Globalization of

Economic
Relations

Prepared By: Ken M. Villamartin, MPA

 Economic Globalization
Economic globalization refers to the increasing
interdependence of world economies as a result
of the growing scale of cross-border trade of
commodities and services, flow of international
capital and wide and rapid spread of
technologies.
It refers on continuing expansion and mutual
integration of market frontiers, and is an
irreversible trend for the economic development
in the whole world at the turn of the millennium.
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
 Trends in Economic Globalization
Emerging Markets
Shift in Economic Power - Emerging
economies, particularly in Asia (China, India) and
Africa, are experiencing rapid growth,
contributing significantly to global economic
output.
Investment Destinations - These markets are
becoming attractive destinations for foreign
direct investment (FDI), driven by their large,
young populations and growing middle class.
 Trends in Economic Globalization
Global Supply Chain
Complex Networks - Production processes are
increasingly spread across multiple countries,
with components sourced from various locations
before final assembly.
Just-In-Time Production - Businesses adopt
lean manufacturing processes, reducing
inventory costs but increasing reliance on
smooth, uninterrupted supply chains.
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
p-2000-1.pdf
 Trends in Economic Globalization
Technological Advancements
Digital Economy - The rise of the internet, e-
commerce, and digital platforms facilitates global
trade and investment, enabling businesses to
reach international markets more easily.
Automation and AI - Technological
advancements in automation, artificial
intelligence, and robotics are transforming
industries and labor markets, increasing
productivity but also raising concerns about job
displacement.
 Trends in Economic Globalization
Trade Agreements and Regional Integration
New Trade Pacts - Comprehensive trade agreements
like the Comprehensive and Progressive Agreement for
Trans-Pacific Partnership (CPTPP) and the Regional
Comprehensive Economic Partnership (RCEP) aim to
reduce trade barriers and enhance economic
cooperation.
Regional Blocs - Economic integration within regions
(e.g., the European Union, ASEAN, African Continental
Free Trade Area) promotes intra-regional trade and
investment.
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
p-2000-1.pdf
 Trends in Economic Globalization
Global Financial Integration
Cross-Border Capital Flows - Increased
movement of capital across borders, including
foreign direct investment, portfolio investment,
and remittances.
Global Financial Markets - Integration of
financial markets enables faster and larger
capital flows, but also increases the risk of
contagion from financial crises.
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
p-2000-1.pdf
 Trends in Economic Globalization
Sustainability and Green Economy
Environmental Concerns - Growing emphasis
on sustainable development and green
technologies as businesses and governments
respond to climate change and environmental
degradation.
Corporate Social Responsibility - Increased
focus on ethical business practices and social
responsibility, driven by consumer preferences
and regulatory pressures.
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
p-2000-1.pdf
 Trends in Economic Globalization
Trade Protectionism and Geopolitical Tensions
Protectionist Policies - Rise in protectionist
measures, such as tariffs and trade barriers,
particularly highlighted by trade disputes
between major economies (e.g., US-China trade
war).
Geopolitical Risks - Political tensions and
instability can disrupt global trade and
investment, with businesses needing to navigate
complex geopolitical landscapes.
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
p-2000-1.pdf
 Trends in Economic Globalization
Global Health Crises
Pandemic Impact - The COVID-19 pandemic
highlighted vulnerabilities in global supply chains
and led to a rethinking of globalization, with
some companies reshoring or diversifying their
supply sources.
Healthcare Investment - Increased global
focus on health security and investment in
healthcare infrastructure and research.
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
p-2000-1.pdf
 Trends in Economic Globalization
Labor Mobility and Migration
Global Workforce - Increased mobility of
labor across borders, driven by demand for
skilled workers in technology, healthcare,
and other sectors.
Remittances - Significant economic
impact of remittances sent by migrant
workers to their home countries.
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
p-2000-1.pdf
 Trends in Economic Globalization
Digital Currencies and Fintech
Cryptocurrencies: Growth of digital currencies
like Bitcoin and the exploration of central bank
digital currencies (CBDCs) by various countries.
Fintech Innovation: Advancements in financial
technology (fintech) are transforming banking,
payments, and financial services, enhancing
financial inclusion and cross-border transactions.
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
p-2000-1.pdf
 Trends in Economic Globalization
Global Value Chains (GVCs)
Regionalization of Production - Shift towards
more regionalized production networks to
mitigate risks associated with long global supply
chains.
Value-Added Trade - Focus on the value added
at each stage of production, rather than just
gross trade flows, to better understand economic
contributions.
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
p-2000-1.pdf
 Trends in Economic Globalization
Consumer Market Integration
Global Brands - Proliferation of global brands
and products, driven by digital marketing and
international distribution networks.
Cultural Exchange - Increased cross-cultural
exchange and influence, impacting consumer
preferences and lifestyles.

