2. LearningObjectives:
At the end of this lesson, you should be able to:
1. Define economic globalization;
2. Identify and discuss the three waves of
economic globalization; and assess the
consequences of global economic integration
specifically, on international trade and trade
3. ECONOMICGLOBALIZATION
• The International Monetary Fund (IMF) (2008) regards
“economic globalization” as a historical process
representing the result of human innovation and
technological process.
• It is characterized by the increasing integration of
economies around the world through the movement of
goods, services, and capital across borders.
6. Early Wave
SILK ROAD
• The coverage of this trade was so vast
connecting by land and sea from Asia to the
far end Europe,Middle East as well as Africa.
• During this period traded goods were
predominantly artisan goods, silk, spices,
ceramics, textile, compasses, gun powder
from India and China.
7. The Age of Exploration
• From early 15th to 17th century was the privotal era
that “changed the shape of the world and the course
of history”.
• European made and unprecedented levels of
exploration because of the growing numbers of
professional explorer and navigators.
• European ships travelled around the world in search
for trading routes and new lands to colonize.
• New age of global commercial capitalism was laid
during this period.
8. GALLEONTRADE
•Trading route that connected
Manila in the Philippines and
Acapulco in Mexico
•This was the first time that the
Americas were directly connected
to Asian trading routes
•For Filipinos, it is crucial to note
that economic globalization
began on the country’s shores
9. GOLDSTANDARD
•A more open trade
system emerged in 1867
when ,following the lead
of the United States and
other European nations
adopted at an
international monetary
conference in Paris.
10. KeynesianLiberal
Wave
Bretton Woods Conference
• During the last phase of the Second
World War, delegates from different
states assembled in the united states
• The world leaders sought to create a
global economic system that would
ensure a longer-lasting global peace.
11. BRETTON WOODS SYSTEM
•Was inaugurated in 1994 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.
12. BRITISH ECONOMIST
JOHN MAYNARD KEYNES
John Maynard Keynes
•Who believed that “Economic crises
occur not when a country does not
have enough money, but when money
is not being spent and, thereby, not
moving”
•This active role of governments in
managing spending served as the
anchor for what would be called a
system of global Keynesianism
14. INTERNATIONAL BANK FOR
RECONSTRUCTION AND
DEVELOPMENT(IBRD, OR WORLD BANK)
• To be responsible for funding postwar reconstruction projects.
It was a critical institution at a time when many of the world’s
cities had been destroyed by the war.
• Was primarily designed for the Marshall Plan to extend the
financial loans to reconstruct the devastated economies in
Europe
• The Marsall Plan, also known as the European Recovery
Program, was a U.S. program providing aid to Western Europe
following the devastation of World War ll.
15. INTERNATIONAL
MONETARY FUND(IMF)
• Which was to be the global lender or last resort to prevent
individual countries from spiraling into credit crises.
• It was also established to administer responsibility to
coordinate and regulate international monetary transction
as well as to promote global economic prosperity and
political stability.
16. • The WTO opened a new forum within which broad range of
international issues would be negotiated, including not just
traditional trade issues on tarrif and non-tariff barriers, but also
intellectual property rights, trade, related investment measures,
and food safety standards.
• General Agreement on Tariffs and Trade (GATT) in 1947.GATT’S
main purpose was to reduce tariffs and other hindrances to free
trade.
WORLD TRADE
ORGANIZATION (WTO) IN 1995
17. BRETTON WOODS GOALS AND
STRATEGIES
• The U.S dollar was the only international standard currency of
choice peg at $35 per ounce of gold.
• As a response, foreign countries converted their US dollars into
gold thereby depleting US gold reserves. With the pressure
mountaining President Nixon of United States announced on
August 15, 1971 to abandon the gold-exchange standard.
1. MACROECONOMIC STABILITY
18. 2. IMPORT SUBSTITUTION
• Domestic industries were built in the 50s and 60s to replace
imported products and promote domestic industrial
development and eventually achieve industrialization.
• Industrialization from the west, trade surplus, import
dependent – export oriented.
• Four Asian Tigers are the economies of Hong Kong, Singapore,
South Korea and Taiwan.
• Tiger Cub Economies (i.e. Malaysia, Philippines, Thailand, and
Vietnam.
19. 3. GOVERNANCE REFORM
• Loans extended to poor countries from IMF often comes
with conditions such as they should adopt market
oriented economic models and open up their economies
to the foreign competition and gradual opening of
markets.
• Another reform instituted by IMF is to foster good
governance through eradicating corruption
• Practice of crony capitalism was rampant among
developing countries.
20. • In early 1970s, the prices of oil rose sharply as a result of the
Organization of Arab Petroleum Exporting Countries’ (OAPEC, the
Arab member-countries of the Organization of Petroleum
Exporting Countries or OPEC)
• imposition of an embargo in response to the decision of the
United States and other countries to resupply the Israeli military
with the needed arms during the Yom Kippur War
• Arab countries also used the embargo to stabilize their
economies and growth. The “oil embargo” affected the Western
economies that were reliant on oil
NEO – LIBERAL WAVE
21. • a phenomenon called stagflation, in which a decline in economic
growth and employment (stagnation) takes place alongside a
sharp increase in prices (inflation)
• a new form of economic thinking that critics labeled
neoliberalism became the codified strategy of the United States
Treasury Department, the World Bank, the International
Monetary Fund (IMF), and eventually the World Trade
Organization (WTO). The policies they forwarded came to be
called the Washington Consensus.
• The term Washington Consensus was named after the key players
in Washington headed by President Ronald Reagan of US and
Prime Minister Margaret Thatcher of England
22. • The Washington Consensus required governments to implement
the structural adjustments measures in order to qualify for loans.
It advocates pushed for minimal government spending to reduce
government debt.
23. PERSPECTIVES ON ECONOMIC
GLOBALIZATION
Indicates that the international system is
more likely to remain stable when a
single nation-state is the dominant
world power, or hegemon. This is called
hegemony which refers to a state’s
ability to “single-handedly dominate the
rules and arrangements of international
political and economic ties.
Hegemonic Stability Theory
(HST)
Explains that international institutions,
such as the IMF, World Bank, and the
GATT, have an independent impact on
global economy. Governing
arrangements called regimes, as
Robert Keohane argued, explain the
endurance of international
cooperation in the absence of a
hegemon.
Neo – liberal Institutionalist
Theory
24. ECONOMIC GLOBALIZATION TODAY
According to the IMF, the global per capita GDP
rose over five-fold in the second half of the 20th
century. It was this growth that created the large
Asian economies like Japan, China, Korea, Hong
Kong, and Singapore
25. Economic globalization remains an uneven process, with some countries,
corporations, and individuals benefitting a lot more than others.
1. First, developed countries are often protectionists, as they repeatedly
refuse to lift policies that safeguard their primary products that could otherwise
be overwhelmed by imports from the developing world
2. The beneficiaries of global commerce have been mainly transnational
corporations (TNCs) and not governments. The term “race to bottom” refers to
countries’ lowering their labor standards, including the protection of workers’
interests, to lure in foreign investors seeking high profit margins at the lowest
cost possible
