GEC103 - THE CONTEMPORARY WORLD the flow of culture.

A
―technoscape‖ refers to the
UNIT 1 circulation of mechanical good
and software; a ―financescape‖
GLOBALIZATION DEFINITIONS:
denotes the global circulation of
Of these changes, one can say that money; and ―ideoscape‖ is the
globalization is a very important change, realm where political ideas
if not, the ―most important‖ (Bauman move around.
2003). ―The reality and omnipresence of
THEORIES OF GLOBALIZATION:
globalization makes us see ourselves as
part of what we refer to as the ―global World-systems Analysis
age‖.
The compression of the world and rapid The theory originated with sociologist
increase of consciousness of the world Immanuel Wallerstein, who suggests
as a whole. This is how we experience that the way a country is integrated into
the world in the global age. Its rotation the capitalist world system determines
seems to have speeded up (Ronald how economic development takes place
Robertson). in that country.
A global movement towards integration World Systems Theory posits that there
of the economy, finance, commerce, is a world economic system in which
and communication. Globalization some countries benefit while others
means opening local and nationalistic are exploited.
perspectives to a broader view of an Like dependency theory, suggests that
interconnected and interdependent wealthy countries benefit from other
world with free transfers of capital, countries and exploit those countries‘
goods, and services across national citizens.
borders. It is the integration of the  Structured times: (i) cycles
national markets to a wider global Kondratieff economic cycles
market signified by the increased free of approximately 50 years
trade (Lobo et al, 2019) length starting with an A-phase
The expansion and intensification of of growth followed by a B-phase
social relations and consciousness of stagnation, and longer
across world-time and across world- hegemonic cycles through
space. The creation of new social which one ―special‖ state
networks and the multiplication of dominates e.g. the twentieth
existing connections that cut across the century as ―American century‖
traditional political, economic, cultural encompassed in (ii) asymptotic
and geographic boundaries refers to trends (such as labour costs,
expansion. These various connections democratic demands,
occur at the different levels. (Manfred environmental crisis that are
Steger) inevitably diminishing the overall
For anthropologist Arjun Appadurai, rate of profit).
different kinds of globalization occur on  Structured spaces: (i) division of
multiple and intersecting dimensions of labor into core and periphery
integration that he calls ―scapes‖. created by core-producing (high
 An ―ethnoscape‖, it refers to the tech, high wage) and periphery-
global movement of people, producing (low tech, low wage)
while a ―mediascape‖ refers to processes supplemented by
 semi-periphery zones where the argues, states have always been the
two processes are relatively handmaiden of capitalism.
balanced, and governance His assertion that the political role of the
provided by (ii) multiple states core states is crucial to world-system is
as territorial sovereign units. an insight upon which more scholars
Kondratieff Wave - a long-term writing on globalization need to build.
economic cycle believed to be born out
of technological innovation, which Transformationalist or Postmodernists
results in a long period of prosperity.
Argues that globalization should be
This theory was founded by Nikolai D.
understood as a complex set of
Kondratieff believed that these cycles
interconnecting relationships
involved periods of evolution and self-
through which power, for the
correction.
most part, is exercised indirectly.
Relationship between world-systems analysis & They suggest that the globalization
Globalization process can be reversed, especially
where it is negative or, at the very
Three key similarities: least, that it can be controlled.
Transformationalists argue that the
1. Both approaches are multi-sectoral but flow of culture is not one way,
with a focus on the economic: both from the west to the developing
aspire to describe macro-social change world; it is a two-way exchange in
in the whole based upon a materialist which Western culture is also
understanding of social change; influenced, changed and enriched
2. Both approaches place the state at by cultures in the developing world.
centre-stage in their analyses but so as *INSERT DITO YUNG CONCEPT
to downgrade it, as an analytical MAP
category (world-systems analysis) or as
a political category (globalization). The Transformationalist View of Globalization:
3. Neither proposes a multi-sectoral
alternative organization nexus to the ‗Trade‘ has many complex formations.
state, but both relate marginally to the So it is difficult to say that it is either
literature on world cities. good or bad. Besides Free Trade, Fair
Wallerstein himself rejects use of the Trade is expanding, and there is also
term "globalization" because he believes illegal trade – in drugs for example.
it distorts his central argument that the Increasing consumerism isn‘t just
capitalist system is the crucial ingredient good or bad – cultural globalization is
for transnational relations. characterized by hybridity – new brands
He does accept the term "globalism" to come into contact with local cultures and
refer to cultural trends that parallel they are modified by those cultures,
economic dominance, but he rejects the creating new products – Bollywood,
argument that globalization somehow Chiken Tikha Massala. A related
diminishes the importance of state concept here is glocalism.
power. Globalization is characterized by new
The recent surge of international political formations, not just the spread
economic integration—growing free of democracy or the spread of
trade and international investment—is a American dominance.
continuation, he believes, of the historic E.G China is a Communist country that
capitalist world-system in which, he doesn‘t allow voting but supports
Capitalism, while many African
 ‗democracies‘ are so corrupt they can‘t
really be called democracies. Also,
many countries have proved more than
capable of resisting American force –
mostly in the Middle East.

