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Cworld 1- Module-PART-A

Contemporary World (Urdaneta City University)

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TABLE OF CONTENTS

Content Page

Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

Introduction of the Module . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

Lessons

1: Introduction to the Study of Globalization. . . . . . . . . . . . . . . . . . . 1

A. Approaches to the Study of Globalization . . . . . . . . . . . . 3

B. Market Globalism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

2: The Global Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

3: Market Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

4: The Global Inter-State System. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

5: Contemporary Global Governance. . . . . . . . . . . . . . . . . . . . . . . . 41

6: Global Divides: The North and the South. . . . . . . . . . . . . . . . . . . . 48

7: Asian Regionalism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

8: Global Media Cultures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

9: The Globalization of Religion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

10: The Global City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

11: Global Demography (Mandated Topic). . . . . . . . . . . . . . . . . . . 95

12: Global Migration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

13: Sustainable Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124

14: Global Food Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140

15: Global Citizenship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147

Evaluation of the Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154

References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155

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INTRODUCTION OF THE MODULE

Course Code: CWORLD1

Course Title: The Contemporary World

Credit: Three (3) Units

Course Description:

This course introduces students to the contemporary world by examining the

multifaceted phenomenon of globalization. Using the various disciplines of the social
sciences, it examines the economic, social, political, technological, and other
transformations that have created an increasing awareness of the interconnectedness
of peoples and places around the globe. To this end, the course provides an overview
of the various debates in global governance, development, and sustainability. Beyond
exposing the student to the world outside the Philippines, it seeks to inculcate a sense of
global citizenship and global ethical responsibility.

Requirements of the Course:

1. Three (3) Major Examinations

2. Regular Attendance
3. Scheduled Quizzes, Seat-works, Home-works/ Assignments, Classroom-Based
Recitations
4. Critique Papers, Synthesis Papers, Essay Writing
5. Group Power-Point Presentations, Video Presentations
6. Research Paper Writing

Learning Competencies:

At the end of the course the students are expected to:

1. be proficient and effective in communication skills through writing, speaking,

listening, reading, viewing, and the use of new platforms of technology;

2. apply critical, analytical, and creative thinking skills (i.e., quantitative, qualitative,
artistic, scientific, textual, visual, experimental, and observational) in tackling local,
national, and global problems methodically;

3. exhibit personal and civic responsibilities as a global citizen in viewing the

contemporary world from both the Philippine and global perspectives;

4. demonstrate the ability to reflect on moral norms or ethical standards as they affect
individuals and the global society;

5. exhibit understanding and respect for human rights as they contribute personally and
meaningfully to the country’s development;

6. possess and display practical skills through working effectively in a group;

7. demonstrate application of computing and information technology skills to assist and

facilitate research-related activities; and

8. display practical problem-solving skills in addressing real-world problems.

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Learning Objectives:

1. To differentiate the competing approaches to the study of

globalization
2. To understand the varying processes of globalization
3. To explain the different ideological dimensions of
globalization
4. To appreciate the core claims of market globalism
5. To agree on a working definition of globalization for the
course

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LESSON 1
INTRODUCTION TO THE STUDY OF
GLOBALIZATION

The first part of this lesson discusses the summary of the “Approaches to the Study
of Globalization” as presented by Manfred B. Steger (2014) which was adopted from
the “SAGE Handbook of Globalization” edited by Manfred B. Steger, Paul Battersby,
and Joseph M. Siracusa (2014). The succeeding discussion presents the work of Manfred
B. Steger (2014) entitled “Market Globalism” which was also adopted from the “SAGE
Handbook of Globalization”.

A. Approaches to the Study of Globalization

There are many different approaches to the study of globalization. The purpose of
this chapter is to provide a general overview of the various approaches to the concept
as espoused by several scholars since the 1990s.

Various scholars have advanced the concept of globalization by analyzing the

changing economic, political, and cultural processes that happened since the 1970s.
Some of the accepted definitions of globalization include the following: “increasing
global inter-connectedness”; “the expansion and intensification of social relations
across world-time and world-space”; “the compression of time and space”; “distant
proximities”; “a complex range of processes, driven by a mixture of political and
economic influences”; and “the swift and relatively unimpeded flow of capital, people,
and ideas across national borders” (Giddens, 1990; Harvey, 1989; Held & McGrew, 2007;
Lechner & Boli, 2011; Robertson, 1992; Steger, 2013; Waters, 2001).

Globalization as “Globaloney”.

Three groups of scholars argue that the existing accounts of globalization are
incorrect and imprecise. Their arguments fall into three differing categories. The first
group disagrees with the usefulness of globalization as a precise analytical concept.
The second group contends that the world is not really integrated as many proponents
believe. The last cluster disputes the novelty of the process while acknowledging the
presence of moderate globalizing tendencies.

Rejectionists. These scholars believe that the term “globalization” is an example of

a vague word employed in academic discourses. Just like the term “nationalism”,
“globalization” is a complex and ambiguous phenomenon, thus both are hard
concepts to define (Calhoun, 1993).

Sceptics. This group stresses the limited nature of current globalizing processes.
According to Hirst and Thompson (2009), our international economy is not really a
global phenomenon, since it only centered on Europe, Eastern Asia, and North
America. They also emphasized that most of the economic activities are still national in
terms of origin and scope.

Modifiers. They entail that “globalization” has often been applied in a historically
inaccurate manner. Gilpin (2000) argues that our international economy in the late
1990s was even less incorporated before the outbreak of World War I. According to the
neo-Marxist proponents of World-System Theory (Wallerstein, 1979; Frank, 1998), the
modern capitalist economy today has been global five centuries ago. Thus
globalization can be drawn back to the political and cultural relations that developed
the ancient empires of Persia (Iran), China, and Rome.

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Globalization as an Economic Process

The evolution of global markets and international corporations led to global

economic interdependence among nation-states. The development of international
economic institutions such as the European Union, the North American Free Trade
Association, and other regional trading blocs are some of the examples (Keohane &
Nye, 2000). This only shows that economic globalization increases the linkage of
national economies through trade, financial flows, and foreign direct investment (FDI)
by multinational or trans-national corporations (MNCs/TNCs) (Gilpin, 2000).

The emergence and evolution of the post-World War I global economy was
attributed to the establishment of the 1944 Bretton Woods Conference (Schaeffer,
2005). Its operation for almost thirty years contributed to the formation of the “golden
age of controlled capitalism” (Luttwak, 1999).

The collapse of the Bretton Woods System in the early 1970s was followed by the
intensification of neo-liberalist ideas in the 1980s coupled with the collapse from 1989 to
1991 of the command-type economies in Eastern Europe. Aside from the issue on free
trade, the advent of a transnational financial system made possible the deregulation of
interest rates, the removal of credit controls, and the privatization of government-
owned banks and other financial institutions.

Globalization as a Political Process

Political globalization includes the discussion and analysis of political processes

and institutions. Thus two questions are asked: (1) what are the political grounds for the
immense flows of capital, money, and technology across territorial boundaries?; (2) do
these flows create a serious test to the power of the nation-state? These dilemmas imply
that economic globalization might lead to the reduced control of national
governments over restrictive policies and economic regulations.

According to Ohmae (1990, 1995, 2005), the rise of a “borderless world” was the
consequence of the irresistible forces of capitalism. Thus, the nation-state has already
lost its function as a significant entity in the global economy vis-à-vis the decline of
territory as a meaningful framework for understanding political and social change.
Regional economies will be linked together and operate based on free-market
principles.

In terms of global governance, political globalization might enable the

emergence of democratic ideals promoting a “global civil society” that promote
human rights in the international level (Brysk, 2002).

Globalization as a Cultural Process

Two focal questions are raised by scholars of cultural globalization. First, does
globalization intensify cultural homogeneity, or does it lead to more diversity and
heterogeneity? Second, what could be the impact of the culture of consumerism on
our natural environment?
According to Tomlinson (1999), cultural globalization signifies a growing linkage of
intricate cultural interconnections and interdependencies that define our modern
social life. These can be made possible through the emergence of powerful global
media corporations that develop new communication technologies which promote
the Anglo-American value system. This global dissemination of American values
(Americanization), consumer goods, and lifestyles promote the objectives of American
“cultural imperialism” which is also termed by Ritzer (1993) as “McDonaldization” which
describes the ideals of the fast-food business that dominate the American society and
the rest of the globe.

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According to Barber (1996), a type of cultural imperialism that was assembled in

the 1950s and 1960s promoted an American culture of popular consumerism which he
termed as “McWorld”. This was driven by expansionist commercial interests which was
evident in its choice of music, video, theater, books, and theme parks which create
exports that center around common logos, advertising slogans, stars, songs, brand
names, jingles, trademarks, and the like.

As argued by Robertson (1995) global cultural flows also take place in local
contexts which result to “glocalization”. This refers to an intricate collaboration of the
global and local cultures characterized by cultural borrowing. These interactions lead
to a complex mixture of both cultures often referred to as “hybridization” or
“creolization” which signifies processes of cultural mixing that are replicated in music,
film, fashion, language, and other types of social expression.

Appadurai (1996) classifies five dimensions or “landscapes” that are instituted by

global cultural flows: (a) ethnoscapes (shifting populations due to influx of tourists,
immigrants, refugees, and exiles); (b) technoscapes (improvement of technologies that
assists the rise of MNCs); (c) finanscapes (movement of all forms of global capital); (d)
mediascapes (electronic know-hows that produce and spread information), and (e)
ideoscapes (principles advanced by states and social movements).

Sad to say, there are ecological dilemmas that are connected with this
consumerist culture that promote an infinite accumulation of material possessions.
These include and are not limited to the following: (a) human-induced global climate
change; and (b) worldwide destruction of biodiversity. Data suggest that further
increase in global temperature could lead to a partial melt-down of the polar ice caps,
causing global sea levels to rise up to three feet by 2100 which could threaten many
coastal regions of the world. By the end of this century, there would be a great
possibility that 50 per cent of all plant and animal species (most of them in the global
south) might disappear (Broswimmer, 2002).

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Activity 1.A.i
(Matching Type)

Name: Score:
Course/Year/Section: Date:

Direction: Match the items under Column A with those items under Column B. Write your
answer on the space provided before each of the items below. Use CAPITAL
LETTERS and erasures of any kind will NOT be credited.

Column A Column B

___1. They reject the idea that globalization is a recent A. Ethnoscapes

Phenomenon
___2. Its establishment contributed to the formation of the B. Regional Training
“golden age of controlled capitalism” Blocs
___3. This refers to an intricate collaboration of the global C. Sceptics
and local cultures characterized by cultural borrowing
___4. This refers to the improvement of technologies that D. Mediascapes
assists the rise of MNCs
___5. The swift and relatively unimpeded flow of capital, E. Rejectionists
people, and ideas across national borders
___6. This denotes electronic know-hows that produce and F. Political
spread information Globalization
___7. It refers to principles advanced by states and social G. Globalization
Movements
___8. They believe that globalization is an example of a H. Finanscapes
vague word employed in academic discourses
___9. This type of globalization enables the emergence of I. The 1944 Bretton
democratic ideals promoting a “global civil society” Woods Conference
___10. This type of globalization refers to the evolution of J. Ideoscapes
global markets and international corporations
___11. This denotes movement of all forms of global K. Cultural
Capital Globalization
___12. They argue that international economy is not really L. Glocalization
a global phenomenon
___13. This refers to shifting populations due to influx of M. Modifiers
tourists, immigrants, refugees, and exiles
___14. This type of globalization promotes the N. Technoscapes
dissemination of Anglo-American values system
___15. The European Union (EU), the North American Free O. Economic
Trade Association (NAFTA), ASEAN, etc. Globalization

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Activity 1.A.ii
(Essay Type)

Name: Score:
Course/Year/Section: Date:

Essay Question:

In not more than (five) 5 sentences, explain/justify how the prevailing values and
beliefs of consumerism are interconnected with the most threatening ecological
problems dealing with human-induced global climate change.

