Download to read offline
![UNIT 3 INTERNATIONAL BUSINESS [Autosaved].pptx](https://cdn.slidesharecdn.com/ss_thumbnails/unit3internationalbusinessautosaved-250828123159-46ee6bdc-thumbnail.jpg?width=640&height=640&fit=bounds)
GLOBAL-ECONOMY-3.pptx file type presenta
- 1. LOBAL ECONOMY UNIT II:STRUCTURES OF GLOBALIZATION By: MIKKO ERMOSO MARIELLE GOME DANA ISABELLE MACAINAN
- 2.
- 3. Economic globalization refersto the growing interdependence of economies across the globe, driven by several factors including trade, capital flow, and technological advancements. WHAT IS ECONOMIC GLOBALIZATION?
- 4. KEY DRIVERS OFECONOMIC GLOBALIZATION Cross-Border Trade • Expansion of international trade in commodities and services. • Example: Philippines’ trade partnerships with China, the United States, and Australia.
- 5. HOW DOES IT WORK? (Global,2022b) • Country A exports goods and services to Country B in exchange for income. • Country B pays for these imports with its income. • Country A can use its earned income to buy goods or invest in capital in Country B. • Similarly, Country B can use its income to purchase goods or invest in capital in Country A.
- 6. KEY DRIVERS OFECONOMIC GLOBALIZATION Flow of International Capital • Foreign Direct Investment (FDI): Investments where companies establish or acquire businesses in other countries. ⚬ Example: Toyota Motor Philippines, a subsidiary of Toyota Japan.
- 7. KEY DRIVERS OFECONOMIC GLOBALIZATION Flow of International Capital • Foreign Portfolio Investments: Investments in foreign stocks and bonds. • Other Capital Flows: Trade flows, external assistance, commercial borrowings, and private loans.
- 8. KEY DRIVERS OFECONOMIC GLOBALIZATION Technology Spread • Rapid dissemination of technology across borders. • Example: Smartphones - drive global markets, and integrate economies through trade and investment
- 9. HISTORICAL CONTEXT AND DEFINITIONS SHANGQUAN(2000): • Attributes economic globalization to increased cross-border trade, capital flow, and technology spread. IMF DEFINITION (2008): • Economic globalization as a result of human innovation and technological progress. • Increased integration of global economies through goods, services, and capital movement.
- 10. QUANTIFYING ECONOMIC GLOBALIZATION • Thevalue of international trade in goods and services as a percentage of world GDP has increased significantly. • 1980: Trade represented 42.1% of global GDP. • 2007: This figure rose to 62.1%, illustrating a substantial growth in global trade activity over the decades. • Implication: This increase reflects the expanding interconnectedness of economies and the growing role of global trade in economic development. Trade Growth
- 11. QUANTIFYING ECONOMIC GLOBALIZATION • Advancesin technology have revolutionized financial markets through high-frequency trading (HFT). • Function: Technology allows for the execution of millions of stock transactions within seconds. • Impact: This rapid trading capability enhances market liquidity and efficiency but also introduces new challenges, such as increased volatility and complexity in financial markets. High-Frequency Trading
- 12. ASSESSMENT OF ECONOMIC GLOBALIZATION 1.EconomicGrowth: • Increased trade and investment contribute to overall economic expansion. • Example: Emerging markets experience rapid growth due to foreign investment and access to global markets. 2. Technological Advancements: • Globalization facilitates the spread of new technologies, leading to innovation. • Example: Advances in technology improve productivity and create better living standards worldwide. BENEFITS
- 13. ASSESSMENT OF ECONOMIC GLOBALIZATION BENEFITS 3.Improved Living Standards: • Enhanced access to goods, services, and technologies raises quality of life. • Example: Globalization can provide access to a wider range of consumer products and healthcare innovations.
- 14. ASSESSMENT OF ECONOMIC GLOBALIZATION CHALLENGES 1.UnequalBenefits: • The advantages of globalization are not shared equally among all countries or sectors. • Example: While some countries benefit from increased trade and investment, others may face economic difficulties or stagnation. 2. Economic Disadvantages: • Some regions or industries may be adversely affected, leading to job losses or economic decline. • Example: Local industries in developing countries may struggle to compete with international companies, leading to economic imbalances.
