TABLE OF CONTENTS

Content Page

Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

Introduction of the Module . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

Lessons

1: Introduction to the Study of Globalization. . . . . . . . . . . . . . . . . . . 1

A. Approaches to the Study of Globalization . . . . . . . . . . . . 3

B. Market Globalism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

2: The Global Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

3: Market Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

4: The Global Inter-State System. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

5: Contemporary Global Governance. . . . . . . . . . . . . . . . . . . . . . . . 41

6: Global Divides: The North and the South. . . . . . . . . . . . . . . . . . . . 48

7: Asian Regionalism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

8: Global Media Cultures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

9: The Globalization of Religion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

10: The Global City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

11: Global Demography (Mandated Topic). . . . . . . . . . . . . . . . . . . 95

12: Global Migration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

13: Sustainable Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124

14: Global Food Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140

15: Global Citizenship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147

Evaluation of the Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154

References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155

INTRODUCTION OF THE MODULE

Course Code: CWORLD1

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Course Title: The Contemporary World
Credit: Three (3) Units
Course Description:
This course introduces students to the contemporary world by examining the multifaceted
phenomenon of globalization. Using the various disciplines of the social sciences, it examines the
economic, social, political, technological, and other transformations that have created an increasing
awareness of the interconnectedness of peoples and places around the globe. To this end, the course
provides an overview of the various debates in global governance, development, and sustainability.
Beyond exposing the student to the world outside the Philippines, it seeks to inculcate a sense of global
citizenship and global ethical responsibility.

Requirements of the Course:

1. Three (3) Major Examinations

2. Regular Attendance
3. Scheduled Quizzes, Seat-works, Home-works/ Assignments, Classroom-Based Recitations
4. Critique Papers, Synthesis Papers, Essay Writing
5. Group Power-Point Presentations, Video Presentations
6. Research Paper Writing

Learning Competencies:
At the end of the course the students are expected to:
1. be proficient and effective in communication skills through writing, speaking, listening, reading,
viewing, and the use of new platforms of technology;
2. apply critical, analytical, and creative thinking skills (i.e., quantitative, qualitative, artistic, scientific,
textual, visual, experimental, and observational) in tackling local, national, and global problems
methodically;
3. exhibit personal and civic responsibilities as a global citizen in viewing the contemporary world from
both the Philippine and global perspectives;
4. demonstrate the ability to reflect on moral norms or ethical standards as they affect individuals and the
global society;
5. exhibit understanding and respect for human rights as they contribute personally and meaningfully to
the country’s development;
6. possess and display practical skills through working effectively in a group;
7. demonstrate application of computing and information technology skills to assist and facilitate
research-related activities; and
8. display practical problem-solving skills in addressing real-world problems.

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Learning Objectives:

1. To differentiate the competing approaches to the study of globalization

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 2. To understand the varying processes of globalization
3. To explain the different ideological dimensions of globalization
4. To appreciate the core claims of market globalism
5. To agree on a working definition of globalization for the course

SOURCE: https://www.pinterest.ph/christine06295/advantages-of-globalisation/

LESSON 1
INTRODUCTION TO THE STUDY OF
GLOBALIZATION

The first part of this lesson discusses the summary of the “Approaches to the Study of
Globalization” as presented by Manfred B. Steger (2014) which was adopted from the “SAGE Handbook
of Globalization” edited by Manfred B. Steger, Paul Battersby, and Joseph M. Siracusa (2014). The

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succeeding discussion presents the work of Manfred B. Steger (2014) entitled “Market Globalism” which
was also adopted from the “SAGE Handbook of Globalization”.

A. Approaches to the Study of Globalization

There are many different approaches to the study of globalization. The purpose of this chapter is to
provide a general overview of the various approaches to the concept as espoused by several scholars since
the 1990s.
Various scholars have advanced the concept of globalization by analyzing the changing economic,
political, and cultural processes that happened since the 1970s. Some of the accepted definitions of
globalization include the following: “increasing global inter-connectedness”; “the expansion and
intensification of social relations across world-time and world-space”; “the compression of time and
space”; “distant proximities”; “a complex range of processes, driven by a mixture of political and
economic influences”; and “the swift and relatively unimpeded flow of capital, people, and ideas across
national borders” (Giddens, 1990; Harvey, 1989; Held & McGrew, 2007; Lechner & Boli, 2011;
Robertson, 1992; Steger, 2013; Waters, 2001).
Globalization as “Globaloney”.

Three groups of scholars argue that the existing accounts of globalization are incorrect and
imprecise. Their arguments fall into three differing categories. The first group disagrees with the
usefulness of globalization as a precise analytical concept. The second group contends that the world is
not really integrated as many proponents believe. The last cluster disputes the novelty of the process
while acknowledging the presence of moderate globalizing tendencies.

Rejectionists. These scholars believe that the term “globalization” is an example of a vague word
employed in academic discourses. Just like the term “nationalism”, “globalization” is a complex and
ambiguous phenomenon, thus both are hard concepts to define (Calhoun, 1993).

Sceptics. This group stresses the limited nature of current globalizing processes. According to Hirst
and Thompson (2009), our international economy is not really a global phenomenon, since it only
centered on Europe, Eastern Asia, and North America. They also emphasized that most of the economic
activities are still national in terms of origin and scope.

Modifiers. They entail that “globalization” has often been applied in a historically inaccurate
manner. Gilpin (2000) argues that our international economy in the late 1990s was even less incorporated
before the outbreak of World War I. According to the neo-Marxist proponents of World-System Theory
(Wallerstein, 1979; Frank, 1998), the modern capitalist economy today has been global five centuries ago.
Thus globalization can be drawn back to the political and cultural relations that developed the ancient
empires of Persia (Iran), China, and Rome.

Globalization as an Economic Process

The evolution of global markets and international corporations led to global economic
interdependence among nation-states. The development of international economic institutions such as the
European Union, the North American Free Trade Association, and other regional trading blocs are some
of the examples (Keohane & Nye, 2000). This only shows that economic globalization increases the
linkage of national economies through trade, financial flows, and foreign direct investment (FDI) by
multinational or trans-national corporations (MNCs/TNCs) (Gilpin, 2000).

The emergence and evolution of the post-World War I global economy was attributed to the
establishment of the 1944 Bretton Woods Conference (Schaeffer, 2005). Its operation for almost thirty
years contributed to the formation of the “golden age of controlled capitalism” (Luttwak, 1999).
The collapse of the Bretton Woods System in the early 1970s was followed by the intensification of
neo-liberalist ideas in the 1980s coupled with the collapse from 1989 to 1991 of the command-type
economies in Eastern Europe. Aside from the issue on free trade, the advent of a transnational financial
system made possible the deregulation of interest rates, the removal of credit controls, and the
privatization of government-owned banks and other financial institutions.

Globalization as a Political Process

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 Political globalization includes the discussion and analysis of political processes and institutions.
Thus two questions are asked: (1) what are the political grounds for the immense flows of capital, money,
and technology across territorial boundaries?; (2) do these flows create a serious test to the power of the
nation-state? These dilemmas imply that economic globalization might lead to the reduced control of
national governments over restrictive policies and economic regulations.

According to Ohmae (1990, 1995, 2005), the rise of a “borderless world” was the consequence of
the irresistible forces of capitalism. Thus, the nation-state has already lost its function as a significant
entity in the global economy vis-à-vis the decline of territory as a meaningful framework for
understanding political and social change. Regional economies will be linked together and operate based
on free-market principles.
In terms of global governance, political globalization might enable the emergence of democratic
ideals promoting a “global civil society” that promote human rights in the international level (Brysk,
2002).

Globalization as a Cultural Process

Two focal questions are raised by scholars of cultural globalization. First, does globalization
intensify cultural homogeneity, or does it lead to more diversity and heterogeneity? Second, what could
be the impact of the culture of consumerism on our natural environment?
According to Tomlinson (1999), cultural globalization signifies a growing linkage of intricate
cultural interconnections and interdependencies that define our modern social life. These can be made
possible through the emergence of powerful global media corporations that develop new communication
technologies which promote the Anglo-American value system. This global dissemination of American
values (Americanization), consumer goods, and lifestyles promote the objectives of American “cultural
imperialism” which is also termed by Ritzer (1993) as “McDonaldization” which describes the ideals of
the fast-food business that dominate the American society and the rest of the globe.
According to Barber (1996), a type of cultural imperialism that was assembled in the 1950s and
1960s promoted an American culture of popular consumerism which he termed as “McWorld”. This was
driven by expansionist commercial interests which was evident in its choice of music, video, theater,
books, and theme parks which create exports that center around common logos, advertising slogans, stars,
songs, brand names, jingles, trademarks, and the like.

As argued by Robertson (1995) global cultural flows also take place in local contexts which result
to “glocalization”. This refers to an intricate collaboration of the global and local cultures characterized
by cultural borrowing. These interactions lead to a complex mixture of both cultures often referred to as
“hybridization” or “creolization” which signifies processes of cultural mixing that are replicated in music,
film, fashion, language, and other types of social expression.
Appadurai (1996) classifies five dimensions or “landscapes” that are instituted by global cultural
flows: (a) ethnoscapes (shifting populations due to influx of tourists, immigrants, refugees, and exiles);
(b) technoscapes (improvement of technologies that assists the rise of MNCs); (c) finanscapes (movement
of all forms of global capital); (d) mediascapes (electronic know-hows that produce and spread
information), and (e) ideoscapes (principles advanced by states and social movements).

Sad to say, there are ecological dilemmas that are connected with this consumerist culture that
promote an infinite accumulation of material possessions. These include and are not limited to the
following: (a) human-induced global climate change; and (b) worldwide destruction of biodiversity. Data
suggest that further increase in global temperature could lead to a partial melt-down of the polar ice caps,
causing global sea levels to rise up to three feet by 2100 which could threaten many coastal regions of the
world. By the end of this century, there would be a great possibility that 50 per cent of all plant and
animal species (most of them in the global south) might disappear (Broswimmer, 2002).

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 Activity 1.A.i
(Matching Type)

Name: Score:
Course/Year/Section: Date:

Direction: Match the items under Column A with those items under Column B. Write your
answer on the space provided before each of the items below. Use CAPITAL
LETTERS and erasures of any kind will NOT be credited.

Column A Column B

___1. They reject the idea that globalization is a recent A. Ethnoscapes

Phenomenon
___2. Its establishment contributed to the formation of the B. Regional Training
“golden age of controlled capitalism” Blocs
___3. This refers to an intricate collaboration of the global C. Sceptics
and local cultures characterized by cultural borrowing
___4. This refers to the improvement of technologies that D. Mediascapes
assists the rise of MNCs
___5. The swift and relatively unimpeded flow of capital, E. Rejectionists
people, and ideas across national borders
___6. This denotes electronic know-hows that produce and F. Political
spread information Globalization
___7. It refers to principles advanced by states and social G. Globalization
Movements
___8. They believe that globalization is an example of a H. Finanscapes
vague word employed in academic discourses
___9. This type of globalization enables the emergence of I. The 1944 Bretton
democratic ideals promoting a “global civil society” Woods Conference
___10. This type of globalization refers to the evolution of J. Ideoscapes
global markets and international corporations
___11. This denotes movement of all forms of global K. Cultural
Capital Globalization
___12. They argue that international economy is not really L. Glocalization
a global phenomenon
___13. This refers to shifting populations due to influx of M. Modifiers
tourists, immigrants, refugees, and exiles
___14. This type of globalization promotes the N. Technoscapes
dissemination of Anglo-American values system
___15. The European Union (EU), the North American Free O. Economic
Trade Association (NAFTA), ASEAN, etc. Globalization

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 Activity 1.A.ii
(Essay Type)

Name: Score:
Course/Year/Section: Date:

Essay Question:

In not more than (five) 5 sentences, explain/justify how the prevailing values and beliefs of
consumerism are interconnected with the most threatening ecological problems dealing with human-
induced global climate change.

