THE GLOBAL ECONOMY

THE GLOBAL ECONOMY

 EC O N OM I C
G L O B A LI Z A TI O N
• The increasing integration of economic
around the world, particularly through
the movement of goods, services and
capital across the borders.
• Movements of people and knowledge
across international borders economic
globalization.
ECONOMIC GLOBALIZATION
• In economic terms, globalization is
nothing but a process making the
world economy an “organic system”
by extending transnational economic
processes and economic relations to
more and more countries and by
deepening the economic
independencies among them.
ECONOMIC GLOBALIZATION
INTERCONNECTED DIMENSIONS
OF ECONOMIC GLOBALIZATION
 According to Benczes (2014), the
phenomenon can does have several
interconnected dimensions are:
1. The globalization of trade of goods and
services
2. The globalization of financial and capital
markets
3. The globalization of technology and
communication
4. The globalization of productions
INTERCONNECTED DIMENSIONS OF ECONOMIC GLOBALIZATION
INTERCONNECTED DIMENSIONS OF ECONOMIC GLOBALIZATION
GLOBALIZATION OF
SERVICES
 • Filipinos are known “World Class
Professionals” because of being hard
working and persevering in their chosen
profession even in overseas. The free flow
of skilled labor brought by ASEAN
economic integration brings more job
opportunities for the Filipino skilled workers.

GLOBALIZATION OF SERVICES
• Globalization transforms the
national economy into a global
one where “there will be no
national products or
technologies, no national
corporations, no national
industries”
GLOBALIZATION OF SERVICES
EXAMPLES
• UN (United Nations)
• NGO’s (Non-Governmental
Organizations) appears as new
actors on the stage of political
and cultural globalization
• TNCs (Transnational
Corporations)

GLOBALIZATION OF SERVICES
THE ECONOMIC
GLOBALIZATION
PHENOMENON
• Globalization is the process
that creates an “organic
system” of the world
economy, its seems
reasonable to look beyond the
last 30 years.
THE ECONOMIC GLOBALIZATION PHENOMENON
• Globalization processes have been ongoing
ever since far we should Homo sapiens
began migrating from the African continent
ultimately to populate the rest of the world.
Minimally, they have been ongoing since
the sixteenth century’s connection of the
Americans to Afro-Eurasia.
THE ECONOMIC GLOBALIZATION PHENOMENON
 • The origin of globalization, the
existence of the of the same world
system in which we live stretches
back at least 5,000 years.
• Archaic globalization is the silk road.
THE ECONOMIC GLOBALIZATION PHENOMENON
 ASIA-AFRICA-EUROPE
The economic globalization
phenomenon diagram
The structural
transformation of the
western world was,
therefore, both a cause
and an effect of intensified
economic integration.
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THE ECONOMIC GLOBALIZATION PHENOMENON
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 TH E I N T E R N A L
M O N E TA R Y S Y S T E M
• The international monetary system is a
system that forms rules and standard for
facilitating international trade among the
nations in the world.
• Realists also point to the fact that
international monetary transaction will still
rely primarily on the existence of separate
national currencies
THE INTERNAL MONETARY SYSTEM
 • Cohn (2005) states that international
system is the most central area in
international economy, because the
most important transaction in the
international economy – including trade,
investment and finance – all depends
on the availability of money and credit.
THE INTERNAL MONETARY SYSTEM
 • Most critical issue to hegemonic
stability theorists should not what the
hegemon does or does not do in
trade but what it does or fail to do to
maintain peace and what it does or
fail to do to keep the monetary
system stable and credit flowing in a
stead fashion.
THE INTERNAL MONETARY SYSTEM
• Liberal transactions have resulted
largely from advances in
communications, technology and
transportation and that nation states
are finding it increasingly difficult to
regulate economic activities.

THE INTERNAL MONETARY SYSTEM

 TH E F O U R
M O N E TA R Y R E G I M E S
• Cohn (2005) states that the
modern period of international
monetary relation commonly
refers to the existence of four
successive monetary regimes.
THE FOUR MONETARY REGIMES
 • The classical gold standard from the
1870s to the outbreak of World War 1 in
1914; a gold exchange standard during
the first part of the inter war period; the
Bretton Woods System from 1944 to 1973;
and “non-system” of floating and fixed
exchange rates from 1973 to the present.