- 15. MERCANTILISM (16TH-18TH CENTURY) An economic systemwhere countries accumulate wealth by exporting more than they import. Mercantilism was a form of economic nationalism that sought to increase the prosperity and power of a nation through restrictive trade practices. Mercantilism was the dominant economic system from the 16th century to the 18th century.
- 16. HISTORY OF MERCANTILISM First seenin Europe during the 1500s; Example: the Sugar Act of 1764 and Navigation Act of 1651 Under mercantilism: •Nations frequently engaged their military might •Believed that a nation's economic health could be measured by its ownership of precious metals, such as gold or silver.
- 17. The Belief inthe Static Nature of Wealth MERCANTILISM HAD SEVERAL NOTEWORTHY CHARACTERISTICS. The Need to Increase the Supply of Gold The Need to Maintain a Trade Surplus (KENTON, 2024) The Importance of a Large Population The Use of Colonies to Support Wealth The Use of Protectionism
- 18.
- 19. LEGACY OF MERCANTILISM EconomicNationalism: Mercantilism laid the groundwork for later policies of economic nationalism, which continue to influence modern trade policies Colonial Legacies: The economic patterns established during the mercantilist era shaped the development of modern global trade, particularly the relationships between developed and developing countries. Development of Capitalism: Though ultimately replaced by capitalism and free-market economies, mercantilism influenced the rise of European global dominance and the development of modern economic systems.
- 20.
- 21. Bretton Woods Systemwas inaugurated in 1944 during the United Nations Monetary and Financial Conference to prevent the catastrophes after the WWII. It was largely influenced by the ideas of British economist John Maynard Keynes who believed that economic crisis occurs not when the country does not have enough money but when the money is not being spent and thereby not moving This active role of the governments in managing spending served as the anchor for what would be called a system of THE BRETTON WOODS SYSTEM (1944)
- 22. GLOBAL KEYNESIANISM Approach to economicswhich emphasizes responsible public management of economic problems in a world-system context. Common themes in global Keynesianism include the importance of public management, democratic politics, the mixed economy, global income distribution, the management of global demand, investment and money, ecological sustainability and the importance of multiple levels of public management -- local, national, regional and global.
- 23. THE SYSTEM WASDESIGNED WITH A KEY GOAL: STABILITY IN THE GLOBAL FINANCIAL SYSTEM. TWO KEY IDEAS EMERGED FROM THIS: Currencies pegged to the US dollar (which was, in turn, pegged to gold at the time). Creation of international financial institutions like the World Bank and the International Monetary Fund (IMF).
- 24. •The IMF overseesthe stability of the world's monetary system. •Monitors economic activity, offers members policymaking tools and analysis, and also provides loans to member countries. NTERNATIONAL MONETARY FUND (IMF) VS. THE WORLD BANK: •Aims to reduce poverty by offering assistance to middle-income and low- income countries. •Goal is accomplished through technical and financial support that enables countries to implement specific projects. TERNATIONAL MONETARY FUND THE WORLD BANK
- 25. The International MonetaryFund (IMF): The IMF was created to ensure financial stability and help countries facing economic crises. If a country’s economy is struggling (e.g., it cannot pay its debts or its currency is losing BRETTON WOODS INSTITUTIONS:
- 26. The IMF maintainsits mission in three ways: The International Monetary Fund (IMF) 1. Keeps track of the global economy and those of its member countries. 2. Gives practical assistance to members 3. IMF lends money to countries with balance of payments difficulties.
- 27. The World Bank: Itsinitial role was to help rebuild countries devastated by World War II, especially in Europe and Asia. Over time, it evolved to focus on funding development projects in poorer countries, like building infrastructure (e.g., roads, schools, hospitals). BRETTON WOODS INSTITUTIONS:
- 28. The World Bankconsists of five different organizations that all aim to meet the group's mission. World Bank International Bank for Reconstruction and Development (IBRD) International Development Association (IDA) International Finance Corporation (IFC) Multilateral Investment Guarantee Agency (MIGA) International Center for Settlement of Investment Disputes
- 29. •The IMF andWorld Bank are both funded by their member nations. •The IMF gets much of its funding from member quotas, based on the economy and size of each member nation. •The World Bank's funding comes from loans made by member countries, interest on loans, and earnings on WHO FUNDS THE IMF AND WORLD BANK?