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B. Market Globalism

The Ideological Dimension of Globalization

During the early 1990s, the emphasis of globalization was dominated by the
economic and technological features of globalization. Later, the role of incorporating
markets and new information know-hows became part of understanding the process of
globalization. This section incorporates the ideological aspect of globalization and the
roles and purposes of political ideologies. It also integrates ideas on the six central
claims of market globalism.

Political Ideologies and the Global Imaginary

According to Steger (2014), “ideology” is a structure of broadly shared ideas or

philosophies, patterned beliefs, guiding norms, values, and ideals recognized as fact by
some collections of people. Every ideology is organized around core claims which
differentiates it from other contrasting ideologies.

The concept “ideology” was first introduced by Antoine Destutt de Tracy in the
18th century. For this Enlightenment thinker, the term means a positivistic “science of
ideas” using the empirical tools borrowed from the natural sciences. According to Paul
Ricoeur (1986), the first functional level of ideology (Ideology as Distortion) refers to the
construction of contorted descriptions of social truth. This process obscures the
difference between things as they are perceived in theory and things as they are
viewed in reality.

Ricoeur (1986) acknowledged “Ideology as Legitimation” to be the second

functional stage of ideology. There are two central elements to be considered here: (a)
the right to legitimacy claimed by the ruling authority; and (b) the trust in the ruler’s
legitimacy granted by its followers.

The third functional level of ideology according to Ricoeur (1986) is “Ideology as

Integration”. In this case, ideology offers humanity with permanence as it constructs,
conserves, and safeguards the social identity of individuals and collections of people.
This means that this constructive role of ideology provides the symbols, norms, and
images that holds together the identity of individuals and collectivities. Therefore,
ideology here is seen as having a conservative role as it preserves and conserves
peoples’ existing identities.

This section now defines “market globalism” as a hegemonic structure of

philosophies that provides normative assertions about a set of social procedures called
“globalization”.

Political Ideologies and the “Social Imaginary”

According to Charles Taylor (2004), “social imaginaries” are neither theories nor
ideologies, but are implied “background understandings” of a group’s shared customs.
The social imaginary explains how a group of people fit as one and their expectations
of every member within the community.

Each ideology organized its core concepts based on liberty, progress, race, class,
rationality, tradition, community, welfare, security, and others. The ideologies of
liberalism, conservatism, socialism, communism, and Nazism/fascism are all “nationalist”
in character and are promoted by the elites within the group which are evident in their
political goals through the concept of “national imaginary”.

In the middle era of the 1990s, globalization elites advanced their political
agenda with the introduction of a single international free market and the promotion of

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a consumerist values system worldwide. They converted this social imaginary into their
own economistic assertions. Thus the ideas on international trade and financial markets;
global flows of goods, services, and all possible forms of capital; multinational
corporations, offshore financial markets, and the like were popularized.

The Core Claims of Market Globalism

With the downfall of Soviet-style command economy in Eastern Europe, power

elites from the global north (i.e., corporate managers, CEOs of multinational
corporations, corporate lobbyists, high-ranking military officials, remarkable journalists,
public-relations experts, scholars writing to a large public audience, state administrators
and leading politicians) introduced their idea of market globalism. For them, market
globalism means an advocacy that advances the deregulation of markets, trade
liberalization, the privatization of government-owned and controlled corporations, and
the upkeep of the global “War on Terror” spearheaded by US (Steger, 2014).

Claim 1: Globalization is about the Liberalization and Global Integration of Markets

This claim is buttressed in the neo-liberal philosophy of the laissez faire self-
regulating market economy as the foundation for a global market economy.
According to Steger (2014), the focal roles of the free market in order to foster more
societal integration and material advancement are only possible in a democratic
society that values and protects individual rights and freedoms.

This claim argues that the vital assets of market globalism are the liberalization
and integration of worldwide markets and the lessening of government intervention in
the national and global economies. Thus, privatization, free trade, and unconstrained
capital flows are seen as the paramount ways for attaining personal liberty and
material advancement in the world.

Claim 2: Globalization is Inevitable and Irreversible

This claim contends that globalization promotes the expansion of unalterable

market forces motivated by technological improvements that facilitate the
unavoidable worldwide integration of state economies. Nation-states, political parties,
and civil society organizations have no option but to adapt to the inevitable forces of
globalization.

This neo-liberal depiction of globalization is synonymous to a natural force that

forces people to adjust to these market forces if they want to survive and succeed.
These neo-liberal rules are over and above state politics, thus they call for the abolition
of all forms of state control.

Claim 3: Nobody is in Charge of Globalization

This argues that globalization is manifested through a “self-regulating market”.

According to Hormats (1998), what is attractive with globalization is that nobody is in
control of the process. Thus it is not regulated by any individual, any nation-state, or any
organization. In addition, Friedman (1999) contends that the international market is an
Electronic Herd of anonymous stock, bond and money traders and transnational
foreign investors, integrated by global screens and networks.

Claim 4: Globalization Benefits Everyone (... in the Long Run)

The benefits for all relate to material aspects such as “economic growth” and
“prosperity”. These benefits were according to the participating heads of state of the
1996 G-7 Summit in Lyons, France, consisting of the world's seven most influential highly-
developed countries that issued a joint Economic Communique (1996) that exemplified

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the implications of this claim.

These affirmative benefits include an unmatched increase in investment and

trade; the incorporation to global trade of the globe's most densely inhabited regions;
more chances for the less developed countries (LDCs) to develop their standards of
living; faster dissemination of information; technological innovation; and the rise of
skilled jobs.

Claim 5: Globalization Furthers the Spread of Democracy in the World

This claim links the concepts on globalization and market with that of democracy
which provides individuals with economic choices. According to Freeden (1996),
globalists treat freedom, free markets, free trade and democracy as identical
concepts.

As Fukuyama (2000) asserted, there is a clear connection between a nation’s

level of economic progress and successful democracy. The stage of economic
advancement as a consequence of globalization is beneficial to the formation of
multifaceted civil societies with a powerful middle class which facilitates the spread of
democracy.

Claim 6: Globalization Requires a War on Terror

The neo-conservatives who are committed to the American values of freedom,

security, and free markets added this sixth claim of market globalism. According to
Kaplan (2003), you need to possess both military and economic supremacy in order to
spread your ideas worldwide. This claim integrates idea of market globalism with
militaristic and nationalistic ideas linked with the American-headed global “War on
Terror”.

As asserted by Barnett (2004), the globe is divided into three diverse regions:

The Functioning Core or Core. This is categorized by global network connectivity,

financial transactions, liberal media, cooperative security, nations having stable
democratic governments, practice of transparency, increasing standards of living, and
more deaths by suicide than by killings (i.e., North America, most of Europe, Australia,
New Zealand, and a small part of Latin America).

The Non-Integrating Gap or Gap. This refers to regions where globalization is

thinning or if not, absent. These regions are plagued by authoritarian political regimes,
government regulated markets, mass killings, prevalent poverty and diseases, and the
breeding ground of global terrorists (i.e., the Caribbean Rim, almost all of the African
continent, the Balkans, the Caucasus, Central Asia, China, the Middle East, and much
of Southeast Asia).

Seam States. These states lie along the Gap's bloody borders (i.e., Mexico, Brazil,
South Africa, Morocco, Algeria, Greece, Turkey, Pakistan, Thailand, Malaysia, the
Philippines, and Indonesia).

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Activity 1.B.i
(Matching Type)

Name: Score:
Course/Year/Section: Date:

Direction: Match the items under Column A with those items under Column B. Write your
answer on the space provided before each of the items below. Use CAPITAL
LETTERS and erasures of any kind will NOT be credited.

Column A Column B

___1. A functional stage of ideology which refers to the A. Ideology as

right of the ruling authority and the trust granted by Integration
its followers
___2. It refers to a hegemonic structure of philosophies that B. Democratic
provides normative assertions about a set of social
processes called “globalization”
___3. A free market which fosters societal integration and C. Social Imaginary
material advancement that protects individual rights
and freedoms will only be possible in this type of society
___4. This refers to a group’s shared ideas or philosophies, D. Ideology as
patterned beliefs, guiding norms, values, and ideals Distortion
___5. These regions are plagued by authoritarian political E. Ideology as
regimes, government regulated markets, the Legitimation
breeding ground of global terrorists, etc.
___6. A functional level of ideology that aims to preserve and F. Power Elites
conserve a group’s existing identity
___7. They refer to CEOs of multinational corporations, high- G. Market
ranking military officials, remarkable journalists, state Globalism
administrators, and leading politicians, etc.
___8. These regions are categorized by global network H. Gap
connectivity, financial transactions, and stable
democratic governments, etc.
___9. A functional level of ideology which constructs contorted I. Ideology
descriptions of the social reality
___10. This explains how a group of people fit as one and the J. Core
expectations of every member within the community

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Activity 1.B.ii
(Essay Type)

Name: Score:
Course/Year/Section: Date:

Explain/expound the following statement in not more than five (5) sentences:

“You also have to have military and economic power behind it, or else your
ideas cannot spread.”

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Learning Objectives:

1. To define economic globalization

2. To identify the actors that facilitate the international
monetary system
3. To understand international trade issues and trade policies
4. To articulate a stance on global economic integration

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LESSON 2
THE GLOBAL ECONOMY

This chapter discusses the summary of “The Globalization of Economic Relations”

as presented by Istvan Benczes (2014) which was adopted from the “SAGE Handbook
of Globalization” edited by Manfred B. Steger, Paul Battersby, and Joseph M. Siracusa
(2014).

Introduction

This chapter discusses the definition, foundation, and effects of economic

globalization. While the second section tackles on the development of the key global
monetary regimes that include the gold standard, the Bretton Woods System, and
European Monetary Integration. The last segment talks about trade rules and relations,
which will focus on the unilateral trade system of the late 19th and early 20th centuries
and the multilateral trade agreements of the post-World War II period (Benczes, 2014).

According to Held et al. (1999), globalization may be claimed as the

broadening, deepening, and rapid global interconnectedness in all facets (political,
technological, cultural, and economic) of modern-day social life (Giddens, 1999). Thus
globalization is a multidisciplinary course.

What is Economic Globalization?

According to the International Monetary Fund (2008), this refers to a historical

progression, which is the consequence of humanity’s modernization and technological
development. It may also denote a growing interconnection of global economies via
the mobility of goods, services, knowledge, and all forms of capital around the world.

The following are the various interrelated scopes of economic globalization:

(a) the globalization of goods and services in trade;

(b) the globalization of monetary and capital markets;
(c) the globalization of know-how and communication; and
(d) the globalization of production.

Economic globalization differs from internalization since the former refers to

functional interconnectedness between globally isolated activities while
internationalization speaks of the extension of economic activities of one country to
another (Dicken, 2004).

For hyperglobalists, nation-states are no longer the key economic institutions in

the global market. Humanity is now consuming extremely standardized international
products and services created by multinational corporations (Ohmae, 1995). According
to Reich (1991), globalization converts the local economy into an international one,
thus products, technologies, corporations, and industries are no longer treated as
national.

The new actors of political and cultural globalization today refer to the United
Nations (UN) and non-governmental organizations (NGOs) or civil society organizations
(CSOs). While the key actors of this modern-day global market economy are the
multinational corporations (MNCs) or transnational corporations (TNCs). This MNCs or
TNCs are the key motivating powers of economic globalization for the last 100 years,
and they account for about 67% of world exports (Gereffi, 2005).