https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
p-2000-1.pdf
 Risks in Economic Globalization
Economic Vulnerability and Dependency
• Supply Chain Disruptions: Global supply
chains can be fragile, as seen during the COVID-
19 pandemic. Disruptions in one part of the world
can cause significant delays and shortages
elsewhere.
• Dependency on Foreign Markets: Countries
and businesses that heavily rely on foreign
markets and suppliers may face significant risks
if there are economic or political issues in those
markets
 Risks in Economic Globalization
Financial Instability
• Capital Flight: Sudden outflows of capital can
destabilize economies, particularly in emerging
markets. Investors might rapidly withdraw funds
in response to economic or political instability.
• Currency Fluctuations: Exchange rate volatility
can impact trade and investment, creating
uncertainty for businesses operating
internationally.
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
p-2000-1.pdf
 Risks in Economic Globalization
Income Inequality
• Domestic Inequality: Globalization can lead to
significant income disparities within countries.
While some sectors and regions prosper, others
may decline, leading to social and economic
tensions.
• Global Inequality: Differences between wealthy
and poor countries can be exacerbated, with
benefits of globalization not evenly distributed.
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
p-2000-1.pdf
 Risks in Economic Globalization
Job Displacement and Labor Market Issues
• Outsourcing: Jobs may be outsourced to countries
with lower labor costs, leading to job losses and wage
stagnation in higher-cost countries.
• Precarious Employment: The rise of the gig economy
and informal work can lead to unstable and insecure
employment conditions.
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
p-2000-1.pdf
 Risks in Economic Globalization
Environmental Degradation
• Resource Exploitation: Increased economic
activity can lead to overexploitation of natural
resources, deforestation, pollution, and loss of
biodiversity.
• Climate Change: Globalization-driven
industrialization and transportation contribute
significantly to greenhouse gas emissions and
climate change.
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
p-2000-1.pdf
 Risks in Economic Globalization
Cultural Homogenization
• Loss of Local Cultures: Global brands and
media can overshadow local cultures, leading to
cultural homogenization and loss of traditional
practices and languages.
• Consumerism: Global marketing can drive
consumerism and materialism, potentially
impacting social values and lifestyles.
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
p-2000-1.pdf
 Risks in Economic Globalization
Political Risks and Geopolitical Tensions
• Trade Wars: Trade disputes between major
economies, such as the US-China trade war, can
disrupt global trade and economic stability.
• Regulatory Risks: Differences in regulations
and standards across countries can create
compliance challenges and uncertainties for
businesses.
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
p-2000-1.pdf
 Risks in Economic Globalization
Health Risks
• Pandemics: Increased global travel and trade
can facilitate the rapid spread of infectious
diseases, as evidenced by the COVID-19
pandemic.
• Food Safety: Global food supply chains can
complicate food safety and quality control,
potentially leading to health risks.
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
p-2000-1.pdf
 Risks in Economic Globalization
Cybersecurity Threats
• Cyber Attacks: As businesses and financial
systems become more interconnected, the risk of
cyberattacks and data breaches increases.
• Intellectual Property Theft: Global operations
can make companies more vulnerable to
intellectual property theft and industrial
espionage.
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
p-2000-1.pdf
 Risks in Economic Globalization
Regulatory Arbitrage
• Tax Avoidance: Multinational corporations may
exploit differences in tax laws to minimize their
tax liabilities, depriving countries of vital
revenue.
• Labor and Environmental Standards:
Companies might relocate to countries with lax
labor and environmental regulations to reduce
costs, contributing to poor working conditions
and environmental damage.
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
 Risks in Economic Globalization
Economic Crises Transmission
• Contagion Effect: Financial crises can quickly spread
from one country to another due to interconnected
financial systems, as seen during the 2008 global
financial crisis.
• Systemic Risk: Large, interconnected global banks
and financial institutions can pose systemic risks to the
global economy.
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
p-2000-1.pdf
 Mitigating Risks
Diversification: Companies and countries can
reduce dependency on single markets or
suppliers by diversifying their trade and
investment partners.
Regulation and Oversight: Strengthening
financial regulations, improving labor and
environmental standards, and ensuring fair trade
practices can mitigate some risks.
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
p-2000-1.pdf
 Mitigating Risks
Resilience Planning: Developing robust supply chain
strategies and contingency plans can help manage
disruptions.
International Cooperation: Enhanced cooperation
and dialogue between countries can address global
challenges such as climate change, cyber threats, and
health pandemics.
Social Safety Nets: Implementing strong social
safety nets and retraining programs can help mitigate
the negative impacts on workers displaced by
globalization.
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-b
 Reframing Internationalization
Reframing internationalization involves rethinking and
redesigning the approach to global engagement and
cooperation, considering the evolving dynamics of
globalization, technology, cultural exchange, and
geopolitical shifts.
Internationalization – is the intentional process of
integrating an international, intercultural or global dimension
into the purpose, functions and delivery of post-secondary
education, in order to enhance the quality of education and
research for all students and staff, and to make a meaningful
contribution to society. (Knight 2024) (de Wit et al., 2015, p. 29)
https://journals.sfu.ca/cjhe/index.php/cjhe/article/view/185272/pdf
 Key Aspects to Consider
Inclusive Globalization
Equitable Access: Ensure that international
opportunities are accessible to a diverse range of
participants, including those from underrepresented and
marginalized groups.
Digital and Virtual Exchange
Leveraging Technology: Use digital platforms to
facilitate international collaborations, virtual exchanges,
and online learning.
https://journals.sfu.ca/cjhe/index.php/cjhe/article/view/185272/pdf
 Key Aspects to Consider
Cultural Competency and Sensitivity
Cultural Exchange: Encourage deep cultural
exchanges that go beyond surface-level interactions to
foster genuine understanding and respect.
Interdisciplinary and Cross-Sector Collaboration
Broad Partnerships: Build collaborations across
different sectors, including academia, industry,
government, and non-profits.
https://journals.sfu.ca/cjhe/index.php/cjhe/article/view/185272/pdf
 Key Aspects to Consider
Resilience and Adaptability
Flexible Models: Develop flexible models of
international engagement that can adapt to changing
global circumstances, such as political changes,
pandemics, and environmental crises.
Local-Global Connection
Glocalization: Blend global perspectives with local
contexts to make internationalization more relevant and
impactful at the local level.
https://journals.sfu.ca/cjhe/index.php/cjhe/article/view/185272/pdf
 Key Aspects to Consider
Sustainable Development Goals (SDGs)
Alignment with SDGs: Align international activities
with the United Nations Sustainable Development Goals
to address global challenges such as poverty, inequality,
and climate change.
Policy and Governance
Inclusive Policies: Develop inclusive policies that
support internationalization while considering the
diverse needs and perspectives of all stakeholders.
https://journals.sfu.ca/cjhe/index.php/cjhe/article/view/185272/pdf
 Globalization versus Internationalization

