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Globalization as an Economic, Political, or Cultural

Process

• Economic Process
Lesson 1: The Concept of Globalization in economics refers to the increasing
interconnectedness of economies through trade,
Globalization investment, technology, and financial markets. It
influences policies, production, and consumption
patterns worldwide, shaping global economic
The Meaning of Globalization Through structures.
Conceptualization • Political Process
Defining Globalization Politically, globalization fosters
intergovernmental cooperation and the influence
The term “globalization” has multiple interpretations, but it of international institutions. Governments,
generally refers to: organizations, and even non-state actors interact
across borders to address global challenges, from
• The increasing interconnectedness and climate change to human rights, impacting
interdependence of individuals, businesses, nations, governance and policy-making.
and economies worldwide.
• Cultural Process
• The exchange of goods, services, information, Cultural globalization involves the exchange and
technology, capital, and ideas across national blending of traditions, values, and practices
borders. across societies. It leads to a more interconnected
world, influencing languages, arts, media, and even
• The interaction between people, states, and
everyday lifestyles while raising discussions about
cultures through the international flow of money,
cultural identity and preservation.
ideas, and traditions.

• The liberalization of economies, allowing foreign

investments in key sectors.

Indicators of Globalization The Importance of Studying Globalization

Globalization is evident in technological advancements and In today's world, humanity faces pressing global
infrastructure development, such as: challenges that require interdisciplinary collaboration
• Innovations in transportation and technology to solve. These challenges include:
(jet engines, the internet, e-banking, e-books, e- • Ensuring access to clean water and a sustainable
bikes, LRT, MRT, etc.). environment
• Economic and cultural interdependence, fostered • Providing affordable renewable energy
by these advancements.
• Addressing the unpredictable effects of climate
• Environmental challenges, including global change
warming, air and water pollution, and overfishing,
which highlight globalization’s impact on natural Solving these issues demands global cooperation,
resources and global policies. where knowledge and resources are shared across
disciplines, institutions, and nations. But how can this
Globalization continues to shape business, economies, be achieved?
societies, and the environment, making nations increasingly
interlinked in modern times. By studying globalization, students gain an
understanding of its benefits, drawbacks, and driving
forces. This knowledge prepares them to work in
collaborative international teams across various
Understanding Globalization: A Multifaceted
fields, including:
Concept
• Business and trade
To grasp the complexities of globalization, one must break it
down into its fundamental components. As a widely studied • Education and research
phenomenon, different schools of thought have emerged,
allowing scholars and students alike to explore globalization • Healthcare and medical advancements
as a concept, fact, or event—and even challenge the notion
• Science and engineering
that it exists at all.
• Arts and culture
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Reasons for Globalization
• Hospitality and tourism Globalization is essential in today’s world for several
reasons:
With globalization shaping the modern world,
understanding its impact equips individuals with the 1. Rapid Shrinking of Time and Distance
tools to navigate, contribute to, and innovate in an
interconnected global society. o Advanced technology has made it easier
and faster to connect, communicate, and
transport goods and people across the
world.
The Importance of Globalization for
Everyone 2. Declining Domestic Market Growth

According to Neil Kokemuller, globalization refers to o Many local markets face economic
the expansion of local economies and businesses into challenges, making global expansion
the international marketplace. But why is this necessary for business survival and
important? profitability.

Impact on Businesses 3. Political and Economic Stability

• Small businesses can now operate globally, thanks o Companies and institutions seek stable
to the internet and mobile technology, which environments in other countries where
enable communication across countries. economic and political conditions are
more favorable.
• Companies worldwide can compete in foreign
markets by leveraging lower labor costs and 4. Access to Advanced Knowledge and Innovation
efficient distribution, leading to the rise of o Nations globalize to gain technological
multinational and transnational corporations. and managerial expertise from countries
with advancements in science,
• U.S. businesses can expand into global markets,
technology, education, and health.
such as the Philippines, by offering their goods and
services internationally. 5. Reduction in Transportation Costs
The Role of Competition o Digital tools and modern logistics make
global trade and communication more
• Even if a company wants to avoid globalization,
efficient and cost-effective.
competition makes it unavoidable.
6. Proximity to Raw Materials and Markets
• The entry of foreign competitors into the U.S.
limits domestic success for some businesses. o Businesses expand globally to source raw
materials and sell their finished products
• Global expansion is necessary to stay in regions where resources or demand are
competitive—companies that earn in foreign higher.
markets reinvest their profits in strengthening their
brand, products, and services. 7. World Trade Organization (WTO) Influence

