The document discusses various aspects of economic globalization including its definition, driving forces, manifestations, dimensions, and relationship to internationalization and localization. It provides historical context on the emergence of global trade dating back to the Silk Road and Manila-Acapulco Galleon Trade. Key global actors and institutions supporting economic integration are outlined such as the IMF, World Bank, WTO, NATO and multinational corporations. The Bretton Woods system established the IMF and World Bank but was later challenged by neoliberalism in the 1970s. International trade relies on concepts of specialization and comparative advantage between nations. Countries establish trade policies focused on tariffs, barriers, safety standards, and bilateral/international cooperation. Outsour

1. STRUCTURES
OF
GLOBALIZATION
GE 5: The Contemporary World

2. The Global Economy
•United Nations defines Economic globalization as
“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.”
•“It reflects the continuing expansion and mutual
integration of market frontiers and is an irreversible
trend for the economic development in the whole
world at the turn of the millennium. The rapid
growing significance of information in all types of
productive activities and marketization are the two
major driving forces for economic globalization.”

3. Two Major Driving Forces for Economic
Globalization
1. The rapid growing of information in all types of productive activities
2. Marketization (A restructuring process that enables state enterprises
to operate as market-oriented firms by changing the legal environment in
which they operate (20) and can be achieved through reduction of state
subsidies, organizational restructuring of management such as
corporatization, decentralization, and privatization (21) .

4. •One manifestations of economic globalization is the interconnections of
various components of production, where the stages in production takes
place in different location depends on the favorable conditions such as
cheap labor, raw material, skilled labor and market consumer.

5. Dimensions of Economic Globalization
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 production

6. Economic Globalization, Internationalization
and Localization
Economic globalization is a functional integration between internationally
dispersed activities which means that it is a qualitative transformation
rather than a quantitative change while internationalization is an
extension of economic activities between internationally dispersed
activities.
Internationalization is a corporate strategy that involves making products
and services as adaptable as possible, so they can easily enter different
national markets. This often requires the assistance of subject matter
experts. Internationalization is sometimes shortened to "i18n", where 18
represents the number of characters in the word.

7. What is Localization?
Localization is the process of adapting a product to a specific target
market. This usually happens after internationalization has taken place.
Where internationalization develops a product that’s easy to adapt for
many audiences in many different countries, localization takes that
product and makes it highly relevant for one specific market.

8. History of Economic Globalization

9. Emergence of Global trade
• According to Dennis O. Flynn and Arturo
Giraldez, global trade emerged in two ways:
•1.) all heavily populated continents began
to exchange products continuously – both
with each other directly and indirectly via
other continents, and
•2.) did so in values sufficient to generate
lasting impacts on all trading partners.

10. SilkRoad

11. In the 16th century world system analysts identify the origin of
modernity and globalization through long distance trade in the 16th
century (25). This best known example of archaic globalization is the Silk
Road, which started in western China, reached the boundaries of the
Parthian empire, and continued onwards towards Rome (26). It also
connected Asia, Africa, and Europe (27) .

12. In the 17th and 18th century global economy exists only in trade and
exchange rather than production as the world export to World GDP did
not reach 1 to 2 percent.
In the 19th century the advent of globalization approaching its modern
form is witnessed. A short period before World War I is referred to as
golden age of globalization characterized by relative peace, free trade,
financial and economic stability (29). Growth in international exchange of
goods accelerated in the second quarter of the 19th century. Global
economy in the 19th and 20th centuries grew by an average of nearly 4
percent per annum, which is roughly twice as high as growth in the
national incomes of the developed economies since the late 19th century
(30) .

13. Manila-AcapulcoGalleonTrade(1565-1815)

14. Global Actors
• Multinational Corporations- it is a business organization whose
activities are located in more than two countries and is the
organizational form that defines foreign direct investment. This
form consists of a country location where the firm is
incorporated and of the establishment of branches or
subsidiaries in foreign countries (A.A Lazarus, 2001 p. 10197)
• The International Monetary Fund (IMF)- [187 countries] founded
at the Bretton Woods Conference in 1944, it is the official
organization for securing international monetary cooperation.
It has done useful work in various fields, such as research and
the publication of statistics and the tendering of monetary
advice to less-developed countries. It has also conducted
valuable consultations with the more developed countries.

