Introduction to Globalization

Lesson 1. What does the contemporary world mean?

Contemporary means “present,” so contemporary world means our modern world

today. As we all know, different issues concerning politics, economy, environment, and
culture have emerged nowadays-- new solutions and problems.

New technologies, practices, and things are being presented to us day by day.

If you look at the brighter side, our lives became easier and faster through advanced
technologies and gadgets. However, there will always be its downsides. Studying the
contemporary world doesn’t only revolve around technologies or modernization. It touches a
lot of aspects like politics, environment, economy, and culture.

Have you seen how trading and investments have improved in today’s world?
Trading became faster as transportation is more accessible now than before. Another
one is culture. Can you claim that you are 100% Filipino by culture? Possibly not,
because Filipinos nowadays are unconscious enthusiasts of other cultures like Korean
culture or American culture. They idolize and adopt different cultural habits because the
internet tells them to do so.

Our country is facing a myriad of issues and problems together with the world.
Knowing the world is not just a simple Google Search, it takes a series of lessons in
understanding what we are facing in our world right now. Knowing how the world works
involves understanding the past, the present, and the future. This will help you in living a
significant life and not a wasted one.

Lesson 2. Defining globalizationnGETTING TO KNOW YOU

What is globalization?
Globalization had been debated throughout the years and has been given different
meanings. It is an inevitable phenomenon that brings countries around the world closer.
Due to the changing times, globalization intensified as countries all over the globe
became more interconnected in terms of economy, trading, culture, language, politics,
and the environment. We became globally connected to the world. One proof is how we
can freely buy products that are made from America, China, or Japan even if we are
here in the Philippines. Not only that, we watch international TV shows and movies,
which open our eyes to cultural diversity. Due to the different technologies getting
discovered and improved every day like mobile phones, faster transportation, and the
internet we can now reach the world easily. In conclusion, globalization is the process of
interaction and integration among people, companies, and governments worldwide.

Other scholars defined it as follows:

“The expansion and intensification of social relations

and consciousness across world time and world
space.” -Manfred B. Steger

“...globalization means the onset of the borderless world” -Kenichi Ohmae

“Globalization can thus be defined as the
intensification of worldwide social relations which link
distant localities in such a way that local happenings
are shaped by events occurring many miles away
and vice versa.” -Anthony Giddens

“Globalization as a process of world shrinkage, of

distance getting shorter, things moving closer. It
pertains to the increasing ease with which somebody
on one side of the world can interact with mutual
benefit with somebody on the other side of the
world.” -Thomas Larson

What are the signs of globalization?

Below are some signs of globalization that are present in today’s contemporary world:

Globalization in Economics
Multinational corporations operate on a global scale, with satellite offices and branches
in numerous locations. Outsourcing can add to the economic development of a
struggling country, bringing much-needed jobs.
For example:
1. Some automobiles use parts from other countries, as in a car being assembled in
the United States with the parts coming from Japan, Germany, or Korea.
2. One shirt sold in the United States could have been made from Chinese cotton by workers in
Thailand. Then, it could have been shipped on a French freighter that had a Filipino crew.

Globalization in the Blending of Cultures

The Silk Road was a trade route between China and the Mediterranean Sea area, and it
allowed the exchange of not only goods, but culture and knowledge.
For example:
1. Food is one factor of globalization.
2. Satellite television allows shows from one country to be broadcasted in many
others, adding to cultural globalization e.g. spread of K-Pop.

Globalization in Technology
The Internet is a major contributor to globalization, not only technologically but in other
areas as well, like in cultural exchanges of the arts.
For example:
1. Global news networks, like CNN, contribute to the spread of knowledge.
2. Cell phones connect people all over the world. Around 60% of all people in the
world use cell phones.