Conclusion o The WTO has facilitated increased cross-

border trade, making it easier for
Globalization has transformed the way businesses countries to engage in international
operate, making international competition essential for commerce.
survival and growth. Whether as consumers,
employees, or entrepreneurs, everyone is affected by
globalization's influence on the global economy.
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Theoretical Paradigms of Globalization
Advantages of Globalization 1. World-System Theory

1. Economic Growth • Views globalization as the historical expansion of

the capitalist system.
• Increased Trade and Investment: Opens markets,
boosts trade, and creates job opportunities, leading • Suggests that powerful nations (core) exploit
to economic growth. weaker nations (periphery) for labor, resources, and
trade.
2. Access to Resources and Markets
• Immanuel Wallerstein argues that globalization is
• Expanded Availability: Countries can access
not new but has existed since the 16th century.
goods, services, and raw materials they lack,
improving living standards. 2. World Polity Theory
3. Improved Technology and Knowledge Transfer • Focuses on global culture and organizations
shaping institutions worldwide.
• Faster Innovation: Scientific and technological
advancements spread across borders, enhancing • Highlights how global rules and models influence
global productivity. states in addressing common problems.
4. Cultural Exchange • Suggests that international organizations help
establish and spread world culture.
• Diverse Perspectives: Encourages exposure to
different cultures, promoting understanding and 3. World Culture Theory
global unity.
• Emphasizes globalization as a process of cultural
interconnection and awareness.

Disadvantages of Globalization • Argues that while globalization brings people

together, cultures remain diverse.
1. Inequality
• Addresses the challenge of globality—how to live
• Widening Wealth Gap: Benefits are often skewed together meaningfully in a globalized world.
towards wealthier nations and individuals,
increasing income disparity.

2. Job Displacement Misconceptions about Globalization

(According to Jan Aart Scholte)
• Industry Decline: Some local industries struggle
to compete globally, leading to job losses and 1. Globalization Equals
economic instability. Westernization/Americanization
3. Cultural Homogenization o Misconception: Globalization is just the
spread of Western or American culture.
• Loss of Local Cultures: The dominance of global
brands and Western influence can weaken unique o Reality: Globalization involves complex
cultural identities. interactions between diverse cultures, not
just the imposition of Western norms. It
4. Environmental Impact
includes cultural exchanges and the
• Resource Exploitation: Increased industrial prominence of non-Western cultures.
activities can lead to overuse of natural resources.
2. Globalization is a New Phenomenon
• Pollution: Global trade and industrialization o Misconception: Globalization emerged
contribute to pollution and climate change. only in the late 20th century.

o Reality: Global interconnectedness has

been happening for centuries, seen in
historical exchanges like the Silk Road
and colonial empires.
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3. Globalization Leads to Homogenization

o Misconception: Globalization results in a

uniform global culture.

o Reality: Globalization can enhance

cultural diversity, as local cultures adapt
and reinterpret global influences (also
known as "glocalization").

4. Globalization is Only About Economics

o Misconception: Globalization is only

about trade and market integration.

o Reality: It also affects social, political,

cultural, and environmental dimensions,
such as global governance, identity, and
social movements.

5. Globalization is Inevitable and Irreversible

o Misconception: Globalization is
unstoppable due to technological
advancements.

o Reality: Globalization is shaped by human

choices and policies, and it can be
managed, resisted, and reformed.