https://keydifferences.com/difference-between-internationalization-and-globalization.html
 International Trade Theory and Policy
CLASSICAL THEORY: THE EARLY BEGINNING OF A
THEORY OF FREE TRADE
1776 and 1826 - Adam Smith’s (1986 [1776]) Wealth of
Nations and David Ricardo’s Principles of Economics
(1951)
Wealth of nation – it addresses how nations accumulate
and distribute wealth.
https://tinyurl.com/yxwvc63s
 International Trade Theory and Policy
Role of Demand in Trade Theory - In trade theory,
demand plays a crucial role in determining the patterns
and benefits of international trade.
THEORY OF OVERLAPPING DEMAND: NEW ROLE OF
DEMAND IN TRADE THEORY - The theory of
overlapping demand, introduced by Swedish economist
Staffan Burenstam Linder in 1961, provides a nuanced
perspective on the role of demand in international trade.
This theory suggests that the structure of domestic
demand significantly influences trade patterns,
particularly for manufactured goods.
https://tinyurl.com/yxwvc63s
 International Trade Theory and Policy
New Trade Theory (NTT), developed in the late 20th century
by economists such as Paul Krugman, reshapes the traditional
free trade doctrine by introducing concepts that address the
limitations of classical trade theories.
New Trade Theory restructures the free trade doctrine by
integrating more realistic assumptions about market structures,
economies of scale, product differentiation, and the role of
government policy. It extends beyond the classical theories'
focus on comparative advantage by considering the
complexities of modern economies, thereby offering a richer
and more flexible framework for understanding and facilitating
international trade.
https://tinyurl.com/yxwvc63s