Economics 9 4th Quarter

MODULE

3 Globalization
Definition of Globalization
Globalization refers to the increasing integration of the global economy marked by easier inflow and outflow of goods and
services, financial capital, and labor among countries. This increased interdependence of economic activities was made possible by
the rise of the Internet as well as advances in transportation and telecommunications.
Globalization has three characteristics:
 A rapid change in structure and scope of production;
 Liberalization and the widening of international trade in goods and services; and
 Entry of foreign investments and improvements in technology.
Although globalization is commonly discussed in terms of economic implications, it also has significant implications on the
cultural, political, and social aspects of life in the Philippines.
Manifestation. Various signs that clearly show the extent of globalization today. The free trade among nations that is being
prompted globalization is widening over time. Free trade is slowly replacing protectionism, or implementation of economic policies
that restrict trade among countries. Protectionism aims to protect local industries from foreign competition.
There are opposing views on the effects of globalization. Some say it will be beneficial because it provides a way for more
backward countries to acquire wealth and knowledge. But others believe that globalization is harmful because it widens the gap
between rich and poor countries. Moreover, others think that is homogenizing effect- blending diverse cultures into a uniform
mixture- will harm the traditions and culture of particular countries.
Economic. Some economists believe that discussions that focus on national economies is becoming irrelevant as the role of
international trade and finance become more pervasive. In industrial countries, roughly 65% of their GDP comes from international
trade.
The economic implications of globalization can be traced to the formation of the World Trade Organization and
International Monetary Fund, international inter-governmental organizations that manage international trade and finance. There are
regional trade blocs like the North American Free Trade Agreement (NAFTA) and the ASEAN Free Trade (AFTA). These trade
blocs aim to integrate the economies of their member-countries. In many cases these trade blocs are art of the regional
intergovernmental organizations.
Evidently, there are a number of benefits from globalization. But globalization can also pose some dangers to the economy.
During the 1997 Asian financial crisis, the collapse of the baht caused financial panic not only in Thailand but also in other Asian
countries, notably South Korea, Malaysia, Indonesia, Singapore, and the Philippines.
In the face of such risks, social safety nets are being put in place. Social safety nets refer to financial and social support
from the government which prevent the poor or those vulnerable to shocks from being adversely affected by economic crises.
Political. There are different views about the potential effects of globalization on politics. According to some political scientists,
globalization will weaken the influence of the state and strengthen the power of global institutions. Some would go as far as to say
that global institutions will dethrone national economies from the seat of power. On the other hand, it will remain at the center of
economic activities in the world market.
Economic relations are also influence by political relations. This brings us to one of the accompanying characteristics of
globalization: hegemonization. Hegemonization is the political and ideological domination of a powerful country. This could mean
disproportionate global economic power among a few countries.
Socio and Cultural. Another accompanying characteristic of globalization is homogenization which means increasing similarity-
people, practices, and cultures are becoming more and more alike across the world. Due to the free entry of ideas and foreign
influences on the traditional culture, a globalized taste is emerging. Technology, especially the Internet, plays a big role in its
realization. As an example, the Korean artist Psy and his rap song “Gangnam Style” was made internationally famous by Youtube.
Globalization and Economic Reforms
Some economic reforms are being adopted by many countries as a response to globalization.