Conclusion:
According to anthropologist Arjun Appadurai, different kinds of globalization occur
on multiple and interesting dimensions of integration that he calls “scapes.”
1. Ethnoscape refers to the global movement of people.
2. Mediascape is about the flow of culture.
3. Technoscape refers to the circulation of mechanical goods and software.
4. Financescape denotes the global circulation of money
5. Ideoscape is the realm where political ideas move around
Does globalization affect everyone equally?
Globalization, in general, helped each part of the world to become richer, as
access to different technologies and products have been made available for almost
everyone. There are more foreign investors and job opportunities for everyone because
of globalization. Moreover, it had brought a lot of ideas and practices to each one who is
part of it.
However, the horrors of capitalism can never disappear. Rich countries are
always on the top of the game. Because of globalization, making money had been much
easier for them. United States of America, Japan, and South Korea are now some of the
first world countries that had exercised influence using technologies and goods over
developing countries. Due to these advancements, they benefit the most in the
contemporary world.

Ideologies of Globalization

An ideology can be defined as a system of widely shared ideas, patterned beliefs,

guiding norms and values, and ideals accepted as truth by a particular group of people.
Ideologies offer individuals a more or less coherent picture of the world not only as it is,
but also as it ought to be. In doing so, ideologies help organize the tremendous complexity
of human experience into fairly simple but frequently distorted, images that serve as
guides and compasses for social and political action.

These simplified and distorted ideas are often employed to legitimize certain political interests
or to defend dominant power structures. Seeking to imbue society with their preferred norms
and values, ideologists present the public with a circumscribed agenda of things to discuss,
claims to make, and questions to ask. They speak to their audience in stories and narratives
that persuade, praise, condemn, distinguish truths from falsehoods, and separate the good
from the bad. Thus, ideology connects theory and practice by orienting and organizing human
activity in accordance with generalized claims and codes of conduct.

Like all social processes, globalization contains an ideological dimension filled with a
range of norms, claims, beliefs, and narratives about the phenomenon itself. For example,
the heated public debate over whether globalization represents a 'good' or a "bad thing
occurs in the arena of ideology. Hence, before exploring the ideological dimension of
globalization, we should make an important analytical distinction between globalization –
social processes of intensifying global interdependence that has been described by
various commentators in different, often contradictory ways - and globalism - an ideology
that endows the concept of globalization with neoliberal values and meanings.

Market globalism is a system of ideas that consists of claims about globalization. To

understand the fundamental changes brought about by globalization, it is necessary to
grasp the connection between political ideologies and how it creates a social imaginary.
Social imaginaries are a set of values, institutions, laws, and symbols through which
people imagine their social whole. It is common to the members of a particular social
group and the corresponding society. Social imaginaries are neither theories nor
ideologies, but implicit ‘background understandings’ that make possible communal
practices and a widely shared sense of their legitimacy. Social imaginaries offer
explanations of how ‘we’ – the members of a particular community – fit together, how things
go on between us, the expectations we have of each other; and the deeper
normative notions and images that underlie those expectations. (Charles Taylor, 2004)
 The term globalization should be confined to a set of complex, sometimes
contradictory, social processes that are changing our current social condition based on
the modern system of independent nation-states. Indeed, most scholars
of globalization have defined their key concept along those lines as a multidimensional
set of social processes that create, multiply, stretch, and intensify worldwide social
interdependencies and exchanges while at the same time fostering in people a
growing awareness of deepening connections between the local and the distant. At
its core, then, globalization is about the compression of time and space as a result
of political, economic, and cultural change, as well as powerful technological
innovations.

The saying ‘globalization is happening’ implies that we are moving from the modern
socio-political order of nation-states that gradually emerged in the seventeenth century
toward the postmodern condition of globality. Indeed, like modernization and other verbal
nouns that end in the suffix ‘-ization’, the term globalization suggests the dynamic notion
of development or unfolding. Such unfolding may occur quickly or slowly, but it always
corresponds to the idea of change and, therefore, denotes the changes of present
conditions.
 Core Claims of Market Globalism

Manfred B. Steger defines market globalism as a set of claims that seek to endow
globalization with free-market norms and neoliberal meanings.

