Contemporary World Reviewer

UNIT 1: INTRODUCTION TO GLOBALIZATION

LESSON 1: DEFINING GLOBALIZATION
Globalization refers to the process by which more people across large
distances become connected in more and different ways. They can become
connected very simply by doing or experiencing the same sort of things. For
example, Japanese cuisine “globalizes” when more people on different continents
enjoy the test of the sushi. Since the 19th century Soccer has become globalize
as player and fans in many countries took an interest in the game.

THE FORCES OF GLOBALIZATION

• Globalization is an interaction of people and primarily an economic
process of integration which has social and cultural aspects as well
• Such instructions, which have emerged in many areas of human activity,
reflect increasingly common knowledge and awareness.
• Eating sushi and getting a hepatitis Bs shot involve elements of world
culture- the meaning of sushi and patients regardless of their location
• Even they do not know the larger structures, their everyday life is
nevertheless embedded in a world culture that transcends their village,
town, or country and that becomes part of individual and collective
identities.
• Globalization thus involves growing diffusion, expanding
interdependence, more transnational institutions, and an emerging world
culture and consciousness- all aspects of the connectedness at the heart
of globalization, all elements of the world globalization is creating
(Lechner, 2015)

THE MEANING OF GLOBALIZATION

Globalization is the set of processes by which more people become
connected in more and different ways across ever-greater distances.
A more academic version of this idea is to equate globalization with
“deterritorialization”, the process through which the constrains of physical
space lose their hold on social relations.
It is also defined as the process by which capitalism expands across the
globe as powerful economic actors seek profit in global markets and impose
their rules everywhere, a process often labeled “Neoliberalism.”
THE MEANING OF GLOBALIZATION TO DIFFERENT PEOPLE
According to Lechner (2015), globalization means different things to
different people.
• To a Korean Pentecostal missionary, it means a new opportunity to spread
the faith and convert lost souls abroad.
• To a Dominican immigrant in the United States, it means growing new
roots while staying deeply involved in the home village
• To an Indian television viewer, it means sampling a variety of new shows,
some adapted from foreign formats.
• To a Chinese apparel worker, it means a chance to escape rural poverty
by cutting threads off designer jeans
• To an American shoe company executive, it means managing a far-flung
supply chain to get products to stores.
• To a Filipino global justice advocate, it means rules of the global game
that favor the rich North over the poor South.

THEORIES OF GLOBALIZATION
According to Lechner (2015) states the following are the theories or perspective
in the emergence of globalization:
1. World-System Theory
• A perspective that globalization is essentially the expansion of the
capitalist system around the globe.
• At the time Marx was writing in the mid-nineteenth century, the world
was becoming unified via thickening networks of communication and
economic exchange
• At the “core” of the system, resources, and trade opportunities, most
notably in “peripheral” areas.
• Buffer countries in the “semi periphery” helped mitigate tensions between
core and helped to keep the system remarkably stable.
• The central purpose of the world system is capital accumulation by
competing firms, which go through cycles of growth and decline.

2. World Polity Theory

• In this theoretical perspective, state remains an important components
of world society, but primary attention goes to the global cultural and
organizational environment in which states are embedded.
• What is new in world society, from this perspective, is the all-
encompassing “world-polity, and its associated world culture, which
supplies a set of cultural rules or script that specify how institution
around the world should deal with common problems.
 • Globalization is the formation and enactment of this world polity and
culture.
• One of the world polity’s key elements is a general, globally legitimated
model of how to form a state.
• Guided by this model, particular states widely varying circumstances
organize their affairs in surprisingly similar fashion.
• Because world structured as a polity with an intensifying global culture,
new organization-business enterprises educational institutions, social
movements, leisure and hobby groups, and so on-spring up in all sorts of
countries to enact it precepts.
• As a carrier of global principles, these organizations then help to build
and elaborate world culture and world society further.

3. World Culture Theory

• This perspective agrees that world culture is indeed new and important,
but it is less homogenous than world-polity scholars imply.
• Globalization is a process of relativization.
• Societies must make sense of themselves in relation to a larger system of
societies while individuals make sense of themselves as a larger whole in
relation to a sense of humanity as a larger whole.
• World society thus consists of a complex set of relationship among
multiple units in the “global field”. In this model, world society is
governed not by a particular set of values but by the confrontation of
different way of organizing this relationship.
• Globalization compresses the world into a single entity, and people
necessarily become more aware of their relationship to this global
presence.
• Of central importance to this process is the problem of “globality”: how
to male living together in one global system meaningful or even possible.
• Not surprisingly, religious traditions take on new significance insofar
as they address in new predicament that compels societies and individuals
to “identify themselves in new ways.
• It concludes that a “search for fun fundamentals” is inherent in
globalization.