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 B. Market Globalism

The Ideological Dimension of Globalization

During the early 1990s, the emphasis of globalization was dominated by the economic and
technological features of globalization. Later, the role of incorporating markets and new information
know-hows became part of understanding the process of globalization. This section incorporates the
ideological aspect of globalization and the
roles and purposes of political ideologies. It also integrates ideas on the six central claims of market
globalism.

Political Ideologies and the Global Imaginary

According to Steger (2014), “ideology” is a structure of broadly shared ideas or philosophies,

patterned beliefs, guiding norms, values, and ideals recognized as fact by some collections of people.
Every ideology is organized around core claims which differentiates it from other contrasting ideologies.
The concept “ideology” was first introduced by Antoine Destutt de Tracy in the 18 th century. For
this Enlightenment thinker, the term means a positivistic “science of ideas” using the empirical tools
borrowed from the natural sciences. According to Paul Ricoeur (1986), the first functional level of
ideology (Ideology as Distortion) refers to the construction of contorted descriptions of social truth. This
process obscures the difference between things as they are perceived in theory and things as they are
viewed in reality.
Ricoeur (1986) acknowledged “Ideology as Legitimation” to be the second functional stage of
ideology. There are two central elements to be considered here: (a) the right to legitimacy claimed by the
ruling authority; and (b) the trust in the ruler’s legitimacy granted by its followers.

The third functional level of ideology according to Ricoeur (1986) is “Ideology as Integration”. In
this case, ideology offers humanity with permanence as it constructs, conserves, and safeguards the social
identity of individuals and collections of people. This means that this constructive role of ideology
provides the symbols, norms, and images that holds together the identity of individuals and collectivities.
Therefore, ideology here is seen as having a conservative role as it preserves and conserves peoples’
existing identities.

This section now defines “market globalism” as a hegemonic structure of philosophies that
provides normative assertions about a set of social procedures called “globalization”.

Political Ideologies and the “Social Imaginary”

According to Charles Taylor (2004), “social imaginaries” are neither theories nor ideologies, but
are implied “background understandings” of a group’s shared customs. The social imaginary explains
how a group of people fit as one and their expectations of every member within the community.
Each ideology organized its core concepts based on liberty, progress, race, class, rationality,
tradition, community, welfare, security, and others. The ideologies of liberalism, conservatism, socialism,

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communism, and Nazism/fascism are all “nationalist” in character and are promoted by the elites within
the group which are evident in their political goals through the concept of “national imaginary”.

In the middle era of the 1990s, globalization elites advanced their political agenda with the
introduction of a single international free market and the promotion of a consumerist values system
worldwide. They converted this social imaginary into their own economistic assertions. Thus the ideas on
international trade and financial markets; global flows of goods, services, and all possible forms of
capital; multinational corporations, offshore financial markets, and the like were popularized.

The Core Claims of Market Globalism

With the downfall of Soviet-style command economy in Eastern Europe, power elites from the
global north (i.e., corporate managers, CEOs of multinational corporations, corporate lobbyists, high-
ranking military officials, remarkable journalists, public-relations experts, scholars writing to a large
public audience, state administrators and leading politicians) introduced their idea of market globalism.
For them, market globalism means an advocacy that advances the deregulation of markets, trade
liberalization, the privatization of government-owned and controlled corporations, and the upkeep of the
global “War on Terror” spearheaded by US (Steger, 2014).

Claim 1: Globalization is about the Liberalization and Global Integration of Markets

This claim is buttressed in the neo-liberal philosophy of the laissez faire self-regulating market
economy as the foundation for a global market economy. According to Steger (2014), the focal roles of
the free market in order to foster more societal integration and material advancement are only possible in
a democratic society that values and protects individual rights and freedoms.

This claim argues that the vital assets of market globalism are the liberalization and integration of
worldwide markets and the lessening of government intervention in the national and global economies.
Thus, privatization, free trade, and unconstrained capital flows are seen as the paramount ways for
attaining personal liberty and material advancement in the world.
Claim 2: Globalization is Inevitable and Irreversible

This claim contends that globalization promotes the expansion of unalterable market forces
motivated by technological improvements that facilitate the unavoidable worldwide integration of state
economies. Nation-states, political parties, and civil society organizations have no option but to adapt to
the inevitable forces of globalization.

This neo-liberal depiction of globalization is synonymous to a natural force that forces people to
adjust to these market forces if they want to survive and succeed. These neo-liberal rules are over and
above state politics, thus they call for the abolition of all forms of state control.
Claim 3: Nobody is in Charge of Globalization

This argues that globalization is manifested through a “self-regulating market”. According to

Hormats (1998), what is attractive with globalization is that nobody is in control of the process. Thus it is
not regulated by any individual, any nation-state, or any organization. In addition, Friedman (1999)
contends that the international market is an Electronic Herd of anonymous stock, bond and money traders
and transnational foreign investors, integrated by global screens and networks.
Claim 4: Globalization Benefits Everyone (... in the Long Run)

The benefits for all relate to material aspects such as “economic growth” and “prosperity”. These
benefits were according to the participating heads of state of the 1996 G-7 Summit in Lyons, France,
consisting of the world's seven most influential highly-developed countries that issued a joint Economic
Communique (1996) that exemplified the implications of this claim.
These affirmative benefits include an unmatched increase in investment and trade; the
incorporation to global trade of the globe's most densely inhabited regions; more chances for the less
developed countries (LDCs) to develop their standards of living; faster dissemination of information;
technological innovation; and the rise of skilled jobs.

Claim 5: Globalization Furthers the Spread of Democracy in the World

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 This claim links the concepts on globalization and market with that of democracy which provides
individuals with economic choices. According to Freeden (1996), globalists treat freedom, free markets,
free trade and democracy as identical concepts.
As Fukuyama (2000) asserted, there is a clear connection between a nation’s level of economic
progress and successful democracy. The stage of economic advancement as a consequence of
globalization is beneficial to the formation of multifaceted civil societies with a powerful middle class
which facilitates the spread of democracy.

Claim 6: Globalization Requires a War on Terror

The neo-conservatives who are committed to the American values of freedom, security, and free
markets added this sixth claim of market globalism. According to Kaplan (2003), you need to possess
both military and economic supremacy in order to spread your ideas worldwide. This claim integrates
idea of market globalism with militaristic and nationalistic ideas linked with the American-headed global
“War on Terror”.

As asserted by Barnett (2004), the globe is divided into three diverse regions:

The Functioning Core or Core. This is categorized by global network connectivity, financial
transactions, liberal media, cooperative security, nations having stable democratic governments, practice
of transparency, increasing standards of living, and more deaths by suicide than by killings (i.e., North
America, most of Europe, Australia, New Zealand, and a small part of Latin America).

The Non-Integrating Gap or Gap. This refers to regions where globalization is thinning or if not,
absent. These regions are plagued by authoritarian political regimes, government regulated markets, mass
killings, prevalent poverty and diseases, and the breeding ground of global terrorists (i.e., the Caribbean
Rim, almost all of the African continent, the Balkans, the Caucasus, Central Asia, China, the Middle East,
and much of Southeast Asia).

Seam States. These states lie along the Gap's bloody borders (i.e., Mexico, Brazil, South Africa,
Morocco, Algeria, Greece, Turkey, Pakistan, Thailand, Malaysia, the Philippines, and Indonesia).

Activity 1.B.i
(Matching Type)

Name: Score:
Course/Year/Section: Date:

Direction: Match the items under Column A with those items under Column B. Write your
answer on the space provided before each of the items below. Use CAPITAL
LETTERS and erasures of any kind will NOT be credited.

Column A Column B

___1. A functional stage of ideology which refers to the A. Ideology as

right of the ruling authority and the trust granted by Integration
its followers
___2. It refers to a hegemonic structure of philosophies that B. Democratic
provides normative assertions about a set of social
processes called “globalization”
___3. A free market which fosters societal integration and C. Social Imaginary
material advancement that protects individual rights
and freedoms will only be possible in this type of society

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___4. This refers to a group’s shared ideas or philosophies, D. Ideology as
patterned beliefs, guiding norms, values, and ideals Distortion
___5. These regions are plagued by authoritarian political E. Ideology as
regimes, government regulated markets, the Legitimation
breeding ground of global terrorists, etc.
___6. A functional level of ideology that aims to preserve and F. Power Elites
conserve a group’s existing identity
___7. They refer to CEOs of multinational corporations, high- G. Market
ranking military officials, remarkable journalists, state Globalism
administrators, and leading politicians, etc.
___8. These regions are categorized by global network H. Gap
connectivity, financial transactions, and stable
democratic governments, etc.
___9. A functional level of ideology which constructs contorted I. Ideology
descriptions of the social reality
___10. This explains how a group of people fit as one and the J. Core
expectations of every member within the community

Activity 1.B.ii
(Essay Type)

Name: Score:
Course/Year/Section: Date:

Explain/expound the following statement in not more than five (5) sentences:

“You also have to have military and economic power behind it, or else your ideas cannot
spread.”

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11 | Page
Learning Objectives:

1. To define economic globalization

2. To identify the actors that facilitate the international monetary system
3. To understand international trade issues and trade policies
4. To articulate a stance on global economic integration

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 SOURCE: https://www.google.com/search?q=images/+photos+related+with+the+global+economy

LESSON 2
THE GLOBAL ECONOMY

This chapter discusses the summary of “The Globalization of Economic Relations” as presented
by Istvan Benczes (2014) which was adopted from the “SAGE Handbook of Globalization” edited by
Manfred B. Steger, Paul Battersby, and Joseph M. Siracusa (2014).

Introduction

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 This chapter discusses the definition, foundation, and effects of economic globalization. While
the second section tackles on the development of the key global monetary regimes that include the gold
standard, the Bretton Woods System, and European Monetary Integration. The last segment talks about
trade rules and relations, which will focus on the unilateral trade system of the late 19th and early 20th
centuries and the multilateral trade agreements of the post-World War II period (Benczes, 2014).

According to Held et al. (1999), globalization may be claimed as the broadening, deepening, and
rapid global interconnectedness in all facets (political, technological, cultural, and economic) of modern-
day social life (Giddens, 1999). Thus globalization is a multidisciplinary course.
What is Economic Globalization?

According to the International Monetary Fund (2008), this refers to a historical progression,
which is the consequence of humanity’s modernization and technological development. It may also
denote a growing interconnection of global economies via the mobility of goods, services, knowledge,
and all forms of capital around the world.

The following are the various interrelated scopes of economic globalization:

(a) the globalization of goods and services in trade;

(b) the globalization of monetary and capital markets;
(c) the globalization of know-how and communication; and
(d) the globalization of production.

Economic globalization differs from internalization since the former refers to functional
interconnectedness between globally isolated activities while internationalization speaks of the extension
of economic activities of one country to another (Dicken, 2004).

For hyperglobalists, nation-states are no longer the key economic institutions in the global
market. Humanity is now consuming extremely standardized international products and services created
by multinational corporations (Ohmae, 1995). According to Reich (1991), globalization converts the local
economy into an international one, thus products, technologies, corporations, and industries are no longer
treated as national.

The new actors of political and cultural globalization today refer to the United Nations (UN) and
non-governmental organizations (NGOs) or civil society organizations (CSOs). While the key actors of
this modern-day global market economy are the multinational corporations (MNCs) or transnational
corporations (TNCs). This MNCs or TNCs are the key motivating powers of economic globalization for
the last 100 years, and they account for about 67% of world exports (Gereffi, 2005).