For realists, they argue that these MNCs/TNCs still represent national interests
(Gilpin, 2001). However, for the pioneers of the Dependency School, they assert that
these are the vehicles through which the rich can exploit the underprivileged majority

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(Feenstra, 1998). On the other hand, Gereffi (1999) introduced the idea on the “global
commodity chains” which emphasizes on the growing significance of international
buyers in a global market of dispersed production.

Is Economic Globalization a New Phenomenon?

Gills and Thompson (2006) assert that the process of globalization began since
Homo sapiens started moving from the African continent to the rest of the globe. Frank
and Gills (1993) argued that the foundation of globalization dates back about 5,000
years ago as manifested by the Silk Road which linked Asia, Africa and Europe.

When Adam Smith wrote his book “An Inquiry into the Nature and Causes of the
Wealth of Nations in 1776, he regarded the rediscovery of the Americas by Christopher
Columbus in 1492 and the rediscovery of the direct maritime route to India by Vasco de
Gama in 1498 as the two ultimate accomplishments in humanity’s historical accounts.

Other significant accomplishments were the technological developments of the

British Industrial Revolution after the Napoleonic Wars which spread to European and
North American continents. Monopolized trade during this period were controlled by
the first transnational corporations, the British East India Company (1600) and the Dutch
East India Company (1602). However, these TNCs did not favor global economic
integration due to their idea of nationalism (Gereffi, 2005).

The real global economic break-through came in the 19th century due to the
transport innovations via the use of steamships and railroads which decreased
transaction expenses and boosted both local and global economic exchanges (Held
et al., 1999). The relatively short period from 1870 to 1913 before World War I (1914 to
1919) is often regarded to as the “Golden Age of Globalization”. This period is
characterized by the presence of peace, free trade, and financial and economic
permanence (O'Rourke & Williamson, 1999).

The Neoclassical Solow Growth Model

Bairoch (1993) argues that the industrial revolution and global trade relations
strengthened economic growth and development among developed parts of the
globe, the rest of the world did not achieve such accomplishments. Thus, the
industrialization of the developed regions led to the de-industrialization of the poorer
regions.

Structuralism

Structuralism is a set of models which emerged from the 1950s to the 1970s and
affirm the notion that the North and South regions are in a structural association (Brown,
2001). The most recognized critical theory to the prevalent social partition of labor and
global inequities is presented by the “World-Systems Analysis”, which argues that
capitalism under globalization strengthens the structural arrangements of unequal
change.

According to Wallerstein (1983), capitalism produced the differing historical level

of wages in the global economic stage of the global system. Thus, rising disparity,
coupled with economic and political dependency, are not independent from
economic globalization.

For Rostow (1960), underdevelopment (i.e. the absence of economic growth and
development, coupled with poverty and malnourishment) is not the primary phase of a
historical and evolutionary uni-linear progress, rather the effect of colonialism and
imperialism. Wallerstein (1983) acknowledged imperialism as the product of the global
capitalist structure which propagated imbalanced exchange.

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The present capitalist structure produced political systems that ensure an infinite
appropriation and amassing of surplus products from less developed countries (the
periphery) to the industrializing countries (the semi-periphery) and the highly
industrialized or highly developed countries (the core or metropole) (Arrighi, 2005).

The International Monetary Systems

An international monetary system or regime (IMS) denotes the policies, practices,

tools, services, and institutions for carrying out global payments (Salvatore, 2007). In the
liberal custom, the key responsibility of an IMS is to assist international transactions on
trade and investment. An IMS is more than just money or currencies it also mirrors
economic supremacy since money is essentially political and is also considered as a
vital aspect of “high politics” of diplomacy (Cohen, 2000).

The Gold Standard

The foundations of the first IMS dates back to 19th century, when Britain assumed
gold mono-metallism in 1821. In 1867, the European countries, including United States,
shifted to gold at the International Monetary Conference in Paris. Gold was viewed to
ensure a non-inflationary, constant economic atmosphere, and a vehicle for hastening
global trade (Einaudi, 2001). When Prussia won over France in 1872, Germany joined the
global system. France decided to join six years later. The gold standard developed to
be the global monetary regime by 1880 when United States joined in 1879. In 1894, Italy
decided to participate and Russia followed in 1897. About 70% of the countries took
part in the gold standard prior to the eruption of World War I (Meissner, 2005).

The gold standard operated as a fixed exchange rate system, which made gold
as the lone global reserve. Member countries ascertained the gold content of their
national currencies which defined fixed exchange rates (or mint parities). Monetary
authorities were mandated to exchange their national currencies for gold at the
authorized exchange rate without restrictions on global markets (Bordo & Rockoff,
1996).

Due to the outburst of World War I, the gold standard came to an end. Member
countries gave up convertibility and stopped gold export in order to halt the exhaustion
of their national gold reserves. The 1930s turn out to be the gloomiest era of modern
economic history (Eichengreen & Irwin, 2009).

The Bretton Woods System and its Dissolution

According to Destler and Henning (1989), the allied nations started to negotiate
on a new global monetary regime under the structure of the United Nations Monetary
and Financial Conference in Bretton Woods, New Hampshire (US), in July 1944. Forty-
four countries decided to adopt the gold-exchange standard. At that time, the US
dollar was the lone exchangeable currency of the time. Thus, United States devoted
itself to trade and buy gold without limitations at US$35 per ounce. All participating
countries having non-convertible currencies were pegged to the US dollar.

The participating countries also established two global monetary institutions: (a)
The International Banks for Reconstruction and Development (IBRD) which was
responsible for post-war reconstruction and development; and (b) The International
Monetary Fund (IMF) which encouraged global financial collaboration and
international trade. The IMF also provided short-term monetary assistance to countries in
cases of transitory balance of payments difficulties.

During the middle part of the 1960s, the US dollar became overvalued along with
other major currencies. As a reaction, foreign nations started to exhaust the US gold
reserves. This forced the United States to abandon the gold-exchange standard on

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August 15, 1971. In 1973, developed countries agreed to float their currencies (prices of
currencies were determined by demand and supply forces). This arrangement in the
exchange rate policy was mandated by the Jamaica Accords in 1976 (Destler &
Henning, 1989).

The Plaza Accord

In 1985, the G7 countries decided to devaluate the US dollar as a consequence

of the heightening pressure of local US manufacturers and farmers to reinstate their
global competitiveness in the world market.

The Louvre Accord

In 1987, the Louvre Accord was agreed upon in order to protect the US dollar from
further devaluation in the world market. The United States might have profited from
these internationally, however, one of the main losers was Japan. The appreciation of
the Japanese yen proved to be devastating for the Japanese local economy (Destler
& Henning, 1989).

The Washington Consensus

The neoliberal, pro-market Washington Consensus became successful in the

1990s. Its agenda were promoted and disseminated by the IMF as part of its
conditionalities in exchange for financial assistance. The IMF and the Washington
Consensus (and its free-market ideology) have been blamed for the unsuccessful
progress of the periphery. For Wallerstein (2005), the way for the periphery to develop is
not to “import-substitute” but to export orient productive activities.

The Morgenthau Plan

After World War II, the United States sought to carry out the Morgenthau Plan. The
idea was to downscale Germany’s economy to become a pastoral and agricultural
one. This was a reaction to USSR's (specifically, Russia) thrust for communism in the East
European region coupled with the growth of socialist and communist parties in the
West. However, the plan did not materialize and was abandoned by US. In contrary,
United States shifted its plans and promoted an economically and militarily powerful
Germany and Western Europe.

The Marshall Plan and the European Monetary Integration

This was United States’ post-war reconstruction and development program in 1948
for Western Europe, which was managed by the Organization for European Economic
Cooperation, the forerunner of the Organization for Economic Cooperation and
Development (OECD). The astonishing growth and development of Western Europe
encouraged a closer collaboration of Western European countries which consequently
gave birth to the European Coal and Steel Community in 1951. The ECSC was followed
by the signing of the Rome Treaty in 1957, which founded the European Economic
Community (EEC) which consequently became the European Union (EU).

The six founding member-countries (West Germany, France, Italy, Netherlands,

Belgium and Luxembourg) aimed at the formation of a common market for the freer
movement of goods, services, capital and labor. The downfall of the Bretton Woods
System pressured the member-countries in 1979 to establish their own regional
monetary regime (the European Monetary System, EMS). Here, neither the US dollar, nor
gold can function in the stabilization process of exchange rates. Instead, the European
Exchange Rate Mechanism (EERM) was created (Gros & Thygesen, 1998).

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In 1992, with the help of the late French President Francois Mitterrand and
German Chancellor Helmut Kohl, the foundations of a new European Economic and
Monetary Union (EMU) were established under the Maastricht Treaty. As early as 1999,
member-countries of the EMU replaced their national currencies and deputized
monetary policies to a supranational stage, managed by the European Central Bank
(ECB). Consequently, trade and capital transactions increased; local economies
became more interconnected; macroeconomic stability was reestablished, and the
euro grew to become the second most globally used currency (European Commission,
2008).

David Ricardo’s Comparative Advantage Theory

According to Ricardo (1817) as cited in Samuelson (1995), a country such as

Britain could profit from a voluntary trade with Portugal even if Portugal is more
effective in producing both wine and clothing. For Britain, it should concentrate in the
production of the product with less disadvantage and let Portugal produce the other
product. The theory argues that every country must possess a comparative (relative)
advantage in the production of something irrespective of its original situation.

International Trade and Trade Policies

Reformist and radical (new left and neo-Marxian) theorists, such as Emmanuel
(1972) or Amin (1976), argued that the social partition of labor adds to the economic
development of the highly developed countries (HDCs or core) and hampers progress
of the less developed countries (LDCs or periphery). The economies of HDCs have the
finest of two worlds (as buyers of cheap primary commodities and as sellers of costly
manufactured products. On the other hand, LDCs have the worst of both worlds, as
buyers of expensive industrial products and as producers of cheap raw materials
(Singer, 1964). According to Amin (1993), if this global economy only benefits the HDCs
at the loss of the LDCs, then the periphery countries must implement a protectionist
policy in its extreme form of de-linking (i.e. to cut their ties with the HDCS or core
countries).

Unilateral Trade Order

During the 17th to 18th century, global trade in Europe concentrated more on the
accumulation of gold reserves which encouraged nation-states to export and limit
imports. This mercantilist or protectionist policy was branded as a zero-sum game in
global trade. Hence, trade and trade policies only furthered the interest of the
monarchs (royal family) from Portugal to Great Britain (now UK), which utilized their
accumulated bullions (gold) to support battles and consolidate power over their
domestic supporters (Dunham, 1930).

Bilateral Trade Agreements

Bilateral Trade Agreements also succeeded in Europe, one example of these is

the most-favored nation (MFN) policy. This policy demonstrates the principle which
stated that any negotiated mutual tariff cutbacks between two parties must benefit all
other trading partners without conditions (Lampe, 2008).

The United States adopted a protectionist policy (import substitution

industrialization) which imposed tariffs on manufactured goods with an average of 45%.
Even France, the Scandinavian countries, and UK from the 1860s onwards, imposed
protectionist measures due to the entry of low-cost agricultural commodities from their
foreign territories, Germany, and US. UK persisted to be hegemonic economically and
militarily. It also depended on the massive reserves of its territories, especially India
(Arrighi & Silver, 2003).

