present in many countries. They typically market their
products and services to each individual local market.
• Transnational companies- (TNCs) are more complex organizations that have investments in foreign
operations, have a central corporate facility but give decisionmaking, research and development,
and marketing powers to each individual foreign market.
The ascent of global corporations is a reflection of a globalized market integration. TNCs and MNCs are no
longer limited to their home countries. They are able to expand their reach to other continents and countries.
These global corporations have common attributes. Neubauer (2014) identifies three of them- an agent
of desired economic development, an economic prominence, and a very powerful entity that can create a
crisis. These corporations may hit their target of economic development by making their consumer products
available in many parts of the globe.
The formation of economic integration is designed to address and enhance the level of competitiveness of
member economies in trade. Free trade is the primary consideration of regional economic integrations. Free
Trading Area (FTA) is a trading bloc which involves the reduction of internal tariffs to zero of member
economies while retaining its different external tariffs, this policy aims to promote free flow of goods and
services as well as to increase the volume of trade within the region. However, there are criticisms on FTAs
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like unfair trade practice. Unfair Trade is the product of trade by a business firm or government that violates
and breaks the international trade agreements that are unjustifiable and discriminatory.
The ASEAN was founded on August 1967 in Bangkok Thailand with Indonesia, Malaysia,
Philippines, Singapore, and Thailand as its founding fathers. Brunei Darussalam, Vietnam,
Myanmar, and Cambodia joined the organization making up today the 10 member-countries. The ASEAN
Political-Security Community, ASEAN Economic Community and ASEAN SocioCultural Community are the
three main pillars of ASEAN.
As stated in the Treaty of Amity and Cooperation in Southeast Asia (TAC) of 1976. The ASEAN Community
functions under six fundamental principles (ASEAN.org):
1. Mutual respect for the independence, sovereignty, equality, territorial integrity, and national identity
of all nations;
2. The right of every State to lead its national existence free from external interference, subversion or
coercion;
3. Non-interference in the internal affairs of one another;
4. Settlement of differences or disputes by peaceful manner; 5. Renunciation of the threat or use of
force; and
6. Effective cooperation among themselves.
Instructions: Choose one Filipino global corporation. In an essay, discuss its history, worldwide
reach, and attributes as a global corporation. (10pts.)
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This lesson analyzes the dynamics of transnational cooperation and how governments are
affected by globalization. We will look at regional alliances and worldwide organizations of states. This
manifests the efforts of countries and governments in the world to cooperate and collaborate together.
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1. explain the effects of globalization on nation-states ;
2. categorize the institutions that govern international relations; and
3. differentiate internationalism from globalism.
First, globalization is seen to impose a forced choice upon nation-states. Either they conform to
the neo-liberal ideas and free-market principles of deregulation, privatization, and free trade or
run the risk of being left behind in terms of development. Of course, the nation states, in this
contemporary age, are forced to submit themselves to the demands of globally accepted free-
market principles. Friedman in Steger (2005) claims that nation-state are in danger of losing
important elements of economic sovereignty because of the notion that neoliberalism is beyond
contestation as an aspect of globalization. In other words, nation-states still exist but lose a part
of integral to their economic development and let global corporations control their economic
movement. Though government policies can be put in place, nation state are forced to realign
their policies to be congruent with the principles of free trade because of the pressures from
global corporations. To illustrate, the member states of the Association of Southeast Asian
Nations (ASEAN), including the Philippines, established the ASEAN Free Trade (AFTA) in 1999. Its
goal is to encourage the member-states to deepen their commitments in investment, trade, and
industrial collaboration to brace them for the increase in the region’s economic activity.
EU is guided by its core values, considered as integral part in the way of life of its citizens.
It believes on the following value orientations: (1) Human dignity, (2) freedom (3) democracy (4)
equality, (5) rule of law, and (6) human rights. Joining this organization is a very complex
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process. Countries expressing its membership must meet the requirements and implement EU
rules and regulations. It has to undergo a rigorous process, where domestic and national policies
of the applicant will be evaluated. Commitment to adhere the philosophies of EU is an
important factor in accepting an applicant country.
