GEC04 Handout 2 Economic Globalization

GEC04 Handout 2 • American companies set up subsidiaries in the
country because of cheap labor cost, English

Lesson 2, 1st Term: Economic Globalization
proficiency, and customer service skills.
Global Economy
(2) Globalization of financial and capital markets
• Refers to the interconnected worldwide economic
• This dimension is evident in the liberalization of
activities that take place between multiple
financial and capital markets.
countries.
• Stock exchange, free trade agreements, etc.
• Innately tied to trade; it allows countries around
the world to obtain any resource they may want, (3) Globalization of technology and communication
whether or not it is produced on the home front
• Emphasizes that various transactions and
Major Actors in the Global Economy interactivities that transpire instantly due to the
internet and communication technology.
1. Intergovernmental Organizations - Entities created
by treaty, involving two or more nations, to work in good (4) Globalization of production
faith, on issues of common interest. (United Nations,
World Bank, etc). • This dimension is best illustrated by the existence
of multinational corporations (MNCs) and
2. Intergovernmental Non-Governmental transnational corporations (TNCs)
Organizations - include charities, non-profit advocacy
groups, business associations, and cultural associations.
3. Businesses – After World War 2, businesses started
going more global.
4. Migrants – Often transfers significant amounts of
money through remittances to relatives.
International Trade
• Economic transactions that are made between

countries.
• Among the items commonly traded are consumer
goods, such as foods, television sets, and
clothing;
• Capital goods, such as machinery; and raw
materials and food.
• Other transactions involve services, such as travel
services and payments for foreign patents.
Interconnectedness of Global Economy and Trade
(Benzces, 2004)
(1) Globalization of trade, goods and services
Market Integration
• For example: The emergence of China as a top
manufacturer and exporter. • Shows the contributions of the different financial
• To meet this demand, China creates more jobs for and economic institutions that facilitated the
its citizens. growth of the global economy.
• Another example of economic globalization of • There are different views on the actors that
trade and services is the increasing number of facilitate economic globalization:
business process outsourcing (BPO) companies
1. GOVERNMENTS
in the Philippines.
The government acts as ‘midwives’ of globalization
(Brodie, 1996).
Some government decisions and policies have effects on
a nation’s economy.
2. Global Corporations
• Existed as the primary economic organization

unit in the global market, meanwhile, nation-state
has ceased
• Have vast influence under globalization as their
economic power can make or break a country’s
economy.
• Some have a bigger valuation than the GDP of
several developing countries.
3. International Monetary Systems
• Refers to internationally agreed rules,

conventions, and institutions for facilitating
international trade, investments, and flow of
capital among nation-states.
• Compelled several countries to develop a system
on how trade can be facilitated in the international
community.
Historically, there are two global IMS:
Gold Standard - with gold as the only international
reserve and participating countries determine the gold
content of national currencies (Benczes, 2014).
Bretton-Woods System - the US dollar was the only
convertible currency, with standardized currency
exchange rates.
It effectively ended in the early 1970s when President
Richard M. Nixon announced that the U.S. would no
longer exchange gold for U.S. currency.
“Only if you have been in the deepest valley, can you ever
know how magnificent it is to be on the highest mountain.”
Richard M. Nixon
37th President of the United States

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GEC04 Handout 2 • American companies set up subsidiaries in the

country because of cheap labor cost, English

• Economic transactions that are made between

• Existed as the primary economic organization

• Refers to internationally agreed rules,

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