For realists, they argue that these MNCs/TNCs still represent national interests (Gilpin, 2001).
However, for the pioneers of the Dependency School, they assert that these are the vehicles through
which the rich can exploit the underprivileged majority (Feenstra, 1998). On the other hand, Gereffi
(1999) introduced the idea on the “global commodity chains” which emphasizes on the growing
significance of international buyers in a global market of dispersed production.
Is Economic Globalization a New Phenomenon?

Gills and Thompson (2006) assert that the process of globalization began since Homo sapiens
started moving from the African continent to the rest of the globe. Frank and Gills (1993) argued that the
foundation of globalization dates back about 5,000 years ago as manifested by the Silk Road which linked
Asia, Africa and Europe.
When Adam Smith wrote his book “An Inquiry into the Nature and Causes of the Wealth of
Nations in 1776, he regarded the rediscovery of the Americas by Christopher Columbus in 1492 and the
rediscovery of the direct maritime route to India by Vasco de Gama in 1498 as the two ultimate
accomplishments in humanity’s historical accounts.

Other significant accomplishments were the technological developments of the British Industrial
Revolution after the Napoleonic Wars which spread to European and North American continents.
Monopolized trade during this period were controlled by the first transnational corporations, the British
East India Company (1600) and the Dutch East India Company (1602). However, these TNCs did not
favor global economic integration due to their idea of nationalism (Gereffi, 2005).

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 The real global economic break-through came in the 19th century due to the transport innovations
via the use of steamships and railroads which decreased transaction expenses and boosted both local and
global economic exchanges (Held et al., 1999). The relatively short period from 1870 to 1913 before
World War I (1914 to 1919) is often regarded to as the “Golden Age of Globalization”. This period is
characterized by the presence of peace, free trade, and financial and economic permanence (O'Rourke &
Williamson, 1999).
The Neoclassical Solow Growth Model

Bairoch (1993) argues that the industrial revolution and global trade relations strengthened
economic growth and development among developed parts of the globe, the rest of the world did not
achieve such accomplishments. Thus, the industrialization of the developed regions led to the de-
industrialization of the poorer regions.
Structuralism

Structuralism is a set of models which emerged from the 1950s to the 1970s and affirm the notion
that the North and South regions are in a structural association (Brown, 2001). The most recognized
critical theory to the prevalent social partition of labor and global inequities is presented by the “World-
Systems Analysis”, which argues that capitalism under globalization strengthens the structural
arrangements of unequal change.

According to Wallerstein (1983), capitalism produced the differing historical level of wages in the
global economic stage of the global system. Thus, rising disparity, coupled with economic and political
dependency, are not independent from economic globalization.
For Rostow (1960), underdevelopment (i.e. the absence of economic growth and development,
coupled with poverty and malnourishment) is not the primary phase of a historical and evolutionary uni-
linear progress, rather the effect of colonialism and imperialism. Wallerstein (1983) acknowledged
imperialism as the product of the global capitalist structure which propagated imbalanced exchange.
The present capitalist structure produced political systems that ensure an infinite appropriation and
amassing of surplus products from less developed countries (the periphery) to the industrializing countries
(the semi-periphery) and the highly industrialized or highly developed countries (the core or metropole)
(Arrighi, 2005).
The International Monetary Systems

An international monetary system or regime (IMS) denotes the policies, practices, tools, services,
and institutions for carrying out global payments (Salvatore, 2007). In the liberal custom, the key
responsibility of an IMS is to assist international transactions on trade and investment. An IMS is more
than just money or currencies it also mirrors economic supremacy since money is essentially political and
is also considered as a vital aspect of “high politics” of diplomacy (Cohen, 2000).
The Gold Standard
The foundations of the first IMS dates back to 19th century, when Britain assumed gold mono-
metallism in 1821. In 1867, the European countries, including United States, shifted to gold at the
International Monetary Conference in Paris. Gold was viewed to ensure a non-inflationary, constant
economic atmosphere, and a vehicle for hastening global trade (Einaudi, 2001). When Prussia won over
France in 1872, Germany joined the global system. France decided to join six years later. The gold
standard developed to be the global monetary regime by 1880 when United States joined in 1879. In
1894, Italy decided to participate and Russia followed in 1897. About 70% of the countries took part in
the gold standard prior to the eruption of World War I (Meissner, 2005).

The gold standard operated as a fixed exchange rate system, which made gold as the lone global
reserve. Member countries ascertained the gold content of their national currencies which defined fixed
exchange rates (or mint parities). Monetary authorities were mandated to exchange their national
currencies for gold at the authorized exchange rate without restrictions on global markets (Bordo &
Rockoff, 1996).

Due to the outburst of World War I, the gold standard came to an end. Member countries gave up
convertibility and stopped gold export in order to halt the exhaustion of their national gold reserves. The
1930s turn out to be the gloomiest era of modern economic history (Eichengreen & Irwin, 2009).

The Bretton Woods System and its Dissolution

According to Destler and Henning (1989), the allied nations started to negotiate on a new global
monetary regime under the structure of the United Nations Monetary and Financial Conference in Bretton

15 | Page
Woods, New Hampshire (US), in July 1944. Forty-four countries decided to adopt the gold-exchange
standard. At that time, the US dollar was the lone exchangeable currency of the time. Thus, United States
devoted itself to trade and buy gold without limitations at US$35 per ounce. All participating countries
having non-convertible currencies were pegged to the US dollar.
The participating countries also established two global monetary institutions: (a) The
International Banks for Reconstruction and Development (IBRD) which was responsible for post-war
reconstruction and development; and (b) The International Monetary Fund (IMF) which encouraged
global financial collaboration and international trade. The IMF also provided short-term monetary
assistance to countries in cases of transitory balance of payments difficulties.
During the middle part of the 1960s, the US dollar became overvalued along with other major
currencies. As a reaction, foreign nations started to exhaust the US gold reserves. This forced the United
States to abandon the gold-exchange standard on August 15, 1971. In 1973, developed countries agreed to
float their currencies (prices of currencies were determined by demand and supply forces). This
arrangement in the exchange rate policy was mandated by the Jamaica Accords in 1976 (Destler &
Henning, 1989).

The Plaza Accord

In 1985, the G7 countries decided to devaluate the US dollar as a consequence of the heightening
pressure of local US manufacturers and farmers to reinstate their global competitiveness in the world
market.
The Louvre Accord

In 1987, the Louvre Accord was agreed upon in order to protect the US dollar from further
devaluation in the world market. The United States might have profited from these internationally,
however, one of the main losers was Japan. The appreciation of the Japanese yen proved to be devastating
for the Japanese local economy (Destler & Henning, 1989).
The Washington Consensus

The neoliberal, pro-market Washington Consensus became successful in the 1990s. Its agenda were
promoted and disseminated by the IMF as part of its conditionalities in exchange for financial assistance.
The IMF and the Washington Consensus (and its free-market ideology) have been blamed for the
unsuccessful progress of the periphery. For Wallerstein (2005), the way for the periphery to develop is
not to “import-substitute” but to export orient productive activities.

The Morgenthau Plan

After World War II, the United States sought to carry out the Morgenthau Plan. The idea was to
downscale Germany’s economy to become a pastoral and agricultural one. This was a reaction to USSR's
(specifically, Russia) thrust for communism in the East European region coupled with the growth of
socialist and communist parties in the West. However, the plan did not materialize and was abandoned by
US. In contrary, United States shifted its plans and promoted an economically and militarily powerful
Germany and Western Europe.

The Marshall Plan and the European Monetary Integration

This was United States’ post-war reconstruction and development program in 1948 for Western
Europe, which was managed by the Organization for European Economic Cooperation, the forerunner of
the Organization for Economic Cooperation and Development (OECD). The astonishing growth and
development of Western Europe encouraged a closer collaboration of Western European countries which
consequently gave birth to the European Coal and Steel Community in 1951. The ECSC was followed by
the signing of the Rome Treaty in 1957, which founded the European Economic Community (EEC)
which consequently became the European Union (EU).

The six founding member-countries (West Germany, France, Italy, Netherlands, Belgium and
Luxembourg) aimed at the formation of a common market for the freer movement of goods, services,
capital and labor. The downfall of the Bretton Woods System pressured the member-countries in 1979 to
establish their own regional monetary regime (the European Monetary System, EMS). Here, neither the
US dollar, nor gold can function in the stabilization process of exchange rates. Instead, the European
Exchange Rate Mechanism (EERM) was created (Gros & Thygesen, 1998).

16 | Page
 In 1992, with the help of the late French President Francois Mitterrand and German Chancellor
Helmut Kohl, the foundations of a new European Economic and Monetary Union (EMU) were
established under the Maastricht Treaty. As early as 1999, member-countries of the EMU replaced their
national currencies and deputized monetary policies to a supranational stage, managed by the European
Central Bank (ECB). Consequently, trade and capital transactions increased; local economies became
more interconnected; macroeconomic stability was reestablished, and the euro grew to become the second
most globally used currency (European Commission, 2008).
David Ricardo’s Comparative Advantage Theory

According to Ricardo (1817) as cited in Samuelson (1995), a country such as Britain could profit
from a voluntary trade with Portugal even if Portugal is more effective in producing both wine and
clothing. For Britain, it should concentrate in the production of the product with less disadvantage and let
Portugal produce the other product. The theory argues that every country must possess a comparative
(relative) advantage in the production of something irrespective of its original situation.
International Trade and Trade Policies
Reformist and radical (new left and neo-Marxian) theorists, such as Emmanuel (1972) or Amin
(1976), argued that the social partition of labor adds to the economic development of the highly
developed countries (HDCs or core) and hampers progress of the less developed countries (LDCs or
periphery). The economies of HDCs have the finest of two worlds (as buyers of cheap primary
commodities and as sellers of costly manufactured products. On the other hand, LDCs have the worst of
both worlds, as buyers of expensive industrial products and as producers of cheap raw materials (Singer,
1964). According to Amin (1993), if this global economy only benefits the HDCs at the loss of the LDCs,
then the periphery countries must implement a protectionist policy in its extreme form of de-linking (i.e.
to cut their ties with the HDCS or core countries).

Unilateral Trade Order

During the 17th to 18th century, global trade in Europe concentrated more on the accumulation of
gold reserves which encouraged nation-states to export and limit imports. This mercantilist or
protectionist policy was branded as a zero-sum game in global trade. Hence, trade and trade policies only
furthered the interest of the monarchs (royal family) from Portugal to Great Britain (now UK), which
utilized their accumulated bullions (gold) to support battles and consolidate power over their domestic
supporters (Dunham, 1930).

Bilateral Trade Agreements

Bilateral Trade Agreements also succeeded in Europe, one example of these is the most-favored
nation (MFN) policy. This policy demonstrates the principle which stated that any negotiated mutual
tariff cutbacks between two parties must benefit all other trading partners without conditions (Lampe,
2008).

The United States adopted a protectionist policy (import substitution industrialization) which
imposed tariffs on manufactured goods with an average of 45%. Even France, the Scandinavian countries,
and UK from the 1860s onwards, imposed protectionist measures due to the entry of low-cost agricultural
commodities from their foreign territories, Germany, and US. UK persisted to be hegemonic
economically and militarily. It also depended on the massive reserves of its territories, especially India
(Arrighi & Silver, 2003).
After World War I (1914-1919), the two World Economic Conferences in 1927 and 1933 did not
succeed in reducing tariffs due to the refusal of US to take the lead as the hegemonic descendant of a
declining United Kingdom. In 1930, the Hawley Act in US amplified tariffs in the country. As a
consequence, trading partners of US retaliated which lessened international trade by an average of 33 to
66 percent. To address the issue, US enacted the Reciprocal Trade Agreements Act in 1934 which halted
the further decline in global trade. This Law gave the US president the power to decide on trade policies
and lessened the burden put on the Congress for determining protectionist trade policies. This trade policy
was a return to the original notion of MFN policy prior to the eruption of World War II (Irwin, 1998).