DIMENSIONS OF GLOBALIZATION

Economic Globalization

Economic globalization refers to the

intensification and stretching of
economic connections across the globe.
Gigantic flows of capital mediated by
digital technology and standardized
means of transportation have
stimulated trade in goods and
services. Extending their reach around Dimensions of Globalization:
the world, markets have migrated to
cyberspace and integrated local, WORLD BANK
national, and regional economies. WORLD TRADE ORGANIZATION
Huge Transnational Corporations Neoliberalism is rooted in the classical
(TNCs), powerful international economic liberal ideals of Adam Smith (1723–90)
institutions, and gigantic regional and David Ricardo (1772–1823), British
business and trade networks like the thinkers who viewed the market as a
Asian Pacific Economic Cooperation self-regulating mechanism tending
(APEC), the Association of Southeast toward equilibrium of supply and
Asian Nations (ASEAN), the Southern demand, thus securing the most efficient
Common Market (MERCOSUR), and allocation of resources.
the European Union (EU) have emerged British sociologist Herbert Spencer
as the major building blocks of the 21st (1820– 1903) added to this doctrine a
century‘s global economic order. twist of social Darwinism by arguing that
Contemporary economic free market economies constitute the
globalization can be traced back to the most civilized form of human
emergence of a new international competition in which the ‗fittest‘ would
economic order assembled at a naturally rise to the top.
watershed economic conference held The immense power of TNCs has
towards the end of the Second World profoundly altered the structure and
War in the sleepy New England town of functioning of the world economy. These
Bretton Woods Under the leadership of giant firms and their global strategies
the United States and Great Britain, the have become major determinants of
major powers of the global North agreed trade flows, the location of industries,
to reverse their protectionist policies of and other economic activities around
the interwar period. the world. In particular, their ability to
disperse manufacturing processes into
many discrete phases carried out in
many different locations around the
world has globalized economic
production.
 Participation in global value chains Nurtured by demonizing images of
(GVCs), the international fragmentation ‗outsiders‘ and ‗foreigners‘, people‘s
of production, can lead to increased job belief in the superiority of their own
creation and economic growth. In order nation has supplied the psychological
to reap the gains from value chain energy required for large-scale
participation, countries must put in place warfare—just as the enormous
the right kind of trade and investment productive capacities of the modern
policies. state have provided the material means
A single finished product often results necessary to fight the costly total wars
from manufacturing and assembly in of the last century.
multiple countries, with each step in the President Wilson’s other main idea of
process adding value to the end a League of Nations that would give
product. international cooperation an institutional
expression was belatedly realized with
Political Globalization the founding of the United Nations in
1945.
Political globalization: the intensification
While deeply rooted in a political order
and expansion of political interrelations
based on the modern nation-state
across the globe.- an important set of
system, the UN and other fledgling
political issues pertaining to the
intergovernmental organizations also
principle of state sovereignty,- the
served as catalysts for the gradual
growing impact of intergovernmental
extension of political activities across
organizations,- and the future
national boundaries, thus
prospects for regional and global
simultaneously affirming and
governance.
undermining the principle of national
The evolution of political
sovereignty.
arrangements beyond the framework of
the nation-state, thus breaking new The demise of the nation-state?
conceptual ground. After all, for the last
few centuries, humans have organized Hyperglobalizers - are of the opinion that
their political differences along globalization is real and everywhere. It
territorial lines that generate a sense of brings about accelerated economic
‘belonging’ to a particular nation-state. interdependence and intense
This artificial division of planetary social competition, which leads to qualitative
space into ‗domestic‘ and ‘foreign’ economic growth. According to them,
spheres corresponds to people‘s with increasing globalization, the nation-
national imaginary that engenders states are drawing to a close.
collective identities based on the The majority : political globalization as a
creation of a common ‗us‘ versus an mere secondary phenomenon driven by
unfamiliar ‗them‘. more fundamental economic and
Thus, the modern nation-state system technological forces.
has rested on psychological foundations Politics has been rendered almost
and cultural assumptions that convey a powerless by an unstoppable techno-
sense of existential security and historic economic juggernaut that will crush all
continuity of the national, while at the governmental attempts to reintroduce
same time demanding from its citizens restrictive policies and regulations.‘
that they put their patriotic loyalties to Endowing economics with an inner logic
the ultimate test. apart from, and superior to, politics,
these commentators look forward to a
new phase in world history in which the institutions and associations like the
main role of government will be to serve International Criminal Court or the
as a superconductor for global International Law Commission held
capitalism. together by common norms and
Pronouncing the rise of a ‘borderless interests.
world’, hyper-globalizers seek to In this early phase of global governance,
convince the public that globalization these structures resemble an eclectic
inevitably involves the decline of network of interrelated power centers
bounded territory as a meaningful such as municipal and provincial
concept for understanding political and authorities, regional blocs, international
social change. organizations, and national and
Consequently, they suggest that international private-sector associations.
political power is located in global
social formations and expressed through Cultural globalization
global networks rather than through
Refers to the intensification and
territorially based states. In fact, they
expansion of cultural flows across
argue that nation-states have already
the globe.
lost their dominant role in the global
We are witnessing the rise of an
economy. As territorial divisions are
increasingly homogenized popular
becoming increasingly irrelevant, states
culture underwritten by a Western
are even less capable of determining the
culture industry‘ based in New York,
direction of social life within their
Hollywood, London, Paris, and Milan. As
borders.
evidence for their interpretation, these
For example, since the workings of
commentators point to Amazonian
genuinely global capital markets
Indians wearing Nike sneakers;
dwarf their ability to control exchange
denizens of the Southern Sahara
rates or protect their currency, nation-
purchasing Yankees baseball caps; and
states have become vulnerable to the
Palestinian youths proudly displaying
discipline imposed by economic choices
their Golden State Warriors basketball
made on a supranational level.
singlets in downtown Ramallah.
Again, the relative decline of the nation-
American sociologist George Ritzer
state over the last three decades does
coined the term McDonaldization to
not necessarily mean that governments
describe the wide-ranging sociocultural
have become impotent bystanders to
processes by which the principles of the
the workings of global forces. States can
fast-food restaurant are coming to
still take significant measures to make
dominate more and more sectors of
their economies more or less attractive
American society as well as the rest of
to global investors. In addition, they
the world.
have continued to retain control over
Number of languages: The declining
education, infrastructure, and foreign
number of languages in different parts of
policy. Still, the intensifying population
the world points to the strengthening of
movements linked to the form of
homogenizing cultural forces.
embodied globalization have challenged
Movements of people: People carry
some of the most crucial powers of
their languages with them when they
nation-states: immigration control,
migrate and travel. Migration patterns
population registration, and security
affect the spread of languages.
protocols.
Foreign language learning and
Political globalization is perhaps most
tourism: Foreign language learning and
visible in the rise of supraterritorial
 tourism facilitate the spread of general. Unsustainable forms of
languages beyond national or cultural ecological globalization are now
boundaries. recognized as threatening all life on our
Internet languages: The Internet has planet.
become a global medium for instant The worldwide impacts of natural and
communication and quick access to man-made disasters—such as the
information. Language use on the horrifying 1986 nuclear plant accidents
Internet is a key factor in the analysis of at Chernobyl, Ukraine, and Fukushima,
the dominance and variety of languages Japan, in 2011, or the massive 2010
in international communication. Deepwater Horizon oil spill in the Gulf of
International scientific publications: Mexico— clearly show that the
International scientific publications, both formidable environmental problems of
online and print, contain the languages our time can only be tackled by a global
of global intellectual discourse, thus alliance of states and civil society actors.
critically impacting intellectual Man-made disaster: Kuwait Oil Fires,
communities involved in the production, Chernobyl Power Plant Explosion, Union
reproduction, and circulation of Carbide Pesticide Plant Accident, The
knowledge around the world. Love Canal Tragedy, Exxon Valdez Oil
The globalization of languages can be Spill.
viewed as a process by which some Two major concerns relate to still
languages are increasingly used in uncontrolled population growth in
international communication while parts of the global South and the lavish
others lose their prominence and even consumption patterns in the global
disappear for lack of speakers. North. Since farming economies first
One model posits a clear correlation came into existence about 480
between the growing global significance generations ago, the world population
of a few languages—particularly has exploded a thousand-fold to reach
English, Chinese, and Spanish—and the nearly 7.7 billion in 2019. Half of this
declining number of other languages increase has occurred in the last thirty
around the world. years.
With the possible exception of rats and
Another model suggests that the mice, humans are now the most
globalization of language does not numerous mammals on earth. Vastly
necessarily mean that our descendants increased demands for food, timber, and
are destined to utilize only a few fibre have put severe pressure on the
tongues. Still another thesis emphasizes planet‘s ecosystems.
the power of the Anglo-American culture
industry to make English—or what some
commentators call ‗Globish‘—the global
lingua franca of the 21st century.