16. •North Atlantic Treaty Organization or NATO- it is based on the
North Atlantic Treaty, which provides the organization a
framework. The treaty provides that an armed attack against
one or more of NATO`s member nations shall be considered an
attack against them all. (30 members from North America and
Europe)
•World Trade Organization (WTO) [160 members representing 98
per cent of world trade], International Monetary Fund (IMF), and
the World Bank
•These three institutions underwrite the basic rules and
regulations of economic, monetary, and trade relations
between countries. Many developing nations have loosened
trade rules under pressure from the IMF and the World Bank.

17. Members ofNATO

18. The Bretton Woods System
• The Bretton Woods System was largely influenced by John Maynard Keynes, a British
economist.
• Keynes believed that economic crises occur not when a country does not have
money, but when money is not being spent or not moving.
•Moreover, according to Keynes, when economies slow down, governments have to
reinvigorate markets with infusions of capital.
•The active role of governments in managing spending would serve as a basis for type
of system called global Keynesianism.
•In 1944, delegates at Bretton Woods created two financial institutions: The
International Monetary Fund and World Bank.

19. Keynesian Economics vs. Neoliberalism
• With the ideas of John Maynard Keynes being applied in IMF and World Bank’s
strategy, governments poured money into their economies in order to
reinvigorate their respective economies, although causing inflation. (Keynesian
economics)
•Nonetheless, the effectivity of the Keynesian economics was greatly tested in
the 1970’s when prices of oil rose dramatically due to Organization of Arab
Petroleum Exporting Countries’ (OAPEC) decision to impose an embargo on US
and other countries due to the latter’s support on Israel (resupplying Israel
with needed arms for Yom Kippur War).
• Added with the 1973 and 1974 stock market crash in the US a phenomenon
called “stagflation” happened, wherein economic growth and employment
declined, with sharp inflation of goods. (prices increased)
• Even with great government spending and intervention on economy, this did
not remedy the situation.

20. NEOLIBERALISM
• With the failure of Keynesian economics to remedy the stagflation that
happened in US and other countries in the 1970’s, a new form of economic
thinking was introduced– Neoliberalism.
•According to Investopedia, Neoliberalism can be defined as a policy model that
encompasses both politics and economics and seeks to transfer the control of
economic factors from the public sector to the private sector.
• It called for the privatization of government-controlled services like water,
power, communications, transport.
• highlighted free markets

21. INTERNATIONAL TRADE
ANDTRADEPOLICIES
International trade is the exchange of
goods, services and capital across
national borders. It is a multi-million
dollar activity, central to the Gross
Domestic Product (GDP) of many
countries, and it is the only way for
many people in many countries to
acquire resources (41). In acquiring
products where demand is inelastic
and domestic supply is inadequate,
there is absence traders, consumers
and suppliers are forced to either
develop substitute goods or devote a
large percentage of their income.

22. INTERNATIONAL
TRADEAND
TRADEPOLICIES
The two key concepts in the economics of
international trade are specialization and
comparative advantage.
Comparative advantage comes in; so long as
the two countries have different relative
efficiencies, the two countries can benefit
from trade – the country with absolute
advantage will still benefit by directing its
resources to those goods where it is most
productive and trading for the others;
specialization refers to this process;
countries as well as individual businesses can
maximize their welfare by specializing in the
production of those goods where they are
most efficient and enjoy the largest
advantages over rivals (43) .

23. INTERNATIONALTRADE
ANDTRADEPOLICIES
-pointsforconsideration-1
More affordable products for the
consumer is the result of competition.
The economy of the world is affected
by the exchange of goods as dictated by
supply and demand, making goods and
services obtainable which may not be
available globally to consumers.
Trading globally gives consumers and
countries the opportunity to be
exposed to goods and services not
available in their own countries.

24. INTERNATIONAL
TRADEAND
TRADEPOLICIES
-pointsfor
consideration-2
Almost every kind of products can be found
in the international market aside from
services being traded like banking, tourism,
etc.
Global trade allows wealthy countries to use
their resources such as labor, technology, or
capital more efficiently.
Because countries are endowed with
different assets and natural resources, some
countries may produce the same good more
efficiently and therefore sell it more cheaply
than other countries (44) .
Specialization in international trade happens
if a country cannot efficiently produce an
item and obtain it by trading with another
country that can.