Claim 1: Globalization is about the liberalization and global integration of markets

Like all ideologies, globalism starts with the attempt to establish an authoritative
account of what the phenomenon is all about. Neoliberalism is generally associated with
policies like cutting trade tariffs and barriers. Its influence has liberalized the international
movement of capital and limited the power of trade unions. For neoliberals, such a
definition is anchored in the idea of the self-regulating market that serves as the
framework for a future global order. Neoliberals seek to cultivate in the popular mind the
uncritical association of 'globalization' with what they assert to be the benefits of market
liberalization. In particular, they present the liberalization and integration of global markets
as 'natural' phenomena that further individual liberty and material progress in the world.
Globalization is about the triumph of markets over governments. Both proponents
and opponents of globalization agree that the driving force today is marketing, which is
suborning the role of government. (Business Week, 13 December 1999)
The liberal market economy is by its very nature global. It is the summit of human
endeavor. We should be proud that by our work and by our votes we have - collectively
and individually - contributed to building it. (Peter Martin, British journalist)

Claim 2: Globalization is inevitable and irreversible

The second mode of explaining globalization turns on the concept of historical
inevitability. In the last decade, it was discussed on globalization describing it as,
inevitable, inexorable, and irreversible.
For example:
Today we must embrace the unstoppable logic of globalization - that everything from the
strength of our economy to the safety of our cities to the health of our people depends on
events not only within our borders but half a world away. Globalization is irreversible.
Globalization is inevitable and inexorable and it is accelerating. Globalization is
happening– it's going to happen. It does not matter whether you like it or not– it's
happening.

Claim 3: Nobody is in charge of globalization

Globalization is based on the classical liberal concept of the ‘self-regulating
market’. The contextual link between ‘globalization market’ and the idea of
‘leaderlessness’ is simple: globalists are not ‘in charge’ in the sense of imposing their own
political agenda on people. Rather, they regulate the markets with minimal restrictions
from the government. Every person is in charge of globalization. They are part of the
social and economic processes without one single dominant organization or person
controlling them.
And the most basic truth about globalization is this: No one is in charge. We all
want to believe that someone is in charge and responsible. But the global marketplace
today is an Electronic Herd of often anonymous stock, bond, and currency traders and
multinational investors, connected by screens and networks. (Thomas Friedman, New
York Times correspondent and award-winning author)
The great beauty of globalization is that no one is in control. The great beauty of
globalization is that it is not controlled by any individual, any government, any institution.
(Robert Hormats, Vice Chairman of Goldman Sachs International)

Claim 4: Globalization benefits everyone (... in the long run.)

This claim lies at the very core of globalism because it provides an affirmative
answer to the question of whether globalization should be considered a good or a bad
thing. Globalists frequently connect their arguments to the alleged benefits resulting from
market liberalization: rising global living standards, economic efficiency, individual
freedom, and unprecedented technological progress. Here are examples of such claims:
Spurred by unprecedented liberalization, world trade continues to expand faster than
overall global economic output, inducing a wave of productivity and efficiency and
creating millions of jobs. Peter Sutherland, Chairman of British Petroleum
We are at an optimistic time in our world: the barriers between nations are down,
economic liberalism is decidedly afoot and proven to be sound, trade and investment are
soaring, income disparities between nations are narrowing, and wealth generation is at
record high levels, and I believe likely to remain so. (George David, CEO of United
Technologies Corporation)

Claim 5: Globalization furthers the spread of democracy in the world

This globalist claim is rooted in the neoliberal assertion that free markets and
democracy are synonymous terms. Since people are freer now in regulating the market-
- the things they buy and sell-- government restrictions are lessened making democracy
spread even more. Not only this, sometimes it is associated with the relaxation of laws
relating to social matters such as abortion and divorce. Because of the various
conceptions about social issues, coming from different cultures, we had more power to
decide on social issues.
Francis Fukuyama, for example, asserts that there exists a ‘clear correlation’
between a country’s level of economic development and successful democracy. While
globalization and capital development do not automatically produce democracies, ‘the
level of economic development resulting from globalization is conducive to the creation
of complex civil societies with a powerful middle class. It is this class and societal structure
that facilitates democracy.

