CONTEMPORARY WORLD (Notes)

1. Definition of Globalization

a. Describes the growing interdependence of the world's economies, cultures and populations
brought about by cross-border trade in goods and services, technology and flows of investment,
people and information; countries have built economic partnerships to facilitate these
movements over may centuries

b. Process by which ideas, knowledge, information, goods and services spread around the
world.

c. In business, the term is used in an economic context to describe integrated economies

marked by free trade, the free flow of capital among countries, and easy access to foreign
resources, including labor markets, to maximize returns and benefit for the common good.

d. PRO's and CON's

i. Pro: it paves the way for the continuing development of major technological advances

ii. Con: it may bring alleged harm to certain groups and aggravates inflation, supply
chain disruptions, trade disputes and national security concerns

2. Three (3) Components of Globalization¹

a. Economic globalization → primarily comprises of globalization of production, finance,

markets, technology, regimes, institutions, corporations and labor; the result of the increasing
integration of economies around the world, particularly through trade and financial flows and the
movement of people and knowledge across international borders²

i. Elements:

1. International trade: An increasing share of spending on goods and services is devoted

to imports and an increasing share of what countries produce is sold as exports; the
importance of international trade lies at the root of a country's economy. In the constant
changing business market, countries are now more interdependent than ever on their
partners for exporting, importing, thereby keeping the home country's economy afloat
and healthy.

2. Foreign Direct Investment: according to the United Nations, FDI is defined as

"investment made to acquire lasting interest in enterprises operating outside of the
economy of the investor," direct investment in constructing production facilities, is
distinguished from portfolio investment, which can take the form of short-term capital
flows (e.g. loans), or long-term capital flows (e.g. bonds) (Stiglitz, 2003)
 3. Capital market flows: in many countries, particularly in the developed world, investors
have increasingly diversified their portfolios to include foreign financial assets, such as
international bonds, stocks or mutual funds, and borrowers have increasingly turned to
foreign sources of funds (World Briefing, Paper, 2001). Capital market flows also include
remittances from migration, which typically flow from industrialized to less industrialized
countries. In essence, the entrepreneur has a number of sources for funding a business.

4. Migration: labor is increasingly mobile. Migration can benefit developing economies

when migrants who acquired education and know-how abroad return home to establish
new enterprises. However, migration can also hurt the economy through "brain drain",
the loss of skilled workers who are essential for economic growth (Stiglitz, 2003).

5. Diffusion of technology: Innovations in telecommunications, information technology,

and computing have lowered communication costs and facilitated the cross-border flow
of ideas, including technical knowledge as well as more fundamental concepts such as
democracy and free markets (Stiglitz, 2003). The rapid growth and adoption of
information technology, however, is not evenly distributed around the world—this gap
between the information technology is often referred to as the "digital divide". As a result,
for less industrialized countries this means it is more difficult to advance their businesses
without the technical system and knowledge in place such as the Internet, data tracking,
and technical resources already existing in many industrialized countries.

b. Cultural globalization → influenced by the diffusion of commodities and ideas, reflects a

standardization of cultural expressions around the world. ³

i. Detraditionalisation: where people question their traditional beliefs about religion,

marriage, gender roles and the like

ii. Global Risk Consciousness: emerges due to shared global problems which threaten
people in multiple countries such as terrorism, nuclear war, global pandemic, organized
crimes, planetary meltdown.

c. Political globalization ➔ refers to the process by which political decisions and activities are
becoming increasingly internationalized, leading to a diminishing role of national borders and a
rise in global governance structure; focuses on how the leaders of nations have integrated their
laws and built alliances for their mutual benefit; primarily involved the blurring of boundaries
between nation-states to decrease friction between nations and can reach all areas of political
and social areas including, lowering barriers to migration, lowering barriers to the movement of
goods and services, and agreeing on common standards for labor, intellectual property and
environmental protection.4
 i. Advantages: establishment of international norms; ease of movement of labor across
boundaries; ease of trade for creation of better trade routes around the world to support
economic globalization

ii. Disadvantages: loss of power at the nation-state level; additional layers of

bureaucracy and decreased political accountability

iii. Some manifestations of political globalization

1. United Nations (UN);

2. European Union (EU)- a trade and treaty bloc comprising of 27 nation-states

on the continent of Europe. It is the successor of several other political
agreements established after World War 2 to help integrate the European
continent after the war;

3. North Atlantic Treaty Organization (NATO);

4. World Trade Organization (WTO);

5. International Criminal Court (ICC)

iv. Some features of political globalization:

