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).
• 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,
while the semi-peripherals processed or distributed the
products to the core areas-sites of major demands for
goods and services (Wallerstein, 2011).
• There are significant and meaningful movements of
resources, products, people in different economies
facilitated by modern transport and communication
(Chase-Dunn, 2018).