REASONS WHY GLOBALIZATION WILL NOT MAKE THE WORLD HOMOGENEOUS

According to Lechner (2015), the reasons why globalization will not lead
to a homogeneous world are:
1. General rules and models are interpreted in light of local circumstances.
Thus, regions respond to similar economic constraints in different ways;
 countries still have great leeway in structing their own policies; the
same television program means different thighs to audiences; McDonald's
adapts its menu and marketing to local tastes.

2. Growing similarity provokes reactions. Advocates for many cultures seek

to protect their heritage or assert their identity. Witness the efforts of
fundamentalists to reinstate what they consider orthodoxy, the actions
of indigenous people to claim their right to cultural survival.
3. Cultural and political differences have themselves become globally valid.
The notion that the people and countries are entitled to their
particularity of distinctiveness is itself part to global culture. The
tension between homogeneity and heterogeneity is integral to
globalization.

THE INTERDISCIPLINARY UNDERSTANDING OF GLOBALIZATION

1. Political Scientist
• With global ecological changes, an ever more integrated global economy,
and other trends, political activity increasingly takes place at the
global level.
• Under globalization, politics can take place above the state through
political integration schemes such as the European Union, the ASEAN
integration where Philippines is involved, though the intergovernmental
organizations such as the International Monetary Fund, the World Bank
and the World Trade Organization.
• Political activity can also transcend national borders through global
movements and Non-Governmental Organizations (NGO’s). Civil society
organizations act globally by forming alliances with organizations in
other countries, using global communication systems, and lobbying
international organizations and other actors directly, instead of
working though their national governments (Global Policy Forum 2017).

2. Economist
• According to Franker (2017), economists have his own view of
globalization.
• First, it is integration through international trade of markets in goods
and services as a reflected in variety of possible measures.
• These include direct measures of barriers like tariffs and transport
costs, trade volumes and price related measures. Globalization also means
foreign direct investment, increased trade in intermediate product,
international outsourcing of services like the call center industry here
in the Philippines, and international movement of persons like our
Overseas Filipino Workers (OFW).
• Globalization would also include the international spread of ideas, from
consumer tastes like Coke and Hershey’s to intellectual ideas like
technological patents and management principles and accounting
standards.

3. Sociologist
• Cole (2017) states that globalization, according to sociologists is an
ongoing process that involves interconnected changes in cultural and
social spheres.

• As a process, it involves the spread and diffusion of ideologies-values,

ideas, norms, beliefs and expectations-that foster, justify and provide
legitimacy for economic and political globalization.

• It fueled by globally integrated communication systems like social media

such as Facebook and Twitter, media coverage of the world’s elite and
their lifestyles, the movement of people around the world via business
and leisure travel, and the expectation of these travelers that host
societies will provide amenities and experiences that reflect their own
cultural norms.

4. Historian
• Historians follow rather than led the way.
• Globalization is not new as a phenomenon but the word itself took hold
only recently which records shows first use in English in 1930 and shows
that usage soared suddenly in the 1990’s.

• Why globalization “hot” now and what does it portend for the study of
history. Hunt (2014) states that globalization defined most succinctly as
the interconnection of places far distant from each other.

• When the Soviet Union collapse and end the Cold War globalization filled
the ideological vacuum created by the end of Cold War division between
Capitalism and Communism.

• Cultural history has lost its luster. Theory no longer excites passionate
and debate and perhaps most important, the nation-state no longer seems
as self-evident as the necessary unit of historical analysis. Moreover,
globalization is still too much entangled with world history, global
history and transnational history.
 MARKET GLOBALISM

• Market globalism is an idea that reflects the concepts of globalization.