1. The rise of International Bodies like the WMF and WTO.

2. The rise of Free Trade.

3. The rise of Multinational Agreements to develop Shared Norms.

4. The emergence of the Concept of the Global Citizen.

3. Theories of Globalization

a. Neoliberalism - characterized by a belief in sustained economic growth as the best means to

achieve human progress, by a confidence in free markets as the most efficient means of
allocating resources, by an emphasis on minimal state intervention in economic and social
affairs, and by a commitment to the freedom of trade and capital. 5

i. Characterized by limiting government spending, government regulation and public

ownership; associated with austerity policies and attempts to cut government spending
on social programs; minimal government interference in the economic issues of
individuals and society; usually favors progressive taxation at lower rates
 ii. Supports the following: (1) free enterprise; (2) competition deregulation and the
importance of individual responsibility; (3) opposition to the expansion of government
power, state welfare, inflation; (4) minimizing government control of industry and
boosting private sector ownership of business and property; (5) free market capitalism
and the efficient allocation of resources; (6) free trade rather than heavily regulated
markets and protectionism; (7) a reduction in government spending and lower taxes; (8)
less government control over economic activity to enhance the efficient functioning of the
economy; (9) a reduction in union power and greater flexibility in employment; (10)
government intervention when it is needed to implement, sustain and protect free market
activities

iii. Criticisms on the theory: (1) misguided free market approach to public services (i.e.
health and education); (2) monopolies as shown in increase profits of corporations at the
expense of benefits to consumers; (3) financial instability

iv. Effects of neoliberal globalization: (1) lack of job security; (2) loss of jobs due to
outsourcing because of lack of government regulation on employment; (3) greater
competition leading to increasing indifference to the needs and well-being of individuals

b. World Systems - states that the world exists as a single socio-economic system made up of a
core, periphery, and semi-periphery. In this system, "surplus value" is transferred from the
periphery to the core.

i. Components:

1. Core Areas - A small set of technologically advanced and industrialized capitalist

nations/regions characterized by higher incomes, large tax bases, and high standards of
living. In the 21st century, the developed countries that form the G-7 group, along with
China can be considered the core of the world-system.

2. Periphery Areas - Poor countries that primarily subsist by exporting primary products
such as agricultural produce and natural resources to the core countries. The periphery
is characterized by a small tax base, low incomes, and low levels of human development
index. In the 21st century, much of sub-Saharan African, parts of Latin America and
Central Asia can be considered the periphery.

3. Semi-Periphery Areas - These countries act as the periphery to core countries, and as
a core to the countries on the periphery. Typically, such countries are regional powers
with moderate levels of development indices and growing capitalist economies. In the
21st century, countries such as India, Brazil, Turkey, Mexico, Israel, Nigeria etc. can be
considered the semi-periphery of the world-system.6
c. World Cultures/Global Culture - encompasses the collective experiences, traditions, and
expressions of diverse societies, fostering interconnectedness and cultural exchange on a
global scale; often emerges from the influence of globalization, migration, technological
advancements, and the interplay between the local and global identities7

i. Glocalization - the incident where a product or service is developed and distributed

globally but also adjusted to accommodate consumers in a local market

• Example of glocalization - cars that are sold worldwide but adjusted to meet local
criteria such as emissions standards or what side the steering wheel is located; global
fast-food chain offering geographically specific menu items that cater to local tastes.8

4. Three distinct eras of modern globalization9

a. "First globalization" era refers to the period between approximately 1870 and 1914,
during which new transportation and communication technology decreased or eliminated
many of the drawbacks to distance.

b. "Second globalization" era is said to have lasted from roughly 1944 to 1971, a period
in which an international monetary system based on the value of the U.S. dollar
facilitated a new level of trade between capitalist countries.

c. "Third globalization" era is thought to have begun with the revolutions of 1989-90,
which opened the communist Eastern bloc to the flow of capital and coincided with the
creation of the World Wide Web.