6. Globalization Benefits Everyone Equally

o Misconception: Globalization benefits

everyone in equal measure.

o Reality: Globalization often creates

winners and losers, exacerbating
inequalities within and between countries.
Its benefits are not evenly distributed.
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2. International Development Association (IDA)

o Provides financial support to the world’s

poorest countries.
Lesson 2: The Structure
o Offers grants and low-interest or zero-
of Globalization interest loans to low-income countries
with significant development challenges.

3. International Finance Corporation (IFC)

Structures of the Global Economy
o Promotes private sector investment in
Global economic structures refer to the framework and
developing countries.
arrangements that govern international economic
interactions and shape the global economy. These o Provides investment financing and
structures include institutions, agreements, and systems advisory services to private companies to
that facilitate global trade, finance, investment, and support private sector development, job
economic cooperation. creation, and economic growth.

4. Multilateral Investment Guarantee Agency

(MIGA)
Key Elements of Global Economic Structures
o Provides political risk insurance and credit
A. International Monetary Fund (IMF)
enhancement to investors and lenders in
• Established in 1944 as part of the Bretton Woods developing countries.
system.
o Helps promote foreign direct investment
• Provides financial assistance and policy advice to by offering guarantees against non-
member countries. commercial risks like expropriation,
breach of contract, and political violence.
• Monitors global economic developments and
facilitates international monetary cooperation. 5. International Centre for Settlement of
Investment Disputes (ICSID)

o Provides a forum for resolving investment

B. The World Bank disputes between foreign investors and
host countries.
• An international development organization owned
by 189 countries. o Offers arbitration and conciliation
procedures for settling disputes in a
• Aims to reduce poverty by lending money to the neutral and impartial platform.
governments of its poorer members to improve
their economies and the standard of living. C. World Trade Organization (WTO)

• Since 1947, the World Bank has funded over • An international organization that oversees global
12,000 development projects through traditional trade rules and resolves trade disputes among
loans, interest-free credits, and grants. member countries.

Five Key Institutions of the World Bank Group: • Aims to promote free and fair trade by reducing
trade barriers, negotiating trade agreements, and
1. International Bank for Reconstruction and providing a platform for trade discussions.
Development (IBRD)
D. Regional Trade Agreements (RTAs)
o The largest and original institution within
the World Bank Group. • Agreements between countries or regions to
facilitate trade and economic cooperation within a
o Provides loans and development
specific geographic area.
assistance to middle-income and
creditworthy low-income countries. • Examples of RTAs include:
o Focuses on financing development o European Union (EU)
projects that reduce poverty and promote
sustainable economic growth. o North American Free Trade Agreement
(NAFTA)

o Association of Southeast Asian Nations

(ASEAN)
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E. Multinational Corporations (MNCs) Economic Impact:

• Companies that operate in multiple countries and • Promotion of Free Trade and Globalization:
have a significant impact on the global economy. Neoliberalism supports opening up markets to
international competition, which is believed to
• MNCs engage in foreign direct investment, foster:
establish global supply chains, and play a crucial
role in global trade and production. o Efficiency

o Innovation

Neoliberalism and Its Discontents o Economic growth

Neoliberalism has emerged as a dominant economic and • Proliferation of Trade Agreements and
political ideology in the contemporary world, Economic Blocs: Notable examples include:
significantly shaping the policies and practices of o NAFTA (North American Free Trade
nations. Since its inception in the late 20th century, it Agreement)
has influenced economic systems, governance
structures, and societal norms by promoting free o European Union (EU)
markets, individualism, and limited government
intervention.
Political and Social Implications:

• Impact on Governance and Social Policies:

