THE GLOBAL ECONOMY

THE GLOBAL ECONOMY

 ECONOMIC
GLOBALIZATION
 • The increasing integration of economic
around the world, particularly through the
movement of goods, services and capital
across the borders.
• Movements of people and knowledge across
international borders economic globalization.
ECONOMIC GLOBALIZATION
• In economic terms, globalization is nothing
but a process making the world economy an
“organic system” by extending transnational
economic processes and economic relations
to more and more countries and by deepening
the economic independencies among them.
ECONOMIC GLOBALIZATION
 INTERCONNECTED
DIMENSIONS OF ECONOMIC
GLOBALIZATION
 According to Benczes (2014), the phenomenon
can does have several interconnected dimensions
are:
1. The globalization of trade of goods and services
2. The globalization of financial and capital
markets
3. The globalization of technology and
communication
4. The globalization of productions
INTERCONNECTED DIMENSIONS OF ECONOMIC GLOBALIZATION
INTERCONNECTED DIMENSIONS OF ECONOMIC GLOBALIZATION
GLOBALIZATION OF
SERVICES
• Filipinos are known “World Class Professionals”
because of being hard working and persevering
in their chosen profession even in overseas. The
free flow of skilled labor brought by ASEAN
economic integration brings more job
opportunities for the Filipino skilled workers.
GLOBALIZATION OF SERVICES
• Globalization transforms the national
economy into a global one where
“there will be no national products or
technologies, no national
corporations, no national industries”
GLOBALIZATION OF SERVICES
EXAMPLES
• UN (United Nations)
• NGO’s (Non-Governmental
Organizations) appears as new
actors on the stage of political and
cultural globalization
• TNCs (Transnational Corporations)
GLOBALIZATION OF SERVICES
THE ECONOMIC
GLOBALIZATION
PHENOMENON
• Globalization is the process that
creates an “organic system” of the
world economy, its seems
reasonable to look beyond the last
30 years.
THE ECONOMIC GLOBALIZATION PHENOMENON
• Globalization processes have been ongoing ever
since far we should Homo sapiens began
migrating from the African continent ultimately
to populate the rest of the world. Minimally, they
have been ongoing since the sixteenth century’s
connection of the Americans to Afro-Eurasia.
THE ECONOMIC GLOBALIZATION PHENOMENON
• The origin of globalization, the existence
of the of the same world system in which
we live stretches back at least 5,000
years.
• Archaic globalization is the silk road.
THE ECONOMIC GLOBALIZATION PHENOMENON
 ASIA-AFRICA-EUROPE
The economic globalization phenomenon
diagram
The structural transformation
of the western world was,
therefore, both a cause and
an effect of intensified
economic integration.
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THE ECONOMIC GLOBALIZATION PHENOMENON

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 THE INTERNAL
MONETARY SYSTEM
• The international monetary system is a system
that forms rules and standard for facilitating
international trade among the nations in the world.
• Realists also point to the fact that international
monetary transaction will still rely primarily on
the existence of separate national currencies

THE INTERNAL MONETARY SYSTEM

• Cohn (2005) states that international system is
the most central area in international economy,
because the most important transaction in the
international economy – including trade,
investment and finance – all depends on the
availability of money and credit.

THE INTERNAL MONETARY SYSTEM

• Most critical issue to hegemonic stability
theorists should not what the hegemon does
or does not do in trade but what it does or
fail to do to maintain peace and what it does
or fail to do to keep the monetary system
stable and credit flowing in a stead fashion.
THE INTERNAL MONETARY SYSTEM
• Liberal transactions have resulted largely
from advances in communications,
technology and transportation and that
nation states are finding it increasingly
difficult to regulate economic activities.
THE INTERNAL MONETARY SYSTEM
THE FOUR
MONETARY
REGIMES
• Cohn (2005) states that the modern
period of international monetary
relation commonly refers to the
existence of four successive
monetary regimes.
THE FOUR MONETARY REGIMES
• The classical gold standard from the 1870s to the
outbreak of World War 1 in 1914; a gold
exchange standard during the first part of the
inter war period; the Bretton Woods System from
1944 to 1973; and “non-system” of floating and
fixed exchange rates from 1973 to the present.

