Globalization-used to describe the changes of societies and the world economy that are the result of

dramatically increase trade and cultural exchange. Refers exclusively to the effect of trade particularly
trade liberalization or free trade.

Economic Globalization-a historical process, the result of human innovation and technological progress.
Refers to the increasing integration of economies around the world, particularly through the movement
of goods, services, and capital borders.

The Term “Globalization” began to be used more commonly in the 1980s

International Trade- Core element of globalization, refers to the expansion of world trade through the
elimination or reduction of trade barriers such as import tariffs.

Protectionism- also reduces the variety of goods available and generates inefficiency by reducing
competition and encouraging resources to flow into protected sectors.

UN human Development Report- according to this report that there are still around 1 billion people
surviving on less than $1 per day---with 2.6 billion living on less than 2$ per day.

Ernesto Zedillo-Former President of Mexico observed that “ in every case where a poor nation has
significantly overcome its poverty, this has been achieved while engaging in production for export
markets and opening itself to the influx of foreign goods, investment and technology.

Martin Wolf- Financial Times Columnist, highlights one of the fundamental contradictions inherent in
those who bemoan inequality, pointing our that this charge amounts to arguing “that it would be better
for everybody to be equally poor than for some to become significantly better off, even if, in the long
run, this will almost certainly lead to advances for everybody.

David Dollar & Aart Kraay- They concluded that since 1980, globalization has contributed to a reduction
in poverty as well as a reduction in global income inequality.

Kofi Annan- Secretary General of the United Nations.

Myths about Globalization

Downward pressure on wages – As more work can be mechanized and as fewer people are needed to
do a given job than in the past, the demand for that labor will fall, and as a result the prevailing wages
for that labor will be affected as well.

The “race to the bottom”

Globalization is irreversible

Openness to globalization will on its own deliver economic growth

The shrinking state

HISTORY OF GLOBALIZATION

Silk Road- Ancient Road that connects Asia, Europe, And Africa, is an excellent example of the
transformative power of global exchange.

United States of America- Notably identified as the leader in globalization after the world war II,

NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA) – Introduced in 1993, which was a movement
aimed at eliminating trade boundaries and promoting globalization.

INTERNATIONAL MONETARY FUND (IMF) - originally created in 1945 as part of the Bretton Woods
Agreement, which attempted to encourage international financial cooperation by introducing a system
of convertible currencies at fixed exchange rates.

Fundamental Aspects of Globalization

 Trade and Transactions

 Capital and investment movements
 Migration and Dissemination of Knowledge

Yalta Conference – This conference enabled the leaders to agree in the foundation of the United
Nations after the 2nd world war

Cold War – A period in our history that the Soviet Union and United States divided the world into a
bipolar system

Global Market Opportunities – Refers to the increases in market potential, trade and investment
potential and resource accessibility.

Infrastructure - Basic Institutions and public facilities upon which an economy’s development depends.

Nationalism – Sense of national consciousness that boosts the culture and interest of one country over
those of all other countries.

Neoliberalism- Idea that calls for free movement of goods, services, capital and money (but not people)
across national borders, are also concerned with dismantling what remains of the regulationist welfare
state.

Robert Hermats – states that the great beauty of globalization is that no one is in control.

President George W. Bush – states that the “the concept of free trade arose as a moral principle even
before it became a pillar of economics”

President Bill Clinton – on US Foreign Policy states “ today we must embrace the inexorable logic of
globalization- that everything from the strength of our economy to the safety of our cities, to the health
of our people , depends on events not only within our borders, but half way a world away.
Global Market Threats – can be destructive to firm performance due to an increasing number of
competitors and an increase in intensity of competition coupled with higher market opportunity.

Six Core Claims of Globalization

 Globalization is about the liberalization and global integration of markets (not an ideology)
 Globalization is Inevitable and Irreversible
 Nobody is in charge of globalization
 Globalization benefits everyone
 Globalization Furthers the spread of democracy in the world
 Globalization Requires War on Terror

Global Economy – refers to the interconnected worldwide economic activities that take place between
multiple countries. These economic activities can have either a positive or negative impact on the
countries involved.

Who controls the global economy?