These three mentioned effects are vertical effects. Aside from this, globalization also has
a horizontal effect which can be observed in the formation of transgovernmental Networks
(Slaughter, 2004). National government offices connect with their counterparts in other
nationstates in order to establish linkages that would benefit all parties. These linkages are
informal; institutions that connect legislators, finance ministers, and other valuable individuals
who are significant in carrying out various aspects of global governance. As institutions, policies
are agreed upon and individual state-participants are conscious that their home country policies
should not be violated.
The fourth effect of globalization is the rise of transnational activism (TNA). Such
happens when activist groups of nation-states connect with their counterparts in other states.
For example, an advocacy-based organization in the Philippines may connect itself with and get
support from other human rights in Europe to pressure the Philippine government top realign its
stance and actions in upholding human rights. When a nation-state recognizes international
interventions and changes its behavior in response to international pressure, it reconstitutes the
relationship among the nation-state, its citizens, and international actors.
The fifth and last effect of globalization is the creation of new communications network.
Globalization binds communities through digital media. With new technologies in
communication, political interaction can happen in a virtual sphere. People can exchange
political perspectives through the internet, therefore stirring political discourse on an online
platform. Because of the so called network society (Castells, 2009), nation-states must reshape
themselves to become part of global networks in the arena of finance, education, science,
technology, arts, and sports. This can be seen in the proliferation of online education from
universities outside the Philippines. Conversely, Philippine universities offer online courses to
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non-Filipinos. Thus, digital media has become the platform for strategic communications at
home and abroad wherein the nation-states can utilize the internet to gather feedback from the
citizens. On the other hand, digital media can also be used by governments to gain public
support in their campaigns. Thus, social media, in particular, can become an alternative to
mainstream media that advances its biased perspective.
Established in 1967, The Association of Southeast Asian Nations (ASEAN) now has 10
member states. Its aims are 1) to accelerate economic growth, social progress, and cultural
development in the region; 2) promote regional progression; 3) advance peace and
sustainability; 4) promote active and beneficial cooperation and mutual assistance on matters of
common interest in the economic, technical, cultural, administrative, and scientific fields; 5)
provide assistance to each other in the framework of training and research installations in the
educational, professional, technical and administrative spheres; 6) work hand in hand for more
effective and greater use of agriculture and industries; 7) advance Southeast Asian research; and
8) preserve close and beneficial collaboration with current international and regional institutions
with similar aims and purposes (asean.org). Indonesia, Malaysia, Philippines, Singapore,
Thailand, Vietnam, Laos, Myanmar, and Cambodia are the members of ASEAN.
The World Trade Organization (WTO) has 164 member-states. It is the sole IGO that
caters to rules of trade on a global scale. Its objective is to ensure that trade runs as smoothly,
predictably, and freely as possible. It also encourages trade by lowering trade barriers that may
hinder how products and services flow from nation to nation.
Some other examples of IGOs are the International Criminal Court (ICC), North Atlantic
Treaty Organization (NATO), and Organization of Petroleum exporting countries (OPEC). All IGOs
serve purposes base on the common interest of their member-states that is deemed beneficial
to all parties involved.
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nations were subject to the universal laws of God that could be discovered through reason. He
adopted the principles of self- determination, democratic government, collective security,
international law, and a league of nations in his concept of internationalism. Socialist
internationalism, on the other hand, contradicts liberal internationalism. This form of
internationalism is based on the view that capitalism is a global system and that the working
class must unite as a global class to forward the struggle against capitalism. The notion of
socialist internationalism is linked to the goal of a world revolution-to end class struggle globally.
The Second International (1889-1916), the original socialist international, was on organization of
labor and social parties established in Paris in 1889. It is best known for declaring the
International Worker’s Day (May 1) and International Women’s Day (March 8) and for initiating
the campaign for the eight-hour work day.
On the other hand, globalism emerged as an attitude that seeks to understand all the
interconnections of the modern world and to highlight patterns that underlie them. It pursues to
describe and explain a world that is characterized by a network of connections that span multi-
continental distances.
Instructions: Below are organizations that govern international relations. Compare two of them
in terms of their objectives, roles, functions. Write your answers in the space provided below.
(10 pts.)
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