5. Structures of Globalization10

a. Global economy - characterized by international exchange of goods and services that is

expressed in monetary units of money; free movement of goods, capital, services, technology
and information; the economy of every country is considered as one giant entity; global
economy has grown at an increased rate due to an increase in communication and
technological advancement.

i. Two types of economic globalization or global economy

1. Protectionism - protecting one's economy from foreign competition by creating

trade barriers through quota and tariff;

2. Trade Liberalization - act of reducing trade barriers to make international trade

easier between countries
 ii. Fair trade - shows concern for the social, economic and environmental well-being of
marginalized small producers; it promotes protection of workers and producers and
establishment of more just prices; it also promotes engagement in environmentally
sound practices and sustainable production; it encourages promotion of safe working
environment

b. Market integration - exists when prices among different location or related goods follow the
same patterns over a long period of time; it is combining separate national economies into
larger economic regions

i. Establishment of Free Trade Areas - these are regions in which a group of countries
has signed a free trade agreement and invoke little or no price control in the form of
tariffs or quotas between each other.

c. International financial institutions - established by more than one country; the owners or
shareholders are generally national governments

i. World Bank - multinational financial institution established at the end of World War II to
help provide long-term capital for the reconstruction and development of member
countries

1. Specific objectives: to assist in the reconstruction and development of

territories of members; to promote private foreign investment by means of
guarantees or participation in loans and other investments made by private
investors; to promote the long-range balanced growth of international trade and
the maintenance of equilibrium in balance of payments; to conduct its operations
with due regard to the effect of international investment on business conditions in
the territories of members; to assist in bringing about a smooth transition from a
wartime to a peacetime economy; to strengthen and sustain the fundamental
conditions that help to attract and retain private investment

ii. International Monetary Fund (IMF) - cooperative institution that 182 countries have
voluntarily joined because they see the advantage of consulting with one another on this
forum to maintain a stable system of buying and selling their currencies; it lends money
to members having trouble meeting financial obligations to other members, but only on
the condition that they undertake economic reforms to eliminate these difficulties for their
own good and that of the entire membership

iii. World Trade Organization - oversees multilateral trade agreements

d. Global Interstate System - this structure mentions that "the state has traditionally been the
subject of most interest to scholars of global politics because it is viewed as ' the institution that
creates warfare and sets economic policies for a country.' Furthermore, the state is a political
unit that has authority over its own affairs. Its borders are cognized by other countries. It is
assumed that whoever is in charge of these borders has the right to determine exactly what is
going to happen in their country. Globalization, on the other hand, suggests a decrease in the
power of a nation-state.

e. Global Governance - movement towards political cooperation among transnational actors,

aimed at negotiating responses to problems that affect more than one state or region.

i. Examples of Global Governance: United Nations System and the International Court of
Justice; World Trade Organization; International Monetary Fund; Paris Agreement on
Climate Change; Universal Declaration of Human Rights; International Criminal Court

6. United Nations11

a. The United Nations is a public organization of States that was established by the
intergovernmental cooperation after the end of Second World War. Established on October 24,
1945 by 51 countries as an outcome of the initiatives taken by the United States, the USSR,
Great Britain and China, it has, according to its Charter, four purposes: to maintain international
peace and security, to develop friendly relations among nations, to cooperate in solving
international problems and in promoting respect for human rights, and to be a center for
harmonizing the actions of nations.

b. The United Nations shall possess juridical personality. It shall havethe capacity: (a) to
contract; (b) to acquire and dispose of immovable and movable property; and (c) to institute
legal proceedings.

c. Article 2 of the U.N. Charter provides that the Organization and its Members, in pursuit of its
Purposes, shall act in accordance with the following Principles:

i. Principle of the sovereign equality of all its members

ii. Fulfillment of the obligations assumed by them in good faith in accordance with the
Charter

iii. Settlement of international disputes by peaceful means in such a manner that

international peace and security, and justice are not endangered

iv. To refrain in their international relations from the threat or use of force against the
territorial integrity or political independence of any State, or in any other manner
inconsistent with the Purposes of the Organization

v. To give the United Nations every assistance in any action it takes in accordance with
the Charter, and to refrain from giving assistance to any State against which the United
Nations is taking preventive or enforcement action
 vi. The Organization shall ensure that States which are not Members of the United
Nations act in accordance with these Principles so far as may be necessary for the
maintenance of international peace and security

vii. Non-intervention in matters which are essentially within the domestic jurisdiction of
any State

d. Classes of Members of the United Nations:

i. Original Members: the States which, having participated in the United Nations
Conference on International Organization at San Francisco, or having pre-signed the
Declaration by United Nations of January 1, 1942, signed and duly ratified the Charter.
There were 51 original members, including the Philippines.

ii. Non-Original Members: the States which were admitted to membership by a decision
of two-thirds majority vote in the General Assembly upon the recommendation of a
qualified majority in the Security Council.

e. A member against which preventive or enforcement action has been taken by the Security
Council may be suspended from the exercise of the rights and privileges of membership by
two-thirds majority of the members present and voting in the General Assembly upon the
recommendation of a qualified majority in the Security Council. It must be noted, however, that
the member will not actually be suspended from its membership, but only from the exercise of
the rights and privileges of membership. The exercise of these rights and privileges may be
restored by the Security Council.

f. A member which has persistently violated the Principles contained in the Charter may be
expelled from the Organization by two-thirds majority of the members present and voting in the
General Assembly upon the recommendation of a qualified majority in the Security Council.

