The Structure of Globalization 1.

Globalization of trade and goods and

Lesson 2.1 The Global Economy services;
1. Economic Globalization o Establishment of the World
2. Actors that Facilitate Economic Trade organization (WTO)
Globalization that eases trade among
countries. WTO, established
Steger’s (2014) definition of globalization in 1995, “ensures that trade
“as the expansion and intensification of flows as smoothly,
social relations and consciousness across predictably and freely as
world time and space” implies that there possible” (WTO, 2012).
are various forms of connectivity. o Emergence of China as a
Globalization is a multidimensional major supplier and
phenomenon, creating economic, political, exporter of manufactured
cultural, and even technological forms of goods that has affected the
connectivity. world economy.
o The increasing number of
Economic Globalization business process
- refers to the expanding outsourcing (BPO)
interdependence of world economies. companies in the Philippines.
(Shangquan 2000) attributes this to 2. Globalization of financial and capital
the growing scale of cross-border markets;
trade commodities and services, flow o Evident in the liberalization
of international capital, and wide and of financial and capital
rapid spread of technology. markets. This is seen in
- A historical process, the result of cross-listing of shares on one
human innovation and technological or more foreign stock
progress. “it refers to the services exchange, cross-hedging and
increasing integration of economies diversification of portfolio,
around the world, particularly and round the clock trading
through the movement of goods, and worldwide (National
capital across borders” (IMF, 2008) Research Council, 1995)
3. Globalization of technology and
Four Interconnected Dimensions of communication;
Economy: o Emphasizes that various
1) Globalization of trade and goods and transactions and
services; interactivities that transpire
2) Globalization of financial and capital instantly due to the internet
markets; and communication
3) Globalization of technology and technology.
communication; and 4. Globalization of production
4) Globalization of products o Illustrated by the existence of
multinational corporations
(MNCs) and transnational
corporations (TNCs)
 - the process of “making the world In support, Brodie (1996) calls the
economy an ‘organic system’ by government as the “midwives” of
extending transnational economic globalization. It means that nation-
processes and relations to more and states are still relevant despite assuming a
more countries and by deepening the global perspective and act as mediators
economic interdependencies among between the effects of globalization and
them”. (Szentes,2003) the national economy. Government
policies and regulation either permit or deny
Actors that facilitate Economic the smooth connection among world
Globalization economies.
1. Nation-state
2. Global Corporations
3. International Monetary System 2. Global Corporations
(IMS) On the other hand, some experts claim
that the actors are now the global
1. Nation-state corporations. Ohmae (1995) argues that the
- is a political unit in which the state, a nation-state has ceased to exist as the
centralized political organization ruling over primary economic organization unit in the
a population within a territory, and the global market.
nation, a community based on a common
identity, are congruent. It is a more precise 3.International Monetary System (IMS)
concept than "country", since a country - refers to internationally agreed rules,
does not need to have a predominant conventions, and institutions for facilitating
national or ethnic group.) international trade, investments and flow of
capital among nation-states..

Nation-states are often characterized by the Three International Monetary System:

following: - The Gold Standard
- A shared sense of national identity, - The Bretton Wood System
which may be based on language, - The European Monetary System
culture, religion, ethnicity, or history. (EMS)
- A common territory, with defined
borders. The Gold Standard
- A centralized government that claims - functions as a fixed exchange rate regime,
sovereignty over the territory and its with gold as the only international reserve
people. and participating countries determine the
- A monopoly on the legitimate use of gold content of national currencies
force within the territory (Benczes, 2014)
- is a monetary system where a country’s
Boyer and Drache (1996) state that the role currency or paper money has a value
of nation-states as manager of the national directly linked to gold. In this
economy is being redefined by system, countries agreed to convert paper
globalization. Although such is the money into a fixed amount of gold. A
case, nation-states still act as buffer to country that uses the gold standard sets a
negative effects of globalization. fixed price for gold and buys and sells
gold at that price. That fixed price is used to
determine the value of the currency. the European Central Bank (European
Commission, 2008).
Bretton Woods System
-a set of unified rules and policies that The development of international trade and
provided the framework necessary to create trade policy is also a form of such economic
fixed international currency exchange rates. integration. Trade patterns must not be
The Bretton Woods Agreement was stagnant. Flow of goods must be voluntary
negotiated in July 1944 by delegates but restricting it might affect the relationship
from 44 countries at the United Nations between and among states.
Monetary and Financial Conference held in
Bretton Woods, New Hampshire. Does Economic Globalization divide or
-Under the Bretton Woods System, gold was Unite the World?
the basis for the U.S. dollar and other
currencies were pegged to the U.S. dollar’s With the nation-states, global corporations
value. The Bretton Woods System and international monetary systems as actors
effectively came to an end in the early 1970s of economic globalization, the world is now
when President Richard M. Nixon confronted with a number of ongoing
announced that the U.S. would no longer debates as to whether economic
exchange gold for U.S. currency. globalization unites or divides the world.
Benczes (2014) believes that economic
-the US dollar was the only convertible globalization fosters universal economic
currency. Thus, it was agreed by 44 growth and development.
countries to adopt the gold-exchange
standard. Also, two financial institutions
were established: the International Bank As foreign countries are in need of
for Reconstruction (IBRD) and the IMF. workforce and human capital, Filipino
The former, now known as the World nurses become overseas workers ; they go to
Bank, is responsible for post- war Europe and other foreign countries to
reconstructions while the latter aims to support their families in the Philippines.
promote international financial Lastly globalization creates mutual
cooperation and strengthen international dependence between developing and
trade developed countries (Arrighi, 2005). Some
developing countries rely on developed
European Monetary System (EMS). countries for employment and income while
-It came about after the collapse of the the latter relies on the former for raw and
Bretton Woods services like labor.
System. EMS was successful in the
stabilization process of On the other hand, some observers of
exchange rates. It then prompted the economic globalization believe that it
foundation of a new divides the world further. First, one might
European Economic and Monetary Union observe that the sources of goods and
(EMU). National services are exploited, since these
currencies were abandoned, and member economically poor nation-states depend
states delegated on industrialized countries for
monetary policy onto a supranational level employment and income, these
administered by
industrialized countries compensate their
labor with cheap cost

These industrialized countries even source

materials from natural resources of poor
nation-states as another form of
exploitation. Some even destroy nature
without doing anything to rehabilitate it

Second, economic globalization does not

benefit all nations (World Bank, 2002).
There is an uneven experience among
nations. Workers in TNCs are paid less
compared to their counterparts in the
companies’ home countries. This shows how
cheap labor is in the Philippines

Third, Wallerstein (2005) claims that

capitalism created the different levels of
wages in the economic arena of world
systems. It further divides the world for it
leads to inequality according to expertise,
experience and skills.

Economic globalization affects all nations

and citizens through the increasing
integration of economies around the
borderless world. It’s important players are
the nation-states, global corporations, and
the international monetary systems.
Though some people believe that economic
globalization brings unity of all economic
movements, others believe that
globalization furthers the separation
among nation-states around the world.