Structures of Globalization:

1. The Global Economy

Globalization is the process by which the world, previously isolated through physical and technological
distance, becomes increasingly interconnected. It is manifested by the increase in interaction between
people around the world that involves the sharing of ideas, cultures, goods, services, economic, political,
cultural, ideological, investment environmental and processes aided by information technology.

What is Global Economy?

The world economy or global economy is the economy of the humans of the world, considered as the
international exchange of goods and services that is expressed in monetary units of account.

According to the United Nations, “Economic Globalization refers to the increasing interdependence of
World Economies as a result of growing scale of cross-border trade of commodities and services, flow of
international capital, and wide rapid spread of technologies.”

Typical EXAMPLES of economic globalization are the global supply chains now standard for the
manufacture of many devices, ranging from cars to smart phones; the processes surrounding raw
materials, components, and assembly may take place across multiple countries.

What is the importance of Global Economy?

Because of its size and interconnectedness, developments in the US economy are bound to have
important effects around the world. The US has the world’s single largest economy, accounting for
almost a quarter of global GDP (at market exchange rates), one-fifth of global FDI, and more than a third
of stock market capitalization. It is the most important export destination for one-fifth of countries
around the world.

GDP= Gross Domestic Product

FDI = Foreign Direct Investment

Changing Structure: Global Economy

Since the end of World War II, the global economy has steadily increased its trade and financial
openness, enabled in part by the International Monetary Fund (IMF), the World Bank, and the General
Agreement on Tariffs and Trade (GATT), now the World Trade Organization (WTO).

 In parallel, colonialism, with its inherent constraints on economic development and its built-in
asymmetries, collapsed.

 As formal barriers to trade and capital flows declined, a number of other trends combined to
accelerate the growth and structural changes in the developing economies.

Changing Structure of the Global Economy INCLUDE:

 Advances in transportation and communications technology.

 Management innovation in multinational companies.

 Integration of multinational supply chains.

Changing Structure of the Global Economy

The shape of global supply chains is constantly shifting. Countries enter and engage with the global
economy at different times and expand at different rates.

The early high-growth economies— Japan, South Korea, and Taiwan— initially exported labor-intensive
products, then graduated to more capital-intensive products such as automobiles and motorcycles, and
then to human capital intensive activities such as design and technology development.

DO CHANGING STRUCTURE OF THE GLOBAL ECONOMY AFFECT THE PHILIPPINES?

What kind of economy is the Philippines?

The Philippines has a mixed economic system which includes a variety of private freedom, combined
with centralized economic planning and government regulation.

Philippines is a member of the Asia- Pacific Economic Cooperation (APEC) and the Association of
Southeast Asian Nations (ASEAN).

PHILIPPINES: COMPETING IN GLOBAL ECONOMY

The economy of the Philippines is the world's 34th largest economy by nominal GDP according to the
2017 estimate of the International Monetary Fund's statistics, it is the 13th largest economy in Asia, and
the 3rd largest economy in the ASEAN after Indonesia and Thailand. The Philippines is one of the
emerging markets and is the sixth richest in Southeast Asia by GDP per capita values, after the regional
countries of Singapore, Brunei, Malaysia, Thailand and Indonesia.

PHILIPPINES: NEW INDUSTIALIZED COUNTRY

The Philippines is primarily considered a newly industrialized country, which has an economy in
transition from one based on agriculture to one based more on services and manufacturing. As of 2017,
GDP by purchasing power parity was estimated to be at $1.980 trillion

PHILIPPINES: a tiger cub in economic globalization

Primary exports include semiconductors and electronic products, transport equipment, garments,
copper products, petroleum products, coconut oil, and fruits. Major trading partners include Japan,
China, the United States, Singapore, South Korea, the Netherlands, Hong Kong, Germany, Taiwan and
Thailand. The Philippines has been named as one of the Tiger Cub Economies together with Indonesia,
and Thailand.