Multilateralism: From the GATT to the WTO

In 1950, the US dollar became an international currency, supported by 67% of the world's gold
reserve (Green, 1999). US was also the leading aid donor (i.e., the Marshall Plan). Owing to the downfall
of the European and Japanese manufacturing industries after World War II, USA’s manufacturing
industry amplified which accounted for about 60% of the world's total in 1950, and its export amounted to
about 33% of the world's total (Branson et al., 1980).
At that time, the latest international trade regime must have been driven by the International Trade
Organization (ITO) agreement, which was one of the three pillars of the Bretton Woods System, aside

17 | Page
from the IMF and the IBRD, however, a series of rejections in the US Congress obstructed its creation. In
place of the ITO, nation-states dedicated to lower down tariffs agreed to create the General Agreement on
Tariffs and Trade (GATT) (Branson et al., 1980).

The GATT encouraged international trade through a sequence of multilateral trade negotiations
called “rounds”. The first five rounds concentrated on tariff cuts: (1) 1947 Geneva Tariffs; (2) 1949
Annecy Tariffs; (3) 1951 Torquay Tariffs; (4) 1956 Geneva Tariffs; (5) 1960 Dillon Round Tariffs; (6)
1964 Kennedy Round Tariffs and anti-dumping measures; (7) 1973 Tokyo Round Tariffs, non-tariff
barriers, and “framework agreements”; and (8) 1986 Uruguay Round Tariffs, non-tariff barriers, rules,
services, intellectual, property, dispute settlement, textiles, agriculture, and creation of the WTO (WTO,
2012).
The establishment of the European Economic Community (EEC) in 1957 forced US to implement
the Trade Expansion Act of 1962 and demanded for a new round, the Kennedy Round. Its consequence
was an across-the-board cutting (which replaced the practice of item-by-item cuts) and reduction of non-
tariff barriers (i.e., anti-dumping measures) (Evans, 1971).

During the 1970s, the Tokyo Round besides tariff cuts, also approved a series of codes of conduct
(i.e., the “subsidies code” or the “government procurement code” (Deardorff & Stern, 1983). The most
popular multilateral trade negotiations occurred under the Uruguay Round from 1986 to 1994. While
previous trade arrangements were successful in reducing tariffs, a series of other corrective measures (i.e.,
non-tariff barriers) were also implemented by nation-states. The Uruguay Round stretched multilateral
policies to current concerns and areas, such as agriculture which concluded in a harsh dispute between the
US and the EU.
According to Walter and Sen (2009), the foremost results of the trade arrangements were the
agreements on trade-related investment measures (TRIMs); trade in services (GATS) and trade-related
features of intellectual property rights (TRIPs). These agreements were promoted by highly developed
countries (HDCs) and targeted less developed countries (LDCs) with massive service market potentials in
finance and telecommunications.
After 50 years of trade negotiations, the Uruguay Round came up with a genuine global trade
institution, the World Trade Organization (WTO). The WTO was established on January 1, 1995 and
become a formal forum for trade dialogs. Unlike the GATT, it is a formally constituted association with
legal personality. However, in 1999, the developing nations epitomized a united movement for a new
round of trade negotiations in Seattle. This event revealed the power of NGOs/CSOs and anti-
globalization movements. These movements objected in favor of the LDCs and were against the current
status quo of international trade affairs; the hegemony of the US economy; the personal interests of
MNCs/TNCs; and the discriminatory mechanisms of the WTO in favor of HDCs (Narlikar & Tussie,
2004).
In 2001, the quasi-official Doha Round must have become a round on economic development,
however, it failed due to the interests of the opposing parties (HDCs vs. LDCs). LDCs asserted on the
proper and full execution of the Uruguay Agreement (especially in the area of agriculture), however, US
promoted to keep labor and environmental issues on the agenda. The deadlock between the two opposing
sides, motivated LDCs to cooperate and strengthen their leverage within the WTO by creating a pressure
group called the Group of 20 (G20). This conglomeration of countries accounts for almost 67% of the
world's inhabitants and 25% of world-wide agricultural export (Narlikar & Tussie, 2004).
Developing Countries and International Trade

Developing (third world) countries did not partake aggressively in multilateral trade agreements for
quite a long period of time. The so-called East Asian newly industrializing countries (NICs) embraced an
outward-oriented development approach. However, a majority of these developing nations were not able
to integrate successfully into this trading scheme. Rather, they promoted an inward-looking, import-
substitution industrialization policy, which did not encourage trade liberalization (Findlay & O'Rourke,
2007). Meanwhile, the HDCs were also hesitant to open their markets to products (i.e., textile or
agricultural) in which developing countries have a comparative advantage.

The key transformation in this economic affairs occurred in 1964 when the United Nations
Conference on Trade and Development (UNCTAD) was institutionalized with the collaborative stance of
the developing countries. The objective of UNCTAD was to encourage trade and mutual aid between and
among the HDCs and LDCs (Salvatore, 2007). However, due to the two oil crises dilemma which
affected the economic activities of the HDCs, these countries adopted highly protectionist measures (both
tariff and non-tariff) in order to address the damaging effects of the economic stagnation in the 1980s.
Developing countries started to aggressively participate in trade with the advent of the Uruguay
Round. This round was a grand bargain between the HDCs and LDCs (Ostry, 2002). The HDCs were

18 | Page
projected to open their markets to agricultural and textile products, while the LDCs must accept the new
rules on intellectual property rights and services. LDCS opened up their service markets, however, their
export of agricultural commodities is still blocked by the HDCs. Agricultural products have a share of
about 33% to 50% of the total economic production among HDCs. Without trade liberalization in
agriculture, it is difficult for LDCs to entirely assimilate themselves into the international economy.

For Khor (1995), he saw the WTO as a medium by the HDCs to gain entry to the markets of LDCs.
While Wade (2003) criticized the three major trade agreements (i.e. TRIMS, GATS, and TRIPS) saying
that they constrained the set of industrial policies to achieve development for the LDCS.

Activity 2.A
(Matching Type)

Name: Score:
Course/Year/Section: Date:

Direction: Match the items under Column A with those items under Column B. Write your
answer on the space provided before each of the items below. Use CAPITAL
LETTERS and erasures of any kind will NOT be credited.

Column A Column B

___1. The first transnational corporation founded in 1600 A. The Marshall Plan
___2. The highly industrialized or highly developed B. British East India
countries (HICs/HDCs) Company
___3. This was agreed upon in 1987 in order to protect the C. Christopher
US dollar from further devaluation in the world market Columbus
___4. A global monetary institution responsible for post-war D. GATT
reconstruction and development
___5. The new actors of political and cultural globalization E. IMF
___6. This was USA’s post-war reconstruction and F. Periphery
Development program in 1948 for Western Europe
___7. Rediscovery of the Americas in 1492 G. Vasco de Gama
___8. A global trade institution created by the Uruguay Round H. The Morgenthau Plan
and became a formal forum for trade dialogs with a
formally constituted association with legal personality
___9. The less developed countries (LDCs) I. IBRD/WB
___10. Rediscovery of the direct maritime route to India in J. WTO
1498
___11. It replaced the ITO and was dedicated to lower down K. Core/Metropole
tariffs and encouraged international trade through a
series of multilateral trade negotiations called “rounds”
___12. An agreement in 1985 which decided to devaluate the L. Louvre Accord
US dollar as a consequence of the heightening pressure
of local US manufacturers and farmers
___13. A global monetary institution which provides short-term M. Semi-Periphery
monetary assistance to countries in cases of transitory
balance of payments difficulties
___14. The idea was to downscale Germany’s economy to N. UN and NGOs/CSOs
become a pastoral and agricultural one
___15. The newly-industrialized countries (NICs) O. Plaza Accord

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 Activity 2.B
(Essay Type)

Name: Score:
Course/Year/Section: Date:

Essay Question: Explain your answer in not more than five (5 sentences).

What are the advantages and disadvantages of free trade? Do these arguments fully hold in
relation to both developed and developing countries?

20 | Page
21 | Page
Learning Objectives:

1. To understand the creation, attributes, and types of global corporations

2. To enumerate the functions and importance of global corporations
3. To explain the development processes that occur among global corporations
4. To appreciate the existence of the emerging global corporations

SOURCE: https://www.pinterest.ph/oneeurope/european-integration/
https://www.google.com/search?q=images/+photos+related+to+global+market+integration

LESSON 3
MARKET INTEGRATION

22 | Page
 This chapter discusses the summary of the “The Rise of the Global Corporation” as presented by
Deane Neubauer (2014) which was adopted from the “SAGE Handbook of Globalization” edited by
Manfred B. Steger, Paul Battersby, and Joseph M. Siracusa (2014).

The Historic Rise of the Global Corporation

The methodology used in the study of globalization which is also known as “historical
globalization” is based on arrangements in trade and exchange (Bentley, 2003; Gills & Thompson, 2006;
Moore & Lewis, 2000). In the earlier times, globalization was stimulated by the leading technologies in
shipping and navigation (Harvey, 1990).

After the massive destructions of World War II, economic recovery and growth were spearheaded
by American corporations followed by the reentry of Japanese and European companies into the
international arena which later on were regarded as multinational corporations (MNCs) (Barnet &
Mueller, 1974).
How Do Global Corporations Function? What Constitutes a Global Corporation?
According to Iwan (2012), the current international corporation may be called as any of the
following:

International Companies. They import and export but have no investments outside of their
country.
Multinational Companies. They invest in foreign countries, but do not possess coordinated
commodity offerings in every nation.

Global Companies. They invest in and are existing in many countries. They sell their goods and
services to each local market.
Transnational Companies. They are complex corporations and have invested in foreign nations.
They also possess fundamental commercial facilities, however, give decision making, research and
development (R&D), and marketing authorities to every individual overseas market.
This section will utilize the term “global corporation” to refer to all of these classifications. A TNC
is defined by the United Nations Center on Transnational Corporations (UNCTC) as a business
organization that involves itself in activities which add value (manufacturing, extraction, services,
marketing, etc.) in more than one nation (UNCTC, 1991).

The post-war period can be delineated in three structural periods: (a) investment-based
globalization (1950-70); (b) trade-based globalization (1970-95); and (c) digital globalization (1995
onwards) (Geriffi, 2001).

Another approach of validating the growth of TNCs/MNCs is to identify the sources and levels of
Foreign Direct Investment (FDI). As Hedley shows, in 1900 only European companies were principal
investors. Later on, American firms started to follow in the 1930s. An FDI is defined as the influx of
private capital from a foreign source into a receiving nation. FDIs were regarded as the principal
components of international economic development for third world countries (TWCs). But in reality, the
bulk of FDIs in the 1990s was among nations of the industrialized world (i.e., North America, Europe and
Japan) (Geriffi, 2001).

According to Gilpin (2000), the investment-based era was led by producer-driven commodity or
value chains dominated by companies possessing massive amounts of capital using extensive and capital-
intensive manufacturing strategies. Many companies in the United States that operate via the producer-
driven commodity chain were structured based on the “fordist” management principles.

The advent of Japan as a principal producer of automobiles and consumer electronic products since
the 1970s introduced new prototypes of effective manufacturing strategies which centered on quality and
flexible production. These are seen by American companies as challenges to their dominant positions on
commodity design, manufacturing efficiency, and quality which resulted to an advanced reinvention of
the US corporate model, especially in the industrial sector (Risi, 2005).