Claim 6: Globalization requires a global war on terror

In Thomas P.M. Barnett’s best-selling book, Barnett argues that the Iraq War
marks ‘the moment when Washington takes real ownership of strategic security in the
age of globalization’. Barnett breaks the globe down into three distinct regions. The first is
characterized by ‘globalization thick with network connectivity, financial transactions, liberal
media flows, and collective security’, yielding nations featuring stable democratic
governments, transparency, rising standards of living, and more deaths by suicide than by
murder (North America, most of Europe, Australia, New Zealand, and a small part of Latin
America). He calls these regions of the world the ‘Functioning Core’ or ‘Core’.
Conversely, areas where ‘globalization is thinning or just plain absent’ constitute a region
plagued by repressive political regimes, regulated markets, mass murder, and
widespread poverty and disease (the Caribbean Rim, virtually all of Africa, the Balkans, the
Caucasus, Central Asia, China, the Middle East, and much of Southeast Asia). The breeding
ground of ‘global terrorists’, Barnett refers to this region as the ‘Non-Integrating Gap’, or ‘Gap’.
Between these two regions, one finds ‘seam states’ that ‘lie along the Gap’s
bloody boundaries’ (Mexico, Brazil, South Africa, Morocco, Algeria, Greece, Turkey,
Pakistan, Thailand, Malaysia, the Philippines, and Indonesia).

‘The 9/11 attack’

The September 11 attacks, also known as 9/11, were a series of four coordinated
terrorist attacks by the militant Islamist terrorist group al-Qaeda against the United States
on the morning of Tuesday, September 11, 2001. On that morning, four commercial
airliners traveling from the northeastern U.S. to California were hijacked mid-flight by 19
al-Qaeda terrorists.
For Barnett, the importance of what happened in September 11 is that the attacks
forced the United States and its allies to make a long-term military commitment to ‘deal
with the entire Gap as a strategic threat environment’. In other words, the desired spread
of globalization requires a War on Terror. Its three main objectives are: ‘(1) Increase the
Core’s immune system capabilities for responding to September 11-like system
perturbations; (2) Work on the seam states to firewall the Core from the Gap’s worst
exports, such as terror, drugs, and pandemics; and, most important, (3) Shrink the Gap.
The Middle East is the perfect place to start’. The third point is particularly important,
because ‘the real battlegrounds in the global war on terrorism are still over there’. As
Barnett emphasizes, ‘We ignore the Gap’s existence at our own peril, because it will not
go away until we as a nation respond to the challenge of making globalization truly global’

Lesson 3: The Global Economy

What is economy?
An economy is a system according to which the money, industry, labor, and trade of a
country or region are organized.

What is economic globalization?

Economic globalization is the integration of economies worldwide. Economic
globalization had taken place and intensified because of the needs of countries in terms of
trading and international financial support. Specifically, economic globalization is the system of
trade and industry across the world in which countries' economies have been developing to
operate collectively as one system.
The emergence of globalization can be compared to the transformation of solid to
liquid. If we look back at our history, during the time of colonization and wars, countries have
imaginary borders between each other. Trading had been slow. Immigration or migration was
nearly impossible. Travelling was not accessible to everyone. Right now everything has
metaphorically liquidized. Goods, ideas, and culture are now free-flowing from country to
country.
 ➢ The economic aspects stressed in globalization are trade, investment, and migration.

The globalization of trade entails that human beings have greater access to a variety
of goods and services never seen before in human history. From German cars to Colombian
Coffee, from Chinese clothing to Egyptian cotton, from American music to Indian software,
human beings may be able to purchase a wide range of goods and services.

The globalization of investment takes place through Foreign Direct Investment,

where multinational companies directly invest assets in a foreign country, or by direct
investment where individuals and institutions purchase and sell financial assets of other
countries.

Free migration allows individuals to find employment in jurisdictions where there are labor
shortages.