Globalization: Concept,

Globalization (Concept)

- process by which ideas, knowledge, information, goods and services spread around the world
- set of processes and forces that connect and affect people and their geo-social environment
- stretching of economic, political, and social relationships in space and time
- increasing connectedness and interdependence of world cultures and economies

Globalization in History

- Chinese artisans once wove silk bound for the Roman Empire
- Kingdoms in western Europe honoured dictates of the Roman Catholic Church
- English adopted many Norman French words in the centuries after the Battle of Hastings
- European explorers established maritime trade routes across the Atlantic and Pacific oceans
and encountered new lands

Globalization in History

Two Eras:

●​ 1st Era:Mid-19th century to 1914

●​ 2ndEra:1945 to present

Causes:Revolutions in transportation and communication

Globalization (Components)

●​ - Economic Globalization
●​ - Cultural/Social Globalization
●​ - Political Globalization

Globalization (Components)

Economic Globalization
- Widespread international movements of goods, capital, services, technology and information
- 3 institutions created: (1) International Monetary Fund [IMF]; (2) World Bank; and (3) World
Trade Organization

Cultural Globalization
- Converging Global Consumption Patterns
- Homogeneity (ethnicity)
- Financial Homogeneity
- Global Consciousness
- "Detraditionalization"
- "Global Risk Consciousness"

Political Globalization
- Absence of the absolute sovereignty of a state's political borders over a certain area
- Increased interaction between the systems of government
- Democracy, non-government organizations, human rights and freedoms
- Loss of power at the Nation-State level
 - Added layers of bureaucracy
- Decreased political accountability
- Examples: European Union, North American Treaty Organization, ASEAN

Theories

- NEOLIBERALISM
- privatization of industry, fiscal austerity, deregulation, free trade, and reductions in
government spending in order to enhance the role of the private sector in the economy
- governments are inherently inefficient at creating sustained social and economic progress
when compared with free markets
- Competition is the mechanism for progress in this economic approach to the world, and is the
defining characteristic of human interaction

-WORLD SYSTEMS
- Takes into consideration the unequal relationship between the Global North and the Global
South
- Rejects the idea that globalization creates a common playing field of equal opportunities
- the world is divided into regions: (1) CORE; (2) SEMI-PERIPHERY; and (3) PERIPHERY

- WORLD CULTURE
- takes into consideration other factors, beyond economics, that influence social behavior such
as politics, social justice, conflicts, social media, migration, and more
- Convergence = spreading of common values and a gradual homogenization of language,
policy, standards, methods, and more

STRUCTURES OF GLOBALIZATION

Global Economy
●​ exchange of goods and services integrated into a huge single global market
Interconnected worldwide economic activities that take place between multiple countries

Characteristics of Global Economy

-global network of trade, communication, immigration and transportation

- international trade and product specialization
-International finance [currency exchange rates and monetary policy]
- Global investment [foreign direct investment]
- Dominated by large financial institutions

Factors Affecting Global Economy

●​ Natural resources
●​ Infrastructure
●​ Population
●​ Labour
●​ Human Capital
●​ Technology
●​ Law

Market Integration
- a situation in which separate markets for the same product become one single market
- a state of affairs or a process involving attempts to combine separate national economies into
larger economic regions

Impact of Market Integration on Global Economy

- Can reduce the costs of trade
- Improve the availability of goods and services
- Increase consumer purchasing power in member nations

Global Interstate System

●​ a system of competing and allying states"> International Relations Institutions that
govern International Relations:United Nations+ International Financial Institutions (i.e.
IMF-World Bank; Asian Development

Contemporary Global Governance

-Encompasses activities that transcend national boundaries at the international, transnational

and regional levels
- Stresses on cooperative forms of conflict management

ASIAN REGIONALISM

ASIAN MARKETS

●​ increasingly connected
- Trade
- Financial transactions
 - Direct investment
- Technology
- Labor and tourist flows

1997-1998 ASIAN FINANCIAL CRISIS

- July 1997
- Thailand stopped defending the baht after months of downward market pressure,
causing the currency to fall quickly
- Rooted in economic growth policies that encouraged investment but also created high
levels of debt (and risk) to finance it
- International Monetary Fund (IMF) bailed out many countries but imposed strict
spending restrictions in exchange for the help
- Affected countries have since put in place mechanisms to avoid creating the same
scenario in the future

INTEGRATING ASIAN

- How far might an Asian economic community extend?