Corporate brands signify a company’s corporate activities and evaluate a corporation’s prominence
in the international arena based on the value of its commodities and services. This is also recognized as
“Brand Finance”, a current trend which ranks global companies on the value of their brands, aggregate
revenue, earnings, etc. (Brand-Finance, 2012). In this sense, technology brands developed as the greatest
and most valuable global corporate brands in 2012 with Apple surpassing Google as Number 1 with a

23 | Page
brand finance worth of US$70.6 billion. Meanwhile, Amazon’s brand finance value increased by 61 per
cent over the previous year (2011).
Digitalization also influenced the entire operation of how international corporations function.
Producer-driven commodity chains now try to reduce the effects of time and distance in terms of design,
finance and accounting, advertising and brand development, legal services, inventory control etc.
Digitalization is innovating the usual value chain of manufacturing centered on improvement along the
following (Capgemini, 2012):
Product Design and Innovation are replaced with innovations via digital product design;

Labor Intensive Manufacturing is substituted by digitizing the factory shop floor making it more
capital-intensive;

Supply Chain Management is changed by digital supply chain management; and

Marketing Sales and Service is innovated by digital customization.

Buyer-driven commodity chains gradually become digital with companies’ specialization in
Internet marketing of products and services to increase market share over traditional marketing and
retailing. The last thirty or more years observed the revolution of the apparel industry motivated by digital
processes from design, to ordering, factory processing, inventory control, delivery, branding, marketing
and advertising (Capgemini, 2012).

Kentor (2005) studied the economic and spatial growth of multinational corporate linkages and
found out that the top 100 largest MNCs/TNCs owned 1,288 subsidiaries in 1962, and after 36 years, the
top 100 manufacturing corporations owned about 10,000 subsidiaries. The top 44 MNCs in the top 100
global corporations in year 2009 produced revenues of US$6.4 trillion, which is tantamount to 11% of the
world’s GDP (Global Trends, 2013).

What is Different about this Phase of Global Corporate Development?

The alleged developing economies of Brazil, India, China, and South Africa (BRICS) became the
most vibrant region of international corporate growth, as reflected by their noteworthy FDIs over the past
30 years. The number of MNCs from the BRICS (listed in the Fortune Global 500 that ranks companies
in terms of revenue) rose from 47 companies in 2005 to 95 in 2010. Capital flows now originate from
China and India. For instance, China's Lenovo company purchased IBM's PC business and India's
investment in British companies including Jaguar Land Rover (Economist, 2011). China is the leading
outward investor among developing economies with projected assets in 2009 of approximately US$1
trillion (OECD, 2010).

Wolfsensohn, suggested a “four-speed world” categorization which distinguishes economies as

Affluent, Converging, Struggling and Poor, with the BRICS dominating the growth of the convergent
group. With 40% of the globe’s inhabitants, the BRICS signifies a major power in both worldwide
production and consumption (Wolfsensohn, 2007).

According to The Boston Consulting Group (2009), the following are some “Emerging Market
Global Corporations”:

1. Basic Element (Russia) is a world leader in alumina production.

2. Bharat Forge (India) is one of the world's largest forging companies.
3. BYD Company (China) is the world's largest manufacturer of nickel-cadmium
batteries.
4. CEMEX (Mexico) has developed into one of the world's largest cement producers.
5. China International Marine Containers Group (China) is the world's largest
manufacturer of shipping containers.
6. Cosco Group (China) is one of the largest shipping companies in the world.
7. Embraer (Brazil) has surpassed Canada's Bombardier as the market leader in regional
jets.
8. Galanz Group (China) has a 45 per cent share of the European and a 25 per cent
share of the US microwave market.
9. Hisense (China) is the number one supplier of flat-panel TVs to France.
10. Johnson Electric (China) is the world's leading manufacturer of small electric motors.
11. Nemak (Mexico) is one of the world's leading suppliers of cylinder head and block

24 | Page
 casings for the automotive industry.
12. Sistema (Russia) is a conglomerate with a focus on telecommunications.
13. Tata Chemicals (India) is an inorganic-chemicals producer with a significant global
market share of soda ash.
14. Techtronic Industries Company is the number one supplier of power tools to Home
Depot.
15. Wipro (India) is the world's largest third-party engineering services company.
In 2009 China was the primary trade partner of Brazil, India and South Africa, and Tata of India
was the most dynamic investor in sub-Saharan Africa.

Government-owned and controlled corporations (GOCCs or state-owned corporations) may be

defined as businesses composing of parent companies and their overseas partners in which the
government possesses control (full, majority, or significant minority), whether or not registered on a stock
exchange play an important part in these emerging or developing economies (UNCTAD-WIR, 2011).
State-owned corporations may comprise both national and local governments such as regions, provinces
and cities.

Another description of China's state-owned MNCs affirms that these are legacy institutions
(relics) of China's command-socialist system that propagates in its revised neo-capitalist economy.
Companies that lack economic efficiency and competitive discipline are in effect subsidized or funded by
the Chinese state which gives them market leverage to become globally competitive (Woetzel, 2008;
Greenacre, 2012).

Activity 3.A
(Matching Type)
Name: Score:
Course/Year/Section: Date:

Direction: Match the items under Column A with those items under Column B. Write your
answer on the space provided before each of the items below. Use CAPITAL
LETTERS and erasures of any kind will NOT be credited.

Column A Column B

___1. A company that invests, exists, and sells its goods and A. Transnational
Company
services to each local market in foreign countries
___2. A commodity chain that uses massive amounts of B. Buyer-driven
Commodity Chain
capital-intensive manufacturing strategies
___3. In 2012, this MNC was ranked “Number 1” with a brand C. Digitalization
finance amounting to US$70.6 billion
___4. This is defined as the influx of private capital from a D. Producer-driven
Commodity Chain
foreign source into a receiving nation
___5. Under the “four-speed world” categories of Wolfsensohn, E. GOCCs
the BRICS fall under this characterization
___6. A company that imports and exports but have no F. Foreign Direct
Investment (FDI)
investments outside of its country
___7. Under the “four-speed world” categories of Wolfsensohn, G. Global Company
the highly-developed countries fall under this type

25 | Page
___8. They are classified as developing economies as reflected H. Affluent
by their noteworthy FDIs over the past 30 years
___9. This is the other term for state-owned corporations I. International
Company
___10. A complex corporation that gives decision making, J. Lenovo
research and development, and marketing authorities
to every individual foreign market
___11. This is a current trend which ranks global companies on K. BRICS
the value of their brands, aggregate revenue, earnings,
etc.
___12. A Chinese company that purchased IBM's PC business L. Apple
___13. This innovation among companies reduces the effects M. Multinational
Company
of time and distance in terms of design, advertising,
brand development, inventory control, etc.
___14. A commodity chain that uses a more labor-intensive N. Brand Finance
production strategies
___15. A company that invests in foreign countries, but do not O. Converging
possess coordinated commodity offerings in every
nation

Activity 3.B
(Essay Type)
Name: Score:
Course/Year/Section: Date:

Essay Question: Explain your answer in not more than five (5) sentences.

How do digital technologies transform the structures and operations of global corporations?

26 | Page
27 | Page
Learning Objectives:

1. To understand how nation-states interact and comply with global standards

in a world of economic interdependence
2. To recognize the importance of economic and political Integration among
the members of the European Union
3. To appreciate the significance of international law and universal principles
4. To explain how transnational activism and communication networks affect
governments

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SOURCE: https://www.google.com/search?q=images/+photos+related+to+the+global+interstate+system

LESSON 4
THE GLOBAL INTER-STATE SYSTEM

This chapter discusses the summary of the “Governments and Citizens in a Globally
Interconnected World of States” as presented by Hans Schattle (2014) which was adopted from the
“SAGE Handbook of Globalization” edited by Manfred B. Steger, Paul Battersby, and Joseph M.
Siracusa (2014).

Introduction

The 21st century illustrates that globalization dispersed political and economic supremacy beyond
the state. Countries today are answerable to various global rules and standards. States at present face
various types of pressures (i.e., advances toward supranational or regional integration on one side and

29 | Page
forces of domestic fragmentation on the other side. According to Rosenau (2003), these opposing
dynamics is called “fragmegration”.
After World War II (1945), the United Nations (UN) had 51 founding member-states. In 2012, the
organization had 193 members. Palestine obtained acknowledgement in November 2012 as a
“nonmember observer state” of the UN. This is also the status held by the Vatican. When the People's
Republic of China (PRoC) took over mainland China in 1949 and replaced the Republic of China
(Taiwan) as China's representative in the United Nations, Taiwan totally lost its UN membership and its
permanent seat in the UN Security Council in 1971. Taiwan is trying for years (but without success) to be
acknowledged as a “non-member observer” standing in the UN (Schattle, 2008).
According to Max Weber (1997) a “state” (a political concept) is an obligatory political association
having endless operations as long as its administrative staff effectively gains a claim to the monopoly of
the use of legitimate physical force in the execution of its mandate. Regimes and constitutions come and
go, but states continuously endure.
The word “nation” (an ethnic concept) emphasizes organic relations that hold clusters of people as
one and promotes a sense of allegiance and belongingness. At present, nations are seen as communities of
people that unite citizens together based on various cross-cutting identities: ethnicity, language, religion,
etc. (Anderson, 1991).
The State in a World of Economic Interdependence
The word globalization is associated with global free-market capitalism; the intensification of
transnational enterprises, the easy flows of capital across intercontinental borders. Both the supporters and
detractors of the Washington Consensus and its neo-liberal stress on deregulation, privatization, and free
trade view globalization as commanding a forced choice among nation-states which is to comply with
free-market principles or suffer the risk of being left behind.

Thomas Friedman (2000) introduced the notion on the “Golden Straitjacket” which explains how
countries are now obligated to adhere to rules that suit the likings of investment houses and corporate
executives (the “Electronic Herd”) who speedily transfer capital (money and other resources) into states
preferred as adaptable to the dictates of transnational firms. On the other hand, withdraw investments
from nation-states which are believed to be uncompetitive. Hence countries rely heavily on the Electronic
Herd for investments (Friedman, 2000).
Former national leaders such as Ronald Reagan (former US president) and Margaret Thatcher
(former prime minister of UK) pursued the laissez-faire economic policy of Friedrich Hayek and Milton
Friedman. This policy on the “invisible hand” (no/less government intervention in economic affairs)
generated the conditions for deregulation, privatization and free trade to flourish worldwide. This
encouraged the least developed countries to attract the capital of the globe’s wealthiest banks, companies,
and foreign investors in the expectation of raising their citizens’ standard of living (Frieden, 2006).

Under import substitution policy, Mexico failed to produce a feasible car industry. Nonetheless, it
was able to develop its global market for automobile parts. Growers in Argentina and New Zealand
generated profit exporting winter fruits and vegetables to Northern Hemisphere buyers. Firms in Thailand
and Turkey, facing difficulties of borrowing money domestically, now had access to cheap and abundant
overseas finance. These nations and their populace benefitted out of foreign markets to hasten their
growth (Frieden, 2006).