Reasons for the Integration of Economies

Integration of economies worldwide started because of scarcity thus the intensification of
trading happened. Scarcity is having fewer resources that are needed to fill human wants and
needs. In simpler terms, it is the state of shortage.
Rarely can one region or nation satisfy all demands of its people. This forces regions
and nations to trade goods and services.
Some under-developed nations are not able to develop their own resources because
they lack the finances to support industries and lack the technology and expertise to process
the raw materials into goods.
Other nations often invest in industries, creating international companies to process
and export the goods. In this instance, the country owning the resources does not profit as
much as the country which invests in and processes the resources.
Emergence of globalization can be compared to the transformation of solid to liquid. If
we look back at our history, during the time of colonization and wars, countries have imaginary
borders between each other’s boundaries. Trading had been slow. Immigration or migration
was nearly impossible. Travelling was not accessible to everyone. Right now everything have
metaphorically liquidized. Goods, ideas, and culture are now free flowing from country to
country. With this, it’s still important to know where all this “integration” started.

A brief history of how economic globalization emerged

Due to scarcity or the unequal distribution of resources in the geographical lands and waters
of each country, nations exercised trading.

The first wave of trading happened through the

oldest known international trade route, the Silk Road.
Silk Road spanned from China to the Middle East and
to Europe. (130 BCE- 1453 BCE) It is called the Silk
Road because the most profitable product through this
network was silk. The Silk Road was international but
not global because it had no ocean routes that could
reach the American continent. The Silk Road
Galleon Trade

From the 16th century to the 18th century, Mercantilism happened. This is where countries
competed with one another to sell more goods as a means to boost their country's income.
They imposed high tariffs, forbade colonies to trade with other nations, and restricted trade
routes. The most prominent trading system that happened in East Asia was the Galleon Trade.
For the past 333 years, we have been colonized
by Spain. Galleon Trade is a trade agreement during the
Spanish colonization from the 16th to 18th century. It
happened during the Mercantilism age. The Spaniards
closed the ports of Manila to all countries except
Mexico. Manila became the center of commerce in the
East.
A more open trade system emerged in 1867
when, following the lead of the United Kingdom, the
United States and other European nations adopted the gold standard at an international
monetary conference in Paris. Its goal is to create a common system that would allow countries
to trade efficiently and prevent the isolationism of the mercantilist era. The gold standard
stopped because it is a very restrictive system, as it compelled countries to back their
currencies with fixed gold reserves.

The Bretton Woods System

After two world wars, world leaders sought to create a global economic system that would
ensure a longer-lasting global peace. The Bretton Woods agreement was created in a 1944
conference of all of the World War II Allied nations.
This was created to promote peace among nations. They believed that one of the ways
to achieve this goal was to set up a network of global financial institutions that would
promote
economic interdependence and prosperity.

The following financial institutions created are as follows:

1. World Bank
The World Bank is an international agency with 189 member-countries.
It is formed in 1944 to finance the reconstruction of war-torn countries brought
by the devastation of World War II. At present, it provides lowinterest loans,
interest-free credit and grants. It focuses on improving education, health, and
infrastructure
2. International Monetary Fund
IMF is responsible in supervising exchange rate system, and
international payments. It reflects on the amount owed by a country from
another country.
It also indicates the economic operation like what it produces, consumes and
buys with its money.
3. General Agreement on Tariffs and Trade
GATT is a legal agreement between many countries, whose overall
purpose was to promote international trade by reducing or eliminating trade
barriers such as tariffs or quotas.
The Bretton Woods system had started the revolution on lower tariffs
and quotas in trading between nations. This caused easier and faster access of
goods from nation to nation.
Neoliberalism
From 1980s onwards the concept of neoliberalism was introduced. It challenged the
Keynesian orthodoxy. Economists such as Friedrich Hayek and Milton Friedman argued that the
governments’ practice of pouring money into their economies had caused inflation by
increasing demand for goods without necessarily increasing supply. Moreover, they argued that
government.

Neoliberalism then became the codified strategy of the United States Treasury
Department, the World Trade Organization, the World Bank, and the IMF.
Its advocates pushed for minimal government spending to reduce government debt. They
also called for privatization for government-controlled services like water, power, and
communications believing that the free market can produce the best results. Finally, they
pressure governments around the world, particularly the developing countries, to reduce tariffs
and open up their economies, arguing that this is the quickest way to progress.

