College of Education

CONTEMPORARY WORLD

Topic Report:

The Global Economy

Reporters:
Edmielyn Alcorano

Arbhy John Bacanto

Ma. Merlinda Libre

BSED- ENGLISH 1A

Jesusa Luda
Course Facilitator

August 2024
Accredited: Accrediting Agency of Chartered Colleges and Universities of the Philippines (AACCUP)
Member: Philippine Association of State Universities and Colleges (PASUC)
Agricultural Colleges Association of the Philippines (ACAP)
 College of Education
MOTIVATION ACTIVITY: IDENTIFY LEARN AND FIND OUT! PINOY HENYO!

Direction: Identify the word related in the topic that will going to discuss and act it to find out.

1. TRADE

It is a exchanging goods and services in each different countries.

2. MONEY

Use by the people in their daily lives.

Objectives

At the end of the lesson, the students will be able to:

➢ Define economic globalization

➢ Identify the actors that facilitate Economic globalization.
➢ Define the modern world system.
➢ Articulate a stance on global economic integration.

INTRODUCTION

Countries engage in trade because they lack certain resources and cannot fully meet their
needs and wants. As nations developed their resources, they began trading to obtain what they
needed. Historically, international trade involved long-distance travel, underscoring its
important role in industrial development. Imports occur for reasons such as better or cheaper
quality, appealing goods, or lack of alternatives. This lesson will explore the global economy
and the global actors that drive it.

United Nations defines Economic globalization as "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 reflects the 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. The rapid growing
significance of information in all types of productive activities and marketization are the two
major driving forces for economic globalization"

According to Dennis O. Flynn and Arturo Giráldez, "Global trade emerged when
1) all heavily populated continents began to exchange products continuously - both with each
other directly and indirectly via other continents - and
2) did so in values sufficient to generate lasting impacts on all trading partners" ("Globalization
Began in 1571.p2) Worktext in The Contemporary World

In economic globalization, companies aim to maximize profits by expanding operations

across various regions. New technology facilitates the rapid movement of information, goods,
and people, contributing to a "new economy" characterized by global production networks, free
trade, and capital flow. Production processes are often spread across different locations to

Accredited: Accrediting Agency of Chartered Colleges and Universities of the Philippines (AACCUP)
Member: Philippine Association of State Universities and Colleges (PASUC)
Agricultural Colleges Association of the Philippines (ACAP)
 College of Education
leverage favorable conditions, such as inexpensive labor, access to raw materials, skilled
workers, and consumer markets.

Free trade is essential for developing global production networks by minimizing trade
barriers and facilitating the smooth flow of resources, goods, and services. It drives globalization
by leveraging technological advancements and regional differences. Technology fosters
innovation and economic growth, while deregulation and liberalization have allowed financial
markets to thrive. As a result, financial markets, with their significant speculative investments,
now play a dominant role in the global economy.

GLOBAL ACTORS

Multinational Corporation

The multinational corporation is a business organization whose activities are locatal in

more than two countries and is the organizational form that defines foreign direct investmer.
This form consists of a country location where the firm is incorporated and of the establishment
of branches or subsidiaries in foreign countries

The International Monetary Fund

The International Monetary Fund (IMF), founded at the Bretton Woods Conference in
1944, is the official organization for securing international monetary cooperation. It has done
useful work in various fields, such as research and the publication of statistics and the tendering
of monetary advice to less-developed countries. It has also conducted valuabl consultations with
the more developed countries.

North Atlantic Treaty

NATO is based on the North Atlantic Treaty, which provides the organization
framework. The treaty provides that an armed attack against one or more of NATO's membel
nations shall be considered an attack against them all." NATO is headquartered in Brussels
Belgium. The organization was formed in 1949. Many nations joined NATO - even Iceland the
only member without a military force. The organization was originally formed out of the fear
that the Soviet Union would ally militarily with Eastern European nations, i.e. the Warsaw Pact,
and thus become a threat to Western Europe and the United States.

The World Trade Organization (WTO), the International Monetary Fund (IMF), and the
World Bank

Are institutions that shape international economic, monetary, and trade relations. The
WTO oversees global trade rules, the IMF focuses on monetary cooperation and financial
stability, and the World Bank supports development and poverty reduction. Developing nations
often adjust their trade policies and economic practices in response to recommendations and
pressures from these institutions.

In many developing countries, domestic financial markets are underdeveloped, lacking

the legal frameworks needed to support local financial institutions against foreign competition.
Additionally, their administrative structures, judicial systems, and law enforcement agencies
often fall short in ensuring the social discipline and political stability required to create a
favorable environment for economic growth.

Accredited: Accrediting Agency of Chartered Colleges and Universities of the Philippines (AACCUP)
Member: Philippine Association of State Universities and Colleges (PASUC)
Agricultural Colleges Association of the Philippines (ACAP)
 College of Education
As a result, multinational corporations tend to invest primarily in specific geographic
locations. In the 1990s, most foreign investments were concentrated in high-income countries
and a few regions in the Global South, such as East Asia and Latin America. According to the
World Bank's 2002 World Development Indicators, only a small fraction of foreign direct
investment went to low-income countries, increasing slightly from 0.5% in 1990 to just 1.6% in
2000.

The early 20th century saw major upheavals with two world wars and the Great
Depression, which devastated Europe and the U.S. This turmoil led to the creation of a new
international monetary system aimed at stabilizing currency exchange rates without relying
solely on gold, reducing balance-of-payments deficits, and eliminating harmful trade practices
like competitive devaluations and foreign exchange restrictions, while allowing countries to
maintain independent economic policies.

In July 1944, the UN Monetary and Financial Conference was held in Bretton Woods,
New Hampshire, where delegates from 44 countries developed the Articles of Agreement for a
new International Monetary Fund (IMF) to oversee the international monetary system. The
Bretton Woods system sought to encourage global trade, investment, and economic growth by
maintaining stable, convertible currencies and providing financial support to countries facing
deficits through IMF borrowing rather than resorting to restrictive economic measures.

The Articles of Agreement were ratified by 29 countries and came into effect on
December 27, 1945. The IMF’s board of governors met in Savannah, Georgia, in 1946 to adopt
bylaws and elect the IMF's first executive directors. The IMF’s permanent headquarters was
established in Washington, D.C., and its financial operations commenced in 1947.

Summary

Recent rapid globalization of the world's economies is largely driven by advancements

in science and technology. This globalization is fueled by the widespread adoption of market
economic systems and the growing cross-border division of labor. This trend has led to the
development of intricate production chains that span multiple countries, integrating various
stages of production across different enterprises.

Stance on Global Economic Integration

Benefits:

1. Economic Growth: Expands market access and efficiency, allowing countries to specialize
and enhance productivity.
2. Technological Advancement: Accelerates innovation and technological spread across borders.
3. Investment Opportunities: Directs capital to developing regions, supporting infrastructure and
economic progress.

Challenges:

1. Economic Inequality: Can widen disparities between wealthier and poorer regions.
2. Loss of Sovereignty: Limits national control over economic policies, particularly for
developing nations.
3. Global Vulnerability: Increases susceptibility to international financial crises and economic
downturns.

Accredited: Accrediting Agency of Chartered Colleges and Universities of the Philippines (AACCUP)
Member: Philippine Association of State Universities and Colleges (PASUC)
Agricultural Colleges Association of the Philippines (ACAP)