Globalization
- the widening, deepening and speeding up of
worldwide interconnectedness in all aspects of
contemporary social life
- a multidimensional phenomenon
United Nations
- an international organization formed in 1945 to
increase political and economic cooperation among its
member countries
- formed in the wake of World War II as a way to
reduce international tensions, promote human rights
and reduce the possibility of other large-scale conflicts
World Trade Organization
- a mediation entity that upholds the international rules
of trade between nations
-help producers of goods and services, exporters, and
importers protect and manage their businesses
Economic Globalization
-refers to the increasing integration of economies
around the world
-is a spread of trade, transportation, and
communication systems on a global scale in the
interest of promoting international commerce
1. Protectionism
 protecting one’s economy from foreign
competition by creating trade barriers
2. Trade Liberalization
 reducing trade barriers to make international
trade easier between countries
Silk Road
 best known example of old-fashioned globalization
 ancient network of trade routes, formally establishes
during the Han Dynasty connecting Asia, Africa, and
Europe
Adam Smith
-magnum opus, An inquiry into the nature and causes
of the wealth of nations (1776)
The British and the Dutch East India Companies
-established in 1600 and 1602, respectively
-first multinational corporations
Gross Domestic Product
-monetary value of all the finished goods and services
produced within a country's borders
-indicator of the economic health of a country
-gauge of a country’s standard of living
1870-1913
-golden age of globalization
Transnational Corporations (TNCs)
-major players of present-day global economy
-main driving forces of economic globalization
Parent Enterprise
-an enterprise that controls assets of other entities in
countries
Foreign Affiliate
-incorporated enterprise in another country
Multinational Corporation
-international identity belonging to a particular home
country
Transnational Corporation
-borderless company, no particular home country
Global Commodity Chain
-an idea that reflects upon the increasing importance
of global buyers in a world of dispersed production
Issues About Globalization
-Capitalism
-Income Inequality
-Environmental Problems
International Monetary System
-refers to the rules, customs, instruments, facilities,
and organizations for effecting international payments
Gold Standard
-functioned as a fixed exchange rate regime, with gold
as the only international reserve
International Banks for Reconstruction and
Development (IBRD)
-responsible for post-war reconstruction
International Monetary Fund (IMF)
-promotes international financial cooperation and
buttress international trade
European Monetary Integration
-aimed at the creation of a common market, where
goods, services, capital and labor moved freely.
EU Three-Pillar Rescue Program
1. European Financial Stability Mechanism;
2. European Financial Stability Facility; and
3. the financial assistance of the IMF.
Comparative Advantage Theory
-causes free-trade
-when a country produces a good or service for a lower
opportunity cost than other countries
-became the rationale for free-trade agreements
Absolute Advantage Theory
-anything that a country does more efficiently than
other countries
Competitive Advantage Theory
-provide a better value to consumers than its
competitors
Core
-best in consumers of primary commodities and
producers of manufactured articles
Periphery
-worst of both worlds, as consumers of manufactures
and as producers of raw materials
General Agreement on Tariffs and Trade (GATT)
-first worldwide multilateral free trade agreement
World Trade Organization (WTO)
-its goal is to ensure that trade flows as smoothly and
predictably as possible
United Nations Conference on Trade and
Development (UNCTAD)
-promote trade and cooperation between the
developing and the developed nations
World-economy
-a large geographic zone within which there is a
division of labor and hence significant internal
exchange of basic or essential goods as well as flows
of capital and labor
Capitalist World-Economy
-collection of many institutions, the combination of
which accounts for its processes, and all of which are
intertwined with each other
Market Integration
- a situation in which separate markets for the same
product become one single market, for example when
an import tax in one of the market is removed
Free Trade
- wherein international trade (the importation and
exportation) left to its natural course without tariffs and
non-tariff trade barriers such as quotas, embargoes,
sanctions or other restrictions
MAJOR FREE-TRADE AREAS
1. North American Free Trade Agreement (NAFTA)
2. Association of Southeast Asian Nations Free Trade
Area (AFTA)
3. Southern Common Market (MERCOSUR)
4. Common Market of Eastern and Southern Africa
(COMESA)