However, neoliberalism had its flaws. One example is the fall of Communism in Russia.
The IMF immediately called for the privatization of all government industries. They thought this
would free them from corrupt bureaucrats and pass them on to independent private investors.
What happened, however, was the only individuals and groups who had accumulated wealth
under the previous communist order had the money to purchase these industries. This practice
has entrenched an oligarchy that still dominates Russia up to this date.

Trade Protectionism vs Free Trade

From the history presented to you, it is quite visible how different economic systems evolved
through the years— from planned economies, where government intervention is strengthened,
to free-market economies, where government intervention is lessened.

Right now, you can see that most countries are neither of the extremes. However, most
countries applied policies from either or combination of the two. Knowing the history of the
integration of economies, we are going to differentiate two different types of trade policies
used; trade protectionism and trade liberalization.

Trade Protectionism is a policy that protects domestic industries from unfair competition
from foreign ones. It prevents competition from outside industries, supporting the native
industry owned by the country.

Some Tools of Trade Protectionism

1. Tariffs - A tariff is a border tax that needs to be paid before goods can be imported
into a country. Normally the buyer, not the seller, pays the tariffs. Governments impose
high tariff rates to protect our local products. As tariff goes higher, the price of imported
goods increases as well, discouraging people from buying them.

2. Quotas - Quota, in international trade, a government-imposed limit on the quantity, or

in exceptional cases the value, of the goods or services that may be exported or imported
over a specified period of time.

3. Subsidies - A subsidy is a direct or indirect payment to individuals or firms, usually in

the form of a cash payment from the government or a targeted tax cut. When government
subsidies are implemented to the supplier, industry is able to allow its producers to
produce more goods and services. This increases the overall supply of that good or
service, which increases the quantity demanded of that good or service and lowers the
overall price of the good or service.

Trade Liberalization, or free trade, on the other hand, is a policy to eliminate

discrimination against imports and exports. Buyers and sellers from different economies may
voluntarily trade without a government applying tariffs, quotas, subsidies, or prohibitions on
goods and services.

Critics of free trade contend that it may lead to the destruction of a country’s native
industry, environment, and/or loss of jobs which Trade Protectionism protects. However, on
the good side of it, free trade increases choices on goods and their quality, as well as foreign
direct investments.

LESSON 4: Market Integration

Market
Market is a place where exchange takes place and a market comprises a group of buyers
and sellers, who can interact with each other to by sell goods and services. They can
interact with each other with or without physical contact. The transaction can be
conducted over the phone or on the internet. Sellers communicate their offering, price,
availability to the prospective buyers. The buyers purchase there offering by paying
money to the seller. Also the seller seeks feedback about the goods and services sold to
the buyer to determine his satisfaction level.

Market Integration
Market integration is a term used to identify a phenomenon in which markets of goods
and services that are related to one another experience similar patterns of increase or decrease in
terms of the prices of those products. The term can also refer to circumstances in which the
prices of related goods and services sold in a defined geographical location also begin to move
in some sort of similar pattern to one another. Market integration occurs when prices among
different locations or related goods follow similar patterns over a long period of time. Though
products may not be of the same price, the increase and decrease of prices for both the goods
and the services go together.
Distribution of productive resources in proper manner is the essential part of integration.
An efficient management of the overall industry is the idea behind integration so that the
economy can serve for the well-being or betterment of society.
Market integration is the phenomenon by which price interdependence takes place. As per
Faminow and Benson (1990) integrated markets are those where prices are determined
interdependently; which is assumed to mean that price change in one market affect the prices in
other markets. Goodwin and Schroeder (1991) described that markets that are not integrated
may convey inaccurate price information which might distort producer marketing decision and
contribute to inefficient product movements.

Types of Integration
Horizontal integration is the merger of two or more companies that occupy similar
levels in the production supply chain. However, they may be in the same or different industries.
Horizontal integrations help companies expand in size, diversify product offerings, reduce
competition, and expand into new markets. An example of this is Jollibee Food Corporation
who acquired different fast food chains in the Philippines.
Vertical integration occurs when a company takes control over several of the production steps
involved in the creation of a product or service. Vertical integration is a strategy whereby a
company owns or controls its suppliers, distributors or retail locations to control its value or
supply chain.