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After World War I (1914-1919), the two World Economic Conferences in 1927 and
1933 did not succeed in reducing tariffs due to the refusal of US to take the lead as the
hegemonic descendant of a declining United Kingdom. In 1930, the Hawley Act in US
amplified tariffs in the country. As a consequence, trading partners of US retaliated
which lessened international trade by an average of 33 to 66 percent. To address the
issue, US enacted the Reciprocal Trade Agreements Act in 1934 which halted the
further decline in global trade. This Law gave the US president the power to decide on
trade policies and lessened the burden put on the Congress for determining
protectionist trade policies. This trade policy was a return to the original notion of MFN
policy prior to the eruption of World War II (Irwin, 1998).

Multilateralism: From the GATT to the WTO

In 1950, the US dollar became an international currency, supported by 67% of the

world's gold reserve (Green, 1999). US was also the leading aid donor (i.e., the Marshall
Plan). Owing to the downfall of the European and Japanese manufacturing industries
after World War II, USA’s manufacturing industry amplified which accounted for about
60% of the world's total in 1950, and its export amounted to about 33% of the world's
total (Branson et al., 1980).

At that time, the latest international trade regime must have been driven by the
International Trade Organization (ITO) agreement, which was one of the three pillars of
the Bretton Woods System, aside from the IMF and the IBRD, however, a series of
rejections in the US Congress obstructed its creation. In place of the ITO, nation-states
dedicated to lower down tariffs agreed to create the General Agreement on Tariffs
and Trade (GATT) (Branson et al., 1980).

The GATT encouraged international trade through a sequence of multilateral

trade negotiations called “rounds”. The first five rounds concentrated on tariff cuts: (1)
1947 Geneva Tariffs; (2) 1949 Annecy Tariffs; (3) 1951 Torquay Tariffs; (4) 1956 Geneva
Tariffs; (5) 1960 Dillon Round Tariffs; (6) 1964 Kennedy Round Tariffs and anti-dumping
measures; (7) 1973 Tokyo Round Tariffs, non-tariff barriers, and “framework agreements”;
and (8) 1986 Uruguay Round Tariffs, non-tariff barriers, rules, services, intellectual,
property, dispute settlement, textiles, agriculture, and creation of the WTO (WTO, 2012).

The establishment of the European Economic Community (EEC) in 1957 forced US

to implement the Trade Expansion Act of 1962 and demanded for a new round, the
Kennedy Round. Its consequence was an across-the-board cutting (which replaced
the practice of item-by-item cuts) and reduction of non-tariff barriers (i.e., anti-dumping
measures) (Evans, 1971).

During the 1970s, the Tokyo Round besides tariff cuts, also approved a series of
codes of conduct (i.e., the “subsidies code” or the “government procurement code”
(Deardorff & Stern, 1983). The most popular multilateral trade negotiations occurred
under the Uruguay Round from 1986 to 1994. While previous trade arrangements were
successful in reducing tariffs, a series of other corrective measures (i.e., non-tariff
barriers) were also implemented by nation-states. The Uruguay Round stretched
multilateral policies to current concerns and areas, such as agriculture which
concluded in a harsh dispute between the US and the EU.

According to Walter and Sen (2009), the foremost results of the trade
arrangements were the agreements on trade-related investment measures (TRIMs);
trade in services (GATS) and trade-related features of intellectual property rights (TRIPs).
These agreements were promoted by highly developed countries (HDCs) and targeted
less developed countries (LDCs) with massive service market potentials in finance and
telecommunications.

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After 50 years of trade negotiations, the Uruguay Round came up with a genuine
global trade institution, the World Trade Organization (WTO). The WTO was established
on January 1, 1995 and become a formal forum for trade dialogs. Unlike the GATT, it is a
formally constituted association with legal personality. However, in 1999, the developing
nations epitomized a united movement for a new round of trade negotiations in
Seattle. This event revealed the power of NGOs/CSOs and anti-globalization
movements. These movements objected in favor of the LDCs and were against the
current status quo of international trade affairs; the hegemony of the US economy; the
personal interests of MNCs/TNCs; and the discriminatory mechanisms of the WTO in
favor of HDCs (Narlikar & Tussie, 2004).

In 2001, the quasi-official Doha Round must have become a round on economic
development, however, it failed due to the interests of the opposing parties (HDCs vs.
LDCs). LDCs asserted on the proper and full execution of the Uruguay Agreement
(especially in the area of agriculture), however, US promoted to keep labor and
environmental issues on the agenda. The deadlock between the two opposing sides,
motivated LDCs to cooperate and strengthen their leverage within the WTO by
creating a pressure group called the Group of 20 (G20). This conglomeration of
countries accounts for almost 67% of the world's inhabitants and 25% of world-wide
agricultural export (Narlikar & Tussie, 2004).

Developing Countries and International Trade

Developing (third world) countries did not partake aggressively in multilateral

trade agreements for quite a long period of time. The so-called East Asian newly
industrializing countries (NICs) embraced an outward-oriented development approach.
However, a majority of these developing nations were not able to integrate successfully
into this trading scheme. Rather, they promoted an inward-looking, import-substitution
industrialization policy, which did not encourage trade liberalization (Findlay &
O'Rourke, 2007). Meanwhile, the HDCs were also hesitant to open their markets to
products (i.e., textile or agricultural) in which developing countries have a comparative
advantage.

The key transformation in this economic affairs occurred in 1964 when the United
Nations Conference on Trade and Development (UNCTAD) was institutionalized with
the collaborative stance of the developing countries. The objective of UNCTAD was to
encourage trade and mutual aid between and among the HDCs and LDCs (Salvatore,
2007). However, due to the two oil crises dilemma which affected the economic
activities of the HDCs, these countries adopted highly protectionist measures (both tariff
and non-tariff) in order to address the damaging effects of the economic stagnation in
the 1980s.

Developing countries started to aggressively participate in trade with the advent

of the Uruguay Round. This round was a grand bargain between the HDCs and LDCs
(Ostry, 2002). The HDCs were projected to open their markets to agricultural and textile
products, while the LDCs must accept the new rules on intellectual property rights and
services. LDCS opened up their service markets, however, their export of agricultural
commodities is still blocked by the HDCs. Agricultural products have a share of about
33% to 50% of the total economic production among HDCs. Without trade liberalization
in agriculture, it is difficult for LDCs to entirely assimilate themselves into the international
economy.

For Khor (1995), he saw the WTO as a medium by the HDCs to gain entry to the
markets of LDCs. While Wade (2003) criticized the three major trade agreements (i.e.
TRIMS, GATS, and TRIPS) saying that they constrained the set of industrial policies to
achieve development for the LDCS.

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Activity 2.A
(Matching Type)

Name: Score:
Course/Year/Section: Date:

Direction: Match the items under Column A with those items under Column B. Write your
answer on the space provided before each of the items below. Use CAPITAL
LETTERS and erasures of any kind will NOT be credited.

Column A Column B

___1. The first transnational corporation founded in 1600 A. The Marshall Plan
___2. The highly industrialized or highly developed B. British East India
countries (HICs/HDCs) Company
___3. This was agreed upon in 1987 in order to protect the C. Christopher
US dollar from further devaluation in the world market Columbus
___4. A global monetary institution responsible for post-war D. GATT
reconstruction and development
___5. The new actors of political and cultural globalization E. IMF
___6. This was USA’s post-war reconstruction and F. Periphery
Development program in 1948 for Western Europe
___7. Rediscovery of the Americas in 1492 G. Vasco de Gama
___8. A global trade institution created by the Uruguay Round H. The Morgenthau
and became a formal forum for trade dialogs with a Plan
formally constituted association with legal personality
___9. The less developed countries (LDCs) I. IBRD/WB
___10. Rediscovery of the direct maritime route to India in J. WTO
1498
___11. It replaced the ITO and was dedicated to lower down K. Core/Metropole
tariffs and encouraged international trade through a
series of multilateral trade negotiations called “rounds”
___12. An agreement in 1985 which decided to devaluate the L. Louvre Accord
US dollar as a consequence of the heightening pressure
of local US manufacturers and farmers
___13. A global monetary institution which provides short-term M. Semi-Periphery
monetary assistance to countries in cases of transitory
balance of payments difficulties
___14. The idea was to downscale Germany’s economy to N. UN and
become a pastoral and agricultural one NGOs/CSOs
___15. The newly-industrialized countries (NICs) O. Plaza Accord

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Activity 2.B
(Essay Type)

Name: Score:
Course/Year/Section: Date:

Essay Question: Explain your answer in not more than five (5 sentences).

What are the advantages and disadvantages of free trade? Do these

arguments fully hold in relation to both developed and developing countries?

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Learning Objectives:

1. To understand the creation, attributes, and types of global

corporations
2. To enumerate the functions and importance of global
corporations
3. To explain the development processes that occur among
global corporations
4. To appreciate the existence of the emerging global
corporations

SOURCE: https://www.pinterest.ph/oneeurope/european-integration/
https://www.google.com/search?q=images/+photos+related+to+global+market+integration

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LESSON 3
MARKET INTEGRATION

This chapter discusses the summary of the “The Rise of the Global Corporation” as
presented by Deane Neubauer (2014) which was adopted from the “SAGE Handbook
of Globalization” edited by Manfred B. Steger, Paul Battersby, and Joseph M. Siracusa
(2014).

The Historic Rise of the Global Corporation

The methodology used in the study of globalization which is also known as

“historical globalization” is based on arrangements in trade and exchange (Bentley,
2003; Gills & Thompson, 2006; Moore & Lewis, 2000). In the earlier times, globalization
was stimulated by the leading technologies in shipping and navigation (Harvey, 1990).

After the massive destructions of World War II, economic recovery and growth
were spearheaded by American corporations followed by the reentry of Japanese and
European companies into the international arena which later on were regarded as
multinational corporations (MNCs) (Barnet & Mueller, 1974).

How Do Global Corporations Function? What Constitutes a Global Corporation?

According to Iwan (2012), the current international corporation may be called as

any of the following:

International Companies. They import and export but have no investments outside
of their country.

Multinational Companies. They invest in foreign countries, but do not possess

coordinated commodity offerings in every nation.

Global Companies. They invest in and are existing in many countries. They sell their
goods and services to each local market.

Transnational Companies. They are complex corporations and have invested in

foreign nations. They also possess fundamental commercial facilities, however, give
decision making, research and development (R&D), and marketing authorities to every
individual overseas market.

This section will utilize the term “global corporation” to refer to all of these
classifications. A TNC is defined by the United Nations Center on Transnational
Corporations (UNCTC) as a business organization that involves itself in activities which
add value (manufacturing, extraction, services, marketing, etc.) in more than one
nation (UNCTC, 1991).

The post-war period can be delineated in three structural periods: (a) investment-
based globalization (1950-70); (b) trade-based globalization (1970-95); and (c) digital
globalization (1995 onwards) (Geriffi, 2001).

Another approach of validating the growth of TNCs/MNCs is to identify the

sources and levels of Foreign Direct Investment (FDI). As Hedley shows, in 1900 only
European companies were principal investors. Later on, American firms started to follow
in the 1930s. An FDI is defined as the influx of private capital from a foreign source into a
receiving nation. FDIs were regarded as the principal components of international
economic development for third world countries (TWCs). But in reality, the bulk of FDIs in
the 1990s was among nations of the industrialized world (i.e., North America, Europe
and Japan) (Geriffi, 2001).

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According to Gilpin (2000), the investment-based era was led by producer-driven

commodity or value chains dominated by companies possessing massive amounts of
capital using extensive and capital-intensive manufacturing strategies. Many
companies in the United States that operate via the producer-driven commodity chain
were structured based on the “fordist” management principles.