THE FOUR MONETARY REGIMES

THE CLASSICAL
GOLD STANDARD
REGIMES
 • In gold standard, countries agree to
convert paper money into a fixed amount
of gold. It is a monetary system where a
country’s currency or paper money has a
value directly linked to gold.
THE CLASSICAL GOLD STANDARD REGIMES
THE GOLD EXCHANGE
STANDARD REGIMES
(1914-1944)
 • World War 1 completely disrupted
international monetary relations, but after
the war, Britain attempted to establish a
gold exchange standard regime. A gold
exchange standard like a gold standard, is
based on fixed exchange rates among
currencies.
THE GOLD EXCHANGE STANDARD REGIMES (1914-1944)
• However, a country’s international reserves
under the 19th century gold standard were
officially held gold, whereas, official
reserves under a gold exchange standard
consists of both gold and reserve currencies
which is the British pound in the interval
period.
THE GOLD EXCHANGE STANDARD REGIMES (1914-1944)
THE BRETTON
WOOD SYSTEM
REGIME
• The World War II was marked by a breakdown
of monetary corporation and period of exchange
controls, and planning for a post war monetary
regime culminated in the 1944 Bretton Woods
conference, the Bretton Woods Monetary regime
was a gold exchange standard in which the value
of each country’s currency was pegged.
THE BRETTON WOOD SYSTEM REGIME
• According to Cohn (2005), the
international liberal had three
major elements:
THE BRETTON WOOD SYSTEM REGIME
ELEMENT 1

1. The first element was the

post-war gold exchange
standard which was in-fact an
adjustable peg exchange rate
than a fixed exchange rate
system.
ELEMENT 2

2. Liberal compromise
was the IMR, which
would provide short term
loans.
ELEMENT 3

3. The 3rd element of the

compromise supports for
national control over
capital forms.
THE CREATION OF
INTERNATIONAL
MONETARY FUND
• The most important international
organization embedded in the
Bretton Woods monetary regime
was the international (monetary
fund) located in Washington.
THE CREATION OF INTERNATIONAL MONETARY FUND
THE FUNCTIONING OF
THE BRETTON WOODS
MONETARY REGIME
• Cohn (2005) states that the Bretton
Woods was a gold exchange
regime in which the main reserves
gold and the US dollar.
THE FUNCTIONING OF THE BRETTON WOODS MONETARY REGIME
THE ROLE OF THE
US DOLLAR
• Bretton Woods monetary regime was
based on a gold exchange standard, central
banks could hold their international
reserves in two forms-gold and foreign
exchange in any proportions they chose.
THE ROLE OF THE US DOLLAR
• The United States agreed to
exchange all dollars held by
central banks and treasuries for
gold at the official rate.
THE ROLE OF THE US DOLLAR
• United States also receiving the
private benefit of seignorage. It is
the profit that comes to the
seigneurs or sovereign power from
the issuance of money.
THE ROLE OF THE US DOLLAR
 A SHIFT TOWARD
MULTILATERATION
• As US balance of payments deficits
continued to increase, the dollar
slipped from the top currency to
negotiated currency status during
the 1960s.
A SHIFT TOWARD MULTILATERATION
• A top currency is favored in the
international monetary transaction
because other has confidence in the
strong economic position of the
issuing state.
A SHIFT TOWARD MULTILATERATION
THE GROUP OF TEN
MEMBERS (G-10)
• The group of ten refers to the
group of countries that
participate is the general
arrangement to borrow (GAB).
THE GROUP OF TEN MEMBERS (G-10)
 Group of ten countries
• Belgium • Japan
• Canada • Netherlands
• France • Sweden
• Germany • United States
• Italy • Switzerland
 THE FLEXIBLE
EXCHANGE RATE
REGIME
• The Bretton Woods agreement had
outlawed freely floating exchange
rates, so all the major trading
nations were “living in sin” by
1973.
THE FLEXIBLE EXCHANGE RATE REGIME
FLOATING EXCHANGE RATE

Is a regime where the

currency price is set by the
forex marked based on supply
and demand compared in the
other currencies.
GLOBAL ACTORS IN
ECONOMIC
GLOBALIZATION
INTERNATIONAL
GOVENMENTAL
ORGANIZATIONS
• Refers to an entity created by
treaty involving two or more
nations to work in good faith on
issues of common interest.
Ex. UN, World bank, NATO,
ASEAN
International non-governmental
organization
• The Non-Governmental
Organizations (NGOs) works
toward solutions that can
benefit undeveloped countries
that face the backlash of
economic globalization
International non-governmental
organization
• The Non-Governmental
Organizations (NGOs) works
toward solutions that can
benefit undeveloped countries
that face the backlash of
economic globalization.
Multinational corporations
• Multinational corporations
(MNCs) which have overseas
branches
Ex. Ford Motor Corp., Fujitsu,
General Electric, GSK and
Adidas.
THE effects of ECONOMIC globalization on
DEVELOPING COUNTRIES
• Mohn (2017) states the financial and
industrial globalization is increasing
substantially and is creating new
opportunities for both industrialized
and developing countries.
Increase d standard of living

• Economic globalization
gives government of
developing nations to
foreign lending.
Access to new markets

• Globalization
leads to freer trade
between countries.
Widening disparity and incomes

• While an influx of foreign

companies and foreign
capital creates a reduction
and overall unemployment
and poverty.
DECREASED EMPLOYMENT
• The influx of foreign companies into
developing countries increases
employment in many sectors specially
for skilled workers. However,
improvements in technology come with
the new businesses and the technology
speeds to domestic companies.