Ecological Globalization

In recent years, global environmental

issues such as global climate change
and transboundary pollution have
received enormous attention from
research institutes, the media,
politicians, economists, and the public in
 depositors and kept safe by the
Norwegian government.
Another significant ecological problem
associated with population increases Two major concerns relate to still
and the globalization of uncontrolled population growth in
environmental degradation is the parts of the global South and the lavish
worldwide reduction of biodiversity. consumption patterns in the global
North. Since farming economies first
Seven out of ten biologists today believe came into existence about 480
that the world is now in the midst of the generations ago, the world population
fastest mass extinction of living species has exploded a thousand-fold to reach
in the 4.5-billion-year history of the nearly 7.7 billion in 2019. Half of this
planet. increase has occurred in the last thirty
years.
According to recent OECD reports,
two-thirds of the world’s farmlands With the possible exception of rats and
have been rated as ‗somewhat mice, humans are now the most
degraded‘ and one-third have been numerous mammals on earth. Vastly
marked as ‘strongly degraded’. Half increased demands for food, timber, and
the world‘s wetlands have already been fibre have put severe pressure on the
destroyed, and the biodiversity of planet‘s ecosystems.
freshwater ecosystems is under serious
threat. Three-quarters of worldwide Transboundary pollution represents
genetic diversity in agricultural crop another grave danger to our collective
and animal breeds has been lost since survival. The release of vast amounts of
1900. synthetic chemicals into the air and
water has created conditions for human
Some experts fear that up to 50 per cent and animal life that are outside previous
of all plant and animal species—most of limits of biological experience.
them in the global South—will disappear
by the end of this century. Hence, many For example, chlorofluorocarbons
environmentalists argue that biodiversity (CFCs) were used in the second half of
should be treated as a planetary asset the 20th century as non-flammable
and held in trust for the benefit of future refrigerants, industrial solvents, foaming
generations. agents, and aerosol propellants.

The Svalbard Global Seed Vault But sea level and water temperature rise
buried in permafrost in a mountain on as a result of global warming are not the
the Arctic island of Spitzbergen. only serious problems threatening the
Officially opened in 2008, this health of our planet‘s oceans.
‗Doomsday Vault‘ was funded by The Overfishing, the loss of coral reefs,
Global Crop Diversity Trust (financed by coastal pollution, acidification, mega-oil
international donors like the Gates and spills, and illegal dumping of hazardous
Rockefeller Foundations) and specially wastes have had a devastating impact
designed to store back-up copies of the on Earth‘s marine environments.
seeds of the world‘s major food crops at
–18°C. Operating like a safety deposit Consider, for example, the Great
box in a bank, the Global Seed Vault is Pacific Garbage Patch—a gigantic
free of charge to public and private floating mass of often toxic,
nonbiodegradable plastics and chemical trees, soil, and oceans can absorb
sludge twice the size of Texas that naturally, beginning at some point
circulates permanently in the powerful between 2050 and 2100.
currents of the Northern Pacific Ocean.
Third, countries agreed to review each
The central feature of all these other‘s contribution to cutting emissions
potentially disastrous environmental every five years so as to scale up the
problems is that they are glocal, thus challenge.
making them serious problems for all
sentient beings inhabiting our Finally, rich countries promised to help
magnificent blue planet. The dark side of poorer nations by providing ‗climate
unchecked environmental glocalization finance‘ geared toward climate change
became especially visible in the adaptation and hastening the switch to
estimated 87,000 wildfires that raged in renewable energy.
the Amazon region of Brazil in the
summer of 2019.

Indeed, transboundary pollution,

global warming, climate change, and
species extinction are challenges that
cannot be contained within national or
even regional borders. They do not have
isolated causes and effects, for they are
caused by aggregate collective human
actions and thus require a coordinated
global response.

