CONTEMPORARY WORLD

WEEK 2

ECONOMIC GLOBALIZATION
ECONOMIC GLOBALIZATION refers to the
increasing interconnectedness and
interdependence of the world’s economies. It
involves the movement of goods, services,
capital, information, and labor across borders,
creating a global market. This process is driven
by advancements in technology, international
trade policies, investment flows, and the rise
of multinational corporations.
Key elements of economic globalization
include:
1.Trade: Increased
international trade of
goods and services,
facilitated by reduced
tariffs and trade
Barriers (total ban of goods, currency inflation)
2. Capital Flows:
Movement of money
across borders
through
investments, loans,
and foreign direct
investment (FDI).
3. Technology: The spread of new
technologies that enhance production,
communication, and logistics on a global
scale.
4. Labor Mobility:
Migration of people
for work, education,
or better living
conditions, often
tied to labor market
demand in different
regions.
5. Multinational
Corporations:
Companies that
operate in multiple
countries, influencing
global production and
consumption patterns.
KEY ACTORS FACILITATE ECONOMIC
GLOBALIZATION
1. Governments
National Governments: They shape trade policies,
regulations, and legal frameworks that either
promote or hinder global economic integration.
Governments work together through institutions
like the World Trade Organization (WTO), the
International Monetary Fund (IMF), and the World
Bank to set international rules and standards for
trade, investment, and finance.
2. Multinational Corporations (MNCs)
MNCs are perhaps the most visible actors in economic
globalization. These companies operate in multiple countries,
managing production, distribution, and marketing on a global
scale.
Examples include
companies like Apple,
Microsoft, and Toyota.
They often drive the
global supply chain and
directly influence trade,
investment, and labor
mobility patterns.
3. International Financial
Institutions
Banks (e.g., Goldman Sachs,
HSBC) and investment firms are
critical in facilitating global
capital flows. They offer loans,
investments, and financial
services across borders, helping
businesses and governments to
fund projects and operations
internationally.
4. International Organizations
•World Trade Organization (WTO): Sets global trade rules,
helps resolve disputes, and works to reduce trade barriers.
•International Monetary Fund (IMF): Provides financial
assistance and advice to member countries, particularly those
experiencing economic crises, and helps maintain global
economic stability.
•World Bank: Lends to developing countries for infrastructure,
poverty reduction, and economic development projects.
•United Nations (UN): The UN supports economic growth and
poverty alleviation through its various programs and
specialized agencies.
Global Supply Chains
•Supply chains are networks of companies, raw materials,
labor, and technologies that span the globe, often crossing
multiple borders. For instance, a product might be designed in
the U.S., manufactured in
China, and assembled in
Mexico before being sold
worldwide.
Companies like Amazon,
Walmart, and Alibaba are
key players in these global
networks.
6. Consumers
•Consumers in both developed and developing nations
influence economic globalization through their
purchasing power. Demand for products and services
across borders drives trade, innovation, and investment
in various markets.
7. Technological Innovators
Advances in technology, particularly in
information technology (IT), communication, and
transportation, are essential to economic
globalization. Companies
like Google, Facebook,
Tiktok, and Instagram
facilitate communication,
digital trade, and services
that connect people globally.
8. Non-Governmental Organizations (NGOs) and
Advocacy Groups
•NGOs, such as Oxfam or Greenpeace, can influence
economic globalization by advocating for fair trade
practices, environmental sustainability, and human
rights. They often hold
multinational corporations
accountable and push for
policies that promote social
and environmental welfare.
The Modern World-System is a theory that
explains the global economic and political system in
terms of a hierarchical structure that organizes
countries and regions into distinct roles within a
global economy. The theory was developed by
sociologist Immanuel Wallerstein in the 1970s and
offers a framework for understanding how global
inequality, power, and economic systems are
structured.
 1.The hierarchical
structure of the Modern
World-System describes
the global division of labor
and wealth, with
countries classified into
three broad categories:
core, semi-periphery, and
periphery.
 The core nations are highly
Peripheral nations are typically
industrialized, economically
underdeveloped, with economies
diversified, and politically powerful.
that rely on agriculture, resource
They are at the top of the hierarchy,
extraction, and cheap labor. They
controlling global finance,
remain economically dependent on
technological innovation, and
core nations for capital,
high-value industries.
technology, and high-
value manufactured
goods.
(CORE) (SEMI-
PERIPHERAL)
(PERIPHERAL) The periphery
often faces issues
UNITED HONDURAS like political
STATES MEXICO instability, low
wages, and
economic exploitation.
Semi-peripheral nations are countries
that are industrializing and growing
economically but remain dependent on
core nations in some ways. They occupy a
middle position in the global hierarchy
and can exhibit both upward mobility
(moving toward the core) and downward movement (sliding toward the periphery).
Analyze the following Countries in their Hierarchical
Structure of the Modern World-System:
1. Japan
2. Haiti
3. Brazil
4. China
5. Afghanistan
6. South Korea
7. Germany
8. United Kingdom
Analyze the following Countries in their Hierarchical
Structure of the Modern World-System:
1. Japan- CORE
2. Haiti- PERIPHERAL
3. Brazil- SEMI-PERIPHERAL
4. China- SEMI-PERIPHERAL
5. Afghanistan- PERIPHERAL
6. South Korea- SEMI-PERIPHERAL
7. Germany- CORE
8. United Kingdom- CORE
2. The capitalist world-economy refers to the
global economic system characterized by the
production, exchange, and distribution of goods
and services for profit. It operates under the
principles of capitalism, where private individuals
or corporations own the means of production, and
wealth is generated through competition and
market forces.
Capitalist World-Economy can be seen in the
historical and modern relationships between core,
semi-peripheral, and peripheral nations in the
global economic system.