The advent of Japan as a principal producer of automobiles and consumer

electronic products since the 1970s introduced new prototypes of effective
manufacturing strategies which centered on quality and flexible production. These are
seen by American companies as challenges to their dominant positions on commodity
design, manufacturing efficiency, and quality which resulted to an advanced
reinvention of the US corporate model, especially in the industrial sector (Risi, 2005).

Corporate brands signify a company’s corporate activities and evaluate a

corporation’s prominence in the international arena based on the value of its
commodities and services. This is also recognized as “Brand Finance”, a current trend
which ranks global companies on the value of their brands, aggregate revenue,
earnings, etc. (Brand-Finance, 2012). In this sense, technology brands developed as the
greatest and most valuable global corporate brands in 2012 with Apple surpassing
Google as Number 1 with a brand finance worth of US$70.6 billion. Meanwhile,
Amazon’s brand finance value increased by 61 per cent over the previous year (2011).

Digitalization also influenced the entire operation of how international

corporations function. Producer-driven commodity chains now try to reduce the effects
of time and distance in terms of design, finance and accounting, advertising and
brand development, legal services, inventory control etc. Digitalization is innovating the
usual value chain of manufacturing centered on improvement along the following
(Capgemini, 2012):

Product Design and Innovation are replaced with innovations via digital product
design;

Labor Intensive Manufacturing is substituted by digitizing the factory shop floor

making it more capital-intensive;

Supply Chain Management is changed by digital supply chain management; and

Marketing Sales and Service is innovated by digital customization.

Buyer-driven commodity chains gradually become digital with companies’

specialization in Internet marketing of products and services to increase market share
over traditional marketing and retailing. The last thirty or more years observed the
revolution of the apparel industry motivated by digital processes from design, to
ordering, factory processing, inventory control, delivery, branding, marketing and
advertising (Capgemini, 2012).

Kentor (2005) studied the economic and spatial growth of multinational corporate
linkages and found out that the top 100 largest MNCs/TNCs owned 1,288 subsidiaries in
1962, and after 36 years, the top 100 manufacturing corporations owned about 10,000
subsidiaries. The top 44 MNCs in the top 100 global corporations in year 2009 produced
revenues of US$6.4 trillion, which is tantamount to 11% of the world’s GDP (Global
Trends, 2013).

What is Different about this Phase of Global Corporate Development?

The alleged developing economies of Brazil, India, China, and South Africa
(BRICS) became the most vibrant region of international corporate growth, as reflected
by their noteworthy FDIs over the past 30 years. The number of MNCs from the BRICS

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(listed in the Fortune Global 500 that ranks companies in terms of revenue) rose from 47
companies in 2005 to 95 in 2010. Capital flows now originate from China and India. For
instance, China's Lenovo company purchased IBM's PC business and India's investment
in British companies including Jaguar Land Rover (Economist, 2011). China is the
leading outward investor among developing economies with projected assets in 2009
of approximately US$1 trillion (OECD, 2010).

Wolfsensohn, suggested a “four-speed world” categorization which distinguishes

economies as Affluent, Converging, Struggling and Poor, with the BRICS dominating the
growth of the convergent group. With 40% of the globe’s inhabitants, the BRICS signifies
a major power in both worldwide production and consumption (Wolfsensohn, 2007).

According to The Boston Consulting Group (2009), the following are some
“Emerging Market Global Corporations”:

1. Basic Element (Russia) is a world leader in alumina production.

2. Bharat Forge (India) is one of the world's largest forging companies.
3. BYD Company (China) is the world's largest manufacturer of nickel-cadmium
batteries.
4. CEMEX (Mexico) has developed into one of the world's largest cement producers.
5. China International Marine Containers Group (China) is the world's largest
manufacturer of shipping containers.
6. Cosco Group (China) is one of the largest shipping companies in the world.
7. Embraer (Brazil) has surpassed Canada's Bombardier as the market leader in regional
jets.
8. Galanz Group (China) has a 45 per cent share of the European and a 25 per cent
share of the US microwave market.
9. Hisense (China) is the number one supplier of flat-panel TVs to France.
10. Johnson Electric (China) is the world's leading manufacturer of small electric motors.
11. Nemak (Mexico) is one of the world's leading suppliers of cylinder head and block
casings for the automotive industry.
12. Sistema (Russia) is a conglomerate with a focus on telecommunications.
13. Tata Chemicals (India) is an inorganic-chemicals producer with a significant global
market share of soda ash.
14. Techtronic Industries Company is the number one supplier of power tools to Home
Depot.
15. Wipro (India) is the world's largest third-party engineering services company.

In 2009 China was the primary trade partner of Brazil, India and South Africa, and
Tata of India was the most dynamic investor in sub-Saharan Africa.

Government-owned and controlled corporations (GOCCs or state-owned

corporations) may be defined as businesses composing of parent companies and their
overseas partners in which the government possesses control (full, majority, or significant
minority), whether or not registered on a stock exchange play an important part in
these emerging or developing economies (UNCTAD-WIR, 2011). State-owned
corporations may comprise both national and local governments such as regions,
provinces and cities.

Another description of China's state-owned MNCs affirms that these are legacy
institutions (relics) of China's command-socialist system that propagates in its revised
neo-capitalist economy. Companies that lack economic efficiency and competitive
discipline are in effect subsidized or funded by the Chinese state which gives them
market leverage to become globally competitive (Woetzel, 2008; Greenacre, 2012).

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Activity 3.A
(Matching Type)

Name: Score:
Course/Year/Section: Date:

Direction: Match the items under Column A with those items under Column B. Write your
answer on the space provided before each of the items below. Use CAPITAL
LETTERS and erasures of any kind will NOT be credited.

Column A Column B

___1. A company that invests, exists, and sells its goods and A. Transnational
services to each local market in foreign countries Company
___2. A commodity chain that uses massive amounts of B. Buyer-driven
capital-intensive manufacturing strategies Commodity Chain
___3. In 2012, this MNC was ranked “Number 1” with a brand C. Digitalization
finance amounting to US$70.6 billion
___4. This is defined as the influx of private capital from a D. Producer-driven
foreign source into a receiving nation Commodity Chain
___5. Under the “four-speed world” categories of Wolfsensohn, E. GOCCs
the BRICS fall under this characterization
___6. A company that imports and exports but have no F. Foreign Direct
investments outside of its country Investment (FDI)
___7. Under the “four-speed world” categories of Wolfsensohn, G. Global Company
the highly-developed countries fall under this type
___8. They are classified as developing economies as reflected H. Affluent
by their noteworthy FDIs over the past 30 years
___9. This is the other term for state-owned corporations I. International
Company
___10. A complex corporation that gives decision making, J. Lenovo
research and development, and marketing authorities
to every individual foreign market
___11. This is a current trend which ranks global companies on K. BRICS
the value of their brands, aggregate revenue, earnings,
etc.
___12. A Chinese company that purchased IBM's PC business L. Apple
___13. This innovation among companies reduces the effects M. Multinational
of time and distance in terms of design, advertising, Company
brand development, inventory control, etc.
___14. A commodity chain that uses a more labor-intensive N. Brand Finance
production strategies
___15. A company that invests in foreign countries, but do not O. Converging
possess coordinated commodity offerings in every
nation

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Activity 3.B
(Essay Type)

Name: Score:
Course/Year/Section: Date:

Essay Question: Explain your answer in not more than five (5) sentences.

How do digital technologies transform the structures and operations of global

corporations?

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Learning Objectives:

1. To understand how nation-states interact and comply with

global standards in a world of economic interdependence
2. To recognize the importance of economic and political
Integration among the members of the European Union
3. To appreciate the significance of international law and
universal principles
4. To explain how transnational activism and communication
networks affect governments

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LESSON 4
THE GLOBAL INTER-STATE SYSTEM

This chapter discusses the summary of the “Governments and Citizens in a

Globally Interconnected World of States” as presented by Hans Schattle (2014) which
was adopted from the “SAGE Handbook of Globalization” edited by Manfred B. Steger,
Paul Battersby, and Joseph M. Siracusa (2014).

Introduction

The 21st century illustrates that globalization dispersed political and economic
supremacy beyond the state. Countries today are answerable to various global rules
and standards. States at present face various types of pressures (i.e., advances toward
supranational or regional integration on one side and forces of domestic fragmentation
on the other side. According to Rosenau (2003), these opposing dynamics is called
“fragmegration”.

After World War II (1945), the United Nations (UN) had 51 founding member-states.
In 2012, the organization had 193 members. Palestine obtained acknowledgement in
November 2012 as a “nonmember observer state” of the UN. This is also the status held
by the Vatican. When the People's Republic of China (PRoC) took over mainland China
in 1949 and replaced the Republic of China (Taiwan) as China's representative in the
United Nations, Taiwan totally lost its UN membership and its permanent seat in the UN
Security Council in 1971. Taiwan is trying for years (but without success) to be
acknowledged as a “non-member observer” standing in the UN (Schattle, 2008).

According to Max Weber (1997) a “state” (a political concept) is an obligatory

political association having endless operations as long as its administrative staff
effectively gains a claim to the monopoly of the use of legitimate physical force in the
execution of its mandate. Regimes and constitutions come and go, but states
continuously endure.

The word “nation” (an ethnic concept) emphasizes organic relations that hold
clusters of people as one and promotes a sense of allegiance and belongingness. At
present, nations are seen as communities of people that unite citizens together based
on various cross-cutting identities: ethnicity, language, religion, etc. (Anderson, 1991).

The State in a World of Economic Interdependence

The word globalization is associated with global free-market capitalism; the

intensification of transnational enterprises, the easy flows of capital across
intercontinental borders. Both the supporters and detractors of the Washington
Consensus and its neo-liberal stress on deregulation, privatization, and free trade view
globalization as commanding a forced choice among nation-states which is to comply
with free-market principles or suffer the risk of being left behind.

Thomas Friedman (2000) introduced the notion on the “Golden Straitjacket”

which explains how countries are now obligated to adhere to rules that suit the likings of
investment houses and corporate executives (the “Electronic Herd”) who speedily
transfer capital (money and other resources) into states preferred as adaptable to the
dictates of transnational firms. On the other hand, withdraw investments from nation-
states which are believed to be uncompetitive. Hence countries rely heavily on the
Electronic Herd for investments (Friedman, 2000).

Former national leaders such as Ronald Reagan (former US president) and

Margaret Thatcher (former prime minister of UK) pursued the laissez-faire economic
policy of Friedrich Hayek and Milton Friedman. This policy on the “invisible hand”
(no/less government intervention in economic affairs) generated the conditions for

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deregulation, privatization and free trade to flourish worldwide. This encouraged the
least developed countries to attract the capital of the globe’s wealthiest banks,
companies, and foreign investors in the expectation of raising their citizens’ standard of
living (Frieden, 2006).

Under import substitution policy, Mexico failed to produce a feasible car industry.
Nonetheless, it was able to develop its global market for automobile parts. Growers in
Argentina and New Zealand generated profit exporting winter fruits and vegetables to
Northern Hemisphere buyers. Firms in Thailand and Turkey, facing difficulties of
borrowing money domestically, now had access to cheap and abundant overseas
finance. These nations and their populace benefitted out of foreign markets to hasten
their growth (Frieden, 2006).

Experts on neoliberalism argue that if LDCs follow their recommendations on free

and open markets, they would later on become newly-industrialized countries (NICs).
However, in reality what the HDCs planned was to sustain control of the LDCs wealth,
raw materials, and cheap labor (Barajas, 2004).