It seeks to endow globalization with free market norms and neoliberal
meanings. Steger (2005) states that the term ‘globalization’ gained in
currency in the late 1980s. The persistence of academic divisions on the
subject notwithstanding, the term was associated with specific meanings
in public discourse during the 1900s. With the collapse of Soviet-style
communism in Eastern Europe, loosely affiliated power elites
concentrated in the global north stepped up their ongoing efforts to sell
their version of ‘globalization to the public in the ideological form of
‘market globalism’.
• These power elites consisted chiefly of corporate managers, executives of
transnational corporations, corporate lobbyist, high-level military
officers. Prominent journalist and public-relations specialist,
intellectual writing to a large public audience, state bureaucrats and
influential politicians. By the mid-1990s, large segments of the
population in both the global north and south had accepted globalism
core claims., this internalizing large parts overarching neo-liberal
framework that advocate the deregulation of markets, the liberalization
of trade, the privatization of state-owned enterprises.

THE FIVE CORE CLAIMS OF MARKET GLOBALISM

The five core claims of market globalism according to Steger (2205) are:

1. Globalization is about liberation and global integration of markets

The first claim of market globalism is anchored in the neo-liberal ideal
of the self-regulating market as the normative basis for a future global
order.

According to this perspective, the vital functions of the free market –

its rationality and efficiency, as well as its alleged ability to bring
about greater social integration and material progress – can only be
realized in a democratic society that values and protects individual
freedom. Embracing the classical liberal idea of the self-regulating
market, Claim One seeks to establish beyond dispute ‘what
globalization means,’ that is, to offer an authoritative definition of
globalization designed for broad public consumption.

It does so by interlocking its two core concepts and then linking them to
the adjacent ideas of ‘liberty’ and ‘integration.’ Globalization is about
the triumph of markets over government. Both proponents and opponents
 of globalization agree that the driving force today is market, which are
suborning the role of government. The truth is that the size of
governments has been shrinking relative to the economy almost
everywhere. The driving idea behind of globalization is free-market
capitalism – the more you let market forces rule and the more you open
your economy so free trade and competition, the more efficient your
economy will be, globalization means the spread of free-market capitalism
to virtually every country in the world.

2. Globalization is inevitable and irreversible

The second mode decongesting ‘globalization’ turns on the adjacent concept

of ‘inevitability’. At first glance, the belief in the historical
inevitability of globalization seems to be a poor fir for a globalist
ideology based on neo liberal principles. According to the market-
globalist perspective, globalization reflects the spread of irreversible
market forces driven by technological innovations that make the global
integration of national economies inevitable. In fact, market globalism
is almost always intertwined with the deep belief in the ability of
markets to use new technologies to solve social problems far better than
any alternative course. Governments, political parties, and social
movements had no choice but to ‘adjust’ to the inevitability of
globalization. Their sole remaining task was to facilitate the
integration of national economies in the new global markets.

3. Nobody is in charge of globalization

The third mode of de-contesting globalization hinges on the classical

liberal concept of the ‘self-regulating market.’ The link between
‘globalization-market’ and the adjacent idea of ‘leader lessness’ is simple:
if the undisturbed working of the market indeed preordains a certain
course of history, then globalization does not reflect the arbitrary
agenda of a particular social class or group. In other words, globalist
is not ‘in charge’ in the sense of imposing their own political agenda on
people. Rather, they merely carry out the unalterable imperatives of a
transcendental force much larger than narrow partisan interest. The idea
that nobody is in charge serves the neo-liberal political agenda of
defending and expanding global capitalism. Like the market-globalist
rhetoric of historical inevitability, the portrayal of globalization as a
leaderless process seek to both depoliticize the public debate on the
subject and demobilize global justice movements. The deterministic
language of a technological progress driven by uncontrollable market
law turns political issues into scientific problems of administration. As
 ordinary people cease to believe in the possibility of choosing
alternative social arrangements, market globalism gains strength in its
ability to construct passive consumer identities. This tendency is further
enhanced by assurances that globalization will bring prosperity to all
parts of the world.

4. Globalization benefits everyone

This de-contestation chain lies at the heart of market globalism because

it provides an affirmative answer to the crucial normative question of
whether globalization represents a ‘good’ phenomenon. The adjacent idea
of ‘benefits for everyone’ is usually unpacked in material terms such as
‘economic growth’ and ‘prosperity’. However, when linked to globalism’s
peripheral concept, ‘progress.’ the idea of ‘Benefits for everyone’ taps not
only into liberalism’s progressive worldview, but also draws on the
powerful socialist vision of establishing an economic paradise on earth
–albeit in the capitalist form of a worldwide consumerist utopia Thus,
Claim Four represents another bold example of combining elements from
seemingly incompatible ideologies under the master concept
‘globalization.’ Even those market globalist who concede the strong
possibility of unequal global distribution patterns nonetheless insist
that the market itself will eventually correct these irregularities,
television, radio and the internet frequently place existing economic,
political and social realities within a neo-liberal framework sustaining
the claim that globalization benefits everyone through omnipresent
affirmative images, websites, banner, advertisements, and sound bites.

