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World System and Economic Integration

The document discusses Immanuel Wallerstein's world systems theory from 1974 which proposes that the modern world system is capitalist in nature and classifies countries into different categories based on their position in the global economy. Core states dominate and exploit peripheral and semi-peripheral states. It then discusses factors that have contributed to increasing global economic integration such as regional integration, trade liberalization, foreign direct investment, and privatization/deregulation. These changes have reduced trade barriers but also contributed to issues like financial volatility and ineffective domestic policies.

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Jack Aaron Zambrano
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17 views

World System and Economic Integration

The document discusses Immanuel Wallerstein's world systems theory from 1974 which proposes that the modern world system is capitalist in nature and classifies countries into different categories based on their position in the global economy. Core states dominate and exploit peripheral and semi-peripheral states. It then discusses factors that have contributed to increasing global economic integration such as regional integration, trade liberalization, foreign direct investment, and privatization/deregulation. These changes have reduced trade barriers but also contributed to issues like financial volatility and ineffective domestic policies.

Uploaded by

Jack Aaron Zambrano
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Welcome to contemporary world and today we will be discussing the modern world system and

global economic integration. Immanuel Wallerstein 1974 proposes that modern world system is
essentially capitalist in nature and possess boundaries, structures, member groups rules of
legitimation and coherence. He theorized this world system as one where some countries
benefit while others are exploited He classified the world into four categories according to their
position in the world economy. periphery states are a source of raw materials. They are heavily
exploited by reason of cheap labor, lower taxes and weaker central governments. They depend
on core countries for capital. They are less industrialized and urbanized and their economies
are usually agreement they have less developed infrastructures. And among these nations or
Bangladesh, Bolivia, Burkina Faso, Burundi and the Philippines see by very proud states are
states and places of production and processing of raw materials. They distributed finished
products to the core states, they are less developed than coordination with more developed
than peripheral nations. They are buffers between core and peripheral countries. Example of
this nations are Taiwan, South Korea, India and South Africa core states dominate the capitalist
world economy and exploit the lower states they are characterized by high levels of
industrialization and urbanization. They are capital intensive, have high wages and high
technology production patterns. They have lower incidence of labor exploitation and coercion
among the States or Japan, Germany and the US. External states, on the other hand, maintain
their own economic system. They are independent of other modern world system and they
prioritize internal trade and economic sufficiency. The classic example of this is Russia. We go
now to global economic integration. Global Economic integration is the process where regions
come into agreement to reduce and eliminate trade barriers and coordinate fiscal policies with
the goal of increasing trade in the member countries involved while global economic integration
promised to improve allocation of natural resources, promote technology transfer and enhance
the living standards of the people. It is also taking blame for trade imbalance, increase financial
market volatility and ineffective domestic economic policies says Can 2000 What are the
catalysts of economic globalization? There are four factors that are considered vital in the
growth of economies towards globalization. First is regional integration. Second is trade
liberalization. Third is foreign direct investment, and fourth is privatization and deregulation.
Regional Integration refers to the breaking of trade barriers in a particular region like Asia,
allowing for the free flow of goods and services. It also includes the adjustment of fiscal policies
and allow the migration of workers within the region. There are four types of regional economic
integration. The first is the free trade area, which is the most basic form of economic
cooperation. member countries remove all barriers to trade between themselves and member
countries are free to determine their trade policies with other non member nations. An example
of this is the North American Free Trade Agreement for the NAFTA.

The second type of regional economic integration is custom Union. This type allows economic
cooperation as in a free trade zone. Trade barriers, like tariffs and taxes are removed between
member countries. But unlike free trade area, member countries agreed to trade with non
member countries in the same manner.

The third is the common market where trade barriers are removed, as well as restrictions on the
movement of labor and capital between member countries under the Common Market workers
are no longer in need of a visa or work permit to work in another member country. The common
market for Eastern and Southern Africa or comesa is an example of this.

And lastly is the economic union. An economic union exists when countries enter into an
economic agreement to remove barriers to trade and adopt common economic and fiscal
policies. Aside from this, the union may agree to adopt a common currency like the Euro of the
European Union.

Trade Liberalisation refers to the removal of trade barriers such as tariffs and taxes on goods
and services, thereby ensuring their free flow in member states.

Foreign investors establish their businesses in another country with incentives like tax holidays
and reduced corporate income tax, foreign direct investment, or FDI.

FDI is happened when a foreign firm or individual established business operation or acquires
business assets in another company in another country establishes effective control of the
foreign business, or at least have substantial influence over its decision making. It bring capital
to a host country and also acquired business knowledge skills and In crucial technology, it
creates business instability. Because foreign direct investments are long term in nature.

Privatization happens when government grants private companies permission to compete in the
industry and enterprise. It also includes the turning of state owned corporations and assets to
private individuals and corporations. Privatization helps the government to save money and
increase efficiency in management.

Opponents against privatization, however, maintained that basic services and utilities like
education, water and electricity should not be the subject of privatization.

We go now to the derugulation is the reduction or elimination of government power in a


particular industry to create more competition within that industry and encourage more
participation from the private sectors Republic Act 8479, known also as the oil deregulation law
was enacted in order to liberalize and regulate the downstream oil industry in order to ensure a
truly competitive market under a regime of fair prices, adequate and continuous supply of
environmentally clean and high quality petroleum products. The all the Regulation Law had
removed government control on the pricing, exportation and importation of petroleum products,
allowing market forces to dictate all prices

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