Political efforts in favor of immediate

change have been limited. In December
2015, however, the UN Framework
Convention on Climate Change
summit held in Paris, France, proved
to be a turning point for action to limit
climate change with an expressed
objective to move to a zero carbon world
within the foreseeable future. Uniting all
of the world‘s nations in a single
agreement on tackling climate change
for the first time in history, the Paris
global climate deal comprised a number
of key elements;

First, the parties committed themselves

to arresting the rise of global
temperatures.

Second, they pledged to limit the

amount of greenhouse gases emitted by
human activity to the same levels that
UNIT 2 of the world have different views on
what is right or wrong. The colonial
The Global Economy aspects of growing Business Empire can
be reduced by working together and
Economic globalization refers to the
learning from the different views that
international mobility of individuals,
people will work with other people to lift
capital, technology, goods, and services.
each other.
It‘s also about how different countries
Innovations in some fields would
and regions have become
create new technologies. If there is a
interdependent across the globe.
need to reach a global audience for real
According to one of the most often cited
business will need to focus on
definitions, ―economic globalization is a
investment and innovation to make that
historical process, the result of human
happen. Whenever a change takes
innovation and technological progress. It
place, new technologies also arrive in
refers to the increasing integration of
many different fields. The result is a
economies around the world particularly
better living standard for all those
through the movement of goods,
involved in the process of development.
services, and capital across borders.
Disadvantages of Economic Globalization
Economic globalization
It gives more power to businesses to
According to United Nations, it refers to
influence civil government businesses
the increasing interdependence of
grow in wealth, political election can be
world economies as a result of the
better shape. Because of their cash flow
growing scale of cross-border trade of
they can lobby for laws that benefits
commodities and services, flow of
their business. In the past, foreign firms
international capital and wide and rapid
have been restricted from influencing
spread of technologies. It reflects the
domestic elections, but recent U.S
continuing expansion and mutual
Supreme Court ruling, and other legal
integration of market frontiers and is
entities have made it more potent than
an irreversible trend for the economic
ever before.
development in the whole world at
It removes local culture‘s emphasis.
the turn of the millennium.
There is no doubt that in economic
Advantages of Economic Globalization globalization, the American business
revolution takes over the leading role. In
It promotes local growth by there are other multinationals, but the
stimulating overall growth. The theory US dominates the business world. This
of trickledown economics works if it is means that the emphasis on local
appropriately implemented. That‘s culture will be extinguished as
because it is all about spending. globalization continues, instead of giving
Multinational businesses are providing influence from business perspective,
their community with jobs and dollars. If there will only be three regions.
a business hoards their cash, the entire It encourages disease development and
system will collapse, but theory as a spread. Having a globalized economy
whole is right. means more people will travel
Higher levels of mutual trust would internationally than ever before. As of
be created. Different people can trust 2014 Ebola outbreak showed, when
each other, the only way business people hop on aircraft and travel
opportunities can grow. Different corners anywhere in the world in 2 days or less,
 the diseases will spread to places ASEAN region, a major component of
around the world where they are not the ASEAN Economic Community
generally seen today. (AEC). ATIGA covers tariff
liberalization, trade facilitation initiatives,
Aspects Of Economic Globalization And simplification of rules of origin, and
International Relation establishment of an ASEAN Trade
Repository.
International relations attempt to
Philippines – Japan Economic
explain the interactions of states in the
Partnership Agreement. The
global interstate system, and it also
Philippines and Japan entered into a
attempts to explain the interactions of
free trade agreement in 2008. PJEPA is
others whose behavior originates within
the Philippines‘ only bilateral free trade
one country and is targeted toward
agreement, covering, among others,
members of other countries. In short, the
trade in goods, trade in services,
study of international relations is an
investments, movement of natural
attempt to explain behavior that occurs
persons, intellectual property, customs
across the boundaries of states, the
procedures, improvement of the
broader relationships of which such
business environment, and government
behavior is a part, and the institutions
procurement.
(private, state, nongovernmental, and
Philippines – European Free Trade
intergovernmental) that oversee those
Association Free Trade Agreement
interactions. Explanations of that
The Philippines and EFTA members –
behavior may be sought at any level of
Iceland, Liechtenstein, Norway, and
human aggregation.
Switzerland – signed a free trade
Ensures a more natural movement
agreement in 2016 which is expected to
across nations of goods and services.
enter into force in 2018. The
To foster international economic ties,
Philippines-EFTA covers trade in goods,
this is an absolute necessity.
trade in services, investment,
Globalization, which is conducive to
competition, intellectual property,
international industrial relations, has
government procurement, and trade and
also made it possible to move smoother
sustainable development.
people between countries. This also
Other Free Trade Agreements Under
helps people in one country migrate to
ASEAN, the Philippines has a
another for work, thus tackling the
preferential trade agreements with
unemployment problem in many
China, Hong Kong, India, Japan, South
countries.
Korea, and Australia and New Zealand.
Leads to nationwide free trade. Several
The United States and the Philippines
bilateral trade agreements have been
have had a very close trade relationship
signed between countries since the
for more than a hundred years. They
early days of globalization.
meet regularly with the Philippines under
ASEAN Trade in Goods Agreement.
the auspices of the 1989 bilateral Trade
The 2010 ASEAN Trade in Goods
and Investment Framework
Agreement (ATIGA) consolidated all
Agreement (TIFA) to address
Common Effective Preferential
outstanding bilateral issues and
Tariff/ASEAN Free Trade Area
coordinate on bilateral, regional, and
(CEPT/AFTA) commitments related to
multilateral issues. Under the TIFA, the
trade in goods. It seeks to establish a
United States and the Philippines also
single market and production base
have signed agreements on customs
with a free flow of goods in the
administration and trade facilitation
(2010), cooperation on stopping agreed individual targets. The
illegal transshipments of textiles and Convention itself only asks those
apparel (2006), and implementation of countries to adopt policies and
minimum access commitments by measures on mitigation and to report
the Philippines (1998). periodically.
Philippines is currently our 31st largest Another is the application of the
goods trading partner with $21.4 billion ―doctrine of incorporation,‖ which
in total (two way) goods trade during ―mandates that the Philippines is bound
2019. Goods exports totaled $8.6 billion; by generally accepted principles of
goods imports totaled $12.8 billion. international law which automatically
Trade in services with Philippines form part of Philippine law by operation
(exports and imports) totaled an of the Constitution.‖ (Justice Carpio, in