5. Globalization furthers the spread of democracy in the world

The fifth de-contestation chain links ‘globalization’ and ‘market’ to the
adjacent concept of ‘democracy’ which also plays a significant role in
liberalism, conservatism and socialism. Indeed, a careful discourse
analysis of relevant text reveals that globalist tend to treat freedom,
free markets, free trade and democracy as synonymous terms. Persistently
affirmed as common sense, the compatibility of these concepts often goes
unchallenged in the public discourse. The most obvious strategy by which
neo-liberals generate popular support for the equation of democracy and
the market are by discrediting traditionalism and socialism After all,
the contest with both pre capitalist and anti-capitalist forms of
traditionalism such as sovereignty and individual rights have been
enshrined as the crucial catalyst for the technological and scientific
achievements of modern market economies.
THE GLOBALIZATION EXPERIENCE
No one experience globalization in all its complexity but globalization
is significant insofar as it reshapes the daily lives of billions of people.
Increasingly, the larger the world is present locally. The obvious applies to a
Bill Gates (founding chairman of Microsoft), conscious contributors to
globalization. American textile workers sense the global in the local through
the impact of intense foreign competition and outsourcing to overseas
companies. Soccer fans regard as routine the fact to the World’s Cup every four
years, Business people travelling internationally witness globalization daily
in the media offerings in their hotel rooms. Migrants’ wo call home, send money
back, or make return visits bring a bit of that wider world to the villages they
left. These people, and many more, experience globalization. Experiencing
globalization, as the examples indicate, do not mean that some abstract,
impersonal force overwhelms individuals. People participate and respond in
different ways. They can shape, resist, absorb, or try to avoid globalization.
They can seek opportunity in it, feel the harm of it, or lament the power of it.
For some, globalization is a central reality; for others; it is still on the
marine of their lives. In short, there is no one experience of globalization.
That, in itself, is an important aspect of the process. The formation of a new
world society does not involve all people in the same way and it does not create
the same texture in everyone’s everyday life. But there are some commonalities
in the global experience of globalization. To one degree of another,
globalization is real to almost everyone. It transforms the prevailing sense of
time and space, now globally standardized. Its envelope everyone in new
institutions. It poses a challenge, in the sense that even marginally affected
groups must take a stance toward the world. Globalization raises identity
problems for societies and individuals alike.
Focusing on a different kind of global food, James L. Watson, another
anthropologist, describes McDonalds’s customers in Hong Kong, including
children, as critical consumers to whose expectations about food and service
the multinational corporation must adapt. Far from imposing a new dietary
standard McDonalds’s blended into an already heterogeneous urban landscape.
Watson concludes that in places like Hong Kong, the transnational is the local.
How does one explain the phenomenal success of American-style fast food in
Hong Kong and, increasingly, in Guangzhou – the two epicenters of Cantonese
culture and cuisine? Seven of the world’s ten busiest McDonalds’s restaurants
are located in Hong Kong. When McDonalds’s fist opened in 1975, few thought it
would survive more than a few months. By January 1, 1997, Hong Kong had 125
outlets, which means that there was one McDonalds’s for every 51,200 residents,
compared to one for every 30,000 people in the United States. Walking into these
restaurants and looking at the layout, one could well be in Cleveland of Boston.
The only obvious differences are the clientele, the majority of whom are
Cantonese-speakers, and the menu which is in Chinese as well as English. (Watson
2015).

NEOLIBERALISM
• Is in the first instance a theory of political economic practices that
purposes that human well-being can be advance in liberating individual
entrepreneurial freedoms and skills within an institutional framework
characterized by strong private property rights, free markets, and free
trade. The role of the state is to create and preserve an institutional
framework appropriate to such practices. The state has to guarantee, for
example, the quality and integrity of money. It must also set up those
military, defense, police and legal structures and functions required to
secure private property rights and to guarantee, by force, if need be, the
proper functioning of markets. Is in the first instance a theory of
political economic practices that proposes that human well-being can best
be advance by State interventions in markets must be kept to a bare
minimum because, according to the theory, this cannot possibly possess
enough information to second-guess market signals (prices) and because
powerful interest groups will inevitably distort and bias state
interventions (particularly in democracies) for their own benefit.