The Japanese rejected American ideas, and focused more on developing

globally competitive capabilities by protecting and funding infant industries (i.e., steel,
consumer electronics, and semiconductors). In South Korea, the most prosperous
companies are the steel maker POSCO (established with government investment) and
Samsung (a huge family-dominated conglomerate with wide-ranging special affiliations
with the government in various interlocking industries and technologies (Prestowitz,
2012).

According to Clarke (2004), very minimal wages, awful working environments,

and negligible environmental standards entice MNCs to establish sweatshops/firms
(usually through subcontractors) in many LDCS. These LDCS only became aware when
accidents happen (i.e., series of factory fires in Bangladesh in 2012; the collapse of a
factory building in April 2013 in which more than 1,100 workers died producing clothes
for retailers ranging from Benetton to Wal-Mart).

The detractors of economic globalization encourage states to define economic,

social and environmental objectives for their national development. In addition states
must compel MNCs to meet these priorities and to establish new systems of
participatory democracy whereby citizens become effectually involved in determining
international policies on trade, investment and finance (Clarke, 2004).

Economic and Political Integration: The Case of the European Union

Due to intensifying economic interdependence, states decided to form regional

linkages with neighboring countries that encourage commerce and economic
cooperation. Some of these include the African Union (AU); the Association of
Southeast Asian Nations (ASEAN); trading blocs (i.e., North American Free Trade
Agreement - NAFTA); the Caribbean Community (Comunidad del Caribe).

After World War II, the political leaders in Europe, launched the European Coal
and Steel Community (ECSC). Currently, the European Union (EU) which has 28 member
states (with Croatia becoming the 28th member in July 2013). The EU has a single
currency (euro) and monetary system. It also established a supranational European
Parliament with increasing legislative powers alongside the Council of Ministers. The EU
Parliament composed of elected representatives from the national governments of
member-states. In 1992, with the adoption of the Maastricht Treaty, the signatories
approved a common citizenship that gives citizens of the member-states the rights to
live, work, vote and even run for office in European parliamentary elections outside
one's country (Council of Europe, 2012).

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According to the Council of Europe (2012), by the summer of 2012, there were
campaigns for “fiscal union” among the 17 member-states of the Eurozone to
complement monetary union. Thus the national budgets of these Eurozone countries will
be subject to authorization and oversight by the UE’s European Commission. The EU
Parliament also passed a law in September 2013 to administer closer integration and
regulation of the banking sector.

From 1952, the European Court of Justice (ECJ) operated as the highest dispute
resolution body for the EU and its forerunners. It set forth provisions such as “direct
effect” (EU laws take precedence over national laws when the two sets of laws come
into conflict) and “supremacy” (member-states are obligated to follow EU laws)
(Council of Europe, 2012).

The European Court of Human Rights (ECHR) which is a portion of an even bigger
association (the Council of Europe) advocates the European Convention of Human
Rights (ECHR), currently ratified by all 47 of its member-states. Any person, group of
persons, or CSO can file ECHR cases against a member-state, and member-states can
also initiate cases against each other. The ECHR has dispensed groundbreaking
decisions in various areas (i.e., freedom of expression, freedom of religion, protection
from discrimination, and the right to a fair trial) which are frequently violated by
member states (Council of Europe, 2012).

The Rise of International Law and Universal Principles

According to Doyle (2011), the failure of the League of Nations before World War
II reinforced the cooperative will among leaders of the world to establish another
international association that would assist global negotiations and uphold human rights
and fundamental freedoms. Leaders of the Allies (US, UK, France, Russian and China)
collectively established the “United Nations” while fighting the war against the Axis
Powers (Japan, Germany, and Italy). The San Francisco Conference in 1945 established
the organization that endures up to this day.

The system has various limitations: (a) the United Nations (UN) has never surpassed
the states system; and (b) it only functions as a forum for countries to air their grievances
and try to resolve them; (c) the Security Council and its outmoded structure awards
veto power only to each of the five countries that won the Second World War; and (d)
the General Assembly’s lack of power with its state-based configuration (Doyle, 2011).

Other criticisms against the UN also include the Cold War deadlock between the
United States and the Soviet Union which made it problematic for the Security Council
to reach cooperative judgments. In addition, the US-led invasion of Iraq in 2003 without
the consent of the Security Council signified that countries invading foreign nations
unilaterally and in violation of the UN Charter would suffer no penalties of their actions
aside from criticisms and hatred. The organization also was not able to prevent many
violence and killings from happening globally during its existence (Doyle, 2011).

Some of the shortcomings of the UN were gradually addressed with the formation
of ad hoc tribunals that sentenced several persons from Rwanda and the former
Yugoslavia of war crimes. Another significant accomplishment was the permanent
establishment of the International Criminal Court (ICC) in 2002. Its role is to prosecute
individuals accused of genocide and other crimes against humanity. However, China,
India, and the US are not among the 122 states that authorized the court's founding
treaty, the Rome Statute. This signifies that adherence to international law ultimately
remains a matter of choice among states, and states can often evade international
law without any sanction (Doyle, 2011).

According to Doyle (2011), the UN also works with countries across the globe to
advocate human rights and humanitarian values. The UN Security Council promotes the

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doctrine of “Responsibility to Protect” (R2P) when it approved in early 2011 a “no-fly

zone”, an arms embargo, and the use of “hard power” in Libya's civil war. This strategy
aimed to protect civilians from government attacks and gave the revolutionary forces
a better chance at dethroning the government of Moammar Gaddafi.

The R2P doctrine indicates an intensifying willingness among states to interfere in

the unlawful undertakings of governments which are unable to safeguard their own
citizens. The North Atlantic Treaty Organization (NATO), with Britain, France and the
United States taking the lead, intervened in Libya in ousting Gaddafi through its NATO
air strikes.

In Syria, Bashar Hafez al-Assad stayed in power at the start of 2014 even though
his regime and military supporters committed various atrocities against thousands of
citizens (fighters and protesters), including a chemical weapons attack in August 2013
that killed an estimated 1,400 civilians. After U.S. President Barack Obama threatened
to launch limited military strikes against Syria but obtained little support from Americans
and foreign countries, the Syrian regime sworn in an agreement worked out by the
Organization for the Prohibition of Chemical Weapons and the United Nations Security
Council to extinguish its stockpiles of chemical armaments. In this manner, the R2P
doctrine symbolizes that the protection of human beings over any particular
government or regime must take priority (Doyle, 2011).

According to Nye (2005), the partnership among countries in some cases means
better provision of government services. However, in some instances it may also mean
infringements by the “national security state” into civil liberties and privacy rights. These
were evident in the immense global surveillance operations engineered by the United
States National Security Agency (USNSA) and its government and business associates
worldwide. These included interceptions of e-mail messages and tracking of mobile
phones. Global travelers and migrants are conscious that passport control officers take
compulsory photographs and collect fingerprints of people passing through
checkpoints. These make it easier for national governments to impart facts on the
biometrics and travel patterns of countless people. Other countries also include
“biometric authentication” components in the issuance of passports and visas.

States also compete not only for economic development but also for moral
credibility. This is evident on how various CSOs rank countries and publish annual
indexes worldwide. Some of these include the following: (a) Transparency International's
“corruption perceptions index”; (b) Freedom House's “freedom in the world index” of
political rights and civil liberties; (c) the “democracy index” published by The Economist
Intelligence Unit; (d) the “press freedom index” compiled by Reporters without Borders;
(e) the “failed states index” from Foreign Policy Magazine; (f) the Fund for Peace; and
(g) the “better life index” launched in 2011 by the Organization for Economic
Cooperation and Development (OECD). All of these have an impact on a country's
global competitiveness and “soft power” (Nye, 2005).

States as Targets: The Rise of Transnational Activism

According to Keck and Sikkink (1998), transnational activism has roots that go
back to 19th century campaigns against slavery; against foot-binding practices in
China; and for women's voting rights. Keck and Sikkink coined the phrase “boomerang
pattern of influence” to describe what can happen when domestic CSOs/NGOs on the
losing ends of political struggles join forces with compatible foreign advocacy groups
that can pressure the national governments in question.

The Norwegian Nobel Committee, a transnational CSO called attention to the

rising trend of Internet activism by awarding the 1997 Peace Prize to the International
Campaign to Ban Landmines. The global advocacy campaign to ban landmines as a
weapon of war specifically targeted states and urged them to sign the Ottawa Treaty

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that now has 160 signatories. However, similar to the International Criminal Court, some
of the world's largest countries (China, Russia, and the United States) have not signed
the treaty (Keck & Sikkink, 1998).

The Global Justice Movement called for alternatives to neoliberal economic

globalization. Scholars and activists trace the contemporary origins of this movement to
the transnational campaign launched in 1994 in Chiapas, Mexico, by the Zapatista
Army of National Liberation in response to the North American Free Trade Agreement
(NAFTA) (Barlow & Clarke, 1997).

In November 1999, the “Alter-globalization Movement became famous during the

meeting of the World Trade Organization (WTO) in Seattle. The media focused more on
street disruptions and violent incidents and branded it as an “anti-globalization”
movement rather than an alternative model of globalization more attentive to human
rights, participatory democracy, local control, sustainability and cultural diversity
(Cavanagh & Mander, 2004). The implications of this proved that people obtained
public consciousness on globalization. Hence they think of themselves as “global
citizens” who link this idea with concepts such as awareness, responsibility, participation,
and cross-cultural empathy (Schattle, 2008).

The entry of the World Social Forum (WSF) made it a counterpoint to the World
Economic Forum (WEF) (Steger & Wilson, 2012). The World Economic Forum is lavishly
funded, efficiently organized, and easy to observe online with a comprehensive
website and abundantly archived documents and transcripts of proceedings (print,
audio and video). On the other hand, the World Social Forum avoids hierarchy and
centralized control which exists without a single permanent website. Unlike the world's
largest corporations and national governments that back up the WEF and advocate
neoliberalism, the WSF promotes a more socially and environmentally-responsive
alternatives to globalization.

According to Busby (2010), the social media revolution has lifted advocacy
groups and social movements into an exciting new phase and energized CSOs at all
levels. The revolutions in Tunisia and Egypt in early 2011 showed how engaged citizens
could topple dictatorships. Protests in Myanmar (Burma) which were encouraged by
cyber-activists eventually pushed the government there to open up partially. In China,
citizens are more linked and vocal than before, even if the government is still working to
manipulate public opinion and crush dissent (Shirk, 2010).

Social media platforms also eased the way for citizens’ groups across the “global
south” to build network partners. Facebook, Twitter and their local counterparts
worldwide are now utilized in transnational advocacy movements (Gladwell, 2010;
Starbird & Palen, 2012).

Communication Networks, New Media and the State

According to Morozov (2011), technological advances made it easier for

authoritarian states from Russia to Saudi Arabia, and to Myanmar to silence bloggers
utilizing software programs that filter Internet content and denial-of-service attacks,
making the targeted computers or web servers momentarily inaccessible. Even the
world's most isolated and repressive state (North Korea) maintains websites boasting
their national leaders and stirring out colorful news releases.

Ambassadors worldwide now utilize “public diplomacy” and maintain Facebook

groups, Twitter feeds, and dual blog postings written in both languages (that of the
country they represent and the language of the state that they are serving). Across all
levels of government, from city halls to presidential offices, interactive “e-government”
sites have spread worldwide in partnership with constitutional democracies. Citizens
can converse with government officials through the Internet, not only to obtain

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information about government policies and initiatives but to communicate their

grievances (Coleman & Blumler, 2009).

There is also an increase in state-funded television networks. No longer is the

American vanguard of CNN a hegemonic presence. BBC World (United Kingdom), Al
Jazeera English (Qatar), Al Arabiya (Saudi Arabia), France 24, Russia Today, CCTV
(China), NHK World (Japan) are some of the most evident players in this rising industry
(Coleman & Blumler, 2009).

