FM-AA-CIA-15 Rev.

0 10-July-2020

Study Guide in (Course Code and Course Title) Module No.__

STUDY GUIDE FOR MODULE NO. ___

Sg2
THE STRUCTURES OF GLOBALIZATION
MODULE OVERVIEW

Countries trade with each other due to the lack of resources and cannot satisfy their own needs and
wants. As the countries developed their resources and they trade it for the resources they need. Many years
ago, when the other countries travelled a distance to trade, as it is very evident that international trade plays
significant role in the development of industrialized world. Imports of goods and services happen maybe for
better or cheaper quality, appealing goods or no alternatives exist. In this lesson, we will begin with economic
globalization and global actors that facilitate the economic globalization..

MODULE LEARNING OBJECTIVES

At the end of the lesson, the students will be able to:

• define economic globalization
• identify the actors that facilitate Economic globalization.
• define the modern world system.
• articulate a stance on global economic integration.

LEARNING CONTENTS (title of the subsection)

The Global Economy

United Nations defines Economic globalization as “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 rapid 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 Giráldez ,”Global trade emerged when 1) all heavily populated
continents began to exchange products continuously – both with each other directly and indirectly via other
continents – and 2) did so in values sufficient to generate lasting impacts on all trading partners” (“Globalization
Began in 1571.p2 ) 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
interconnections 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.
*please refer to the Worktext in the Conemporary World

LEARNING CONTENTS (title of the subsection)

GLOBAL ACTORS

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Multinational Corporation
The multinational corporation is a business organization whose activities are located in more than two
countries and is the organizational form that defines foreign direct investment. This form consists of a country
location where the firm is incorporated and of the establishment of branches or subsidiaries in foreign countries
(A.A Lazarus, 2001 p. 10197)

The International Monetary Fund

The International Monetary Fund (IMF), founded at the Bretton Woods Conference in 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

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.* NATO is headquartered in Brussels, Belgium. The organization was formed in 1949. Many
nations joined NATO — even Iceland, the only member without a military force. The organization was originally
formed out of the fear that the Soviet Union would ally militarily with Eastern European nations, i.e. the Warsaw
Pact, and thus become a threat to Western Europe and the United States

World Trade Organization (WTO), International Monetary Fund (IMF), and the World Bank
The World Trade Organization (WTO), the International Monetary Fund (IMF), 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.

The domestic financial markets in these countries have not been developed and do not have
appropriate laws in place to enable domestic financial institutions to stand up to foreign competition. The
administrative setup, judicial systems, and law-enforcing agencies generally cannot guarantee the social
discipline and political stability that are necessary in order to support a growth-friendly atmosphere.

*please refer in the Worktext in the Contemporary World WorldIVITY 1

LEARNING ACTIVITY

SUMMARY

The framers of the new Bretton Woods monetary regime hoped to promote world trade, investment,
and economic growth by maintaining convertible currencies at stable exchange rates. Countries with temporary,
moderate balance-of-payments deficits were expected to finance their deficits by borrowing foreign currencies
from the IMF rather than by imposing exchange controls, devaluations, or deflationary economic policies that
could spread their economic problems to other countries. After ratification by 29 countries, the Articles of

PANGASINAN STATE UNIVERSITY 2

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Study Guide in (Course Code and Course Title) Module No.__

Agreement entered into force on December 27, 1945. The fund’s board of governors convened the following
year in Savannah, Georgia, U.S., to adopt bylaws and to elect the IMF’s first executive directors. The governors
decided to locate the organization’s permanent headquarters in Washington, D.C., where its 12 original
executive directors first met in May 1946. The IMF’s financial operations began the following year, In other
words, the fast globalization of the world’s economies in recent years is largely based on the rapid development
of science and technologies, has resulted from the environment in which market economic system has been
fast spreading throughout the world, and has developed on the basis of increasing cross-border division of labor
that has been penetrating down to the level of production chains within enterprises of different countries.

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