I. What is Economic Globalization?

Economic Globalization refers to the growing interdependence of

the world economies manifested by the ever-increasing flows of
capital, technologies, and communication through a common
economic system (Shangquan, 2000; Steger et al., 2014). 
The International Monetary Fund or IMF (2008) attributed the
integration of the global economy to a historical process as the
result of the following;
1. Human Innovation – refers to the higher productivity of people
as it produces goods, services, and capital, making it available in
all parts of the world;
2. Technological progress – refers to the innovative methods of
producing goods and services more efficiently. This type of
development raised the overall people's productivity.
Human Innovation and technological progress can be seen in
human history. One of the major manifestations of this
development was the period of the first industrial revolution of the
18th century to the 4th industrial revolution (Industry 4.0) we are
now experiencing. Basic examples of today’s Fourth Industrial
Revolution (FIRe) are the automation in vehicles such
as Tesla cars and the Artificial Intelligence (AI) embedded in a
number of applications like the Plagiarism checker or text similarity
detection such as Turnitin.
What are the other examples of human innovation and
technological development? What are the differences among these
4 industrial revolutions?
IMF further explains that Economic Globalization is known for the
movement of goods, people (pertains to the workforce), and
knowledge (specifically in technology). This movement helps
global market growth at an unprecedented rate.
The expansion of the global market is felt by all types of
economies, whether in a capitalist or socialist society (IMF, 2005). 
The major far-left countries, for example, like China and Russia,
are now engaged in a free market economy. The infographic below
shows how these two countries are leaning towards market
capitalism where low or less government regulation, less tariff,
privatization, and foreign ownership are increasingly observed.
 In dissecting the Economic dimension of globalization, we could
find the figure shown below as the interrelated concepts. Let’s find
out the meaning and purpose of these concepts and how they
evolved into what we know today as the economic integration and
flows of capital, technology, and communication of ideas through a
common economic system.

As more and more countries are involved and participating in the

global market, Free Trade and Economic liberalization are at the
forefront of different state policies and a major player of state
economic treaties or Free Trade Agreements (FTAs). These
FTAs bound countries to impose imports and export duties for
purposes of mitigating or reducing trade barriers like tariffs.
 
 Thus, it is with utmost importance to understand what and why
Free Trade and Economic Liberalism became the widely used
economic policy and philosophy. We have to examine the very
concept of these two accessible and maintained economic
perspectives before digging into the major concepts of Economic
Globalization.
 So, what is free trade?
Free Trade and the Comparative Advantage  (Links to an external
site.) (Optional)
In Politics, free Trade was justified through the philosophy of
EconomicEconomic liberalism. Proponents of economic liberalism
believe that there should be less government intervention in Trade,
lower taxes, and privatization of government-owned utilities and
financial institutions to better off the world's economy.  This
philosophy was heavily lifted from the theory of Classical liberalism
(Zafirovski, 2007).  
Therefore, we have to answer the following questions;