Experts on neoliberalism argue that if LDCs follow their recommendations on free and open
markets, they would later on become newly-industrialized countries (NICs). However, in reality what the
HDCs planned was to sustain control of the LDCs wealth, raw materials, and cheap labor (Barajas, 2004).
The Japanese rejected American ideas, and focused more on developing globally competitive
capabilities by protecting and funding infant industries (i.e., steel, consumer electronics, and
semiconductors). In South Korea, the most prosperous companies are the steel maker POSCO
(established with government investment) and Samsung (a huge family-dominated conglomerate with
wide-ranging special affiliations with the government in various interlocking industries and technologies
(Prestowitz, 2012).
According to Clarke (2004), very minimal wages, awful working environments, and negligible
environmental standards entice MNCs to establish sweatshops/firms (usually through subcontractors) in
many LDCS. These LDCS only became aware when accidents happen (i.e., series of factory fires in
Bangladesh in 2012; the collapse of a factory building in April 2013 in which more than 1,100 workers
died producing clothes for retailers ranging from Benetton to Wal-Mart).
The detractors of economic globalization encourage states to define economic, social and
environmental objectives for their national development. In addition states must compel MNCs to meet
these priorities and to establish new systems of participatory democracy whereby citizens become
effectually involved in determining international policies on trade, investment and finance (Clarke, 2004).

30 | Page
Economic and Political Integration: The Case of the European Union
Due to intensifying economic interdependence, states decided to form regional linkages with
neighboring countries that encourage commerce and economic cooperation. Some of these include the
African Union (AU); the Association of Southeast Asian Nations (ASEAN); trading blocs (i.e., North
American Free Trade Agreement - NAFTA); the Caribbean Community (Comunidad del Caribe).

After World War II, the political leaders in Europe, launched the European Coal and Steel
Community (ECSC). Currently, the European Union (EU) which has 28 member states (with Croatia
becoming the 28th member in July 2013). The EU has a single currency (euro) and monetary system. It
also established a supranational European Parliament with increasing legislative powers alongside the
Council of Ministers. The EU Parliament composed of elected representatives from the national
governments of member-states. In 1992, with the adoption of the Maastricht Treaty, the signatories
approved a common citizenship that gives citizens of the member-states the rights to live, work, vote and
even run for office in European parliamentary elections outside one's country (Council of Europe, 2012).

According to the Council of Europe (2012), by the summer of 2012, there were campaigns for
“fiscal union” among the 17 member-states of the Eurozone to complement monetary union. Thus the
national budgets of these Eurozone countries will be subject to authorization and oversight by the UE’s
European Commission. The EU Parliament also passed a law in September 2013 to administer closer
integration and regulation of the banking sector.
From 1952, the European Court of Justice (ECJ) operated as the highest dispute resolution body for
the EU and its forerunners. It set forth provisions such as “direct effect” (EU laws take precedence over
national laws when the two sets of laws come into conflict) and “supremacy” (member-states are
obligated to follow EU laws) (Council of Europe, 2012).

The European Court of Human Rights (ECHR) which is a portion of an even bigger association
(the Council of Europe) advocates the European Convention of Human Rights (ECHR), currently ratified
by all 47 of its member-states. Any person, group of persons, or CSO can file ECHR cases against a
member-state, and member-states can also initiate cases against each other. The ECHR has dispensed
groundbreaking decisions in various areas (i.e., freedom of expression, freedom of religion, protection
from discrimination, and the right to a fair trial) which are frequently violated by member states (Council
of Europe, 2012).

The Rise of International Law and Universal Principles

According to Doyle (2011), the failure of the League of Nations before World War II reinforced the
cooperative will among leaders of the world to establish another international association that would
assist global negotiations and uphold human rights and fundamental freedoms. Leaders of the Allies (US,
UK, France, Russian and China) collectively established the “United Nations” while fighting the war
against the Axis Powers (Japan, Germany, and Italy). The San Francisco Conference in 1945 established
the organization that endures up to this day.

The system has various limitations: (a) the United Nations (UN) has never surpassed the states
system; and (b) it only functions as a forum for countries to air their grievances and try to resolve them;
(c) the Security Council and its outmoded structure awards veto power only to each of the five countries
that won the Second World War; and (d) the General Assembly’s lack of power with its state-based
configuration (Doyle, 2011).

Other criticisms against the UN also include the Cold War deadlock between the United States and
the Soviet Union which made it problematic for the Security Council to reach cooperative judgments. In
addition, the US-led invasion of Iraq in 2003 without the consent of the Security Council signified that
countries invading foreign nations unilaterally and in violation of the UN Charter would suffer no
penalties of their actions aside from criticisms and hatred. The organization also was not able to prevent
many violence and killings from happening globally during its existence (Doyle, 2011).

Some of the shortcomings of the UN were gradually addressed with the formation of ad hoc
tribunals that sentenced several persons from Rwanda and the former Yugoslavia of war crimes. Another
significant accomplishment was the permanent establishment of the International Criminal Court (ICC) in
2002. Its role is to prosecute individuals accused of genocide and other crimes against humanity.
However, China, India, and the US are not among the 122 states that authorized the court's founding

31 | Page
treaty, the Rome Statute. This signifies that adherence to international law ultimately remains a matter of
choice among states, and states can often evade international law without any sanction (Doyle, 2011).
According to Doyle (2011), the UN also works with countries across the globe to advocate human
rights and humanitarian values. The UN Security Council promotes the doctrine of “Responsibility to
Protect” (R2P) when it approved in early 2011 a “no-fly zone”, an arms embargo, and the use of “hard
power” in Libya's civil war. This strategy aimed to protect civilians from government attacks and gave the
revolutionary forces a better chance at dethroning the government of Moammar Gaddafi.

The R2P doctrine indicates an intensifying willingness among states to interfere in the unlawful
undertakings of governments which are unable to safeguard their own citizens. The North Atlantic Treaty
Organization (NATO), with Britain, France and the United States taking the lead, intervened in Libya in
ousting Gaddafi through its NATO air strikes.

In Syria, Bashar Hafez al-Assad stayed in power at the start of 2014 even though his regime and
military supporters committed various atrocities against thousands of citizens (fighters and protesters),
including a chemical weapons attack in August 2013 that killed an estimated 1,400 civilians. After U.S.
President Barack Obama threatened to launch limited military strikes against Syria but obtained little
support from Americans and foreign countries, the Syrian regime sworn in an agreement worked out by
the Organization for the Prohibition of Chemical Weapons and the United Nations Security Council to
extinguish its stockpiles of chemical armaments. In this manner, the R2P doctrine symbolizes that the
protection of human beings over any particular government or regime must take priority (Doyle, 2011).

According to Nye (2005), the partnership among countries in some cases means better provision of
government services. However, in some instances it may also mean infringements by the “national
security state” into civil liberties and privacy rights. These were evident in the immense global
surveillance operations engineered by the United States National Security Agency (USNSA) and its
government and business associates worldwide. These included interceptions of e-mail messages and
tracking of mobile phones. Global travelers and migrants are conscious that passport control officers take
compulsory photographs and collect fingerprints of people passing through checkpoints. These make it
easier for national governments to impart facts on the biometrics and travel patterns of countless people.
Other countries also include “biometric authentication” components in the issuance of passports and
visas.
States also compete not only for economic development but also for moral credibility. This is
evident on how various CSOs rank countries and publish annual indexes worldwide. Some of these
include the following: (a) Transparency International's “corruption perceptions index”; (b) Freedom
House's “freedom in the world index” of political rights and civil liberties; (c) the “democracy index”
published by The Economist Intelligence Unit; (d) the “press freedom index” compiled by Reporters
without Borders; (e) the “failed states index” from Foreign Policy Magazine; (f) the Fund for Peace; and
(g) the “better life index” launched in 2011 by the Organization for Economic Cooperation and
Development (OECD). All of these have an impact on a country's global competitiveness and “soft
power” (Nye, 2005).
States as Targets: The Rise of Transnational Activism
According to Keck and Sikkink (1998), transnational activism has roots that go back to 19 th century
campaigns against slavery; against foot-binding practices in China; and for women's voting rights. Keck
and Sikkink coined the phrase “boomerang pattern of influence” to describe what can happen when
domestic CSOs/NGOs on the losing ends of political struggles join forces with compatible foreign
advocacy groups that can pressure the national governments in question.

The Norwegian Nobel Committee, a transnational CSO called attention to the rising trend of
Internet activism by awarding the 1997 Peace Prize to the International Campaign to Ban Landmines. The
global advocacy campaign to ban landmines as a weapon of war specifically targeted states and urged
them to sign the Ottawa Treaty that now has 160 signatories. However, similar to the International
Criminal Court, some of the world's largest countries (China, Russia, and the United States) have not
signed the treaty (Keck & Sikkink, 1998).
The Global Justice Movement called for alternatives to neoliberal economic globalization. Scholars
and activists trace the contemporary origins of this movement to the transnational campaign launched in
1994 in Chiapas, Mexico, by the Zapatista Army of National Liberation in response to the North
American Free Trade Agreement (NAFTA) (Barlow & Clarke, 1997).

In November 1999, the “Alter-globalization Movement became famous during the meeting of the
World Trade Organization (WTO) in Seattle. The media focused more on street disruptions and violent
incidents and branded it as an “anti-globalization” movement rather than an alternative model of

32 | Page
globalization more attentive to human rights, participatory democracy, local control, sustainability and
cultural diversity (Cavanagh & Mander, 2004). The implications of this proved that people obtained
public consciousness on globalization. Hence they think of themselves as “global citizens” who link this
idea with concepts such as awareness, responsibility, participation, and cross-cultural empathy (Schattle,
2008).
The entry of the World Social Forum (WSF) made it a counterpoint to the World Economic Forum
(WEF) (Steger & Wilson, 2012). The World Economic Forum is lavishly funded, efficiently organized,
and easy to observe online with a comprehensive website and abundantly archived documents and
transcripts of proceedings (print, audio and video). On the other hand, the World Social Forum avoids
hierarchy and centralized control which exists without a single permanent website. Unlike the world's
largest corporations and national governments that back up the WEF and advocate neoliberalism, the
WSF promotes a more socially and environmentally-responsive alternatives to globalization.

According to Busby (2010), the social media revolution has lifted advocacy groups and social
movements into an exciting new phase and energized CSOs at all levels. The revolutions in Tunisia and
Egypt in early 2011 showed how engaged citizens could topple dictatorships. Protests in Myanmar
(Burma) which were encouraged by cyber-activists eventually pushed the government there to open up
partially. In China, citizens are more linked and vocal than before, even if the government is still working
to manipulate public opinion and crush dissent (Shirk, 2010).

Social media platforms also eased the way for citizens’ groups across the “global south” to build
network partners. Facebook, Twitter and their local counterparts worldwide are now utilized in
transnational advocacy movements (Gladwell, 2010; Starbird & Palen, 2012).

Communication Networks, New Media and the State

According to Morozov (2011), technological advances made it easier for authoritarian states from
Russia to Saudi Arabia, and to Myanmar to silence bloggers utilizing software programs that filter
Internet content and denial-of-service attacks, making the targeted computers or web servers momentarily
inaccessible. Even the world's most isolated and repressive state (North Korea) maintains websites
boasting their national leaders and stirring out colorful news releases.

Ambassadors worldwide now utilize “public diplomacy” and maintain Facebook groups, Twitter
feeds, and dual blog postings written in both languages (that of the country they represent and the
language of the state that they are serving). Across all levels of government, from city halls to presidential
offices, interactive “e-government” sites have spread worldwide in partnership with constitutional
democracies. Citizens can converse with government officials through the Internet, not only to obtain
information about government policies and initiatives but to communicate their grievances (Coleman &
Blumler, 2009).
There is also an increase in state-funded television networks. No longer is the American vanguard
of CNN a hegemonic presence. BBC World (United Kingdom), Al Jazeera English (Qatar), Al Arabiya
(Saudi Arabia), France 24, Russia Today, CCTV (China), NHK World (Japan) are some of the most
evident players in this rising industry (Coleman & Blumler, 2009).