Key Principles of Neoliberalism:
o Emphasizes individualism and personal
• Emphasis on Private Enterprise: Neoliberalism
responsibility.
stresses the efficiency of private businesses in
driving economic growth and prosperity. o Favors market-oriented solutions to
societal issues.
• Free Markets: Advocates for the liberalization of
markets, where supply and demand freely o Governments have increasingly embraced:
determine prices, and competition is encouraged.
▪ Privatization
• Free Trade: Supports the reduction of trade
barriers, facilitating international exchanges and ▪ Outsourcing public services
globalization. ▪ Reducing social welfare
• Limited Government Role: Neoliberalism argues programs
for minimal state intervention in the economy, • Criticisms of Neoliberalism:
promoting policies such as:
o Proponents' View: These measures
o Deregulation: Reducing or eliminating enhance efficiency and reduce the burden
government regulations on business on taxpayers.
activities.
o Critics' Concerns: These policies can
o Privatization: Shifting state-owned erode social safety nets and exacerbate
industries and services into the private inequality, particularly in areas like:
sector.
▪ Education
o Reducing Government Spending:
Cutting back on public expenditure to ▪ Healthcare
reduce government control and debt.
o Concerns about accessibility and
Understanding Neoliberalism affordability for marginalized
communities.
Neoliberalism is rooted in the belief that economic growth
and individual freedoms are best achieved through free
markets and minimal state intervention. It advocates for
policies such as deregulation, privatization, and reducing
government expenditure and welfare programs. Central to
neoliberal thought is the emphasis on competition,
entrepreneurship, and global trade as key drivers of
economic development.
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3. Financial Markets and Institutions:

Cultural Dimensions of Neoliberalism: o Financial markets, including stock

exchanges, bond markets, and currency
Neoliberalism has permeated cultural and societal norms, markets, are integral to the global
promoting consumerism and emphasizing individual choice economy.
and personal gratification. The following points highlight
the cultural impact: o They determine the movement of capital,
influence investment, and provide the
• Promotion of Consumerism: necessary liquidity for businesses and
o Neoliberalism fosters a culture of governments.
individual choice and personal
gratification.
Economic Impacts of the Conflict
• Impact on Culture:
Taiwan Conflict:
o Proliferation of advertising and
branding. 1. Global Supply Chains:
o Commodification of culture, where o Semiconductors: Taiwan is home to
cultural products are treated as consumer TSMC (Taiwan Semiconductor
goods. Manufacturing Company), the world’s
largest contract chip manufacturer. Any
• Criticism: disruption in Taiwan could severely
o Critics argue that neoliberalism has led to: impact global semiconductor supply
chains, affecting industries ranging from
▪ Shallow consumer culture. electronics to automotive.
▪ Environmental degradation. 2. Trade Routes:
▪ Erosion of social cohesion due o The Taiwan Strait is a critical shipping
to the emphasis on material route for global trade. Conflict in the
consumption. region could disrupt maritime traffic,
negatively impacting global trade flows.

Factors that Affect the Global Economy

Russia-Ukraine Conflict:
The global economy is shaped by various interconnected
factors. Some of the key ones are: 1. Soviet Era and Independence:

1. Macroeconomic Policies: o Ukraine was part of the Soviet Union until

its dissolution in 1991, after which it
o Macroeconomic policies implemented by declared independence.
governments and central banks have a
profound effect on the global economy. o Post-independence, Ukraine sought to
These policies include fiscal measures establish itself as a sovereign state,
(taxation, government spending) and balancing relations with Russia and the
monetary policies (interest rates, money Western world.
supply).
2. Economic Impact:
2. Trade and Globalization:
o Global economic disruptions: The
o International trade plays a vital role in conflict has caused significant disruptions
the global economy. Key elements in energy and food prices, as both Russia
include: and Ukraine are major exporters of oil,
gas, and agricultural products.
▪ Trade policies.
o Sanctions on Russia: Economic sanctions
▪ Tariffs. imposed on Russia have affected global
▪ Trade agreements. markets, leading to inflation and supply
chain challenges worldwide.
o These factors impact the flow of goods,
services, and capital between countries.
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Role of Global Corporations in Globalization

• Multinational Corporations (MNCs) are
companies that operate in multiple countries,
leveraging the global environment to target various
markets and generate revenue.