1. What are the principles of classical liberalism? 

2. How each core principle affects the world's economy? 
3. Do you agree with classical liberalism ideals? 

Please reflect on those questions after you have watched this

video;
In a nutshell, the Classical Liberalists subscribed to the idea of free
will and limited to "no" government intervention to achieve the
economic prosperity of human beings. But critics of this philosophy
commonly argued that classical Liberalism, in practice, made
ordinary people and their environment exposed to exploitation and
abuses. Individuals who own the means of productions like the
capitalists (the business class) or the owners of large corporations
can make more workers suffer in longer hours of work and lower
wages.
For instance, the concept of Free market in the classical liberalist
perspective where the exchanges must be based on mere
voluntary acts between or among the parties involved (consumers
and producers) without a robust government mechanism in place
can result in unfair trade practices. There are specific markets that
could maximize their revenues by haggling down the supplier's
prices while charging their consumers at a higher cost.
 For example, Spotify, a music streaming provider, who charge
their U.S. premium subscribers between $4.99 to $9.99 per month,
at the same time, paying their music artists (suppliers) an average
of $0.0032 per stream in June 2019 (Blum, 2020). So, if you
played your favorite TikTok song on Spotify for 100 times, the artist
will get approximately US$0.32 or Php16.00 only. The Php 16.00
will further split up to the producers, artists, and songwriters,
among others. Although there is some competition, large
companies can dominate specific industries where they can dictate
unfair terms to the suppliers. It is the reason why some groups
called for Federal standard rate or government intervention on
these digital services to protect the artists.
Now, imagine if we have the same scenario in all aspects of our
society from education to banking institutions without an apparent
involvement of our government institutions that would regulate and
hold those organizations directly accountable. Many of these
institutions will leave people with no option but to accept these
greedy terms of companies without immediate consequences (and
yes, it could be worse than the services we received from our
internet providers in the country). Hence, critics of these liberalist
ideals resulted in empowering the government that will set socio-
economic rules and enforces it (Nijs, 2016).
Are we then going to adopt a more stringent type of economy like
the Command economy or communism?
German sociologist and economist Alexander Rüstow, who
popularized the concept of "Free Economy, Strong State," believed
that there must be free-market capitalism together with social
policies that will bring a fair competition while supporting people's
welfare (Nijs, 2016).
In the 1930s, Rüstow coined the term Neoliberalism, as the middle
ground between Liberalism and some ideology of Paleo-liberalism
to meet the socio-economic and political needs of the populace
(Nijs, 2016; Turner, 2008). Paleo-liberalism (old Liberalism)
upholds tradition, culture, liberty, and free-market that is governed
by the rules based on the covenant (contract) agreed by the
society which restricts specific behavior. Therefore, Neoliberalism,
for Rüstow, promotes Liberalism (free market) and socialism (for
the mere reason that it has a political or government intervention).
However, the purpose of state or government power in
Neoliberalism is merely to ensure the efficiency of the market
activities based on its defined and agreed boundaries (its
 contract/covenant) and would not limit its purpose in general (or
the free-market system) (Nijs, 2016).
What is Neoliberalism?
Neoliberalism is both a political and economic ideology, modified
laissez-faire economics that imposes less government regulation
towards businesses (both domestic and foreign) under a "strong
state" that could promote economic cooperation. Further, the
government must limit its expenses through fiscal austerity and
privatization of government-owned corporations with a progressive
type of taxation for the general welfare (Nijs, 2016; Stahl, 2019;
Steger & Roy, 2019; Turner, 2008).
Principles of Neoliberalism (Links to an external site.)
 

Comparative Analysis

Neoliberalism in government policies, however, never existed

nor adopted until the 1980s. It started gaining popularity among
politicians when some of the economists began to blame the state
interventionism (Keynesianism), piloted by the economist John
Maynard Keynes, as the cause of economic recession in 1973
(Keynesianism will be further discussed later on the "Economic
institutions").
 
American President Ronald Reagan and U.K. Prime Minister
Margaret Thatcher campaigned for Neoliberal ideologies and
realized them into state policies and programs of their
governments. It was also known as the First Wave of
Neoliberalism (Steger & Roy, 2019).
 

Reagan and Thatcher intentionally associate Globalization to

economic liberalism. Moreover, the call for a Neoliberal economy
further strengthens with the collapse of communism in
the Soviet Union countries (Russia, Armenia, Georgia, etc.) in the
late 20th century (Steger, 2015). Hence, the global market leads to
the integration and cooperation of various economies since
then, also known as Economic Globalization today.
 

II. What are the Major Elements of Economic

Globalization?
The following are the significant elements of Economic
Globalization;
A. Internationalization of Trade and Finance (Steger, 2005; Stiglitz,
2003)
B. Movements of Labor (Stiglitz, 2003)
C. Diffusion of Technology (Stiglitz, 2003)
 

A. Internationalization of Trade and Finance

In 2018, the world's trade value of goods exported across the
globe was at an astounding US$19.5 Trillion from US$61.8 Billion
in 1950 (O'Connell, 2019).
 Source: UNCTAD.org