estimated $9.2 billion in 2019. Services his dissent in Bayan Muna, 2011; citing
exports were $3.4 billion; services Agpalo, International Law, 2006)
imports were $5.7 billion. ARTICLE II - Declaration of Principles
U.S. goods and services trade with and State Policies (Principles)
Philippines totaled an estimated $30.6 SECTION 2. The Philippines renounces
billion in 2019. Exports were $12.1 war as an instrument of national policy,
billion; imports were $18.5 billion. adopts the generally accepted principles
The ensured information flows easier of international law as part of the law of
and faster across geographic the land and adheres to the policy of
boundaries. Economic relationship peace, equality, justice, freedom,
success often depends on information. cooperation, and amity with all nations.
It has led to reduction in cultural barriers ARTICLE 6 - The Legislative
that have proved conducive to Department SECTION 21. No treaty or
nationwide economic cooperation. international agreement shall be valid
Movement of capital between countries and effective unless concurred in by at
due to globalization has also played an least two-thirds of all the Members of the
essential role in international economic Senate.
relations. The ―doctrine of transformation,‖
It has given rise to several multinational ―which holds that the generally accepted
corporations which undertake economic rules of international law are not per se
activity across geographical borders. binding upon the State but must first be
It has helped to address embodied in legislation enacted by the
environmental issues which are lawmaking body and so transformed will
strategic to international economic they become binding upon the State as
relations. (e.g. Kyoto Protocol of 1997) part of its municipal law.‖ (Isagani Cruz,
The Kyoto Protocol was adopted on 11 International Law, 2000)
December 1997. Owing to a complex
ratification process, it entered into force Economic System
on 16 February 2005. Currently, there
An economic system is a means by
are 192 Parties to the Kyoto Protocol.
which societies or governments
In short, the Kyoto Protocol
organize and distribute available
operationalizes the United Nations
resources, services, and goods
Framework Convention on Climate
across a geographic region or
Change by committing industrialized
country. Economic systems regulate
countries and economies in transition to
the factors of production, including land,
limit and reduce greenhouse gases
capital, labor, and physical resources.
(GHG) emissions in accordance with
 An economic system encompasses production decisions are the preserve of
many institutions, agencies, entities, the government.
decision-making processes, and If an economy enjoys access to many
patterns of consumption that comprise resources, chances are that it may lean
the economic structure of a given towards a command economic structure.
community In such a case, the government comes
in and exercises control over the
Types of Economic Systems resources. Ideally, centralized control
covers valuable resources such as
Traditional Economic System
gold or oil. The people regulate other
The traditional economic system is less important sectors of the economy,
based on goods, services, and work, such as agriculture.
all of which follow certain established In theory, the command system works
trends. It relies a lot on people, and very well as long as the central authority
there is very little division of labor or exercises control with the general
specialization. In essence, the traditional population‘s best interests in mind.
economy is very basic and the most However, that rarely seems to be the
ancient of the four types. case. Command economies are rigid
Some parts of the world still function compared to other systems. They react
with a traditional economic system. It is slowly to change because power is
commonly found in rural settings in centralized. That makes them vulnerable
second- and third-world nations, to economic crises or emergencies, as
where economic activities are they cannot quickly adjust to changed
predominantly farming or other conditions.
traditional income-generating activities.
Market Economic Systems
There are usually very few resources to
share in communities with traditional Based on the concept of free markets.
economic systems. Either few resources In other words, there is very little
occur naturally in the region or access to government interference. The
them is restricted in some way. Thus, government exercises little control over
the traditional system, unlike the other resources, and it does not interfere with
three, lacks the potential to generate a important segments of the economy.
surplus. Nevertheless, precisely Instead, regulation comes from the
because of its primitive nature, the people and the relationship between
traditional economic system is highly supply and demand.
sustainable. In addition, due to its small The market economic system is
output, there is very little wastage mostly theoretical. That is to say, a pure
compared to the other three systems. market system doesn‘t really exist.
Why? Well, all economic systems are
Command Economic System
subject to some kind of interference
In a command system, there is a from a central authority. For instance,
dominant, centralized authority – most governments enact laws that
usually the government – that controls a regulate fair trade and monopolies.
significant portion of the economic From a theoretical point of view, a
structure. Also known as a planned market economy facilitates substantial
system, the command economic system growth. Arguably, growth is highest
is common in communist societies since under a market economic system.
 A market economy’s greatest to experience similar patterns of
downside is that it allows private entities increase or decrease in terms of the
to amass a lot of economic power, prices of those products. The term can
particularly those who own resources of also refer to a situation in which the
great value. The distribution of prices of related goods and services
resources is not equitable because sold in a defined geographical location
those who succeed economically control also begin to move in some sort of
most of them. similar pattern to one another.
At times, the integration may be
Mixed System intentional, with a government
implementing certain strategies as a
Mixed systems combine the
way to control the direction of the
characteristics of the market and
economy. At other times, the integrating
command economic systems. For this
of the markets may be due to factor
reason, mixed systems are also known
such as shifts in supply and demand
as dual systems. Sometimes the term is
that have a spillover effect on several
used to describe a market system under
markets.
strict regulatory control.
At other times, the integrating of the
Many countries in the West follow a
markets may be due to factor such as
mixed system. Most industries are
shifts in supply and demand that have a
private, while the rest, comprised
spillover effect on several markets.
primarily of public services, are under
According to the Cambridge Business
the control of the government.
English Dictionary, Market Integration is
Mixed systems are the norm globally.
a situation in which separate markets for
Supposedly, a mixed system combines
the same product become one single
the best features of market and
market, for example when an import tax
command systems. However, practically
in one of the market is removed.\
speaking, mixed economies face the
Integration is taken to denote a state of
challenge of finding the right balance
affairs or a process involving attempts to
between free markets and government
combine separate national economies
control. Governments tend to exert
into larger economic regions (Robson,
much more control than is necessary.
1998, p.1)
Effect of Integration on Market
Development
1. Market integration provides opportunity
to expand market coverage by selling
local products in the global market.
2. Market integration help to reduce market
failure
3. Difference in the prices in integrated
market should be equal if they are well
integrated.