PRIVATIZATION
• Is the process of transferring an enterprise or industry from the public
sector to the private sector. Some of the government owned and controlled
corporations in the Philippines transferred already from public to
private sector are Philippine Airlines (PAL), Philippine Long-Distance
Corporation (PLDT), Manila Electric Company (MERALCO) and Manila
Waterworks and Sewage System (MWSS) which are now Maynila Water
Services and Manila Water Company.

CHARACTERISTIC OF NEO-LIBERALISM
1. Government must limit subsidies
2. Make a reform to tax law in order to expand tax base
3. Reduce deficit spending
4. Limit protectionism
5. Open markets
6. Removal of fixed exchange rates
7. Back deregulation
8. Privatization
 UNIT II: THE STRUCTURES OF GLOBALIZATION
LESSON I – THE GLOBAL ECONOMY
ECONOMIC GLOBALIZATION
Benczes (2014) defines economic globalization as the increasing
integration of economies around the world. Particularly the movement of goods,
services, and capital across borders. The term sometimes also refers to the
movement of people and knowledge across international borders.

INTERCONNECTED DIMENSIONS OF ECONOMIC GLOBALIZATION

1. The globalization of trade of goods and services
2. The globalization of financial and capital market.
3. The globalization of technology and communication
4. The globalization of production

• For hyper globalist a state ceased to exist as a primary economic

organization unit in the wake of global market. People are consuming
highly standardized global products and services produced by global
corporations in a borderless world. Globalization transform, the national
economy into a global one where there will be no national products or
technologies, no national corporations, no national industries.
• Globalization redefine the role of the nation-state as an effective
manager of the national economy. It is therefore, misleading to assume
that globalization has relegated the nation state and its policies to an
obsolete or irrelevant status government instead are acting the midwives
of globalization. Even liberals recognize the economic openness has
increased vulnerability, also admitting that states are not influenced by
globalization.
• As new actor appears on the stage of political and cultural globalization
(such as the UN) or Non-Governmental Organization (NGOs) economic
globalization produces its own new entrants as well. In all probability
the major players of present-day global economy are the transnational
corporation. (TNCs). For some contemporary globalization is equated
primarily with TNCs, the main driving forces of economic globalization
of the last 100 years, accounting for roughly two-third of world export.
On the other hand, for realist TNCs still represent national interest,
while others such representatives of the dependency school are liable to
identify TNCs with the means through which the rich can exploit the poor.
What is important to note is that TNCs are constantly evolving as economic
 integration is becoming more intensive, production disintegrates as a
result of the outsourcing activity of multinationals.

THE ECONOMIC GLOBALIZATION PHENOMENON

• Just as there is no single definition of globalization, there is no
consensus on its origin. Yet if we accept that economic globalization is
the process that creates an organic system of the world economy, it seems
reasonable to look beyond the last 30 years or so. The question that
necessarily arises is how far we should look back. Globalization processes
have been ongoing since Homo Sapiens began migrating from the African
continent ultimately to populate the rest of the world. Minimally, they
been ongoing since the 16th century connections of the American to Afro-
Eurasia.
• The origin of globalization to the distant past the existence of the same
world system in which we live stretches back at least 5,000 years. The
best-known example of archaic globalization is the Silk Road which
connected Asia, Africa, and Europe. Adopting Fernand Braudel’s innovative
concepts of long duration i.e., slow moving, almost imperceptible
framework from historical analysis, world system analysis identifies the
origins of modernity and globalization with the birth of 16th century
long-distance trade.
• When Adam Smith wrote his Magnum Opus, an inquiry of nation (1776) he
considered the discovery of America by Christopher Columbus in 1492. And
the discovery of direct sea route to India by Vasco de Gama in 1498 as the
two great achievements in human history. In the course of couple of
decades these two remarkable achievements were overshadowed by
breathtaking technological advances and organizations methods of
British Industrial Revolution, From the early 1800 following the
Napoleonic wars. The industrial Revolution spread on Continental Europe
and North America, too.
• The economic nationalism of the 17th and 18th centuries coupled with
monopolized trade did not favor, however, international economic
integration. The total number of ships sailing to Asia from European
countries rose remarkably between 1500 and 1800, but world export to world
GDP did not reach 1 to 2% in that period. If global economy did exist in
this period, then it was only in the sense of trade and exchange, rather
than production, Countries were mostly self-sufficient, the IK and
Netherland being the only exception.
• The real breakthrough came only in the 19th century. The annual average
compound growth rate of world trade saw a dramatic increase of 4.2%
between 1820 and 1870, and was still relatively high at 3.4 % 2001. By 1913,
 trade equaled to 16-17% of world income, thanks to the transport
revolution steamships and railroad reduced transaction cost and
holstered both external international exchanges. The relatively short
period before WWI is often referred to as the golden age of globalization
characterized by relative peace free trade and financial and economic
stability.
• The structural transformation of the Western world was, therefore, both
a cause and an effect of intensified economic integration. By the second
half of 19th century, the division of labor entwined modern world economy.
Consequently, sceptics of globalization, recognize the origin of
globalization to this particular era and argue that in some respect, 19th
century world economy was even more integrated than the present.
(Benczes, 2014).