Television news performed a crucial role during the dismantling of the Berlin Wall in 1989 as live
news from West Germany ignited public demands in East Berlin to open the checkpoints. Similarly, Al
Jazeera played a significant role in the Arab Spring revolutions, broadcasting videos filmed by protesters
through their mobile phones and sent via e-mail to television studios (McChesney & Pickard, 2011). Al
Jazeera tends to go easy on the Emir of Qatar, while Russia Today features a Putinesque view of the
world (Seib, 2008). In this current world of government-run broadcasting, the lines amid journalism and
propaganda are often blurred and concealed, and also defended, if not legitimized, by the government
ministries shelling out the money.
The world's “digital citizens” who have enough Internet access and possess the capability to make
the most of cyberspace now evaluate for themselves which sources are credible and compelling enough to
follow on a continuing basis (Jamieson & Cappella, 2010; Sunstein,
2009).

33 | Page
 Activity 4.A
(Matching Type)

Name: Score:
Course/Year/Section: Date:

Direction: Match the items under Column A with those items under Column B. Write your
answer on the space provided before each of the items below. Use CAPITAL
LETTERS and erasures of any kind will NOT be credited.

Column A Column B

___1. It calls for alternatives to neoliberal economic A. Alter-globalization

globalization and a response to the North American Movement
Free Trade Agreement (NAFTA)
___2. This doctrine symbolizes that the protection of human B. Palestine and Vatican
beings over any particular government or regime
must take priority
___3. It was permanently established in 2002 and its role is C. Allied Nations
to prosecute individuals accused of genocide and
other crimes against humanity
___4. It refers to opposing dynamics of supranational or D. Laissez-faire Economics
regional integration on one side and forces of

34 | Page
 domestic fragmentation on the other side
___5. It was composed of US, UK, France, Russia and China E. Ottawa Treaty
which won in World War II
___6. With Britain, France and the United States, this F. Fragmegration
organization intervened in Libya in ousting Gaddafi
through its air strikes
___7. It is a reaction to the World Economic Forum that G. Global Justice
promotes a more socially and environmentally Movement
responsive alternatives to globalization
___8. This agreement approved a common citizenship that H. European Coal and
gives citizens of EU the rights to live, work, vote and Steel Community (ECSC)
even run for office in European parliamentary
elections
___9. This was the predecessor of the European Union (EU) I. State
which currently has 28 member states
___10. They are acknowledged as “nonmember observer J. International Criminal
states” of the UN Court (ICC)
___11. It was composed of Japan, Germany, and Italy K. Axis Powers
which lost the battle in World War II
___12. This policy advocates the “invisible hand” (no or less L. Responsibility to Protect
government intervention in economic affairs)
___13. It is an obligatory political association having M. Maastricht Treaty
endless operations as long as it gains a claim to the
monopoly of the use of legitimate physical force in
the execution of its mandate
___14. A recipient of the 1997 Nobel Peace Prize which N. NATO
advocated an international campaign to ban
landmines as a weapon of war
___15. It is an alternative model of globalization more O. World Social Forum
attentive to human rights, participatory democracy,
local control, sustainability and cultural diversity

Activity 4.B
(Essay Type)

Name: Score:
Course/Year/Section: Date:

35 | Page
Essay Question: Explain your answer in not more than five (5) sentences.

How is globalization changing the overall balance of power between states and citizens?

36 | Page
Learning Objectives:

1. To identify the roles and functions of the United Nations

2. To identify the challenges of global governance in the 21st century
3. To explain the relevance of the state and globalization

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SOURCE: https://www.google.com/search?q=images/+photos+related+to+contemporary+global+governance
https://www.google.com/search?q=HEADQUARTERS+OF+UNITED+NATIONS
https://www.google.com/search?q=global+governance

LESSON 5
CONTEMPORARY GLOBAL GOVERNANCE

This lesson presents the summary of the article, “The United Nations Meets the Twenty-First
Century: Confronting the Challenges of Global Governance” authored by Thomas G. Weiss and Ramesh
Thakur which was adopted from the “SAGE Handbook of Globalization” edited by Manfred B. Steger,
Paul Battersby, and Joseph M. Siracusa (2014). Other sources were also included to supplement the
discussion presented by the authors.

Global Governance

38 | Page
 Globalization entails the conduct of numerous transactions that go beyond the borders of states.
These varying transactions necessitate system and order. Thus, it can be said that to maintain order and
system in all these international dealings brought about by globalization, global governance is imperative.

Global governance is defined as “the sum of laws, norms, policies and institutions that define,
constitute and mediate trans-border relations between states, cultures, citizens, intergovernmental and
non-governmental organizations and the market — the wielders and the objects of the exercise of
international public power (Weiss & Thakur, 2014). It brings together diverse actors to coordinate
collective action to provide global public goods, particularly peace and security, justice, functioning
markets and unified standards for trade and industry. It is a rules-based order without a government, thus,
there is no central authority. Actors in global governance depend on multilateralism.

Global governance has three main elements, namely consensus, rules, and membership of
multiple national governments. These elements require a binding mode of interaction. Multilateralism,
which is defined as a situation in which several different countries or organizations work together
to achieve something or deal with a problem
(https://dictionary.cambridge.org/us/dictionary/english) facilitates such interaction and helps sustain the
rules-based global order (https://www.eria.org/news-and-views/strengthening-global-governance-
multilateralism/).

Aside from the emergence of collective-action problems that cannot be solved by a single state
alone, another reason that can explain why global governance exists is the growing importance of non-
state actors such as the private sector, market, MNCs, and civil society. The complexity of the present
society makes the government unable to solely satisfy the demands of its citizens. As mentioned by Weiss
and Thakur (2014) in their article, “Society has become too complex for citizens’ demands to be satisfied
solely by governments. Instead civil society actors play increasingly active roles in shaping norms, laws
and policies. They are participants in global governance as advocates, activists and policy makers. They
provide additional levers to people and governments to improve the effectiveness and enhance the
legitimacy of public policy while also posing challenges of representation, accountability and
legitimacy.”

The leading governance actor with an international membership today is United Nations (UN).
This international organization not only involves sovereign states but also non-state entities. It was
founded in 1945, in the wake of World War II with the main purpose of preventing future conflicts
between states. It is mandated to preserve global security through the Security Council. According to
Hurd (2007), UN represents a structure of authority that rests on institutionalized state practices and
generally accepted norms (Weiss & Thakur, 2014). However, UN should not be understood as a new
international system paradigm that will replace the Westphalian sovereignty.

Aside from UN, there are other institutions that play important roles in global governance such as
the World Bank and the International Monetary Fund (IMF).

Roles and Functions of United Nations

UN, as an international organization, has several roles and functions. UN has a role in
“preventing and managing conflicts, regulating armaments, championing human rights and international
humanitarian law, liberating the colonized, providing economic and technical aid in newly liberated
countries, organizing elections, empowering women, educating children, feeding the hungry, sheltering
the dispossessed and displaced, housing the refugees, tending to the sick and coordinating disaster relief
and assistance (Weiss & Thakur, 2014).

The following are the four essential roles of UN in identifying and diagnosing problems (Weiss &
Thakur, 2014).:

1. Managing Knowledge

This involves the recognition of the existence of the problem, the collection of solid data about
the nature of the problem, and identification of its causes to explain the problem. The United Nations uses
its convening capacity and mobilizing power to help funnel knowledge from outside and to ensure its
discussion and dissemination among governments. UN-sponsored world conferences, heads of
government summits and blue- ribbon commissions and panels have been used for framing issues,

39 | Page
outlining choices, making decisions; for setting, even anticipating, the agenda; for framing the rules,
including for dispute settlement; for pledging and mobilizing resources; for implementing collective
decisions; and for monitoring progress and recommending mid-term corrections and adjustments.

2. Developing Norms

Upon identification of problems and collection of knowledge, UN helps create new norm of
behavior usually through summit conferences, international panels and commissions. New norms will
then be institutionalized. However, since our societies vary, there would always be the reality of norm
variation. Though norms may vary, contested norms can still become institutionalized both within and
among states.

International norms can be transmitted down into national politics and incorporated into domestic
laws through state structures, such as the government. UN promulgates norms with the consent of most of
its members. This process sustains, not erodes, the prerogatives of sovereigns.

3. Formulating Recommendations

The UN’s ability to convene and consult widely plays an enormous part in its ability to formulate
recommendations for specific policies, institutional arrangements and regimes that follow from
identifying and diagnosing a problem and developing a norm of desirable changes in behavior and
approach by states.

4. Institutionalizing Ideas

Institutions can facilitate problem solving even though they do not possess any coercive powers.
Institutions give extended life to an idea because they can outlast the individuals who first had it.
Institutions to attack global problems require substantial financing and backing, which makes them the
kind of concrete step that can be initiated by governments as an indication that they are taking an issue
seriously. Once knowledge has been acquired, norms articulated and policies formulated, an existing
institution can oversee their implementation and monitoring.

Challenges of Global Governance in the 21st Century

Contemporary issues such as women empowerment, regulation of the skies and seas, cybercrime,
climate change, urbanization, pandemics, terrorism, weapons of mass destruction (WMDs) require
multidisciplinary perspectives, efforts across sectors with firm central direction and inspired leadership
(Weiss & Thakur, 2014). Thus, the UN, as the leading international organization needs to meet these
requirements to be able to adapt to the changes we face now.

The list of global governance issues addressed by multilateral bodies is long: human rights,
human development, labor, health, peace, conflict, disarmament, communication, finance, and
environment. Trade and economic integration, however, have been the most visible aspects of
international cooperation in the past year (https://www.eria.org/news-and-views/strengthening-global-
governance-multilateralism/).

Currently, the multilateral system of trade governance and cooperation for economic growth is
under stress, induced mostly by world’s two largest economies. Individual positions of the US and China
on tariffs, disputes, and economic cooperation are overshadowing the multilateral governance systems.
Trade facilitation measures, long considered the pathway for improved prosperity, are at risk of being
delayed or even overlooked. This would be detrimental for developing and developed countries alike in
Asia and Europe. The smaller and more economically vulnerable countries are at greater risk of being left
behind (https://www.eria.org/news-and-views/strengthening-global-governance-multilateralism/).

Coordination and cooperation are not only increasingly complex but

also problematic as a result of the number of actors and the existence of decentralized and informal,
largely self-regulatory groupings. For instance, the UN system and International Governmental
Organizations (lGOs) in general that collectively underpin global governance are inadequately resourced,
do not have adequate policy authority and resource-mobilizing capacity and sometimes incoherent in their
separate policies and philosophies (Weiss & Thakur, 2014).

40 | Page
 Many public policy decisions and practices have been transferred to the international level,
raising a number of pressing normative challenges to the Westphalian foundations of multilateralism as
citizens become rights-holders and states are deemed to have responsibilities of sovereignty (Weiss &
Thakur, 2014).

The UN member-states question the legitimacy of the rules promulgated if they do not agree with
them and when they fail to implement or comply with the rules there is little enforcement capacity
available to compel them to do so (Weiss & Thakur, 2014).

The 2004 report of the Panel of Eminent Persons on United Nations Relations with Civil Society
presents points that help determine how UN meets the challenges of global governance in the 21 st century
(UN, 2014):

1. Multilateralism no longer concerns governments alone but is now multifaceted, involving many
constituencies. The UN must develop new skills to service this new way of working.

2. It must become an outward-looking or network organization, catalyzing the relationships needed

to get strong results and not letting the traditions of its formal processes be barriers.

3. It must strengthen global governance by advocating universality, inclusion, participation and

accountability at all levels.
4. It must engage more systematically with world public opinion to become more responsive, to
help shape public attitudes and to bolster support for multilateralism.