CORE NATIONS: UNITED STATES

Apple Inc. is an American multinational corporation and
technology company headquartered in Cupertino, California,
in Silicon Valley. It is best known for its consumer electronics,
software, and services.
Semi-Periphery Nations: South Korea
It has a similar role, particularly in the production of high-end
electronics (e.g., Samsung), which competes with core nation
companies but still benefits from international trade rules and
capital flows dominated by core nations.

While Couth Korea benefits from large-scale manufacturing, it

remains dependent on core countries for technological
innovation, intellectual property, and high-level management.
Many of the profits from the final product still flow back to
the core countries (like the U.S.).
Peripheral Nations (e.g., Bangladesh, Vietnam, Democratic
Republic of the Congo):
•Peripheral countries are involved in lower-value parts of
the supply chain, often focused on low-wage labor and raw
materials.
•For instance, Bangladesh is a major producer of textiles
and clothing, which are part of the larger electronics supply
chain, as many phones are bundled with accessories made
from textiles. The country relies on the demand from core
nations for the export of these goods.
Global economic integration generally refers to
the increasing interconnectedness of national
economies through trade, investment, and
technology. It’s a complex and multifaceted issue,
and different perspectives exist on its benefits and
drawbacks.
Benefits:
•Economic growth by allowing countries to specialize in what
they do best, which can increase efficiency and output.
•Access to a wider market, which benefits businesses and
consumers alike by providing more goods and services at lower
costs.
•Improved technological and knowledge transfer, which can
lift development in less advanced regions and promote
innovation.
•Higher standards of living for many, particularly in developing
countries that gain access to global markets and capital.
Drawbacks:
•Job displacement and income inequality: As companies outsource
production to lower-cost countries, workers in higher-cost nations may
lose jobs, leading to income disparity.
•Cultural erosion and loss of sovereignty: Critics argue that global
integration can lead to homogenization, undermining local cultures
and economic policies.
•Environmental degradation: The pursuit of cheaper goods often
leads to exploitation of natural resources and neglect of
environmental sustainability.
•Vulnerability to global shocks: Highly integrated economies can
suffer more from global recessions, financial crises, or pandemics.
GROUP ACTIVITY
 GROUP 1
Research on the 2008 Financial Crisis. Identify its causes,
effects, and responses. Present your findings and discuss it in
class.
 GROUP 2
Research on labor migration. Afterward, presents your findings
and discuss its positive and negative effects.
 GROUP 3
Research on technology and innovation in economic
globalization. Afterward, presents your findings and discuss its
positive and negative effects.
 GROUP 4
Research on multinational corporations in the world.
Afterward, presents your findings and discuss its positive and
negative effects.
 GROUP 5
Research on the countries that are part of major trade
agreements (e.g., EU, NAFTA, ASEAN). Then, identify core,
semi-periphery, and periphery nations according to the
Modern World-System theory.
 GROUP 6
Research on the policies and implications of FREE-TRADE or
PROTECTIONISM on the global economy.