- determined by the economic and political ties that connect its members and by the
commitment that its governments make to cooperation.
- 10 members of the Association of Southeast Asian Nations (ASEAN)-Brunei
Darussalam, Cambodia, Lao People's Democratic Republic, Indonesia, Malaysia,
Myanmar, Philippines, Singapore, Thailand, and Viet Nam
- People's Republic of China; Hong Kong, China; India; Japan; the Republic of Korea;
and Taipei, China

GLOBAL REGIONALISM

3 Waves
- First wave of global regionalism
- 1950s and 1960s
- coincided with the founding of ASEAN, which marked the inception of Asian
regionalism.
- aim of the bloc was to form a loose security alliance against communist expansion
rather than economic integration.

- Second wave of global regionalism

1980s and 1990s
- limited success was evidenced by the European Union (EU) and the North American
Free Trade Agreement, the precursor to today's US-Mexico-Canada Agreement
 - ASEAN Economic Community (Free Trade Area)
- ASEAN and Asia-Pacific Economic Cooperation (APEC) → twin engines for Asian
regionalism; Bogor Goals to achieve "free and open trade and investment in the
Asia-Pacific" and the objective to establish a Free Trade Area of the Asia-Pacific
(FTAAP) have guided Asian integration.

- **US-Mexico-Canada Agreement (2020)** → intellectual property and digital trading;

increased environmental and working regulations; greater incentives for automobile
production in the U.S. (with quotas for Canadian and Mexican automotive production);
more access to Canada's dairy market; and an increased duty-free limit for Canadians
who buy U.S. goods online.
- **ASEAN Economic Community** → ASEAN as a single market and production base;
free flow of goods, services, investments, capital, and labor will allow the development of
production networks in the region and enhance ASEAN's capacity as the global supply
chain.
- **APEC Bogor Goals** → free and open trade and investment in the Asia-Pacific by
2010 for industrialized economies, and by 2020 for developing economies.

- Third Wave of Global Regionalism

- since the 2000s in tandem with the World Trade Organization (WTO) Doha Round
- "New" aspects of Asian regionalism are intertwined with global changes; turn to
bilateralism and pluralism
- Growing populist nationalism versus hegemonic stability premised on dominant US
power
- European debt crisis + Brexit saga + EU's decreasing share of global trade for two
decades = endangered normative power
- China's Belt and Road Initiative
- COVID-19 pandemic

- South-South FTAs outpaced North-South FTAs

- Mega-regional trade agreements emerged [Comprehensive and Progressive
Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive
Economic Partnership (RCEP)]
- Inter-regionalism brought outside influences to Asian agreements [EU-ASEAN FTA]
- Comprehensive FTAs as the norm; plus components ranging from e-commerce to
sustainable development

CRITICISMS ON FTAS

- Increasing protectionism among developed countries to further the interests of big local
firms
- Further liberalization of less developed countries through multi- or bilateral trade deals
that open up their economies and resources to even more corporate plunder
 - Ease of doing business for big corporations mainly from developed countries
- Imposition of import tariffs and quotas and state subsidies to restrict trade between
countries, usually to protect or fortify a country's domestic industries from foreign
competitors

Made in China 2025

- blueprint to strengthen and build its domestic industries, and make China a global
manufacturing leader
- aims to build or strengthen these local industries so that foreign technology and
products can be replaced with domestic ones
- preferential support like subsidies and capital to local corporations, buy-local
requirements, requiring technology transfers from foreign firms to do business in China,
and state-led or state-directed investment in foreign firms abroad

Philippines
- trade liberalization reduced tariffs to lowest levels and worsened Philippine trade
deficits, significantly in food and agriculture
- has among the lowest agricultural tariffs in Asia at 0-7% in food and agricultural
products, except for rice, in 2017
- heavily subsidized cheap rice imports further flood the domestic market, compete with
local rice produced by Filipino farmers who do not enjoy the same support measures that
Thai or Vietnamese farmers do and depress more the farm gate price of palay.