25. Trade policies on the other hand refer to the
regulations and agreement of foreign
countries (45). It defines standards, goals,
rules, and regulations that pertain to trade
relation between countries (46). Each country
has specific policies formulated by its officials.
Boosting the nation’s international trade is
the aim of each country. Taxes imposes on
import and export, inspection, regulations,
tariffs and quotas are all part of country’s
trade policy.

26. FOCUSESOF
TRADEPOLICY
IN
INTERNATIONAL
TRADE-1
Tariffs. These are taxes or duties paid for a
particular class of imports or exports.
Imposing taxes on imported and exported
goods is a right of every country. Heavy
tariffs on imported goods are levied by some
nations for the protection of their local
industries. The prices of imported goods in
local markets are inflated due to high
imported taxes to ensure demand of local
products.

27. FOCUSESOF TRADEPOLICYIN INTERNATIONAL
TRADE-2
Trade barriers. These are measures that governments or public
authorities introduce to make imported goods or services less
competitive than locally produced goods and services (47). They are
state-imposed restrictions on trading a particular product or with a
specific nation. It can be linked to the product, service like technical
requirement and it can also be administrative in nature such as rules
and procedures of transactions. Tariffs, duties, subsidies, embargoes
and quotas are the most common trade barriers.

28. FOCUSESOF
TRADEPOLICY
IN
INTERNATIONAL
TRADE-3
Safety. This ensures that imported products in
the country are of high quality. Inspection
regulations laid down by public officials ensure
the safety and quality standards of imported
products.
Consumer product quality and standards are
primarily governed by the Consumer Act
("Consumer Act"), which is a general law on
consumer products.
Food and Drug Administration Act of 2009
(Republic Act No. 9711), which amends the Foods,
Drugs and Devices and Cosmetics Act (Republic
Act No. 3720) ("FDA Law"), specifically regulates
"health products," which include food and other
consumer products that may have an effect on
health.

29. FOCUSESOF
TRADEPOLICYIN
INTERNATIONAL
TRADE-3
Agencies that have control on the import
and export activities to ensure safety of
goods and services in the Philippines are:
Department of Trade and Industry
Bureau of Customs
Other line agencies such as DA, DoH and
DENR

30. TYPESOF
TRADE
POLICIES
National Trade Policy
This safeguards the best interest of its trade and
citizen.
Bilateral Trade Policy
To regulate the trade and business relations between
two nations, this policy is formed. Under the trade
agreement the national trade policies of both the
nations and their negotiations are considered while
bilateral trade policy is being formulated.
International Trade Policy
This defines the international trade policy under their
charter like the International economic organizations,
such as Organization for Economic Cooperation and
Development (OECD), World Trade Organization
(WTO) and International Monetary Fund (IMF).The
best interests of both developed and developing
nations are upheld by the policies.

31. TRADEPOLICY
AND
INTERNATIONAL
ECONOMY
In most developed countries where
open market economy prevails, the
international economic organizations
support free trade policies. In the case
of developing nations partially-shielded
trade practices are preferred to protect
their local trade industries. The
following are dependent on
globalization: sound trade policies for
market changes, establishment of free
and fair trade practices and expansion
of possibilities for booming
international trade.

32. Global Economy Outsourcing
Outsourcing is an activity that requires search for a partner and
relation-specific investments that are governed by incomplete
contracts and the extent of international outsourcing depends
on the thickness of the domestic and foreign market for input
suppliers, the relative cost of searching in each market, the
relative cost of customizing inputs and the nature of the
contracting environment in each country (50).
Subcontracting is a central element of the new economy (51). It
is the practice of assigning part of the obligations and tasks
under a contract to another party known as a subcontractor and
especially prevalent in areas where complex projects are the
norm like construction and information technology (52) .

33. Outsourcing is a means of finding a partner with which a firm
can establish a bilateral relationship and having the partner
undertake relationship-specific investments so that it becomes
able to produce goods and services that fit the firm’s particular
needs. Often, the bilateral relationship is governed by a
contract, but even in those cases the legal document does not
ensure that the partners will conduct the promised activities
with the same care that the firm would use itself if it were to
perform the tasks (53) .