The Contemporary World
Module 1:
Globalization
- derived from the word "globalize" which refers to the emergence of an international network
of economic systems
- a very broad topic which is also interrelated on different sectors of our society
Factors to consider in globalization:
1. Geographical
2. Economic
3. Military
4. Cultural
5. Ecological
6. Political
7. Technological
According to the Levin Institute
- process of interaction of governments of different nations
- process driven by international trade and investments and aided by information technology
According to the Nicolas Pologeorgis
- process which aims to expand business operations on a worldwide level based on international
strategies
It is facilitated by:
1. Communication through technological advancements
2. Socioeconomic development
3. Political development
4. Environmental development
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According to the Levin Institute and Pologeorgis
- Globalization is a kind of process which every nation interacts with each other in order to
achieve global unity
Economic Globalization
According to Gao Shangquan
- refers to the increasing interdependence of world economies as a result of the growing scale
of cross-border trade of commodities and services, flow of international capital and wide and
rapid spread of technologies.
Military Globalization
According to David Held
- the process which embodies the growing extensity and intensity of military relations among
political units in the world system
According to Keohane & Nye
- entails long-distance networks of interdependence in which force, and threat or promise of
force employed
According to the article of Stephen Staples
- Globalization and militarism should be seen as two sides of the same coin.
On one side, globalization promotes the conditions that lead to unrest, inequality, conflict, and,
ultimately, war.
On the other side, globalization fuels the means to wage war by protecting and promoting the
military industries needed to produce sophisticated weaponry. This weaponry, in turn, is used -
or its use is threatened - to protect the investments of transnational corporations and their
shareholders.
Cultural Globalization
- the transmission of ideas, meanings, and values around the world in such way as to extend
and intensify social relations
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According to the article of David Volodzko (2015)
- Globalization spells the death of minority cultures
Ecological Globalization
Refers to the global environmental issues such as:
1. Biodiversity
2. Environmental Protection
3. Climate Change
Ecological Society of America (2008)
"Ecological Globalization"
Because of increasing globalization, people often inadvertently introduce non-native plants,
animals and diseases into new locations.
Political Globalization
Mohhamad Abo Gazleh (2001)
"Globalization and Politics: The effects of globalization on human life aspects"
Globalization has also brought to the fore issues such as the rights of women and children...
these aspects promote globally certain common values such as equality, human rights, justice,
democracy and moral values."
Muzzaffar H. Assadi (1998)
"Globalization has internationalized crimes. Drug trafficking and the trafficking of women and
children have become much more difficult to control because of their international character.
Not only crimes are globalized, but also disease
Technological Globalization
- refers to the rapid advancement and global spread of technology
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Technology literary includes:
1. Radio
2. Television
3. Fax machines
4. Cellphones
5. Newspapers
6. Magazines
7. Social media application
8. Internet
9. Computer
10. Cameras
11. Motors (cars, planes, ships, etc.)
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Module 2: The Structures of Globalization
Dimensions of Globalization (According to Manfred Steger)
1. Geographical
2. Economic
3. Military
4. Cultural
5. Ecological
6. Political
7. Technological
A Brief History of Globalization
Age of Discovery (15th to 18th Century)
Leading exports: raw materials/basic goods
Leading nations: Spain, Portugal, Britain, France
Exports: <5%
Enabling era: Scientific Revolution (15th to 17th century)
Enabling innovation: Ships, compass
Characterizing GDP trend: Europe
Globalization 1.0 (19th century to 1914)
Leading exports: textiles/industrial goods
Leading nations: Britain
Exports: 6-17%
Enabling era: 1st Industrial revolution (1780's to mid 19th century)
Enabling innovation: Ships, trains
Characterizing GDP trend: Britain
Globalization 2.0 (1945 to 1989)
Leading exports: Factories
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Leading nations: US, China
Exports:5-15%
Enabling era:2nd Industrial Revolution (1870's to 1910's)
Enabling innovation: Trucks, aircraft
Characterizing GDP trend: World
Globalization 3.0 (1989 to 2008)
Leading exports: Global supply chain
Leading nations: US
Exports:15-20%
Enabling era: 3rd Industrial revolution (1960s to 1990s
Enabling innovation: Computers, internet
Characterizing GDP trend: US
Globalization 4.0
Leading exports: Digital goods
Leading nations: US, China
Exports: ?