The growth of world trade has been attributed to the regional and
international market liberalization agreements. Two primary
examples of this are the North American Free Trade Agreement
(NAFTA) and General Agreements on Tariffs and Trade (GATT).
NAFTA, as a trilateral trade agreement in North America (Canada,
USA, & Mexico), created to reduce and eliminate barriers in trade
and investment (Macdonald, 2017). The results of this agreement
have been the subject of debate and discussions from
unemployment, environmental concerns, and economic growth.
GATT, on the other hand, is a multilateral agreement aimed to
prevent trade wars and was able to liberalize international trade.
However, GATT failed to address global investment and
intellectual property issues, among others. Thus, the World Trade
Organization (WTO) was
formally established to replace GATT and address its inefficiency
and to provide better transparency and accountability (Hira &
Cohn, 2003).
Some national economies were better off because of free trade,
such as increased productivity, competition, specializations, and
the spread of technology (Steger, 2005).
However, studies have shown overwhelming drawbacks and
criticisms on Free Trade over the past decades. The primary
 examples of these growing concerns are the following (Ketover,
2001);

1.     The increasing gap between poor and rich 

To better understand this issue, let’s watch this short video lecture;
2.     Lowering Global Labor standards and Loss of Jobs (due to
Outsourcing);
 

Next is the internationalization of Finance, also known as Financial

liberalization. It is vital for any trade transaction. Some of the
related studies on trade and Finance have a separate empirical
assessment on its impact on the world's economy. However, we
have to understand that these two elements must work hand in
hand to deliver efficient transactions with accuracy and enough
accountability.
 Steger (2003) explains that liberalizing Finance means three (3)
things; First, it is to deregulate interest rates or the reduction of
governmental powers on a certain industry to create more
competition. Second, to remove credit controls over financial or
commercial institutions to provide their clients with more flexible
regulations and expand their business, such as extending loans
and other financial services. Third, the privatization of government-
owned banks and financial institutions. It will create fewer
restrictions and better investment opportunities to the various
commercial and banking institutions.
 

B. Movements of Labor
Another element is the mobility of international labor or workforce.
It refers to less regulated flows of the workforce to a particular
economy or between economies. Overseas Filipino engineers,
medical technologists, and nurses, among others, are a few
examples of this primary element of economic Globalization. It is a
significant factor of productions, not merely to the developing
countries but in all types of economy.
The growing number of nurses, for instance, in the Philippines,
affects its general supply, and as the labor demand is relatively
static, it can substantially decrease its minimum wage rates. It
would be a hindrance for a capitalist economy to increase their
wages if there is a surplus of workers.
It can also be applied to those developed countries like the USA
and the United Kingdom, where they outsourced their businesses
to developing countries such as the Philippines and India to
acquire more workers who can be paid less than their people. But
it has an adverse effect on the human resources of countries such
as but not limited to loss of jobs or unemployment and lower
wages since they outsourced their services in other countries.
 

C. Diffusion of Technology
Technology has become a powerful and game-changer tool of
economic policies of different government and financial institutions.
It facilitated the flow of ideas, money-capital, stocks, and other
commercial transactions of the world. 
Advancement of technology affects people's political and economic
diasporas. It creates individuals who support democracy and free-
market systems since it gives them individual freedom to choose
and live. 
Economist Banda (2019), emphasizes that the world we live in
became more interconnected because of the information and
technology, communication, travel and transportations,  and other
innovations and advancement in sciences. The spread of
technology is part of neoliberal policies to bring all aspects of
society (socio-economic and politics) into free-market capitalism.
 

III. Major International Economic Institutions

What are the primary International Economic Institutions of the
world, and how they influence the global economy?
Globalization scholar Manfred Steger (2003) named the following
three
(3) fundamental institutions that facilitate the Globalization of
the economy;
1.   International Monetary Fund (IMF)
2.   World Bank (WB) and;
3.   World Trade Organization (WTO)