Television news performed a crucial role during the dismantling of the Berlin Wall in
1989 as live news from West Germany ignited public demands in East Berlin to open the
checkpoints. Similarly, Al Jazeera played a significant role in the Arab Spring revolutions,
broadcasting videos filmed by protesters through their mobile phones and sent via e-
mail to television studios (McChesney & Pickard, 2011). Al Jazeera tends to go easy on
the Emir of Qatar, while Russia Today features a Putinesque view of the world (Seib,
2008). In this current world of government-run broadcasting, the lines amid journalism
and propaganda are often blurred and concealed, and also defended, if not
legitimized, by the government ministries shelling out the money.

The world's “digital citizens” who have enough Internet access and possess the
capability to make the most of cyberspace now evaluate for themselves which sources
are credible and compelling enough to follow on a continuing basis (Jamieson &
Cappella, 2010; Sunstein,
2009).

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Activity 4.A
(Matching Type)

Name: Score:
Course/Year/Section: Date:

Direction: Match the items under Column A with those items under Column B. Write your
answer on the space provided before each of the items below. Use CAPITAL
LETTERS and erasures of any kind will NOT be credited.

Column A Column B

___1. It calls for alternatives to neoliberal economic A. Alter-globalization

globalization and a response to the North American Movement
Free Trade Agreement (NAFTA)
___2. This doctrine symbolizes that the protection of human B. Palestine and
beings over any particular government or regime Vatican
must take priority
___3. It was permanently established in 2002 and its role is C. Allied Nations
to prosecute individuals accused of genocide and
other crimes against humanity
___4. It refers to opposing dynamics of supranational or D. Laissez-faire
regional integration on one side and forces of Economics
domestic fragmentation on the other side
___5. It was composed of US, UK, France, Russia and China E. Ottawa Treaty
which won in World War II
___6. With Britain, France and the United States, this F. Fragmegration
organization intervened in Libya in ousting Gaddafi
through its air strikes
___7. It is a reaction to the World Economic Forum that G. Global Justice
promotes a more socially and environmentally Movement
responsive alternatives to globalization
___8. This agreement approved a common citizenship that H. European Coal and
gives citizens of EU the rights to live, work, vote and Steel Community
even run for office in European parliamentary (ECSC)
elections
___9. This was the predecessor of the European Union (EU) I. State
which currently has 28 member states
___10. They are acknowledged as “nonmember observer J. International Criminal
states” of the UN Court (ICC)
___11. It was composed of Japan, Germany, and Italy K. Axis Powers
which lost the battle in World War II
___12. This policy advocates the “invisible hand” (no or less L. Responsibility to
government intervention in economic affairs) Protect
___13. It is an obligatory political association having M. Maastricht Treaty
endless operations as long as it gains a claim to the
monopoly of the use of legitimate physical force in
the execution of its mandate
___14. A recipient of the 1997 Nobel Peace Prize which N. NATO
advocated an international campaign to ban
landmines as a weapon of war
___15. It is an alternative model of globalization more O. World Social Forum
attentive to human rights, participatory democracy,
local control, sustainability and cultural diversity

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Activity 4.B
(Essay Type)

Name: Score:
Course/Year/Section: Date:

Essay Question: Explain your answer in not more than five (5) sentences.

How is globalization changing the overall balance of power between states and
citizens?

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Learning Objectives:

1. To identify the roles and functions of the United Nations

2. To identify the challenges of global governance in the 21st
century
3. To explain the relevance of the state and globalization

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https://www.google.com/search?q=global+governance

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LESSON 5
CONTEMPORARY GLOBAL GOVERNANCE

This lesson presents the summary of the article, “The United Nations Meets the
Twenty-First Century: Confronting the Challenges of Global Governance” authored by
Thomas G. Weiss and Ramesh Thakur which was adopted from the “SAGE Handbook of
Globalization” edited by Manfred B. Steger, Paul Battersby, and Joseph M. Siracusa
(2014). Other sources were also included to supplement the discussion presented by the
authors.

Global Governance

Globalization entails the conduct of numerous transactions that go beyond the

borders of states. These varying transactions necessitate system and order. Thus, it can
be said that to maintain order and system in all these international dealings brought
about by globalization, global governance is imperative.

Global governance is defined as “the sum of laws, norms, policies and institutions
that define, constitute and mediate trans-border relations between states, cultures,
citizens, intergovernmental and non-governmental organizations and the market — the
wielders and the objects of the exercise of international public power (Weiss & Thakur,
2014). It brings together diverse actors to coordinate collective action to provide global
public goods, particularly peace and security, justice, functioning markets and unified
standards for trade and industry. It is a rules-based order without a government, thus,
there is no central authority. Actors in global governance depend on multilateralism.

Global governance has three main elements, namely consensus, rules, and
membership of multiple national governments. These elements require a binding mode
of interaction. Multilateralism, which is defined as a situation in which several
different countries or organizations work together to achieve something or deal with
a problem (https://dictionary.cambridge.org/us/dictionary/english) facilitates such
interaction and helps sustain the rules-based global order (https://www.eria.org/news-
and-views/strengthening-global-governance-multilateralism/).

Aside from the emergence of collective-action problems that cannot be solved

by a single state alone, another reason that can explain why global governance exists
is the growing importance of non-state actors such as the private sector, market, MNCs,
and civil society. The complexity of the present society makes the government unable
to solely satisfy the demands of its citizens. As mentioned by Weiss and Thakur (2014) in
their article, “Society has become too complex for citizens’ demands to be satisfied
solely by governments. Instead civil society actors play increasingly active roles in
shaping norms, laws and policies. They are participants in global governance as
advocates, activists and policy makers. They provide additional levers to people and
governments to improve the effectiveness and enhance the legitimacy of public policy
while also posing challenges of representation, accountability and legitimacy.”

The leading governance actor with an international membership today is United

Nations (UN). This international organization not only involves sovereign states but also
non-state entities. It was founded in 1945, in the wake of World War II with the main
purpose of preventing future conflicts between states. It is mandated to preserve global
security through the Security Council. According to Hurd (2007), UN represents a
structure of authority that rests on institutionalized state practices and generally
accepted norms (Weiss & Thakur, 2014). However, UN should not be understood as a
new international system paradigm that will replace the Westphalian sovereignty.

Aside from UN, there are other institutions that play important roles in global
governance such as the World Bank and the International Monetary Fund (IMF).

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Roles and Functions of United Nations

UN, as an international organization, has several roles and functions. UN has a

role in “preventing and managing conflicts, regulating armaments, championing
human rights and international humanitarian law, liberating the colonized, providing
economic and technical aid in newly liberated countries, organizing elections,
empowering women, educating children, feeding the hungry, sheltering the
dispossessed and displaced, housing the refugees, tending to the sick and coordinating
disaster relief and assistance (Weiss & Thakur, 2014).

The following are the four essential roles of UN in identifying and diagnosing
problems (Weiss & Thakur, 2014).:

1. Managing Knowledge

This involves the recognition of the existence of the problem, the collection of
solid data about the nature of the problem, and identification of its causes to explain
the problem. The United Nations uses its convening capacity and mobilizing power to
help funnel knowledge from outside and to ensure its discussion and dissemination
among governments. UN-sponsored world conferences, heads of government summits
and blue- ribbon commissions and panels have been used for framing issues, outlining
choices, making decisions; for setting, even anticipating, the agenda; for framing the
rules, including for dispute settlement; for pledging and mobilizing resources; for
implementing collective decisions; and for monitoring progress and recommending
mid-term corrections and adjustments.

2. Developing Norms

Upon identification of problems and collection of knowledge, UN helps create

new norm of behavior usually through summit conferences, international panels and
commissions. New norms will then be institutionalized. However, since our societies vary,
there would always be the reality of norm variation. Though norms may vary, contested
norms can still become institutionalized both within and among states.

International norms can be transmitted down into national politics and

incorporated into domestic laws through state structures, such as the government. UN
promulgates norms with the consent of most of its members. This process sustains, not
erodes, the prerogatives of sovereigns.

3. Formulating Recommendations

The UN’s ability to convene and consult widely plays an enormous part in its
ability to formulate recommendations for specific policies, institutional arrangements
and regimes that follow from identifying and diagnosing a problem and developing a
norm of desirable changes in behavior and approach by states.

4. Institutionalizing Ideas

Institutions can facilitate problem solving even though they do not possess any
coercive powers. Institutions give extended life to an idea because they can outlast the
individuals who first had it. Institutions to attack global problems require substantial
financing and backing, which makes them the kind of concrete step that can be
initiated by governments as an indication that they are taking an issue seriously. Once
knowledge has been acquired, norms articulated and policies formulated, an existing
institution can oversee their implementation and monitoring.

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Challenges of Global Governance in the 21st Century

Contemporary issues such as women empowerment, regulation of the skies and

seas, cybercrime, climate change, urbanization, pandemics, terrorism, weapons of
mass destruction (WMDs) require multidisciplinary perspectives, efforts across sectors
with firm central direction and inspired leadership (Weiss & Thakur, 2014). Thus, the UN,
as the leading international organization needs to meet these requirements to be able
to adapt to the changes we face now.

The list of global governance issues addressed by multilateral bodies is long:

human rights, human development, labor, health, peace, conflict, disarmament,
communication, finance, and environment. Trade and economic integration, however,
have been the most visible aspects of international cooperation in the past year
(https://www.eria.org/news-and-views/strengthening-global-governance-
multilateralism/).

Currently, the multilateral system of trade governance and cooperation for

economic growth is under stress, induced mostly by world’s two largest economies.
Individual positions of the US and China on tariffs, disputes, and economic cooperation
are overshadowing the multilateral governance systems. Trade facilitation measures,
long considered the pathway for improved prosperity, are at risk of being delayed or
even overlooked. This would be detrimental for developing and developed countries
alike in Asia and Europe. The smaller and more economically vulnerable countries are
at greater risk of being left behind (https://www.eria.org/news-and-
views/strengthening-global-governance-multilateralism/).

Coordination and cooperation are not only increasingly complex but

also problematic as a result of the number of actors and the existence of decentralized
and informal, largely self-regulatory groupings. For instance, the UN system and
International Governmental Organizations (lGOs) in general that collectively underpin
global governance are inadequately resourced, do not have adequate policy
authority and resource-mobilizing capacity and sometimes incoherent in their separate
policies and philosophies (Weiss & Thakur, 2014).

Many public policy decisions and practices have been transferred to the
international level, raising a number of pressing normative challenges to the
Westphalian foundations of multilateralism as citizens become rights-holders and states
are deemed to have responsibilities of sovereignty (Weiss & Thakur, 2014).

The UN member-states question the legitimacy of the rules promulgated if they

do not agree with them and when they fail to implement or comply with the rules there
is little enforcement capacity available to compel them to do so (Weiss & Thakur, 2014).

The 2004 report of the Panel of Eminent Persons on United Nations Relations with
Civil Society presents points that help determine how UN meets the challenges of global
governance in the 21st century (UN, 2014):

1. Multilateralism no longer concerns governments alone but is now multifaceted,

involving many constituencies. The UN must develop new skills to service this new
way of working.

2. It must become an outward-looking or network organization, catalyzing the

relationships needed to get strong results and not letting the traditions of its
formal processes be barriers.

3. It must strengthen global governance by advocating universality, inclusion,

participation and accountability at all levels.

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4. It must engage more systematically with world public opinion to become more
responsive, to help shape public attitudes and to bolster support for
multilateralism.