Enabling era: 4th Industrial Revolution (2000s to 2010s
Enabling innovation: Cloud services, cryptocurrency
Characterizing GDP trend: China
Silk Roads (1st century BC to 5th century AD, and 13th to 14th centuries AD)
- For the first time in history, luxury products from China started to appear on the other edge
of the Eurasian continent (in Rome)
- The Silk road was a network of paths connecting civilizations in the East and west that was
well travelled for approximately 1400 years
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Spice routes (7th to 15th centuries)
- As the new trade and religion spread in all directions from its Arabian heartland in the 7th
century
- The main focus of Islamic trade in those Middle Ages were spices
Age of Discovery (15th to 18th centuries)
- It was in this era, from the end of the 15th century onwards, that European explorers
connected East and West (and accidentally discovered the Americas.)
- circumnavigation by Magellan
First wave of globalization (19th century to 1914)
- Industrial Revolution
- Great Britain had started to dominate the world both geographically, through the
establishment of the British Empire, and technology
The World Wars
- Breakdown of global economy
- Great economic depression in the US
Second and Third wave of Globalization
- Second industrial revolution
>Iron Curtain
>Sphere of influence
- World Trade Organization
- Third industrial revolution
Globalization 4.0
- New frontier of globalization is the cyber world
- Digital Economy
- Global effect of climate change
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Theories of Globalization
The World System Theory
- Emmanuel Wallerstien
- A world system is a multicultural territorial division of labor which production and exchange
of basic goods and raw materials is necessary for the everyday life of its inhabitants
- globalization represents the triumph of a capitalist world economy
- the world system perpetuates dominance by the core and dependency of the periphery
Theories of Global Capitalism
- Leslie Sklair's Transnational Practices
- transnational practices operate in three spheres: the economic, political and the cultural-
ideological
- William Robinson's Transnational State Apparatus
- global capitalism evolved an epochal shift
- involves three planks: transnational production, transnational capitalists, transnational state
- Transnational State (TNS)
The Network Society by Manuel Castell
- a network society is a society whose structure is made up of networks powered by
microelectronics-based information and communication technologies
- this new symbolic environment is characterized with: SPACE OF FLOWS, in which
informational flows bring physical spaces closer through networks; TIMELESS TIME in which
technology is able to manipulate the natural sequence of events; and REAL VIRTUALITY based
on a hypertext reality and global interconnection which bends space and time relations.
> Informationalism refers to a technological paradigm that replaces and subsumes the
previous paradigm of industrialism
Theories of Space, Place and Globalization
- Time-Space-Distanciation by Anthony Giddens
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> the intensification of worldwide social relations which link distant localities in such a
way that local happenings are shaped by events occurring many miles away and vice
versa
- Global Risk Society by Anthony Giddens
> provocatively argues that globalization has led to the creation of a "global risk
society"
- Time-Space-Compression by David Harvey
> the process whereby time is reorganized in such a way as to reduce the constraints
of space and vice-versa
Theories of Transnationality and Transnationalism
- refers to the rise of new communities and the formation of new social identities and
relations that cannot be defined through the traditional reference point of nation-states
- refers to the multiple ties and interactions linking people or institutions across the border of
nation states
> a process by which migrants through their daily life activities create social fields that
cross national boundaries.