In the 1940s, shortly after World War II, countries were looking to
re-strategize the world’s economy, resulting in a more peaceful
relationship among them. One of the objectives was to fight Trade
protectionism or a policy that safeguards domestic products
through imposing higher tariffs, quotas, and other restrictions
against any foreign industry or market. Trade protectionism is one
of the causes of the great depression in the 1920s to 1930s and
eventually led to World War II (Cohn, 2012).
In 1944, the United Nations Monetary and Financial Conference
was held in Bretton Woods, New Hampshire, U.S.A. The
conference was attended by 44 countries and all country
representatives agreed to establish international economic
institutions, namely IMF and World Bank, or the International Bank
for Reconstruction and Development (IBRD).
And to facilitate an expanded global integration, the more informal
institution called General Agreement on Tariffs and Trade (GATT),
also known as WTO, was established.
This post-world war II new economic order is later called
the Bretton Woods system, spearheaded by the economist John
Maynard Keynes. According to Keynes, the government has a
significant and direct role in managing the economy, as opposed to
classical liberalism or laissez-faire economics, particularly if there
is an economic downturn or crisis through massive spending by
the government (Steger & Roy, 2019).
Yet the Bretton Woods system collapsed in the early 1970s, due to
the economic recession and Oil crisis. The imposed prohibition
and discontinued oil shipments to the USA, UK, and other allied
countries by the Arab-member countries or the OPEC
(Organization of Petroleum Exporting Countries). It quadrupled the
prices of oil and caused stagflation (Stagnant economy and
inflation) to the affected countries (Steger & Roy, 2019).
This short video documentary will provide you the background on
the Oil crisis in 1973 and how it affected the different economies.
This crisis became the opportunity of neoliberals to make the
world’s economy to be more integrated and cooperative with one
another. This policy of neoliberalism is later called the
Washington Consensus. The three major economic institutions of
the world had adopted this policy and using it as their measure in
providing terms and agreements to their borrowing countries
(Steger & Roy, 2019)
Let us now find out how the following 3 economic institutions
operate and affect the world's economy.
 

A. International Monetary Fund

The Covid-19 global pandemic causes many countries' economies
to shrink and slow down. According to the latest World's GDP
report from the IMF, the global economy will shrink as much as 3%
this 2020.

Hence, reinvigorating one's economy is very crucial in the next

months or even in the next few years. The primary function of IMF
is to lend money through what it called Emergency Financing to
its member country like the Philippines (member since 1945). Yet,
the functions of these economic institutions are not limited to
lending. It does a whole lot more, which can influence the
economic mechanisms of various countries.
 

What are the other primary functions of the IMF?

Are there any other benefits of being a member of the IMF?
How could the IMF influence various economies of the world?
 
 
 

B. World Bank
The World Bank is initially known as the International Bank of
Reconstruction and Development (IBRD) and helped postwar
reconstruction after World War II in Europe.
Let's find out how World Bank shifted its mission from rebuilding
Europe in 1944 to helping various nations to fight poverty and
other primary functions through this short video presentation;
After watching the video, you should reflect on how the World
Bank affects our global economy.
 

C. World Trade Organization

WTO, as discussed in the Internationalization of Trade and
Finance born out from the GATT, aimed to reduce trade barriers.
Like other economic institutions such as the IMF and World Bank,
it promotes free and fair trade among countries. It functions as the
governing body of global trading and transactions of its 164
member-countries. Its member-nations must adopt the rules on
trade promulgated by the WTO.
But How WTO creates its rules on trade? Who are the parties or
countries involved?
Can WTO intervene in any conflicts related to trade between or
among countries? What are few criticisms against WTO on Free
and Fair Trade?
______________________________________________________________
________________________________________
Click Here for Your Activity-assessment!
______________________________________________________________
________________________________________

Conclusion
Summary/Conclusion

The wax and wane of the world's economy were presented in this
lesson through the variety of analyses of its perspectives. You
were given an opportunity to research and understand the
complexities of economic integration and the growing
interdependence of the global market together with its concepts.
One could infer from this lesson that after all, having a globalized
economy does not necessarily mean we will be in a 'utopian'
society. It posits the picture of growing inequalities, environmental
degradation, racial discrimination, and exploitation of workers,
among others.
Nevertheless, other globalization dimensions cannot exist and
intensify without the economic Globalization since culture is being
transmitted through convenient exchanges of goods and services
where one can acquire others' cultural aspects like fashions, food,
news, movies, and language. Political Globalization is likewise
dependent on the trade relations and treaties among countries
brought by the integration of the global economy. Thus, one can
agree that economic Globalization is irreversible (Shangquan,
2000) and inevitably caused by rapid and overwhelming changes
in our global market economy (Friedman, 2005).