______________________________________________________________________________

Activity 5.A
(Definition of Terms)

Name: Score:
Course/Year/Section: Date:

Direction: Using your own words, provide a brief definition for the following concepts:

1. Global Governance:
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

2. Multilateralism:
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

3. International Norms:
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

4. Public Goods:

41 | Page
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

5. International Organizations:
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
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Activity 5.B
(Essay Type)

Essay Question: Limit your answer to a maximum of five (5) sentences only.

In what ways does the United Nations (UN) system of governance contribute to the formation of
global consciousness?

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Learning Objectives:

1. To define the term “global south”

2. To differentiate the “global south” from the “third world”
3. To analyze how a new conception of global relations emerged from the
experiences of Latin American countries

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SOURCE: https://www.google.com/
https://www.shutterstock.com/image-vector/cartoon-earth-humans-divided-into-two-365720915

LESSON 6
GLOBAL DIVIDES: THE NORTH AND THE SOUTH

The North and South Divide

The beginning of the categorization of states between North and South can be traced back to the
Cold War Era. The Cold War is considered as a geopolitical, ideological, and economic struggle between

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two world superpowers which are United States (US) and the Union of Soviet Socialist Republic (USSR)
in 1947. During that period, states were categorized based on their alignment between USSR and
America. Non-communist, high income, and developed countries such as US, Canada, Japan, and South
Korea were categorized as First World States. Communist countries, on the other hand, were categorized
as Second World States. While countries that remained non-aligned with the North Atlantic Treaty
Organization nor the Communist Block were categorized as Third World States. These states are poor and
were former colonies of the West. After the Cold War Era, most of the countries that belong to the First
and Second World categories were classified as part of the Global North while countries that belong to
the Third World category are now part of the Global South. At present the concepts, “Less Developed
Countries” (LDCs) such as the developing, underdeveloped, and undeveloped countries are also being
used to refer to Global South States. Developing countries are mostly found in South-East Asia;
underdeveloped countries are mostly located in South America; and most of the undeveloped countries
are the poorest in South Africa.

Global North States have the following characteristics: have developed economies; are attractive
to investors; highly industrialized; have low poverty rate; low birth rates; are technologically advanced;
have low infant mortality rate; their public education and health services are at a high level; have good
infrastructure that allows access to every part of the country; have stable institutions guaranteeing
democracy, the rule of law, human rights, and respect for and protection of minorities; and are marked
with less corruption.

The Global South states on the other hand, are described as having: large inequalities in living
standards; low Gross Domestic Product (GDP); high population; economies that rely on imports from the
Global North States; rural population that depends on agriculture for subsistence; lack of modern
technology; inadequate transportation; and high infant mortality rate.

The Global South

The Global South refers to countries located in Africa, Latin America, and developing countries
in Asia. These countries fail to adopt the policies on innovation and industrialization of Global North
States. It is evident that many of Global South States are former colonies of countries which are now part
of the Global North. Global South States are poorer. One factor that can provide an explanation to this is
their long history of economic colonialism. After gaining independence from their colonizers, these
countries became source of raw materials for their former colonizers. This contributed to their continued
dependence on the Global North countries. This is related to the Dependency Theory which originated in
Latin America.

Dependency Theory and the Global South

Theotonio Dos Santos, one of the founders of Dependency Theory, describes dependence as “a
situation in which the economy of certain countries is conditioned by the development and expansion of
another economy to which the former is subjected” (Dos Santos, 1970; p. 231). If applied to the concepts
of Global North and Global South, the Dependency Theory suggests that industrialized countries exploit
underdeveloped/ developing countries through economic and political neoliberalism which perpetuate the
latter’s pre-industrial or semi-industrial status. Sukarno stated that “colonialism is not yet dead” (Claudio,
2014). Modern colonialism can arise in the form of economic control, intellectual control, or actual
physical control.

Lenin argued that the strength of capitalism is dependent on the creation of new markets through
imperialism. Colonialism and imperialism set stage for the growth of capitalism. This idea of Lenin
reflects the exploitative interaction between core (metropole/global north countries) and peripheral
economies (satellite/global south countries) which can also be applied to the concepts of Global North
and South.

According to Claudio (2014) the existence of the North and South divide shows the
incompleteness of globalization. It emphasizes that in the process of globalization, there is uneven
development. He has pointed out several causes of this unevenness:

a. International financial institutions (IFIs) like the World Bank, the International Monetary Fund
(IMF), and the World Trade Organization (WTO) saddle developing economies with debt while
making them more vulnerable to global economic shocks.

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 b. Forced liberalization and marketization of developing economies through the IFIs

c. Economic norms that the developed world applies to itself are never the same as those it imposed
on the developing world such as demanding the developing economies to cut down government
spending (austerity measures) and raise interest rates in times of economic crises. These can
result to the shrinking of the public sector which can ultimately cause a reduction in social
services like healthcare.

d. Governments of the North, though having the ability to regulate polluting companies, do so
inadequately in order to protect their country’s economic interests. The effects of global
environmental problems are more felt by Global South countries than those that belong to the
Global North.

e. The effect of the introduction of development has to be seen not only in terms of social economic
impact, but also, in relation to the cultural meaning and practices they upset or modify (Escobar,
1988).

As a solution to the uneven development that is happening now between the North and the South,
Walden Bello suggests that development in the Global South must begin by “drawing most of a country’s
financial resources for development from within rather than becoming dependent on foreign investments
and foreign financial markets” (Claudio, 2014).

Activity 6.A
(Identification Type)

Name: Score:
Course/Year/Section: Date:

Direction: Identify the concepts being described under each of the following items. Write your answers
on the space provided before each item.

1. This is the term used to refer to the group of countries that

are non-communist and developed during the Cold War.
These countries aligned themselves with the US.
2. This is the category of countries that chose non-alignment
during the Cold War Era.
3. This term refers to the group of countries that supported
communism during the Cold War.
4. According to Claudio, many countries that belong to this
category prioritize economic gain over environmental
protection.
5. This theory explains that the underdevelopment in Global

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 South countries can be attributed to the exploitation
committed by industrialized countries through the
principles of economic and political neoliberalism.
6. It is a conflict over ideological differences and it does not
involve actual fighting.
7. Provide two non-Asian countries which are
geographically located in the South but are considered
part of the Global North.

8.

9. Provide two Asian states that belong to the Global North.

10.

Activity 6.B
(Essay Type)

Essay Question: Limit your answer to a maximum of five (5) sentences only.

Explain how the international trade relations between the global north countries (HDCs - highly
developed countries) and the global south countries (LDCs - less developed countries) might NOT
transform the latter to become highly developed or highly industrialized countries, like the former, in the
near future.

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Learning Objectives:

1. To differentiate regionalization and globalization

2. To identify the factors that lead to a greater integration of the Asian
region
3. To analyze how different Asian states confront the challenges of
globalization and regionalization

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51 | Page
SOURCE: https://www.google.com/search?q=images/+photos+related+to+Asian+Regionalism
https://www.google.com/url?sa=i&url=https%3A%2F%2F2.zoppoz.workers.dev%3A443%2Fhttps%2Fwww.eurasiareview.com
https://www.google.com/url?sa=i&url=https%3A%2F%2F2.zoppoz.workers.dev%3A443%2Fhttps%2Fwww.vox.com

LESSON 7
ASIAN REGIONALISM

This lesson presents the main ideas of Ehito Kimura on Asian regionalism in his article entitled,
“Globalization and the Asia Pacific and South Asia”. Other authors and sources were also included to
supplement the discussion on regionalism.

Regionalization and Globalization

Regionalization is defined as the way that an area of the world containing several countries
becomes more economically or politically important than the particular countries within that area.
Regionalization also entails “an increase in the cross-border flow of capital, goods, and people within a
specific geographical area or region” (Hoshiro, n.d.). It is the process of regional formation (Söderbaum,
2011).

A region is composed of a limited number of states that are linked together by geographical
relationship and by a degree of mutual interdependence. The European Union (EU), African Union,
Association of Southeast Asian Nations (ASEAN), and the Union of South American Nations
(UNASUR) are examples of results of regionalization.

On the other hand, globalization is defined as the process of international integration arising from
the interchange of world views, products, ideas, and other aspects.

Thus, to compare, globalization promotes the integration of economies of countries all around the
world while regionalization is considered by some as the opposite of globalization since it aims to divide
a large area into smaller parts. Aside from this basic difference, Lis and Rzepka (n.d.) pointed out that
“the processes of globalization of the world economy are guided by the requirements of competition and
the searching by the entities of the most favorable forms of business and business locations. These
activities aimed at regionalism, on the other hand, these are dictated to a large extent by the needs of co-
operation not only economic but also political, social, etc. Regional cooperation between countries aims

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at moderating the differences and contradictions between economies and equalizing their opportunities
for their development."

The relationship between regionalization and globalization is explained by many experts but
sometimes with contradicting ideas. Some claim that these two concepts support each other since some
view regionalization as an early stage of globalization. Some view regionalization as a response to
globalization. It is believed that regionalization was created to provide better adaptation to the processes
of globalization and to reduce the negative impact of globalization on states. Regionalization can help
stimulate local markets that are necessary for responding to the needs of globalization.

Regionalization in Asia

Asia is now at the forefront of globalization. Yendamuri (2009) claims that Asia’s GDP will
overtake the GDP of the rest of the world combined. In fact, according to the International Monetary
Fund (2019), Asia remains as the fastest-growing region in the world, accounting for more than two-
thirds of the global growth in 2019. This can be attributed to different factors such as: presence of China
in Asia; presence of young and more educated workforce; abundance of natural resources; and there are
several Asian states which are leaders in innovation which is essential for globalization to work.

In the recent years, steps had been taken in order to strengthen regionalization in Asia. This
includes the creation of trade agreements that promote free-trade among member-states such as the
ASEAN-China Free Trade Area (ACFTA) and the ASEAN Economic Community (AEC).

Challenges of Globalization and Regionalization in Asia

a. Economic growth has mostly benefited the elite and the middle class. There is a wide gap
between the income of the rich and the poor.

b. Brain drain caused by labor export policies of countries specially for those that are classified as
Third World countries. This phenomenon reduces the capacity of developing and underdeveloped
countries to make use of their human and natural resources for their own development.

c. Some developing countries became reliant on remittances instead of strengthening local

employment.

d. Negative balance of payments for importing countries and neglect of domestic production.

e. Massive environmental destruction and massive extraction of resources in the name of export-
oriented extractive industries.

f. Free trade usually favors industrialized countries at the expense of developing and
underdeveloped states.

Activity 7.A
(Essay Type)

Name: Score:
Course/Year/Section: Date:

Instruction:
In not more than five (5) sentences, answer the question below. Write your answer on the box
provided below the question.

Question:

Is regionalization a part of the globalization process? Support your stand.

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 Activity 7.B

Name: Score:
Course/Year/Section: Date:

Direction: Read the article, “Globalization and the Asia Pacific and South Asia” by Ehito Kimura.
Complete the table below by providing five (5) main arguments/ideas for each factor presented by the
author in his discussion on Asia as being an OBJECT, a SUBJECT, and an ALTERNATIVE for
globalization.

Note: You can access this article through any of the links below:

A. https://www.coursehero.com/file/46829733/GLOBALIZATION-AND-THE-ASIA-PACIFIC-
AND-SOUTH-ASIApptx/

B. https://www.academia.edu/15211516/Globalization_and_the_Asia_Pacific_and_South_Asia

AN OBJECT A SUBJECT AN ALTERNATIVE

1. 1. 1.

2. 2. 2.

3. 3. 3.

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4. 4. 4.

5. 5. 5.

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