WW po a7gait poo ve ager OY section introduces the learners to the concept of econo, This ‘ itate the interdepend., globalization and the important actors that facili of world economies. INTENDED LEARNING OUTCOMES ‘At the end of this section, you are expected to: 1. define economic globalization; 2. analyze the actors that facilitate economic globalization; and 3. articulate a stance on global economic integration. Instructions: Write agree if you think the statement is correct; otherwi! write disagree. 1. Economic globalization includes borderless exchange! goods and services, 2. McDonalds is a transnational corporation. 3. Global economy is influenced by global politics, Unilever is a multinational corporation, ———— 5. Economic globalization can refer to the i ‘ j integration of economies around the world. increasintSteger’s (2014) definition of globalization as the expansion and tensification of social relations and consciousness across world time and race implies that there are various forms of connectivity. G; ization is multidimensional phenomenon, creating economic, political, cultural, d even technological forms of connectivity. This section focuses on a ‘onomic dimension. Economic globalization refers to the expanding interdependence of rid economies. Shangquan (2000) attributes this to the growing scale of \ss-border trade commodities and services, low of international capital, .d wide and rapid spread of technology. In the Philippines, cross-border _ trading can be best illustrated by the country’s trading partnerships with ‘China, the United States, and Australia. Moreover, the flow of international * capital can be observed in foreign direct investments (FDI), a type of | investment in which a company establishes a business in another country for production of goods or services and still takes part in the management __ of that business. A good example of this is Toyota Motor Philippines rporation which is a subsidiary of Toyota Motor Corporation based in foyota, Japan. This flow of international capital can also be observed in foreign portfolio investments, trade flows, external assistance and external ‘ommercial borrowings, and private loan flows. y '2008, the International Monetary Fund (IMF) defined economic slobalization as a historical process, the result of human innovation and ‘echnological progress, “Itrefers to the increasing integration of economies Sound the world, particularly through the movement of goods, services, aa capital across borders” (IMF, 2008). Economic globalization can * traced from the time when there was economic movement in Asia,Module 2 > The Structures of Globalization Africa, and Europe through the Silk Road, a network Of trade r, OUte, t, particularly China, and the West. Historic, . routes also led to the discovery of the Philippine islands when p,. and Spanish envoys were in search of spices, which then colonization. In the contemporary period, foreign expatriates the country to manage their company’s foreign subsidiaries, Like, the Philippines sends thousands of skilled workers to the Middle a . construction workers, seafarers, and nurses. = connected the Pay,” Benczes (2014) identifies four interconnected dimensions of econ, namely: (1) globalization of trade of goods and services; (2) Blobaliz.. i of financial and capital markets; (3) globalization of technology : communication; and (4) globalization of production. The first dimen; economic interconnectedness is demonstrated in the establishm, World Trade Organization (WTO) that eases trade among countries established in 1995, “ensures that trade flows as smoothly, Predi and freely as possible” (WTO, 2012). Another indicator is the eme: of China as a major supplier and exporter | of manufactured goods... has affected the world economy. China-made products or Parts are to the United States. To meet this demand, China creates more jobs ¢ its citizens. Another good example of economic globalization of and services is the increasing number of business process Outsourcing (BPO) companies in the Philippines. Why do American companies ser = subsidiaries in the country? Cheap labor cost, English Proficien customer service skills are the common reasons. The second dimensio: evident in the liberalization of financial and capital markets. This is see: ¢ross-listing of shares on one or more foreign stock exchange, cross-hasi and diversification of portfolio, and round-the-clock trading worldwide (National Research Council, 1995). The third dimension emphasizes the various transactions and interactivities that transpire instantly due to the internet and communication technology. Moreover, the fourth dimeniot is best illustrated by the existence of multinational Corporations (MNCS and transnational corporations (TNCs). The Coca-Cola Company is an example of an MNC. Based in Atlanta, Georgia, USA, the company oat manufactures syrup concentrates and sells them to varioy, bea idee ‘ hold exclusive teritories in different countries including ty, ee ‘Toyota Motor Corporation is also an MNC. Through its sub, cee and in the other parts of the world, it has been. selling Millions ies in Japan every year since 1998. f Vehicles; Section 1. > The Global Economy ; The most fitting definition of economic globalization is that of Szentes’ © (2003): the process of “making the world economy an ‘organic system’ by || extending transnational economic processes and relations to more and more countries and by deepening the economic interdependencies among them.” This implies that the world economy is no longer controlled by the nation-states, but it must be seen from a global context—the reliance and integration of world economies. To illustrate, the price movements of ,|__ imported fuelsin the Philippines are affected not only by the national Tax || Reform for Acceleration and Inclusion’s (TRAIN Law) excise tax on fuels, but i asoby the peso-US dollar exchange rate. At the same time, this exchange en isalso affected by the global market and the international economy's interest rates like the European Union (EU) and the United States Federal Government’ interest rates. It cannot be discounted that global corporations directly affect the inflow of US dollars in the Philippines. ' ‘After recognizing the definition of economic globalization, it is important to discuss the different agents that bring about the interdependencies of global economies. There are different views on who or what the actors are that facilitate economic globalization. Onone hand, some scholars believe that it is still the nation-state but of different levels. Boyer and Drache (1996) state that the role of nation-states as _ manager of the national economy is being redefined by globalization. Although such is the case, nation-states still act as buffer to negative effects ‘of globalization. In support, Brodie (1996) calls the government as the “midwives” of globalization. It means that nation-states are still relevant despite assuming a global perspective and act as