ECONOMIC

GLOBALIZATION
(GROUP 4)

MS. LOUDENIA TAGUIAM

AUGUST 03, 2021
1. How do you illustrate economic globalization?

According to the United Nations:

“Economic globalization refers to the increasing
interdependence of world economies as a result of the growing
scale of cross-border trade of commodities and services, flow
of international capital and wide and rapid spread of
technologies. It reflects the continuing expansion and mutual
integration of market frontiers and is an irreversible trend
for the economic development in the whole world at the turn
of the millennium.” Economic globalization refers to the
mobility of people, capital, technology, goods and services
internationally. It is also about how integrated countries
are in the global economy. It refers to how interdependent
different countries and regions have become across the world.
The rapid growing significance of information in all types
of productive activities and marketizations are the two major
driving forces for economic globalization. In other words,
the fast globalization of the world’s economies in recent
years is largely based on the rapid development of science
and technologies, has resulted from the environment in which
market economic system has been fast spreading throughout
the world, and has developed on the basis of increasing cross-
border division of labor that has been penetrating down to
the level of production chains within enterprises of
different countries.
2. What were the actors that facilitated economic globalization?

• International Economic and Financial Organizations.

• International Governmental Organizations (IGOs)
• Media
• Multilateral Development Banks
• Nation-States
• Non-Governmental Organizations (NGOs)
• Trans-National Corporations (TNCs)
• United Nations (UN) System

3. What role did the Bretton Woods system all about?

The Bretton Woods Institutions the IMF and World Bank have an
important role to play in making globalization work better.
They were created in 1944 to help restore and sustain the
benefits of global integration, by promoting international
economic cooperation. Today, they pursue, within their
respective mandates, the common objective of broadly shared
prosperity. The World Bank concentrates on long-term
investment projects, institution-building, and on social,
environmental, and poverty issues. The IMF focuses on the
functioning of the international monetary system, and on
promoting sound macroeconomic policies as a precondition for
sustained economic growth. It is taking action to strengthen
economic governance. For instance, it is promoting the use of
 standards and codes as vehicles for sound economic and
financial management and corporate governance. It is working
to safeguard the stability and integrity of the international
financial system as a global public good. In particular, the
joint IMF-World Bank Financial Sector Assessment Program
(FSAP) is at the core of efforts to strengthen financial
sectors and combat money laundering in member countries.

4. What role did the Bretton Woods play in global financing and
neocolonialism?

The Bretton Woods institutions were formed after the second

world war to address the economic problems of that time.
Though the European economies needed massive restructuring,
their situation was distinctively different from that of
Africa after independence. These were already relatively
developed nations for the times, merely set back by years of
fighting. The medicine prescribed was to pour in money to
reconstruct what was lost in the war. Africa on the other
hand was coming out of colonialism with unfavorable colonial
economic structures that needed complete overhaul. Land 15
reclamation and use by indigenous farmers was limited by
concessions given to white settlers, so there was limited
agricultural opportunities for the people beyond subsistence
levels. In addition, the majority of the Africans were
secluded in a very rural environment while development
programs mostly supported the urban areas. Access to the
education that would build a manpower able to sustain
 development was limited. Looking at all these conditions that
were peculiar to Africa at the time, pouring in money in the
same manner as was done in Europe, and with the same economic
ideology, was a recipe for failure. Moreover, appointing the
World Bank/IMF, which was run by countries that were
unwilling to give up their colonial mercantile practices in
Africa in the first place, to be the watchdog spelled a big
conflict of interest. It is no surprise that the IMF/World
Bank policies have driven Africa deeper into debt and
poverty, while the western economies still benefit enormously
from African production and markets. The West cannot succeed
in restructuring the economic environment in Africa because
it is not in its best interest to do so. The only role that
the developed countries could take to help would be a
humanitarian one.

5. Compare and contrast the assumptions of the original Bretton

Woods system and with those of the Washington consensus.

The Bretton Wood System is a system that created a framework

of norms, rules, and understanding to counter World War II
economic instability (depression, unemployment,
protectionism, and eventually fascism). The whole point of
the system is to avoid returning to the economic instability
in the 1930s.
The Washington Consensus - describes all the policies that
the international institutions based in Washington, IMF,
World Bank, etc.
The Bretton Woods system sought to guarantee international
financial stability through a system of strict exchange
controls. For most of its existence, this enabled western
countries to run economies with low inflation and full
employment, but if you went abroad, you were only allowed to
take a small amount of spending money. People who lived
through the time, with family bases in more than one country,
have memories of smuggling banknotes in their underwear. It
was blown apart by the oil crisis in the early 1970s. The
Washington Consensus describes the broad principles of
international finance since, involving the absence of
exchange controls, and a policy balance of unemployment
against inflation, plus a few other general rules for
operating such a system. The world has become so used to
these since the 1970s that they have acquired a psychological
status almost of laws of nature, but that was also true of
the Bretton Woods and Gold Standard principles before. The
remarkable thing about the Washington Consensus system is
that it has survived being blown out of the water, in 2007–
2008, perhaps just because of inertia, with no other system
commanding enough respect to replace it. One thing they have
in common is austerity: the notion that the cure for most
ills is starvation. A little like the economic equivalent of
bleeding and leeches in early modern medicine.