THE FOUR MONETARY REGIMES

 TH E C L A S S I C A L
GOLD STANDARD
REG IMES
• In gold standard, countries agree to
convert paper money into a fixed
amount of gold. It is a monetary
system where a country’s
currency or paper money has a
value directly linked to gold.
THE CLASSICAL GOLD STANDARD REGIMES
THE GOLD EXCHANGE
STA N DA R D R E GI M E S
(1914-1944)
•World War 1 completely disrupted
international monetary relations, but
after the war, Britain attempted to
establish a gold exchange standard
regime. A gold exchange standard
like a gold standard, is based on fixed
exchange rates among currencies.
THE GOLD EXCHANGE STANDARD REGIMES (1914-1944)
•However, a country’s international
reserves under the 19th century gold
standard were officially held gold,
whereas, official reserves under a
gold exchange standard consists of
both gold and reserve currencies
which is the British pound in the
interval period.
THE GOLD EXCHANGE STANDARD REGIMES (1914-1944)
THE BRETTON WOOD
SY ST EM RE G I M E
 • The World War II was marked by a
breakdown of monetary corporation
and period of exchange controls, and
planning for a post war monetary
regime culminated in the 1944 Bretton
Woods conference, the Bretton Woods
Monetary regime was a gold exchange
standard in which the value of each
country’s currency was pegged.
THE BRETTON WOOD SYSTEM REGIME
• According to Cohn (2005),
the international liberal had
three major elements:
THE BRETTON WOOD SYSTEM REGIME
ELEMENT 1
1. The first element was the
post-war gold exchange
standard which was in-
fact an adjustable peg
exchange rate than a fixed
exchange rate system.
ELEMENT 2

2. Liberal compromise
was the IMR, which
would provide short
term loans.
ELEMENT 3

3. The 3rdelement of
the compromise
supports for national
control over capital
forms.
THE CREATION OF
INTERNATIONAL
MONETARY FUND
 • The most important
international organization
embedded in the Bretton
Woods monetary regime was
the international (monetary
fund) located in Washington.
THE CREATION OF INTERNATIONAL MONETARY FUND
THE FUNCTIONING OF
THE BRETTON WOODS
MONETARY REGIME
•Cohn (2005) states that the
Bretton Woods was a gold
exchange regime in which
the main reserves gold and
the US dollar.
THE FUNCTIONING OF THE BRETTON WOODS MONETARY
REGIME
THE ROLE OF THE
US DOLLAR
• Bretton Woods monetary
regime was based on a gold
exchange
standard, central banks could
hold their international reserves
in two forms-gold and foreign
exchange in any proportions
THE ROLE OF THE US DOLLAR
they chose.

THE ROLE OF THE US DOLLAR

• The United States agreed to
exchange all dollars held by
central banks and
treasuries for gold at the
official rate.
THE ROLE OF THE US DOLLAR
• United States also receiving the
private benefit of seignorage. It
is the profit that comes to the
seigneurs or sovereign power
from the issuance of money.
THE ROLE OF THE US DOLLAR
A S HI F T T O W A R D
MULTILATERATION
• As US balance of payments
deficits continued to increase,
the dollar slipped from the top
currency to negotiated
currency status during the
1960s.
A SHIFT TOWARD MULTILATERATION
• A top currency is favored in the
international monetary
transaction because other has
confidence in the strong
economic position of the
issuing state.
A SHIFT TOWARD MULTILATERATION
THE GROUP OF TEN
MEMBERS ( G - 1 0)
• The group of ten refers to
the group of countries that
participate is the general
arrangement to borrow
(GAB).
THE GROUP OF TEN MEMBERS (G-10)
 Group of ten countries
• Belgium • Japan
• Canada • Netherlands
• France • Sweden
• Germany • United States
• Italy • Switzerland
 T H E F LE XI B LE
E X CH A N G E R A T E
R E GI M E
• The Bretton Woods
agreement had outlawed
freely floating
exchange rates, so all the
major trading nations were
“living in sin” by 1973.
THE FLEXIBLE EXCHANGE RATE REGIME
FLOATING EXCHANGE RATE
Is a regime where the
currency price is set by
the forex marked based
on supply and demand
compared in the other
currencies.
G LO B A L A C T O R S I N
EC O N O M I C
G L O B A LI Z A TI O N
INTERNATIONAL
GOVENMENTAL
ORGANIZATIONS
• Refers to an entity created
by treaty involving two or
more nations to work in
good faith on issues of
common interest.
Ex. UN, World bank, NATO,
ASEAN
International non-governmental
organization
• The Non-Governmental
Organizations (NGOs)
works toward solutions
that can benefit
undeveloped countries
that face the backlash of
economic globalization
International non-governmental
organization
• The Non-Governmental
Organizations (NGOs)
works toward solutions
that can benefit
undeveloped countries
that face the backlash of
economic globalization.
Multinational corporations
• Multinational corporations
(MNCs) which have
overseas branches
Ex. Ford Motor Corp.,
Fujitsu, General Electric,
GSK and Adidas.
THE effects of ECONOMIC globalization
on DEVELOPING COUNTRIES
• Mohn (2017) states the financial
and industrial globalization is
increasing substantially and is
creating new opportunities for
both industrialized and
developing countries.
Increase d standard of living

• Economic
globalization gives
government of
developing nations
to foreign lending.
Access to new markets

• Globalization
leads to freer
trade between
countries.
Widening disparity and incomes
•While an influx of
foreign companies and
foreign capital creates
a reduction and overall
unemployment and
poverty.
DECREASED EMPLOYMENT
• The influx of foreign
companies into developing
countries increases
employment in many sectors
specially for skilled workers.
However, improvements in
technology come with the new
businesses and the technology
speeds to domestic companies.