mediators between the effects of globalization and the national economy. Government policies d regulations either permit or deny the smooth connection among world onomies. In the looming trade war between China and the United States, ach government imposes high tariffs on goods and services. Thus, this de war does not only affect their economies but also the rest of the claim that the actors are now the rid. On the other hand, some experts bal corporations. Ohmae (1995) argues that the nation-state has ceased to exist as the primary economic organization unit in the global market. ilipino consumers, for instance, prefer to consume and avail of global oducts and services like H & M, Uniqlo, Accenture, Amazon, Alibaba, .d FedEx. As a result of ‘transforming the national economy into a global ne, Reich (1999) posits that national products, technologies, corporations, .d industries become obsolete. San Miguel Corporation and Jollibee Corporation are good illustrations of this effect. These two FilipinoModule 2 > The Structures of Globalization tes have expanded outside their home country as they are Preseny in Europe, US, and the test of Asia. According to Gereffi (2005), such TNe, are the main driving force of economic globalization accounting forty, thirds of the world export. Forbes lists down companies from 63 COuntigg that together Account for $35 trillion in revenue, $2.4 trillion in profi, $162 uillion of assets and have a combined market value of $44 trio, (Schaefer, 2016). An international structure for money, power, and interest was CTeated in order to set a system in the financial and economic relations in the modern day. The establishment of an international monetary system, (IMS) is one of the actors that facilitate economic globalization. IMs Tefers to internationally agreed tules, conventions, and institutions for facilitating international trade, investments, and flow of capital among nation-states, Historically, there are three global IMS—the gold standard, the Bretton Woods System, and the European Monetary System (EMS). The gold standard functions as a fixed exchange rate regime, with gold as the only international reserve and Participating countries determine the gold content of national currencies (Benczes, 2014). In the Bretton Woods Systems, the US dollar was the only convertible currency. Thus, international trade. Another form of integration is the establishment of the EMS. It came about after the collapse of the Bretton Woods System. EMS was successful in the stabilization Process of exchange rates. It then prompted the foundation of a new European Economic and Monetary Union (EMU). National currencies were abandoned and member states delegated monetary policy onto a Supranatignal level administered by the European Central Bank (European Commission, 2008). The development of international trade and trade policy is also a form of such economic integration. Trade patterns must not be stagnant, Flow; of goods must be voluntary but restricting it might affect the relationship between and among states. With the nation-states, global asienione: and international monetary systems as actors of contents globalization, the world is now confronted with a number of ongoing debates as to whether economic nites or divides the world. Benczes (2014) believes i_" i Section 1 > The Global Economy ic growth and ono’ conomic globalization fosters universal distribution of For one, globalization allows a worldwid ance, cannot provide all the raw materials they that & development comes. Austt@ in prod these materials. 5 foreign countries are in need of workforce rseas workers; they go eir families in the alia, for inst Jucts or services, 80 i Also, economic globalization reduces in 1 needs other nation-states (o vd for certa or provide Vorld Bank, 2002). A al, Filipino nurses become ove sreign countries to support th ation creates mutual dependence between hi, 2005). Some developing ployment and income while nec produce poverty (V : and human capit to Europe and other fo philippines. Lastly: globaliz: : developing and developed countries (Arrig] countries rely on developed countries for em the latter relies on the former for raw materials and services like labor. On the other hand, some observers of economic globalization believe that it divides the world further. First, one might observe that the sources of goods an ce these economically d services are exploited. Sint poor nation-states depend on industrialized countries for employment and income, these industrialized countries compensate their labor with cheap cost. These industrialized countries even source materials from natural resources of poor nation-states as another form of exploitation. Some even destroy nature without doing anything to rehabilitate it. Second, economic globalization does not benefit all nations (World Bank, 2002). There is an uneven experience among nations. Workers in TNCs are paid less compared to their counterparts in the companies’ home countries. This shows how cheap labor is in the Philippines. Third, Wallerstien (2005) claims that capitalism created the different levels of wages in the economic arena of world systems. It further divides the world for it leads to inequality experience, and skills. according to expertise, In conclusion, economic globalization affects all nations and citizens through the increasing integration of economies around the borderless world. Its important players are the nation-states, global corporations, and the international monetary systems. Though some people believe that economic globalization brings unity of all economic movements, others believe that globalization furthers the separation among nation-states around the world. ———Section 1» The Global fconmomy CREM et iLL Te Name: aE — Score: Section: Instructions: Dress the human outline with the apparel and accessories that you are currently wearing. Draw at least 10 items and label them, Then, write your own definition of economic globalization and elaborate on it on the space at the back.Exercise 2: Economic Globalization: Unity or Division? a i Ble Date: up No.: tion: —____ Score: up Members: structions: Form groups with four members each. Discuss among yourselves whether economic globalization is something that unites or further divides the world. Using your drawing, articulate a position on global economic integration. Write a short explanation of your stand. 5. Prepare to present your drawing to the entire class.Section 1 > The Global Economy ii ll Assignment 2: Metacognitive Reading Goa Date: Score: Instructions: Read the referenced article and complete the statements that follow. + Witkowska, J. (2016). Integration process in the global economy: Current state and prospects: The cases of the European Union, ASEAN economic community, and NAFTA. Comprehensive Economic Research, 19(4), 47-65. 1. The three (3) things that I significantly learned from the readings are... ee eee | 2. The three (3) things that are still unclear to me are...