Theories of Global Culture
- Homogenization is the name given to the process whereby globalization causes one culture to
consume another
> sees a global cultural convergence and would tend to highlight the rise of world beat,
world cuisines, world tourism, uniform consumption patterns and cosmopolitanism
- Hybridization; cultures are however rarely simply consumed. more often two cultures clash
and new hybrid culture is formed
- Polarization or heterogeneity; this condition continued cultural difference and highlights local
cultural autonomy, cultural resistance to homogenization, cultural clashes and polarization, and
distinct subjective experiences of globalization
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Global Village by Marshall McLuhan
- describes the phenomenon of the world's culture shrinking and expanding at the same time
due to pervasive technological advances that allow for instantaneous sharing of culture
>"the medium is the message"
McDonalization by George Ritzer
- defined as “the process whereby the principles of the fast-food restaurant are coming to
dominate more and more sectors of American society and the world.“
Four Main Dimensions
Efficiency - optimum method of completing a task; the rational determination of the best mode of
production
Calculability - assessment of outcomes based on quantifiable rather than subjective criteria
Predictability - production process is organized to guarantee uniformity of product and standardized
outcomes
Control - substitution of more predictable non-human labor for human labor, either through
automaton or the deskilling of the work force
Glocalization by Rolan Robertson
- suggested that the global is only manifested in the local
- describes how global cultures are adjusted in local context to suit localized needs; a portmanteau of
the terms "globalization" and "localization"
“Disjuncture and Difference in the Global Cultural Economy“ by Arjun Appadurai
For anthropologist Arjun Appadurai (1997), different kinds of globalization occur on multiple and
intersecting dimensions of integration that he calls “scapes.“
1. Mediascapes are about the flows of image and communication.
2. Ethnoscapes are concerned with the flows of individuals around the world.
3. Ideoscapes deal with exchanges of ideas and ideologies.
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4. Technoscapes refer to the flows of technology and skills to create linkages between
organizations around the world.
5. Financescapes relate to the interactions associated with money and capital.
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Module 3: The Globalization of World Economics
What is Economic Globalization?
- A historical process, the result of human innovation and technological progress.
- The movement of people (labor) and knowledge (technology) across international borders.
- ‘In economic terms, globalization is nothing but a process making the world economy an
“organic system“ by expanding transnational economic processes and economic relations to
more and more countries and by deepening the economic interdependencies among them.‘
(Szentes (2003:69)
Is economic globalization a new phenomenon?
- Globalization processes have been ongoing ever since homo sapiens began migrating from the
African continent ultimately to populate the rest of the world (Gill and Thompson, 2006:1).
- The existence of the world systems in which we live stretches back at least 5,000 years
(Frank and Gills, 1993:3).
- According to Adam Smith, the discovery of America by Christopher Columbus in 1492 and the
discovery of the direct route to India by Vasco de Gama are two greatest achievements in
human history.
- The major breakthrough on world economies came only in the nineteenth century.
- The annual average of compound growth rate of the world trade saw a dramatic increase of
4.2 percent between 1820 and 1870, and still relatively high, at 3,4 percent between 1870 and
1913.
- The relatively short period before World War I (1870-1913) is often referred to as the
Golden Age of globalization.
INTERNATIONAL MONETARY SYSTEM
What is IMS?
- Rules, customs, instruments, facilities, and organizations for affecting international payments
(Salvatore, 2007: 764).
What is the task of IMS?
- To facilitate cross-border transactions, especially trade and investment.
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THE GOLD STANDARD
- The gold standard is a monetary system where a country's currency or paper money has a
value directly linked to gold.
Why gold?
- Gold was believed to guarantee a non- inflationary, stable economic environment, a means of
accelerating international trade (Einaudi, 2001).
- The gold standard became the international monetary regime by 1880.
- The gold standard functioned as a fixed exchange rate regime, with gold as the only
international reserve.
- Countries determined the gold content of national currencies, which in turn defined fixed
exchange rates as well.
- The gold standard became the international monetary regime by 1880.
- The gold standard functioned as a fixed exchange rate regime, with gold as the only
international reserve.
- Countries determined the gold content of national currencies, which in turn defined fixed
exchange rates as well.
When did the Gold Standard end?
- Participating nations gave up convertibility and abandoned gold export in order to stop
depletion of their national gold reserve.
What is Market Integration?
- Market Integration (Kohls and Uhl) is a process that refers to corporate expansion by
consolidating additional marketing functions and activities within a single management
framework. Integration shows the company‘s market relationship and its extent affects the
company‘s behavior.
- Global Market Integration involves the process of product standardization and technology
development centralization.
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History of Market Integration
SILK ROAD
- Silk road is the oldest known international trade route. It is a network of pathways in the
ancient world that spanned from China to what is now the Middle East and to Europe.
British Industrial Revolution (1800s)
- 17th-18th Century
- Total number of ships sailing to Asia from major European countries rose remarkably.
Focus on trade and exchange rather than production.