MARKET INTEGRATION FREE TRADE

Market integration is a term that is used Free Trade wherein international trade
to identify a phenomenon in which (the importation and exportation) left to
markets of goods and services that are its natural course without tariffs and
somehow related to one another being non-tariff trade barriers such as
 quotas, embargoes, sanctions or original members were Brunei,
other restrictions. Indonesia, Malaysia, Philippines,
Tariffs - taxes or duties to be paid on a Singapore and Thailand. Four
particular class of imports or exports. countries have subsequently joined:
Embargo - a government-instituted Vietnam, Laos, Myanmar and
prevention of exports to a certain Cambodia. The AFTA was signed in
country. Official ban on trade or other January 1992 in Singapore. The bloc
commercial activity. (The United States has largely removed all export and
has imposed several long-running import duties on items traded between
embargoes on other countries the nations. It has also entered into
including Cuba, North Korea and Iran) agreements with a number of other
Economic sanctions - commercial and nations, including China, eliminating
financial penalties applied by one or tariffs on around 90% of imported
more countries against a targeted goods. The AFTA nations had a
country, group, or individual. combined GDP of US$2.3 trillion in
Free Trade Areas - a group of countries 2012, and they're home to 600 million
within which tariffs and non-tariff people.
trade barriers between the members Southern Common Market
are generally abolished but with no (MERCOSUR) - a Latin American single
common trade policy toward market, its full members are Argentina,
nonmembers. Both in the sense of Brazil, Paraguay and Uruguay.
geography and price, is the foundation Venezuela is a full member but has
of these trading agreements. However, been suspended since December 1,
tariffs are not necessarily completely 2016. Established by the Treaty of
abolished for all products. Asunción in 1991 and Protocol of
Free trade areas impose exclusivity Ouro Preto in 1994. The four have a
among its members since the world is combined gross domestic product
not entirely a free trade economy. (GDP) of roughly $2.9 trillion. Latin
America’s second-largest trade
World‘s Major Free Trade Areas group, the Pacific Alliance, which
comprises Chile, Colombia, Mexico,
North American Free Trade
and Peru, has a combined GDP of
Agreement (NAFTA) - Free trade
about $1.8 trillion.
between the three member nations,
Common Market of Eastern and
Canada, the US and Mexico. Effective
Southern Africa (COMESA) - The
on January 1, 1994 -Although tariffs
member States of COMESA are:
weren‘t fully abolished until 2008. And
Burundi, the Comoros, the
by 2014, a total trilateral merchandise
Democratic Republic of Congo,
trade exceeded US$1.12 trillion. The
Djibouti, Egypt, Eritrea, Ethiopia,
trade with Canada and Mexico supports
Kenya, Libya, Madagascar, Malawi,
more than 140,000 small and medium-
Mauritius, Rwanda, Sudan,
size businesses and over 3 million jobs
Swaziland, Seychelles, Uganda,
in the US. Gains in Canada are
Zambia and Zimbabwe. Formed in
reportedly even higher, with 4.7 million
December 1994. An annual export bill
new jobs added since 1993. Canada is
in excess of $80 billion, the
also the largest exporter of goods to the
organization is a significant market
US.
place, both within Africa and globally.
Association of Southeast Asian
COMESA ultimately aims to remove all
Nations Free Trade Area (AFTA) - The
barriers to intra-regional trade, starting
with preferential tariffs and working would be worth $134 billion a year for
towards a tariff-free common market the EU and $107 billion for the US –
and economic union. although opponents have disputed these
European Union (EU) - is a single figures,
market, which is similar to a free trade
area in that it has no tariffs, quotas or FREE TRADE ISSUE
taxes on trade The 28 member countries
Free Trade vs. Protectionism Basics
of the EU, Austria, Italy, Belgium,
Latvia, Bulgaria, Lithuania, Croatia, Free trade means just what the
Luxembourg, Cyprus, Malta, Czech name implies: free and unfettered
Republic, Netherlands, Denmark, trade between countries,
Poland, Estonia, Portugal, Finland, unhindered by steep tariffs, and
Romania, France, Slovakia, Germany, where goods can pass over borders
Slovenia, Greece, Spain, Hungary, unmolested by any restrictions.
Sweden, & Ireland. The European By contrast, protectionism, It's the
Union's GDP was estimated to be €14.8 process where governments slap
trillion or $17.1 trillion (nominal) in 2016. stiff taxes – tariffs – as well as a
In 1957, the Treaty of Rome host of restrictive regulations on
established the European Economic goods that other countries want to
Community (EEC) or Common export.
Market. However, it was not until 1986 By contrast, protectionism, It's the
that the Single European Act was process where governments slap
signed. This treaty formed the basis of stiff taxes – tariffs – as well as a
the single market as we know it, as it host of restrictive regulations on
aimed to establish the free-flow of trade goods that other countries want to
across EU borders. By 1993 this export.
process was largely complete. Protectionism - the theory or
Trans-Pacific Partnership (TPP) - practice of shielding a country's
Australia, Brunei, Canada, Chile, domestic industries from foreign
Japan, Malaysia, Mexico, New competition by taxing imports to
Zealand, Peru, Singapore and protect their domestic industries.
Vietnam have just signed the trade pact
formerly known as the Trans-Pacific
Partnership In the absence of the US, it
has been renamed the.
Comprehensive and Progressive
Agreement for Trans-Pacific
Partnership (CPTPP). Signed
February 04, 2016 The deal covers a
market of nearly 500 million people,
despite the US pullout.
The Transatlantic Trade and
Investment Partnership - The
Transatlantic Trade and Investment
Partnership is a deal currently being
negotiated between the EU and the
US. It would cover 45% of global GDP.
The Center for Economic Policy
Research has estimated that the deal
Free Trade Issue: Arguments for Free Trade service their debts left over from
World War I
Free trade increases the size of the Economists debate the overall impact of
economy as a whole. It allows goods the protectionist Smoot-Hawley act, but
and services to be produced more the late economist Jude Wanniski
efficiently. That‘s because it encourages called it the principal cause of the
goods or services to be produced where depression.
natural resources, infrastructure, or skills
and expertise are best suited to them. It The Role of International Financial Institutions in
increases productivity, which can lead to the Creation of Global Economy
higher wages in the long term. There is
widespread agreement that rising global International Financial Institutions
trade in recent decades has increased
It plays a major role in the social and
economic growth.
economic development programs of
Free trade is good for consumers. It
nations with developing or transitional
reduces prices by eliminating tariffs and
economies. This role includes advising
increasing competition. Greater
on development projects, funding them
competition is also likely to improve
and assisting in their implementation.
quality and choice. Some things, such
International Financial Institutions (IFIs)
as tropical fruit, would not be available in
 African Development Bank
the UK without trade.
 Asian Development Bank
Reducing non-tariff barriers can remove
 Caribbean Development Bank
red tape, thus reducing the cost of
 European Bank for
trading. If companies that trade in
Reconstruction & Development
several countries have to work with only
 Inter-American Development
one set of regulations, their costs of
Bank
‗compliance‘ come down. In principle,
 World Bank
this will make goods and services
cheaper. World Bank
Protectionism is a slippery slope. The
U.S. has tried protectionism before via With 189 member countries, the World
the imposition of heavy tariffs on its Bank Group (WB) is the largest
European trading partners. The result: multilateral development bank (MDB)
The Great Depression. and the only MDB that is not bound to a
In the early 1930s, the Smoot-Hawley specific region. Its mission is to help
tariff was enacted in the U.S., sparking people help themselves and their
"the most infamous case of environment by providing resources,
protectionism in history," says Bruce sharing knowledge, building capacity
Bartlett, writing on "The Fiscal Times." and forging partnerships in the public
Congress passed the Smoot-Hawley act and private sectors.
in 1930, and the results were disastrous:  multinational financial institution
 The price of imported goods established at the end of World
rose 5 percent War II (1944) to help provide
 America's trading partners long-term capital for the