Liberalization. Liberalization refers to the relaxation of government restrictions in the economy. This could be in the form of trade
liberalization (relaxation of restrictions on imports or exports) or financial liberalization (relaxation of restrictions on financial
institutions and financial markets.)
The 2010-2012 Socioeconomic Report of the National Economic and Development Authority points to continuing
economic liberalization in the Philippines and other members of the Association of Southern East Nations (ASEAN). ASEAN
members removed 98.7% of the tariff on products agreed upon in the ASEAN Trade in Goods Agreement of 2010.
Deregulation. Deregulation refers to the government promotion of greater competition in an industry. It allows new firms to never
established markets and reduce the monopoly of power of entrenched firms or state-owned enterprises.
 In the Philippines, the deregulation of the oil industry was made possible by Republic Act 8479 or the Downstream Oil
Industry Deregulation Act of 1998.
Privatization. Privatization refers to the transfer of assets or service functions from public to private ownership or control.
If the operations of a government-owned or controlled-corporations (GOCCs) require too much financial capital or incur
losses, the GOCCs are privatized. An example is the privatization of the National Power Corporation or Napocor. This involved
contracting out power generation to independent power producers.
Transnational Corporations
Transnational corporation are corporations that are registered and operate in more than one country at a time. For a
transnational corporation, the world is one giant marker where it can operate.
Transnational corporation are also known as multinational corporations. Examples found in the Philippines include Nestle,
Unilever, and Hewlett- Packard. Meanwhile, one example of a transnational corporation that originated in the Philippines is
Jollibee.
Regional and International Organizations
Regional and international organization were established to ensure a fair, reasonable, and proper management of
transnational, regional, and international relation. These organizations are made up of member from various countries. Examples
include Asia-Pacific Economic Cooperation and WTO.
World Trade Organization (WTO). WTO was established on January 1, 1995 in Geneva, Switzerland. It is the only
international organization dealing with trade policies among countries. There are 159 members of WTO as of March 2013.
WTO promotes fair, open, competitive, environment-friendly, and beneficial global trade for all its member. Among its
duties are to implement WTO trade agreements, conduct meeting regarding trade and manage trade conflicts.
Asia-Pacific Economic Cooperation (APEC). Established in January 1989, APEC promotes free trade and economic
cooperation among countries in the Asia-Pacific region and serves as a forum to discuss economic issues that affects its member.
APEC is made of 21 member countries.

FT1. Write in the blank space provided the word that will complete the analogy.
1. Globalization: free trade; protectionism: trade barriers/ local industries barriers/ quota/tarrif
2. Global organization: WTO; regional organization: PAEC/ NAFTA/ AFTA
3. Southeast Asia: ASEAN; Asia-Pacific region: APEC
4. Deregulation: removing control; liberation: relax economy/less government restrictions about trading
5. Privatization: MERALCO; deregulation : oil industry
6. Tax on imports: tariff; limit on quantities traded: quota/protectionism
7. Political: hegemonization; cultural: homogenization
8. Prevent the poor or those vulnerable to shocks from being adversely affected be: economic crises; social safety nets: social
pensions/ food transfers/ healthcare insurances/ education insurance/ commission insurances/ financial support/ protectionism
9. Quota: restriction; tariff; tax on imported goods
FT2. Provide the meaning and the responsibility of the following acronyms.
Complete Term Function/ Responsibility
1. ASEAN Association of Southeast Asian Nation To accelerate economic growth and social progress of the
member countries
2. WTO World Trade Organization Global rules of trade between nations
3. EU European Union Promotes peace, established technological and scientific
development, unifies economic and monetary systems
4. IMF International Monetary Fund Supports or provides loans to countries / financial support
5. APEC Asia-Pacific Economic Corporation Promotes free trade and economic cooperation among
countries in the Asia-Pacific region
FT3. Put a check if the given statement shows a manifestation of globalization, if not, leave it blank.
1. The Philippines as a member of both ASEAN and WTO.
2. The opening of store like Uniqlo, Forever21, and Etude in a mall in Quezon City.
3. The showing of “Project Runway” and “American’s Next Top Model” in a cable channel.
4. Having a local version of “The Voice” in a Philippine TV station
5. The fame of Jericho Rosales in Malaysia.
__6. Manila vendors buying vegetables from Cordillera
7. A foreign worker being employed in a Filipino-owned company
__8. Selling items of Secosana, TRibu, and Penshoppe in a mall in Makati
9. Manufacturing Nokia, Samsung, and Apple products in China
10. Having a French friend on facebook
FT4. Provide examples of the following (that were not mentioned in this module):
1. Transnational corporation
2. Global organization
3. Regional organization
FT5. Answer the questions thoroughly.
1. Do you believe that Philippine industries could manage well on their own without government protection?
Government protection is a must for the stability of the Philippine industries, without it, they would be influx in the economy.

2. Do you think globalization is a boon to the Philippine economy?