THE INTERNATIONAL MONETARY SYSTEM

• Cohn (2005) 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
depend in the availability of money and credit. Thus, one long term of
global monetary issues ha stated that the most critical issue to hegemonic
stability theorist should not (be) what the hegemon does or does not in
trade but what it does or fails to do to maintain peace and what it does
or fail to do to keep the monetary system stable credit flowing in a
steady fashion.

• About 29% of the world’s circulating currency is located outside the

country issuing it, during the mid-1990s at least 300$ billion. Of the top
currencies (the US dollars, German Deutsch mark, and Japanese yen) were
largely from advances in communications, technology difficult to
regulate economic activities. Realist scholars by contrast, argue that
financial transaction have increased with the permission of the most
powerful states and that these states continue to dictate the terms for
such transactions.

• Realist point to the fact that international monetary transaction will

still rely primarily in the existence of separate national currencies.
Some assets such as special drawing rights are international scope, and
the establishment of new “euro” currency members of the European
Economic and Monetary Union (EMU) is posing major challenge to the
 predominance of the nationally based, US dollar. Nevertheless, the global
monetary regime continues to function primarily in a world of separate
national currencies, where states are inevitably concerned, about current
surplus. On the other hand, permits a country to have a capital account
deficit through investment abroad or the accumulation of foreign assets.

• In addition to this current and capital accounts the balance of payments

included two less important items. The statistical discrepancy items
result partly from errors in collecting and computing data, but mainly
from a government’s failure to include all the goods, services and capital
that cross its borders. The final item is in change official reserves. in
reserves. Each country has a Central Bank that holds foreign exchange
and gold reserves. When a country has a deficit in its current and capital
accounts, this amount should be matched by an equivalent in reduction
When a country has a surplus in its current and capital accounts, it
accumulates the surplus in the reserves. The total of a country’s current
accounts statistical discrepancy, and change in reserves equal zero, hence
the term balance of payments.

• Although the balance-of-payments account always balance (i.e. equals

zero) in a bookkeeping sense, this does not indicate that a country never
has payments difficulties. In the country, a country may have a balance-
of-payments surplus or a balance-of-payments deficits. These terms refer
only to the current and capital accounts, and exclude any change in an
official financing. A government with a balance-of-payments surplus
reduces its liabilities to foreign governments and or adds to its official
reserves, whereas a government with a balance-of-payments deficit
increases its liabilities and or reduces its official reserve. The main
body of the balance of payments therefore informs us about a state’s
overall position in terms of financial assets and liabilities.

THE FOUR MONETARY REGIMES

Cohn (2005) states that the modern period of international monetary
relations commonly refers to the existence of four monetary regimes: The
classical gold standard from the 1870s to the outbreak of WWI in 1914: a gold
exchange standard during the first part of the inter war period: the Bretton
Woods system from 1944 to 1947 and “non-system” and floating and fixed exchange
rates from 1973 to the present.
THE CLASSICAL GOLD STANDARD REGIMES (1814 TO 1914)
• The Classical gold standard was a fixed rate regime in which government
announce and adhere to specific exchange rate form their currencies in
relation to gold: By making the national currency values more stable, the
gold standard facilitated trade and other transaction between economies.
For example, if the U.S. dollar and British pound were pegged at $35 and
at £ 14.5 per ounces of gold, the exchange rate of dollar and the pound
would remain constant at 2.41 dollar per £1.