______________________________________________________________________________

Activity 5.A
(Definition of Terms)

Name: Score:
Course/Year/Section: Date:

Direction: Using your own words, provide a brief definition for the following concepts:

1. Global Governance:
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

2. Multilateralism:
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

3. International Norms:
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

4. Public Goods:
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

5. International Organizations:
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

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Activity 5.B
(Essay Type)

Essay Question: Limit your answer to a maximum of five (5) sentences only.

In what ways does the United Nations (UN) system of governance contribute to
the formation of global consciousness?

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Learning Objectives:

1. To define the term “global south”

2. To differentiate the “global south” from the “third world”
3. To analyze how a new conception of global relations
emerged from the experiences of Latin American countries

SOURCE: https://www.google.com/
https://www.shutterstock.com/image-vector/cartoon-earth-humans-divided-into-two-365720915

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LESSON 6
GLOBAL DIVIDES: THE NORTH AND THE SOUTH

The North and South Divide

The beginning of the categorization of states between North and South can be
traced back to the Cold War Era. The Cold War is considered as a geopolitical,
ideological, and economic struggle between two world superpowers which are United
States (US) and the Union of Soviet Socialist Republic (USSR) in 1947. During that period,
states were categorized based on their alignment between USSR and America. Non-
communist, high income, and developed countries such as US, Canada, Japan, and
South Korea were categorized as First World States. Communist countries, on the other
hand, were categorized as Second World States. While countries that remained non-
aligned with the North Atlantic Treaty Organization nor the Communist Block were
categorized as Third World States. These states are poor and were former colonies of
the West. After the Cold War Era, most of the countries that belong to the First and
Second World categories were classified as part of the Global North while countries
that belong to the Third World category are now part of the Global South. At present
the concepts, “Less Developed Countries” (LDCs) such as the developing,
underdeveloped, and undeveloped countries are also being used to refer to Global
South States. Developing countries are mostly found in South-East Asia;
underdeveloped countries are mostly located in South America; and most of the
undeveloped countries are the poorest in South Africa.

Global North States have the following characteristics: have developed

economies; are attractive to investors; highly industrialized; have low poverty rate; low
birth rates; are technologically advanced; have low infant mortality rate; their public
education and health services are at a high level; have good infrastructure that allows
access to every part of the country; have stable institutions guaranteeing democracy,
the rule of law, human rights, and respect for and protection of minorities; and are
marked with less corruption.

The Global South states on the other hand, are described as having: large
inequalities in living standards; low Gross Domestic Product (GDP); high population;
economies that rely on imports from the Global North States; rural population that
depends on agriculture for subsistence; lack of modern technology; inadequate
transportation; and high infant mortality rate.

The Global South

The Global South refers to countries located in Africa, Latin America, and
developing countries in Asia. These countries fail to adopt the policies on innovation
and industrialization of Global North States. It is evident that many of Global South
States are former colonies of countries which are now part of the Global North. Global
South States are poorer. One factor that can provide an explanation to this is their long
history of economic colonialism. After gaining independence from their colonizers,
these countries became source of raw materials for their former colonizers. This
contributed to their continued dependence on the Global North countries. This is
related to the Dependency Theory which originated in Latin America.

Dependency Theory and the Global South

Theotonio Dos Santos, one of the founders of Dependency Theory, describes

dependence as “a situation in which the economy of certain countries is conditioned
by the development and expansion of another economy to which the former is
subjected” (Dos Santos, 1970; p. 231). If applied to the concepts of Global North and
Global South, the Dependency Theory suggests that industrialized countries exploit
underdeveloped/ developing countries through economic and political neoliberalism

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which perpetuate the latter’s pre-industrial or semi-industrial status. Sukarno stated that
“colonialism is not yet dead” (Claudio, 2014). Modern colonialism can arise in the form
of economic control, intellectual control, or actual physical control.

Lenin argued that the strength of capitalism is dependent on the creation of

new markets through imperialism. Colonialism and imperialism set stage for the growth
of capitalism. This idea of Lenin reflects the exploitative interaction between core
(metropole/global north countries) and peripheral economies (satellite/global south
countries) which can also be applied to the concepts of Global North and South.

According to Claudio (2014) the existence of the North and South divide shows
the incompleteness of globalization. It emphasizes that in the process of globalization,
there is uneven development. He has pointed out several causes of this unevenness:

a. International financial institutions (IFIs) like the World Bank, the International
Monetary Fund (IMF), and the World Trade Organization (WTO) saddle
developing economies with debt while making them more vulnerable to global
economic shocks.

b. Forced liberalization and marketization of developing economies through the IFIs

c. Economic norms that the developed world applies to itself are never the same
as those it imposed on the developing world such as demanding the developing
economies to cut down government spending (austerity measures) and raise
interest rates in times of economic crises. These can result to the shrinking of the
public sector which can ultimately cause a reduction in social services like
healthcare.

d. Governments of the North, though having the ability to regulate polluting

companies, do so inadequately in order to protect their country’s economic
interests. The effects of global environmental problems are more felt by Global
South countries than those that belong to the Global North.

e. The effect of the introduction of development has to be seen not only in terms of
social economic impact, but also, in relation to the cultural meaning and
practices they upset or modify (Escobar, 1988).

As a solution to the uneven development that is happening now between the

North and the South, Walden Bello suggests that development in the Global South must
begin by “drawing most of a country’s financial resources for development from within
rather than becoming dependent on foreign investments and foreign financial
markets” (Claudio, 2014).

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Activity 6.A
(Identification Type)

Name: Score:
Course/Year/Section: Date:

Direction: Identify the concepts being described under each of the following items.
Write your answers on the space provided before each item.

1. This is the term used to refer to the group of

countries that are non-communist and
developed during the Cold War. These countries
aligned themselves with the US.
2. This is the category of countries that chose non-
alignment during the Cold War Era.
3. This term refers to the group of countries that
supported communism during the Cold War.
4. According to Claudio, many countries that
belong to this category prioritize economic gain
over environmental protection.
5. This theory explains that the underdevelopment
in Global South countries can be attributed to
the exploitation committed by industrialized
countries through the principles of economic
and political neoliberalism.
6. It is a conflict over ideological differences and it
does not involve actual fighting.
7. Provide two non-Asian countries which are
geographically located in the South but are
considered part of the Global North.

8.

9. Provide two Asian states that belong to the

Global North.

10.

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Activity 6.B
(Essay Type)

Essay Question: Limit your answer to a maximum of five (5) sentences only.

Explain how the international trade relations between the global north countries
(HDCs - highly developed countries) and the global south countries (LDCs - less
developed countries) might NOT transform the latter to become highly developed or
highly industrialized countries, like the former, in the near future.

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Learning Objectives:

1. To differentiate regionalization and globalization

2. To identify the factors that lead to a greater integration of
the Asian region
3. To analyze how different Asian states confront the
challenges of globalization and regionalization

SOURCE: https://www.google.com/search?q=images/+photos+related+to+Asian+Regionalism
https://www.google.com/url?sa=i&url=https%3A%2F%2Ffanyv88.com%3A443%2Fhttps%2Fwww.eurasiareview.com
https://www.google.com/url?sa=i&url=https%3A%2F%2Ffanyv88.com%3A443%2Fhttps%2Fwww.vox.com

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LESSON 7
ASIAN REGIONALISM

This lesson presents the main ideas of Ehito Kimura on Asian regionalism in his
article entitled, “Globalization and the Asia Pacific and South Asia”. Other authors and
sources were also included to supplement the discussion on regionalism.

Regionalization and Globalization

Regionalization is defined as the way that an area of the world containing

several countries becomes more economically or politically important than the
particular countries within that area. Regionalization also entails “an increase in the
cross-border flow of capital, goods, and people within a specific geographical area or
region” (Hoshiro, n.d.). It is the process of regional formation (Söderbaum, 2011).

A region is composed of a limited number of states that are linked together by

geographical relationship and by a degree of mutual interdependence. The European
Union (EU), African Union, Association of Southeast Asian Nations (ASEAN), and the
Union of South American Nations (UNASUR) are examples of results of regionalization.

On the other hand, globalization is defined as the process of international

integration arising from the interchange of world views, products, ideas, and other
aspects.

Thus, to compare, globalization promotes the integration of economies of

countries all around the world while regionalization is considered by some as the
opposite of globalization since it aims to divide a large area into smaller parts. Aside
from this basic difference, Lis and Rzepka (n.d.) pointed out that “the processes of
globalization of the world economy are guided by the requirements of competition
and the searching by the entities of the most favorable forms of business and business
locations. These activities aimed at regionalism, on the other hand, these are dictated
to a large extent by the needs of co-operation not only economic but also political,
social, etc. Regional cooperation between countries aims at moderating the
differences and contradictions between economies and equalizing their opportunities
for their development."

The relationship between regionalization and globalization is explained by many

experts but sometimes with contradicting ideas. Some claim that these two concepts
support each other since some view regionalization as an early stage of globalization.
Some view regionalization as a response to globalization. It is believed that
regionalization was created to provide better adaptation to the processes of
globalization and to reduce the negative impact of globalization on states.
Regionalization can help stimulate local markets that are necessary for responding to
the needs of globalization.

Regionalization in Asia

Asia is now at the forefront of globalization. Yendamuri (2009) claims that Asia’s
GDP will overtake the GDP of the rest of the world combined. In fact, according to the
International Monetary Fund (2019), Asia remains as the fastest-growing region in the
world, accounting for more than two-thirds of the global growth in 2019. This can be
attributed to different factors such as: presence of China in Asia; presence of young
and more educated workforce; abundance of natural resources; and there are several
Asian states which are leaders in innovation which is essential for globalization to work.

In the recent years, steps had been taken in order to strengthen regionalization
in Asia. This includes the creation of trade agreements that promote free-trade among

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member-states such as the ASEAN-China Free Trade Area (ACFTA) and the ASEAN
Economic Community (AEC).

Challenges of Globalization and Regionalization in Asia

a. Economic growth has mostly benefited the elite and the middle class. There is a
wide gap between the income of the rich and the poor.

b. Brain drain caused by labor export policies of countries specially for those that
are classified as Third World countries. This phenomenon reduces the capacity of
developing and underdeveloped countries to make use of their human and
natural resources for their own development.

c. Some developing countries became reliant on remittances instead of

strengthening local employment.

d. Negative balance of payments for importing countries and neglect of domestic

production.

e. Massive environmental destruction and massive extraction of resources in the

name of export-oriented extractive industries.

f. Free trade usually favors industrialized countries at the expense of developing

and underdeveloped states.

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Activity 7.A
(Essay Type)

Name: Score:
Course/Year/Section: Date:

Instruction:
In not more than five (5) sentences, answer the question below. Write your
answer on the box provided below the question.

Question:

Is regionalization a part of the globalization process? Support your stand.

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Activity 7.B

Name: Score:
Course/Year/Section: Date:

Direction: Read the article, “Globalization and the Asia Pacific and South Asia” by Ehito
Kimura. Complete the table below by providing five (5) main arguments/ideas for each
factor presented by the author in his discussion on Asia as being an OBJECT, a SUBJECT,
and an ALTERNATIVE for globalization.

Note: You can access this article through any of the links below:

A. https://www.coursehero.com/file/46829733/GLOBALIZATION-AND-THE-ASIA-
PACIFIC-AND-SOUTH-ASIApptx/

B. https://www.academia.edu/15211516/Globalization_and_the_Asia_Pacific_and_
South_Asia

AN OBJECT A SUBJECT AN ALTERNATIVE

1. 1. 1.

2. 2. 2.

3. 3. 3.

4. 4. 4.

5. 5. 5.

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