 Common misconception: Governments of largest economies control global economy

 Reality: Big banks and large corporations dominate and fund governments
 US banks involved in traditional government businesses and public asset operation
 Evidence: US Congress members letter to Federal Reserve Chairman Ben Bernanke

Dimensions Of Globalization:

 Economic Dimension – refers to an increasing interconnectedness and interdependence of

enterprises through the world market. This interdependence results from world trade, foreign
and joint venture investments, world-wide consumer markets, processes of concentration,
international financial speculation international labor migration.
 Technological Dimension – this is the field of information technology and telecommunications.
The future post-industrial firms are virtual, no more localized physical entity but a flexible
network of temporary contracts and cooperative relations that functions via computer net and
mobile phone often on a world scale.
 Politicial Dimension – it is closely connected to the disciplines historical points of reference
society and nation-state in early modernity.
 Ideological Dimension – is what has been called triumph of liberalism/capitalism or what Franics
Fukuyuma addressed when he talked about the end of history.
 Socio-Cultural Dimension - Refers to the transmission and flow of ideas, values, beliefs,
symbols, practices, and expressions amongst societies and cultures around the world.
 Ecological or Environmental Dimension – refers to the world being a highly fragile ecological
system. It also involves the movement, exchange, and interaction of natural resources, species,
pollutants, and environmental impacts across national borders and geographical boundaries.

Mcdonaldization - a term used to describe the penetration of American cultural and economic products
throughout the world.
Benefits of Global Economy:

 Free Trade - is excellent method for countries to exchange goods and services.
 Movement of Labor- Increased migration of the labor force is advantageous for the recipient
country as well as for the workers. If a country is going through a phase of high unemployment,
workers can look for jobs in other countries. This also helps in reducing geographical inequality.
 Increased Economies of Scale- The specialization of goods production in most countries has led
to advantageous economic factors such as lower average cost and lower prices for the
customers.
 Increased Investment – Due to the presence of global economy, it has become easier for
countries to attract short term and long term investment.

Factors affecting Global Economy:

 NATURAL RESOURCES
 INFRASTRUCTURE
 POPULATION
 LABOR
 HUMAN CAPITAL
 TECHNOLOGY
 LAW

Global Economy Comprises of several characteristics:

 Globalization – describes a process by which national and regional economies, societies, and
cultures have become integrated through the global network of trade, communication,
immigration, and transportation.
 International Trade – is considered to be an impact of globalization. It refers to the exchange of
goods and services between different countries and it also has helped countries to specialize in
products which they have a comparative advantages in.
 International Finance - Money can be transferred at a faster rate between countries compared
to goods, services and people; making international finance one of the primary features of a
global economy. It also consist of topics like currency exchange rates and monetary policy.
 Global Investment- This refers to an investment strategy that is not constrained by geographical
boundaries. Global Investment mainly takes place via foreign direct investment (FDI)

Global Interstate System – refers to the relationship between different state union. It also includes all
cultural aspects and interaction networks of the human population.

World System Theory – refers to the division of labor be it inter regionally or transnationally.

Core Nations – This kind of nation appears to be the powerful, wealthy and highly independent of
outside control.
Semi-Peripheral Nations – This region has a less developed economy and are not dominant in the
international trade.

Peripheral Nations - These are the nations that are least economically developed.

6.6% is the extent of economic growth of the Philippine Economy.

Market Integration- Defined by Kohls and Uhl as a process which refers to the expansion of firms by
consolidating additional marketing functions and activities under a single management. It also occurs
when prices among different locations of goods follow similar patterns over a long period of time.

Horizontal Integration- This occurs when a firm or agency gains control of other firms or agencies
performing similar marketing functions at the same level in the marketing sequence. Some Marketing
agencies combined to form a union with a view to reducing their effective number and the extent of
actual competition in the market.

Vertical Integration – This occurs when a firm performs more than one activity in the sequence of the
marketing process. Also makes it possible to exercise control over both quality and quantity of the
product from the beginning of the production until the product is ready for the consumer.

Conglomeration – These are combination of agencies and activities not directly related to each other
but operates under a unified management.

Ownership Integration- Occurs when all the decisions and assets of firms is completely assumed by
another firm.

Contract Integration – This involve an agreement between two firms on certain decisions which each
firm retains it separate identity.

Integration Among Firms of a Market:

 Extent of vertical integration in a market may be assessed by counting the number of functions
performed by each firm in the market.
 Extent of Horizontal Integration may be measured by studying the number of firms performing
the same marketing function but operating under one common management

Integration among spatially separated markets:

 The extent to which prices in spatially separated markets move together or are related to
transport cost reflects the degree of integration.
 A two-way analysis of price in spatially separated markets may be used to assess the degree of
integration.
2.1 Price correlation
2.2 spatial price deferential and transportation cost
Price Correlation:

 The degree of correlation between two prices is taken as an index of the extent to which the
two markets are integrated.
 A higher degree of correlation coefficient indicates a greater degree of integration at least in
terms of pricing the product between market centers and vice versa.
 The correlation in the price of commodity in markets is unified under spatial price integration.