GALLEON TRADE
- The Galleon Trade was a government monopoly. Only two galleons were used: One sailed from
Acapulco to Manila with some 500,000 pesos worth of goods, spending 120 days at sea; the
other sailed from Manila to Acapulco with some 250,000 pesos worth of goods spending 90
days at sea.
Types of Market Integration
Horizontal Market Integration - is a competitive strategy in which two companies of the same nature
merge or one larger company acquires a smaller company.
Vertical Market Integration - It is a competitive strategy of a firm own to own the upstream
suppliers and downstream buyers; this is an arrangement in which supply chain of a company is also
owned by that company.
Forward Vertical Integration
- This process occurs when a company decides take control of the post-production process
or is acquiring a business further up into the supply chain.
Backward Vertical Integration
- This process occurs when a company decides to buy another company that makes an input
product acquiring company‘s product.
Conglomerate Market Integration - This involves a combination or fusion of companies that are
involved in unrelated business activities.
Pure Mergers conglomerates involves companies that have nothing in common.
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Mixed Mergers Conglomerates - combination of companies that are looking for product extensions or
market extensions.
Effects of Market Integration
- Wider selection of goods and services that have not been previously available.
- Acquisition of goods and services at a lower cost.
- Political Cooperation.
- Erosion of national sovereignty.
- Employment opportunities.
THE BRETTON WOODS SYSTEM
- The Bretton Wood System was inaugurated in 1944 during the United Nations Monetary and
Financial Conference to prevent the catastrophes of the early decades of the century from
reoccurring and affecting international ties.
- The US dollar was the only convertible currency of the time, so the US committed itself to
sell and purchase gold without restrictions at US$35 an ounce.
IBRD & IMF
International Bank for Reconstruction and Development
- Responsible for post-war reconstruction
International Monetary fund (IMF)
- Promotes international financial corporation and buttress international trade. The IMF was
expected to safeguard the smooth functioning of the gold-exchange standard by providing
short-term financial assistance in case of temporary balance of payments difficulties.
What provoked the Bretton Woods
System to Dissolve?
- The Britton Woods Systems was finally abandoned in 1973.
- This period, US is suffering from stagflation.
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- On 15 August 1971, the United States unilaterally terminated convertibility of the US dollar
to gold, effectively bringing the Bretton Woods system to an end and rendering the dollar a
fiat currency.
FIAT CURRENCIES
- Fiat currency of money is a form of currency that is declared legal tender. This includes
money in circulation such as paper money or coins.
e.g. The 20 peso bill and the 5 peso coin are fiat currency/money.
GATT
- Shortly after Bretton Woods, various countries also committed themselves to further global
economic integration through the General Agreement on Tariffs and Trade (GATT) in 1947.
GATT‘s main purpose was to reduce tariffs and other hindrances to free trade.
- The first five rounds concentrated on tariff cuts exclusively. From 1964 onwards, the
scope of trade negotiations experienced a low but steady expansion/
- The creation of the European Economic Community in 1957 enforced the United States to
adopt the Trade Expansion Act of 1962 and to call for a new round, the so-called Kennedy
Round.
- The result was an across-the-board cutting (replacing the previous practice of item-by-item
cuts) and reduction of non-tariff barriers.
- In the 1970s, the Tokyo Round preceded with the same extended mandate, and besides tariff
cuts, it also adopted a series of codes of conduct, such as the subsidies code or the
government procurement code (Deardorff and Stern, 1983.)
The Uruguay Round
- By the end, 125 countries were taking part. It covered almost all trade, from toothbrushes
to pleasure boats, from banking to telecommunications, from the genes of wild rice to AIDS
treatments.
- Within only two years, participants had agreed on a package of cuts in import duties on
tropical products - which are mainly exported by developing countries. They had also revised
the rules for settling disputes, with some measures implemented on the spot. And they called
for regular reports on GATT members' trade policies, a move considered important for making
trade regimes transparent around the world.
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What happened to GATT?
• The WTO replaced GATT as an international organization, but the General Agreement still exists as
the WTO‘s umbrella treaty for trade in goods, updated as a result of the Uruguay Round negotiations.
“GLOBALIZATION IS ANCHORED ON CHANGES IN THE ECONOMY“
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