The Global

Economy
Learning Outcomes

 Define economic globalization

 Identify the actors that facilitate economic globalization
 Define the modern world system
 Articulate a stance on global economic integration
 Explain the role of international financial institutions in the creation of
a global economy
 Narrate a short history of global market integration in the twentieth
century
 Identify the attributes of global corporations
Economic Terms

 Gross Domestic Product (GDP)  Neoliberalism

 Foreign Direct Investments  Oligarchy
 Mercantilism  Global financial crisis
 Tariffs  Stimulus package
 Gold standard  Transnational corporations
 Fiat currencies  Economic Integration
 Inflation
Economic Globalization

 A historical process representing the result of human innovation and

technological progress – IMF
 Characterized by
 increasing integration of economies around the world
 Increased speed and frequency of trading
International Trading Systems

 Silk Road
 Oldest known international trade route
 a network of pathways in the ancient world that spanned from China to
what is now the Middle East and to Europe
 Not truly “global”
Age of Globalization

 According to Flyn and Giraldez (1995) - began when all important

populated continents began to exchange products continuously –
directly and indirectly
 1571 Galleon Trade – connected Manila in the Philippines and
Acapulco in Mexico
 Mercantilism – a system of global trade with multiple restrictions
 1867 – a more open trade system emerged using gold standard
 1930s – Great Depression – govts abandoned using the gold
standard
Bretton Woods System

 Inaugurated in 1944 during the United Nations Monetary and

Financial Conference
 Largely influenced by British economist John Maynard Keynes
 When economies slow down, governments have to reinvigorate
markets with infusions of capital
 Created two financial institutions
 International Bank for Reconstruction and Development (IBRD or World
Bank)
 International Monetary Fund (IMF)
 Other global economic integration commitments: General
Agreement on Tariffs and Trade
Neoliberalism and its Discontent

 Early 1970s, oil prices rose sharply – OPEC embargo

 Economists Friedrich Hayek and Milton Friedman argued that the
gov’t practice of pouring money into their economies had caused
inflation by increasing demand for goods without necessarily
increasing supply
 World Trade Organization founded in 1995 to continue the tariff
reduction under the GATT – Washington Consensus
The Global Financial Crisis and the
Challenge to Neoliberalism
 Global financial crisis of 2008-2009
 Mortgage-backed securities
Economic Globalization Today

 Global per capita GDP rose over five-fold in the second half of the
20th century
 Created large Asian economies like Japan, China, Korea, Hong Kong,
and Singapore
 Economic globalization remains an uneven process
 First world countries are often protectionists
 Beneficiaries of global commerce have been mainly transnational
corporations and not governments
Conclusion

 International Economic Integration is a central tenet of globalization

 Much of globalization is anchored on changes in the economy (i.e.
global culture)
 Important to ask: How this system can be made more just?
Debate

Motion:

That global free trade has done

more harm than good