Spatial Price Differential and Transportation cost

 Correlation Method
 Revallion Procedure
 Co integration Approach
 Parity Bound Models

International Monetary System – Part of institutional framework that binds national economies and
determines the rules and procedures for international payments, exchange rates and movement of
capital. Also refers to the operating system of the financial environment, which consists of financial
situations, multinational corporations and investors.

Bimetallism – used in the 1870s, both gold and silver coins were used as the international modes of
payment.

Gold Standard – prevailed from 1875 to 1914, Gold alone is assured of unrestricted coinage.

Bretton Woods System – established after world war 2 and was in existence during the period of 1945-
1972. This system advocated the adoption of an exchange standard that included both gold and foreign
exchanges.

Special Drawing Rights (SDRs) – created to ease the pressure on the dollar, which was the central
reserve currency.

ACRONYMS:

 NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA)

 GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT)
 WORLD TRADE ORGANIZATION (WTO)
 INTERNATIONAL MONETARY FUND (IMF)
 GROSS DOMESTIC PRODUCT (GDP)
 GROUP OF SEVEN (G7)
 WORLD BANK (WB)
 FOREIGN DIRECT INVESTMENT (FDI)
 SPECIAL DRAWING RIGHTS (SDRs)
 EUROPEAN UNION (EU)
International Financial Institutions – deep expertise in providing and catalyzing investments in
sustainable development and has taken steps to align their activities with the 2030 agenda, including by
scaling up climate finance, designing and deploying innovative sustainable development goals (SDGs).

LIST OF INTERANTIONAL FINANCIAL INSITITUTIONS

EUROPEAN INVESTMENT BANK (EIB) – came into being in 1958 by the Treaty of Rome, with the
objective of integration, balance development and economic and social cohesion of the European Union
(EU) countries.

INTER-AMERICAN DEVELOPMENT BANK (IDB) – regional development bank established in 1959 within
the Inter-American System.

ASIAN DEVELOPMENT BANK (ADB) – Multilateral development financial institution set up in 1986 with
headquarters in Manila.

INTERNATIONAL FUND FOR AGRICULTURAL DEVELOPMENT (IFAD) – an international financial

institution and a United Nations Agency established in 1974. Its objective is to eliminate rural poverty in
developing countries by providing aid for agricultural development.

World Bank – is an international organization dedicated to providing financing advice and research to
developing nations to aid their economic advancement.

Role of World Bank – provider of financial and technical assistance to individual countries around the
globe. They also supplies qualifying governments with low interest loans, zero-interest credits and
grants all for the purpose of supporting the development of individual countries.

History of World Bank – created in 1944 out of the Bretton Woods Agreement which was secured under
the auspices of the United Nations in the latter days of WW2

Role of International Monetary Fund – is to promote global economic growth and financial stability,
encourage international trade and reduce poverty around the world.

Surveillance – IMF collects massive amounts of data on national economies, international trade and the
global economy in aggregate. They also provide regularly updated economic forecast at the national and
international levels.

Capacity Building – IMF provides technical assistance, training and policy advice to member countries
through its capacity building programs. These programs includes training in data collection and analysis
which feed into the IMF’s project of monitoring national and global economies.

Lending – The IMF makes loans to countries that are experiencing economic distress to prevent or
mitigate financial crises.

European Integration - is the product of selective pooling of national sovereignty or ultimate jurisdiction
over a body politic, by postwar European nation-states.
Regional Integration - is the process by which two or more nation-states agree to co-operate and work
closely together to achieve peace, stability and wealth.

Intergovernmentalism – argues that European integration is driven by the interest and actions of the
European nation-states. In this Interpretation, the main aim of nation-states is to protect their
geopolitical interest such as national security and national sovereignty.

The Lifelong Learning Programme of Jean Monnet – originally launched in 1990, it seeks to stimulate
excellence in teaching and research on European Integration in higher education institutions throughout
the world.

European Union Policy - aim to ensure the free movement of people, goods, services and capital within
the internal market; enact legislation in justice and home affairs; and maintain common policies on
trade, agriculture, fisheries and regional development.

THE ASEAN INTEGRATION – The association of Southeast Asian Nations (ASEAN) established the ASEAN
community in 2015; comprising the ASEAN Political Security Community, The ASEAN Economic
Community (AEC) and the ASEAN Social Cultural Community.
SCREENSHOTS OF 1st LESSONS OF SIR CONTEMPO