• Although all countries had to undergo adjustment to maintain their

exchange rate, the gold standard functioned reasonably well because, it
was backed by British hegemony and by cooperation among the major
powers (especially British, France and Germany). British assumed
leadership role in stabilizing the gold standard by providing public
goods or to other countries, such as investment capital, loans, and an
open market for imports, thus Western Europe and the United States
generally, maintained their official gold parties for about 35 yrs.

• The gold standard based on orthodox liberal ideas in some important

respect. The primary objectives were to promote monetary openness and
stability through the maintenance of stable exchange rate. It was a
period before John Maynard Keynes introduced interventionist liberal
ideas to combat unemployment, and countries were expected to sacrifice
domestic social objectives for the sake of monetary stability. Orthodox
liberal sometimes refer to the gold standard on highly idealized terms,
and in 1981 President Ronald Reagan even created a special commission to
determine whether the US should return to the gold standard. However,
critics maintain that the poorest countries and the poorest classes within
countries often assumed the largest burden of adjustment under the gold
standard through sacrifices in welfare and employment.

THE GOLD EXCHANGE STANDARD REGIME (1914 TO 1944)

• WWI 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
rate among currencies. However, a country’s international reserves under
the 19th century gold standard were officially held in gold, whereas
official reserves under a gold exchange standard consist of both gold
and reserve currencies which is the British pound in the inter war period.
 Although the Central Bank had in fact held reserve currencies, as well
as gold in earlier years. The gold exchange standard institutionalized
this practiced. Because gold is in scarce supply and depend on new
discoveries, a gold exchange standard reserve. I more flexibility in
increasing international reserves.

• Although British efforts to maintain a gold exchange standard continued

for several years, they eventually failed. This, monetary relations for
much of the interwar period were marked by competitive devaluation, a
shift to floating rather than fixed exchange rate destabilizing
speculative capital flows, and increased trade protectionism, which
culminated in the Great Depression. Some theories maintain that the
failure to tr-establish monetary stability was the growing reluctance of
countries to sacrifice domestic goals such as full employment for the
sake of currency stability. Those who argue that domestic factor was
mainly responsible point to the differences in domestic politics before
and after WWI.

• Before the warm voting in most countries was limited, labor unions were
weak, farmers were not organized, and left parties were restricted. Thus,
governments generally felt too free to raise rates and taxed and decrease
government expenditures to bolster the value of their currencies, even if
these policies contribute to domestic hardships such as unemployment. By
the end of the WWI, however, domestics group had gained more influence
through the extensions of suffrage, legalization of labor unions,
organization of farmers, and development of mass political parties, it
was no accident that Keynes introduced his interventionist liberal ideas
with domestic economic problems. Thus, governments could no longer easily
sacrifice the welfare of their citizens to maintain the gold exchange
standard, and one government after responded to economic problem s
during the interwar period by turning away from international openness.

THE BRETTON WORLD SYSTEM REGIME

WWII was marked by a breakdown of monetary cooperation and a period of
exchange controls, and planning for post-war monetary regime culminated in
1944 Bretton Woods conference. The Bretton Wood monetary regime was gold
exchange standard in which the value of each country ‘s currency was pegged
to gold or the U.S. dollar Unlike the two previous regimes, however, the Bretton
Wood system was based on the post-war interventionist liberal compromise. On
the other hand, the planners assumed that the pegged exchange rate would
provide sufficient monetary stability to permit a resumption of normal
international trade. On the other hand, the planners ensured that there was
some flexibility and assistance so that countries could pursue domestic
objective related to employment and inflation. This marked a contrast with the
classical gold standard in which long term exchange rate stability took
precedence over domestic requirements.

According to Cohn (2005), the internationalist liberal has three major elements

1. The first element was the Post-war gold exchange standard which was in
fact an adjustable peg exchange rate rather than exchange rate system.
Although countries were to maintain the par values of their currencies
in the short terms. All countries other than the US could devalue or
revalue their currencies under IMF guidance to correct chronic balance-
of-payments problems. The devaluation lowers the value; revaluation
raises the value of a currency. The Bretton Wood negotiations hoped that
the cooperative IMF framework for changing currency values would
provide flexibility that was lacking with the classical gold standard
and avoid competitive such as those of the interwar period.