• Key Role in Globalization:

o Economic Integration: MNCs have

established links between the economies
of different countries, promoting the flow
of goods, services, and capital across
borders.

o Capital Investment: MNCs use capital

from developed countries to establish
operations in developing countries. This
enables them to access raw materials and
cheaper labor.

o Global Supply Chains: By setting up

factories and plants in different regions,
MNCs create global supply chains that
facilitate the movement of goods and
services internationally, thereby enhancing
economic interdependence.

Global Income Inequality

• Relation to Globalization:

o Globalization has contributed to economic

inequality, with nations often divided into
categories like the North vs. South,
developed vs. less developed, and core
vs. periphery. These distinctions
highlight global economic inequality.

• Types of Economic Inequality:

1. Wealth Inequality: Refers to the net worth of a

country, considering all its assets (natural, physical, human)
minus its liabilities.

2. Income Inequality: Focuses on the disparity in

income distribution within or between nations, often
exacerbated by global economic systems.
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achieved by removing or reducing barriers
such as tariffs, quotas, and trade
restrictions, which typically hinder the
Lesson 3: MARKET free flow of goods, services, capital, and
labor across national borders.
INTEGRATION 3. Significance in Economic Globalization:

o Comparative Advantage: Countries can

specialize in producing goods and services
they have a competitive edge in.
Market Integration and Its Types o Global Value Chains: Market integration
1. Horizontal Integration: enables countries to participate in global
production processes.
o Occurs when a firm gains control over
other firms performing similar marketing o Efficiency: By encouraging competition,
functions at the same level in the innovation, and the efficient allocation of
marketing sequence. resources, market integration boosts
productivity.
o Example: In the Philippines, Landbank of
the Philippines acquired Philippine o Economic Growth: It contributes to
Postal Savings Bank to focus on serving economic growth, improves living
overseas Filipino workers (ABS-CBN standards, and expands consumer choices
News, 2017). by offering a wider variety of products and
services worldwide.
2. Vertical Integration:

o Involves a company owning operations

and products across multiple stages of the International Financial Institutions (IFIs)
supply chain.
1. International Monetary Fund (IMF)
o Example 1: An iron mining company
o The IMF is an international organization
that operates a steel manufacturing firm.
with 183 member countries. It promotes
o Example 2: McDonald's owning the land international monetary cooperation and
where its supplies are located to avoid exchange stability to foster economic
lease costs. growth, high employment, and to provide
short-term financial assistance to countries
to help with balance of payments
adjustment (IMF, 2019).
Market Integration
o Purpose: Global monetary cooperation
Market integration is the process by which economies and international financial stability. It was
become more interconnected and interdependent, primarily created in 1945 to monitor the system of
through the flow of commodities and the externalities or pegged or fixed exchange rates and
spillover effects they generate (Genschel & Jacktenfuchs, prevent trade wars caused by competitive
2017). devaluations of currencies (Cohn, 2011).
1. Indicators of Market Integration: 2. World Bank (WB)
o When prices across different locations or o The World Bank is an international
related goods exhibit similar patterns over development organization with 187
extended periods. member countries. It focuses on reducing
poverty by lending money to poorer
o When groups of prices move
countries to improve their economies and
proportionally to each other.
the standard of living of their people.
o A clear relationship among different
o Purpose: Supports investments that help
markets signals integration.
long-term growth and meet the needs of
2. Definition: citizens by developing markets,
institutions, and economies that are stable,
o Market integration involves the linking of equitable, and efficient.
separate markets to form a unified and
interconnected economic system. This is
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poverty, inequality, and promoting
sustainable economic development.
3. European Investment Bank (EIB)
o Purpose: Financing and promoting
o The EIB advances the objectives of the sustainable development in Latin America
European Union by providing long-term and the Caribbean.
project funding, guarantees, and advice. It
supports projects both within and outside 9. African Development Bank (AfDB)
the EU.
o The AfDB is the premier development
o Purpose: Supports EU goals through finance institution in Africa. Its mission is
investment in long-term infrastructure and to reduce poverty, improve living
development projects. conditions, and mobilize resources for the
continent’s development.
4. Islamic Development Bank (IDB)
o Purpose: Mobilizes resources for
o The IDB fosters economic development economic and social development across
and social progress of member countries Africa.
and Muslim communities in non-member
countries, in accordance with Islamic Law 10. Asian Infrastructure Investment Bank (AIIB)
(Shari'ah).
o The AIIB supports infrastructure projects
o Purpose: Promotes economic and social that focus on climate change mitigation,
development in member countries and adaptation, and resilience, promoting
Muslim communities globally. sustainable development across Asia and
beyond.
5. Asian Development Bank (ADB)
o Mission: Promotes sustainable
o The ADB provides loans, grants, and infrastructure development and climate
technical assistance to developing resilience.
countries, the private sector, and public-
private partnerships, focusing on
infrastructure development.
Market Integration: The Role of the Euro in
o Focus Areas: Water, energy, transport, the European Union (EU)
urban development, and ICT.
1. Enhanced Trade and Economic Integration
6. European Bank for Reconstruction and
Development (EBRD) o The adoption of the Euro eliminates
currency exchange costs and fluctuations
o The EBRD provides financing for projects
within the Eurozone. This makes trade
in banks, industries, and businesses, between member countries more efficient
prioritizing countries in Central and West and cost-effective.
Asia, and North Africa.
o It has also stimulated cross-border
o Purpose: Supports projects that enhance
investments and encouraged greater
economic development in transitioning economic integration across EU nations.
economies.
2. Price Transparency and Competition
7. Development Bank of Latin America
o The Euro facilitates price transparency by
o This bank is committed to improving the
allowing consumers to easily compare
quality of life in Latin America and the prices across member states. This has led
Caribbean, promoting sustainable
to more competition and reduced price
development and regional integration. differentials within the Eurozone.
o Goals: Sustainable development, regional o As a result, consumers benefit from lower
integration, and economic/social
prices and businesses are driven to
reactivation. improve efficiency.
8. Inter-American Development Bank Group
(IADB)