retaliated and sharply curtailed reconstruction and development
their U.S. exports of member countries. It provides
 World trade shrank, leaving much of the planning and
many countries unable to financing for economic
 development projects involving investment on business conditions in the
billions of dollars territories of members.
The World Bank Group is currently To assist in bringing about a smooth
involved in more than 1,800 projects in transition from a wartime to a peacetime
virtually every sector and developing economy.
country.
In FY2016, the WB provided US$64.2 What does the World Bank do?
billion in loans, grants, equity
The World Bank is the world‘s largest
investments, and guarantees to its
source of development assistance,
members and to private businesses, for
providing nearly $30 billion in loans,
projects in developing countries
annually, to its client countries. The
worldwide. Its investments generated
main focus is on helping the poorest
around 40,000 contracts, ranging in size
people and the poorest countries hut for
from a few thousand dollars, to
all its clients, the Bank emphasizes the
multimillion dollar expenditures for the
need for:
delivery of a vast range of goods and
 investing in people, particularly
services. The WB provides an extensive
through basic health and
array of services and advice and
education;
facilitates private sector finance and
 protecting the environment;
investment in developing countries. The
 supporting and encouraging
World Bank Group is made up of five
private business development;
institutions:
 strengthening the ability of the
 International Bank for
governments to deliver quality
Reconstruction and
services efficiently and
Development (IBRD)
transparently;
 International Development
 promoting reforms to create a
Association (IDA)
stable macroeconomic
 International Finance
environment conducive to
Corporation (IFC)
investment and long-term
 Multilateral Investment
planning;
Guarantee Agency (MIGA)
 focusing on social development,
 International Centre for
inclusion, governance and;
Settlement of Investment
 Institution building as key
Disputes (ICSID)
elements of poverty reduction
Purpose for the setting up of the Bank: Beneficiary FIRST Social Protection
Project. At least 4 million families are
To assist in the reconstruction and expected to benefit from a new project
development of territories of members. designed to protect the welfare of low-
To promote private foreign investment income households impacted by
by means of guarantees or participation COVID-19 and enable Government to
in loans and other investments made by harness digital tools to transform social
private investors. protection delivery in the Philippines.
To promote the long-range balanced The World Bank‘s Board of Executive
growth of international trade and the Directors has approved a US$600
maintenance of equilibrium in balance of million loan for the Philippines
payments. Beneficiary FIRST Social Protection
To conduct its operations with due Project to provide continuing support to
regard to the effect of international the Department of Social Welfare and
 Development (DSWD) to implement the devaluations that contributed to the
Pantawid Pamilyang Pilipino Program Great Depression of the 1930s.
(4Ps) and pursue Fast, Innovative, and The IMF's primary mission is to ensure
Responsive Service Transformation the stability of the international monetary
(FIRST) for beneficiaries. system—the system of exchange rates
―We are pleased to support the and international payments that enables
Government‘s efforts to sustain social countries and their citizens to transact
protection for the poor and most with each other.
vulnerable families,‖. These efforts are Surveillance: In order to maintain
critical to ensure that their children can stability and prevent crises in the
remain in school and stay healthy as the international monetary system, the IMF
country takes measures to control this monitors member country policies as
pandemic. In these difficult times, cash well as national, regional, and global
transfers to the poor and vulnerable economic and financial developments
indirectly support local economies and through a formal system known as
boost prospects for recovery.‖ (NDIAMÉ surveillance . The IMF provides advice
DIOP World Bank Country Director for to member countries and promotes
Brunei, Malaysia, Philippines and policies designed to foster economic
Thailand) stability, reduce vulnerability to
economic and financial crises, and raise
International Monetary Fund living standards.
Financial assistance: Providing loans
The International Monetary Fund (IMF)
to member countries that are
is an organization of 190 countries,
experiencing actual or potential balance-
working to foster global monetary
of-payments problems is a core
cooperation, secure financial stability,
responsibility of the IMF. Individual
facilitate international trade, promote
country adjustment programs are
high employment and sustainable
designed in close cooperation with the
economic growth, and reduce poverty
IMF and are supported by IMF financing,
around the world. Created in 1945, the
and ongoing financial support is
IMF is governed by and accountable to
dependent on effective implementation
the 190 countries that make up its near-
of these adjustments.
global membership. The IMF's primary
In response to the global economic
purpose is to ensure the stability of the
crisis, in April 2009 the IMF
international monetary system—the
strengthened its lending capacity and
system of exchange rates and
approved a major overhaul of its
international payments that enables
financial support mechanisms, with
countries (and their citizens) to transact
additional reforms adopted in
with each other. The Fund's mandate
subsequent years. These changes
was updated in 2012 to include all
enhanced the IMF‘s crisis-prevention
macroeconomic and financial sector
toolkit, bolstering its ability to mitigate
issues that bear on global stability.
contagion during systemic crises and
The IMF was conceived in July 1944 at
allowing it to better tailor instruments to
the United Nations Bretton Woods
meet the needs of individual member
Conference in New Hampshire, United
countries.
States. The 44 countries in attendance
Capacity development: The IMF
sought to build a framework for
provides technical assistance and
international economic cooperation and
training to help member countries build
avoid repeating the competitive currency
better economic institutions and
 strengthen related human capacities. MNCs place multiple production facilities
This includes, for example, designing in multiple countries under the control of
and implementing more effective a single corporate structure (Oatley,
policies for taxation and administration, International Political Economy 5th
expenditure management, monetary and Edition).
exchange rate policies, banking and A multinational corporation (MNC) is
financial system supervision and a company that operates in more than
regulation, legislative frameworks, and one country. Generally, multinational
economic statistics. corporations consist of separate
companies (called subsidiaries) in
How can IFIs help in Economic Globalization different countries, all of which answer
to a central office located in the firm‘s
They focus on long-term investment
home country (Riggs, Everyday
projects, institution-building, and on
Finance: Economics, Personal Money
social, environmental, and poverty
Management, and Entrepreneurship)
issues - strengthen economic
governance, safeguard the stability and Activities of Multinational Corporations
integrity of the international financial
system as a global public good- International companies are importers
encouraging true national ownership of and exporters, typically without
reforms by streamlining the conditions investment outside of their home
attached to IMF-supported programs. country;
recognizes and values the role of civil Multinational companies have
society organizations. investment in other countries, but do not
ensuring the stability of the international have coordinated product offerings in
financial system. each country. They are more focused
helping individual countries take on adapting their products and services
advantage of the investment to each individual local market.
opportunities offered by international Transnational companies are more
capital markets, while reducing their complex organizations which have
vulnerability to adverse shocks or invested in foreign operations, have a
changes in investor sentiment. central corporate facility but give
Trade liberalization decision-making, research and develop
Reducing debt burdens (R&D) and marketing powers to each
Setting the stage for the 2030 individual foreign market.
development agenda
Merits of a Multinational Companies in a Host
Contemporary Global Corporation Country

