THE STRUCTURES OF GLOBALIZATION

(The Global Economy And

Globalization)
ECONOMY All activities that are related to
produce and consume goods and
services

Evolution of financial markets and

GLOBAL ECONOMY
institutions

Traditional boundaries did not

restrict economic transactions and
consumer activities.

Studythere
of how is
people allocate
ECONOMICS Why
scares resources
resources?
a need to allocate
 • Focuses on the behavior of individual
consumers and producers.

MACROECONOMICS • It is an approach that explains how the

consumers, producers, workers and
owners of capital assets behave
accordingly.

• This examines overall economies on

MICROECONOMICS regional, national, or international scale.

• It deals with the aggregate performance

of the economic entities which stimulate
the activities of the major sectors of the
economy.
 MAJOR GOALS OF MACROECONOMICS

ECONOMIC FULL STABLE

GROWTH EMPLOYMENT PRICES
International trade
The exchange of goods or services across
national borders or territories. This activity allows
greater competition and competitive pricing in
the market.

It allows countries to expand their markets for

both goods and services that otherwise may not
have been available domestically.
Components of international trade
These are products that are brought
from the global market.

IMPORT This may be good or services bought in

one country that was produced in
another.

Products that are sold to the global

market.

EXPORT These are goods or services that are

produced in one country and sold to
buyers in another country.
Economic basis of trade
• Different nations are endowed with various kinds and
amounts of natural resources.

• Various nations have different specializations

• The production of varied goods and services require different

combinations of economic resources and particular
technology.
Factors that affect the economic growth of a country
HUMAN RESOURCE

NATURAL RESOURCES

CAPITAL FORMATION

TECHNOLOGICAL DEVELOPMENT

SOCIAL AND POLITICAL FACTORS

Factors that affect the economic growth of a country
HUMAN RESOURCE

NATURAL RESOURCES

CAPITAL FORMATION • Refers to one of the most important

determinant of economic growth of a
TECHNOLOGICAL DEVELOPMENT country OR vice versa.

SOCIAL AND POLITICAL FACTORS

Factors that affect the economic growth of a country
HUMAN RESOURCE

NATURAL RESOURCES • It involves resources that are

produced by nature either on
the land or beneath the land.
CAPITAL FORMATION
• The efficient utilization or

TECHNOLOGICAL DEVELOPMENT
exploitation of natural
resources depends on the
skills and abilities of human

SOCIAL AND POLITICAL FACTORS

resource, technology used and
availability of funds
Factors that affect the economic growth of a country
HUMAN RESOURCE

NATURAL RESOURCES

CAPITAL FORMATION
• Involves land, building, machinery,

TECHNOLOGICAL DEVELOPMENT
power, transportation, and medium
of communication. Producing and
acquiring all these manmade

SOCIAL AND POLITICAL FACTORS

products is termed as capital
formation.
Factors that affect the economic growth of a country
HUMAN RESOURCE

NATURAL RESOURCES

CAPITAL FORMATION
• It involves application of scientific
TECHNOLOGICAL DEVELOPMENT methods and production techniques.

• Defined as nature and type of

SOCIAL AND POLITICAL FACTORS technical instruments used by a
certain amount of labor.
Factors that affect the economic growth of a country
HUMAN RESOURCE

NATURAL RESOURCES

CAPITAL FORMATION

TECHNOLOGICAL DEVELOPMENT • Involve customs, traditions, values

and beliefs, which contribute to the
growth of an economy to a
SOCIAL AND POLITICAL FACTORS considerable extent.
WORLD ECONOMY

• Division of labor
• Exchange of basic or essential
goods and flows of capital and
labor
• Governed by political units
✓ The European Union
✓ The Asia-Pacific Economic
Cooperation
 Is an economic concept which
states that dividing the
production process into
different stages enables
workers to focus on specific
What is division of labor in economy? tasks. If workers can
concentrate on one small
aspect of production, this
increases overall efficiency –
so long as there are sufficient
volume and quantity
produced.
CAPITALISM
Is an economic system or ideology in which factors of production are privately owned by households,
industry, and market institution operated for private profit. The profit in the form of gain by the private
sector is a driving force serving as latent reward in their effort to manage, supervise, and control
privately the resources guaranteed by existing laws of the country

Adam Smith- father of modern Capitalism popularized the system I

his book entitled An inquiry into the Nature and Causes of the Wealth
of Nations.
Laissez Faire- is an economic philosophy of free-market capitalism that opposes
government intervention

Invisible Hand- The constant interplay of individual pressures on market supply and
demand causes the natural movement of prices and the flow of trade.

Freedom of Competition- refers to the privilege and change for members of the
business community to compete within bounds of legality and morality in terms of
affordable price quality of goods and services they offer to the consuming public. Cut-
throat competition is discouraged.
 • It is a downturn in real Gross
National Product for two or
more successive quarters

ECONOMIC RECESSION • Significant decline in economic

activity

ECONOMIC DEPRESSION • A prolonged

characterized by
period
high
unemployment, low output and
investment, depressed
business confidence, and
widespread business failure
 WORLD’S MAJOR FREE TRADE AREAS

NAFTA

AFTA

EU
 Free trade issues
• The practice of shielding a

PROTECTIONISM
country’s domestic
industries from foreign
competition by taxing
imports to protect their
domestic industries.

ECONOMIC NATIONALISM • Emphasizes domestic control of

the economy, labor, and capital
formation
INTERNATIONAL FINANCIAL INSTITUTION
1. The World Bank is the world’s largest source of
WORLD BANK
1. To assist in the reconstruction and
development assistance, providing nearly $30
development of territories of members
billion in loans, annually, to its client countries.
2. To promote private foreign investment by
2. Main focus is on helping the poorest people
a. what is the purpose of setting up world bank? means of guarantees or participation in loans
and the poorest countries
and other investment made by private investors
3. The Bank is also helping countries to strength
3. To promote the long-range balanced growth of
and sustain the fundamental conditions that help
international trade and the maintenance of
to attract and retain private investment.
equilibrium in balance of payment
4. They are investing in human resources,
B. WHAT DOES THE WORLD BANK DO? infrastructure and environment protection which
4. To assist in bringing about a smooth transition
enhance the attractiveness and productivity of
from a wartime to a peacetime economy.
private investment.
 INTERNATIONAL FINANCIAL INSTITUTION
1. To
Sustained a rapidly
facilitate the increasing
expansion and balancevolume of
growth
International trade
to the
and investment;
of international
2. Displayed
promotion
trade and to contribute, thereby,
flexibility in adaptingoftohigh
and maintenance changes
levels
monetary fund of international
in
3.
employment commerce;
development
and real income and to the
Proved toofbetheefficient
productive resources
(even of all
when there
members
were as primary
decreasing objectivesof ofreserves
percentages economicto
policy.
trade)
4. Allowed for a growing degree or
a. what is the purpose of setting up imf? 2. To promote exchange stability, to maintain
international cooperation
orderly exchange arrangements among
5. Established a capacity to accommodate
B. WHAT are the accomplishments of imf? members and to avoid competitive exchange
reforms and improvements.
depreciation.