Global Corporations
Global Corporation is a large company that operates in many different countries. The
contemporary global corporation is simultaneously and commonly referred to either as a
multinational corporation (MNC), a transnational corporation (TNC), an international company,
or a global company. Enterprises that engage in activities which add value (manufacturing,
extraction, services, marketing, etc) in more than one country (United Nations Centre On
Transnational Corporations, 1991). The global economy is being leaded by the big multinational
and transnational corporations nowadays.

● Multinational companies MNCs place multiple production facilities in multiple

countries under the control of a single corporate structure (Oatley, International Political
Economy 5th Edition). A multinational corporation (MNC) is a company that operates in more
than one country. Generally, multinational corporations
consist of separate companies (called subsidiaries) in different countries, all of which answer to
a central office located in the firm’s home.

● Transnational companies are more complex organizations which have invested in

foreign operations, have a central corporate facility but give decision-making, research and
develop (R&D) and marketing powers to each individual foreign market.

Nowadays, TNCs and MNCs are the ones taking over the global economy.

Internationalization of Trade and Labor

As with Japanese autos, American computers and Taiwanese calculators there is an
emergence of a “new international division of labor”. Basically, internationalization of labor is a
change in geographical pattern of specialization at the global scale-constantly changing and very
dynamic. Division of labor has taken on spatial dimensions- some areas come to specialize in
certain types of economic activity
• At a broad scale :
• industrialized countries - manufacture goods
• non-industrialized countries - raw materials

Offshoring and Outsourcing

In the previous lesson we have learned that economic globalization keeps on intensifying
due to the need of countries to produce high quality materials. Since each country has its own
expertise and specialization, division of labor occurs. This is where one product is actually
processed and manufactured through the help of other countries. Offshoring and outsourcing are
two examples of how labor are divided worldwide.
Offshoring is when production operations are performed in another country by the same
company. It happens when a corporation builds a separate company, still owned by them, for a
business process on another country.
Outsourcing in which part of a product's manufacture/process are performed in more
than one country or more than one company. It occurs when a company entrusts a part of their
business process to an outside vendor/ another country.
We live in an age of outsourcing. Firms are subcontracting an expanding set of activities.
Some have become “virtual” manufacturers, owning designs for so many products but making
almost nothing themselves.
 Both offshoring and outsourcing are done to save production costs and to produce
more high-quality materials. This is also one aspect of the so-called market integration.

Advantages and Disadvantages of Global Corporations

Advantages
● Increased choice
Products worldwide are now more accessible to the consumers as free trade continues to arise.
The internationalization of labor creates more high-quality goods thus a bigger opportunity and
chance for people to consume better equipment and products.
● Greater potential for growth
Through economic globalization, the chances of each country to grow is bigger. Since more
technologies are being produced, more markets are being integrated and firms have a larger
opportunity to sell their products worldwide, most countries all around the world benefit as their
economy grows.
● Greater employment opportunities
Since more foreign investments will enter the country more job opportunities will be given to
the people. Economic globalization will make give more opportunities for people to earn money.

Disadvantages
● Increase in gap between the rich and the poor
Because of the dominance of multinational corporations around the world more opportunities
are given to the rich people since they are ones who control these corporations. When it comes
to market competition, the rich will always be the ones
who can produce more high-quality goods and compete in the market. On the other hand, poor
people become laborers of these big corporations having lesser income than those who own
firms and businesses.
● Lack of opportunities for the poor to have access for markets
Sometimes the global economy that is being developed nowadays are becoming less and less
accessible to the poor since only the rich people are the ones who benefit from it and have the
purchasing power to buy different goods.
● Exploitation of workers and growers
Because of the internationalization of labor sometimes poorer countries are the target of global
corporations when it comes to the production of labor-intensive products like shoes and clothes
since the have the lowest wages and weakest regulations. Workers from these countries have no
other choice but to do the job.

• Environmental Degradation
• Production of natural cultures of corruption through corporate collusion, and in some
instances, threatened national sovereignty.
Supplementary Materials