- 30. ARE THERE DOWNSIDES TOIMF AND WORLD BANK ASSISTANCE? The IMF and World Bank are not without their critics. Some have criticized the organizations for being overreaching or being an economic weapon its most powerful members, generally larger western economies, can wield against smaller nations by withholding assistance or loans. Loans from the World Bank have also been criticized for coming with significant conditions and high
- 31. NEOLIBERALISM AND THE WASHINGTON CONSENSUS The Shiftin Global Economic Policy
- 32. WHAT IS NEOLIBERALISM? •It is an economic approach advocating minimal government intervention and emphasizing free-market policies. • Advocates for free markets, minimal government intervention, privatization, and trade liberalization. • Neoliberalism emerged in response to the economic crises of the 1970s.
- 33. KEY PROPONENTS OF NEOLIBERALISM FRIEDRICHHAYEK MILTON FRIEDMAN
- 34. THE RISE OFKEYNESIAN ECONOMICS (1940S-1970S) • Governments increased spending to stimulate demand and economic growth. • Led to rising prices and increased employment. • Seen as a trade-off necessary for post-war economic recovery.
- 35. THE RISE OFKEYNESIAN ECONOMICS (1940S-1970S) • As demand increased, the prices as well increased. • Western and some Asian Countries like Japan accepted this rise in prices because it was accompanied by general economic growth and
- 36. • OAPEC's oilembargo in response to Western countries' support for Israel in the Yom Kippur War. • Oil prices skyrocketed, severely affecting Western economies. • The embargo caused an oil crisis, or "shock", with many short- and long-term effects on THE 1973 OIL CRISIS
- 37. • The 1973war between Israel and a coalition of Arab states. • The Yom Kippur War, also known as the Ramadan War, the October War, the 1973 Arab–Israeli War, or the Fourth Arab–Israeli War, was fought from 6 to 25 October 1973 between Israel and a coalition of Arab states YOM KIPPUR WAR
- 39. • The UnitedStates stopped linking the dollar to gold, ending the Bretton Woods system. • Stock markets crashed, worsening the economic crisis. • Keynesian economics struggled to provide solutions to stagflation. COLLAPSE OF BRETTON WOODS (1973-1974)
- 41. • The dissolutionof Bretton Woods system resulted to a stagflation (stagnation plus inflation). • An economic cycle characterized by slow growth, a high unemployment rate and high inflation. STAGFLATION
- 42. • Economists likeHayek and Friedman criticized government spending for causing inflation. • They advocated for reduced government intervention in markets. • Argued for a return to free-market policies and reducing demand-side RISE OF NEOLIBERALISM
- 43. • Global economicpolicies were shaped by neoliberal ideas in the 1980s and 2000s. • Advocated for: THE WASHINGTON CONSENSUS (1980S-2000S) 1.Minimal government spending and debt reduction. 2.Privatization of state-controlled industries like water, power, and transport. 3.Free trade and opening economies to global
- 45. • Positive: Increasedforeign investment, economic growth in some regions, boosts efficiency and market expansion. • Negative: Widening income inequality, loss of public services, economic and financial instability in some developing countries. IMPACT OF NEOLIBERAL POLICIES
- 46. • Neoliberal policiesoften exacerbate income disparities, benefiting the wealthy while neglecting the poor (Stiglitz, 2012). • Deregulation and market-driven approaches can lead to increased environmental harm and resource exploitation (Klein, 2014). • Neoliberal practices such as financial deregulation have contributed to global financial crises (Rodrik, CRITICISM AND GLOBAL CHALLENGES
- 47. CONCLUSION • Economic globalizationhas transitioned from mercantilism, which emphasized national wealth accumulation through trade surpluses, to the Bretton Woods System, which aimed to stabilize post- war economies through international cooperation and economic management. • The shift to neoliberalism introduced market-oriented reforms, advocating for minimal government intervention, privatization, and free trade, reflecting a move away from Keynesian policies.
- 48. "The world isinterconnected, and we cannot turn back the clock, but we can choose how to manage the interconnectedness to our advantage."
- 49.