A global corporation is generally referred One of the main advantages to the host
to as a multinational corporation (MNC), country is that MNCs boost their
transnational corporation (TNC), economic growth. They bring with them
international company. huge investments and capital. And then
An enterprise that engages in activities through subsidiaries, joint ventures,
which add value (manufacturing, branches, factories they promote rapid
extraction, services, marketing, etc) in industrial growth. In fact, MNCs are
more than one country (United Nations known as the messengers of progress.
Centre On Transnational Corporations, A multinational corporation helps the
1991). technological growth of the country as
well. They bring new innovations and
 technological advancements to the host Nations Conference on Trade and
country. They help modernize the Development 2009,251) 2,300 percent
industry in developing countries. increase in less that 30 years.
MNCs also reduce the host countries Foreign direct investments are prevalent
dependence on imports. Imports reduce within multinational corporations. The
while exports from the country see a investments occur when an investor or
rise. company from one country makes an
All MNCs have enormous capital and investment outside the country of
resources at their disposal. A good operation.
portion of such resources is invested in
R&D. This can be very beneficial to the Types of FDI
host countries where they set up their
Horizontal Integration occurs when
R&D facilities.
firms creates multiple production of
Multinational corporations also promote
facilities each of which produces the
maximum utilization of the country‘s
same good or goods. Firms integrate
resources. This, in turn, leads to
horizontally when a cost advantage is
economic development.
gained by placing a number of plants
MNCs make their home countries
under common administrative control.
(country of origin) very rich by their
Intangible asset can be based on
revenues. The corporation will collect
patented process or design. These
fees, royalties, profits, charges from all
assets are difficult to sell to other firms
their host countries and bring them back
at a price that accurately reflect their
to the home country. This huge inflow of
true value that's why firms horizontally
foreign exchange is very beneficial to
integrate.
the home country.
Vertical integration refers to instances
IMNCs provide a means of co-operation
in which firms internalize their
between developed countries and
transaction for intermediate goods. An
developing or underdeveloped
intermediate good is an output of one
countries. This allows both to benefit
production process that serves as an
from the partnership.
input into another production process.
And these multinational corporations
Specific asset is an investment that is
also help promote bilateral trade
dedicated to a particular long-term
relations between countries. This is
economic relationship. By internalizing
beneficial to both the countries and the
transactions involving specific assets,
global market and economy.
therefore, vertical integration enables
Foreign Direct Investment welfare-improving investments.

Foreign Direct Investment occurs when

a firm based in once country builds a
new plant or a factory or purchases
existing one in a second country a
national corporation thus becomes an
MNC by making a foreign direct
investment. As consequence, the
world's stock of FDI, the total amount of
foreign investment in operation has
grown from 692.5 billion dollars in 1980
to 16.2 trillion dollars in 2008 (United