Economic Globalization and sustainable development

There are some significant downsides to the globalize trade and perhaps the strongest argument against
economic globalization is its lack of sustainability or the degree to which the Earth’s resources can be
used for our needs, even in the future. The development of our world today by using the Earth’s
resources and preservation of such resources for the future is called Sustainable Development.
The continuous production of the world’s natural resources, such as water and fossil allow humanity to
discover and innovate many things. We were able to utilize energy, discover new technologies, and
make advancements in transportation and communication. However, these positive effects of
development put our environment at a disadvantage. Climate change accelerated and global inequality
was not eradicated. This means that development, although beneficial at one hand, entails cost on the
other.

Environmental Degradation

Economic Development was hastened by the Industrial Revolution. This is the period which made
everything efficient. Efficiency means finding the quickest possible way of producing large amounts of a
particular products. This cycle harms the planet in a number of ways. For instance, the earth’s
atmosphere is damaged by more carbon emissions from factories. Another example is the destruction
of coral reefs and marine biodiversity as more and more wastes are thrown in the ocean.

Food Security

The demand for food will be 60% greater than it is today and challenge of food security requires the
world to feed 9 billion people by 2050. Global Food Security means delivering sufficient food to the
entire world population. It is therefore, a priority of all countries, whether developed or less developed.
The security of food also means the sustainability of society such as population growth, climate change,
water scarcity, and agriculture.

The closest aspect of human life associated with food security is the environment. The challenges can be
traced to the protection of the environment. A major problem is the destruction of natural habitats,
particularly through deforestation. Industrial fishing has contributed to a significant destruction of
marine life and ecosystems. Biodiversity and usable farmland have also declined at a rapid pace.

Another significant environmental challenge is the decline in the availability of fresh water due to the
degradation of soil or desertification – which has transformed what was once considered a public good
into a privatized commodity.

Economic globalization, poverty and inequality

Swedish statistician Hans Rosling once said, “ the 1 to 2 billion poorest in the world who don’t have food
for the day suffer from worst disease, globalization deficiency. The way globalization is occurring could
be much better, but the worst thing is not being part of it.”

Economic and trade globalization is the result of companies trying to outmaneuver their competitors.
While you search for the cheapest place to buy shoes, companies search for the cheapest place to make
those shoes. As a result, this labor-intensive product often produced in countries with the lowest wages.
This process creates winners and losers. Corporations and stockholders who earn more profit are the
winners, so does consumers who get the cheaper products. Losers on the other hand are those high
wage workers who used to make those products.

The multiplier effect means an increase in one economic activity can lead to an increase in other
economic activities. Example, investing in local business will lead to more jobs and more income.
According to Paul Krugman, ‘the Bangladeshi apparel industry is going to consist of what would consider
sweat shops or it won’t exist at all… it’s the only thing keeping it’s (Bangladesh) economy afloat.’
Global Income Inequality

Living conditions are vastly unequal between different places in our world today. This is largely the
consequence of the changes in the last two centuries: in some places living conditions changed
dramatically, in others more slowly.

Today’s global inequality is the consequence of two centuries of unequal progress. Some places have
seen dramatic improvements, while others have not. It is on us today to even the odds and give
everyone – no matter where they are born – the chance of a good life. This is not only right, but, as we
will see below, is also realistic. Our hope for giving the next generations the chance to live a good life lies
in broad development that makes possible for everyone what is only attainable for few today.

If you look at average incomes and compare the richest country – Qatar with a GDP per capita of almost
$117,000 – to the poorest country in the world – the Central African Republic at $661 – then you find a
177-fold difference. This is taking into account price differences between countries and therefore
expressed in international-$ Qatar and other very resource-rich economies might be considered outliers
here, suggesting that it is more appropriate to compare countries that are very rich without relying
mostly on exports of natural resources. The US has a GDP per capita of int.-$54,225 and Switzerland of
57,410 international-$. This means the Swiss can spend in 1 month what people in the Central African
Republic can spend in 7 years.