o The IDB is a multilateral source of

development financing for Latin America
and the Caribbean. It focuses on reducing
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• Additional Members:
3. Increased Financial Integration o Brunei: January 7, 1984
o The Euro has promoted financial o Vietnam: July 28, 1995
integration, encouraging cross-border
banking and capital flows within the o Laos and Myanmar: July 23, 1997
Eurozone. o Cambodia: April 30, 1999
o This has led to more efficient financial
markets, improved access to credit, and
enhanced risk-sharing mechanisms. ASEAN Community Vision 2025

4. Increased Foreign Direct Investment (FDI) The ASEAN Community Vision 2025 aims to build a
people-centered and people-oriented community, which is:
o The Euro provides a stable and attractive
investment environment, which has led to • Politically cohesive
higher levels of FDI into the Eurozone.
• Economically integrated
o Increased investment has contributed to
economic growth and job creation across • Socially responsible
member states.
• Environmentally sustainable
5. Improved Monetary Policy and Stability
The vision emphasizes the creation of an ASEAN
o The European Central Bank (ECB) community that is:
oversees monetary policy for the
• Resilient
Eurozone, ensuring stability in interest
rates and inflation across member states. • Inclusive
o This consistent approach to monetary • Dynamic
policy has contributed to macroeconomic
stability and reduced exchange rate risks.

6. Elimination of Exchange Rate Uncertainty ASEAN Political Security Community (APSC) 2025

o By adopting a single currency, the Euro • Objective: To foster political and security
eliminates exchange rate volatility cooperation among ASEAN member states.
between member states.
• Goal: Ensure peace, stability, and resilience in the
o This stability reduces uncertainty for region.
businesses and investors, encouraging
long-term investment and fostering
economic growth. ASEAN Socio-Cultural Community (ASCC)

• Focus: Promotes social progress, cultural

Asian Integration: ASEAN Overview and development, and human resource capacity-
building within ASEAN.
Vision
ASEAN Establishment and Members

• Established on: August 8, 1967, in Bangkok,

Thailand.

• Founding Members:

o Indonesia

o Malaysia

o Philippines

o Singapore

o Thailand