2. The second element of the interventionist liberal compromise was the IMF,
which would provide short-term loans. Short term loans are provided to
countries with temporary balance-of-payments problems and thus
alleviate domestic problems resulting from the need to maintain exchange
rate stability.

3. The third element of the compromise was support for national controls
over capital flows, Speculative capital flows had contributed to great
instability during the interwar period, and the post was negotiators
feared that such speculations could undermine efforts to pegged exchange
rates and promote freer trade wood regime. under the Bretton Wood regime.
The chief negotiator also believed that unrestricted capital flows would
interfere with the functioning of the welfare state. If corporations and
citizens could freely move capital abroad to evade taxes this jeopardize
funding the state required social welfare expenditure.

THE CREATION OF INTERNATIONAL MONETARY FUND

 The most important international organization embedded is the Bretton
Wood Monetary regime was the International Monetary Fund (IMF), located in
Washington D.C. The IMF was created to stabilize exchange rate and provide
member states with short-term loans for temporary balance-of –payments
problems. Under the IMF article of Agreements, members were required peg their
currencies to gold or to U.S. dollar, which was valued to at $34 per ounce of
gold. Member states where also to contribute to a pool of national currencies
that would be available for the IMF loans to deficit countries. Each IMF members
was given a quota on its relative economic importance, which determined the
size of subscription or contribution to IMF resource pool. Under the IMFs
weighted voting system, the most economically powerful states have the largest
quotas and subscription and the most votes. At regular intervals of not more
than five years. The IMF decides whether to propose adjustment in the members
quotas in accordance with change in their relative economic positions.

THE FUNCTIONING OF THE BRETTON WOOD MONETARY REGIME

Cohn (2005), States that Bretton Wood was gold exchange regime in which
the main reserves gold and U.S. dollar. Economist generally ask three questions
about the adequacy of reserve assets in upholding a monetary regime. Are there
sufficient reserve (e.g., gold and the U.S. dollar) for liquidity, or financing
purposes, as interdependence increases, more liquidity is necessary to cover the
growing number of economic transaction, but if there is a surplus of liquidity,
inflation, and other problems can result. Is there a confidence problem with
the existing reserve asset? When countries lack confidence that an asset’s value
will remain reasonably stable, they are reluctant to hold the asset in their
reserve. Confidence problems have led to periodic efforts to sell of British
pound and U.S. dollars. What adjustment options do reserve-currency countries
have in dealing with their balance-of-payments deficits? An effective regime
should provide all deficit countries with a sufficient range of adjustment
options.

THE ROLE OF THE US DOLLAR

Because the Bretton Woods monetary regime was based on a gold exchange
standard, central bank could hold their international reserves in two forms, -
gold and foreign exchange- in any proportion they chose. It is ironic, however,
that the original attraction of gold as reserve asset-its scarcity- became a
liability as increased trade and foreign investment led to growing demand for
international reserves. With gold mining sources limited and Western Europe
recovering from WWII, the U.S. dollar was the only currency that could meet this
need with increase liquidity. Monetary relations immediately after the war were
more unstable than expected, with balance-of-payments deficits and lack of
foreign exchange seriously hindering Europe’s recovery. Thus, Western Europe
was severely lacking in the main source of liquidity is required for making
payments – US balanced-of-trade surpluses in the late 1940s contributed to a
dollar shortage. To remedy the problem, the US distributed dollars throughout
the world through economic aid and military expenditures from 1947 to 1958.

From the liberal perspective , the US provided public goods to Europeans

and others during this period opening its market to imparts, providing long
term loans and grants through the Europeans Recovery Program or Marshal Plan,
and supplying the dollars s the main source of International liquidity, to gold
for their reserves and international transactions; dollars (unlike gold) earned
interest and did not have to be shipped and stored.

Although the US as global hegemon was providing its currency as a public

good to meet international liquidity needs., it was also receiving the private
benefit of seignorage. Seignorage is the profit that comes to the seignourn or
sovereign power, from the issuance of money, As the supplier of the key world
currency, the US gained financial power and influence and it was largely exempt
from the discipline the international financial system imposed on other state.
The US was also able to trade and borrow in domestic currency and thus avoid
exchange rate risks and transaction costs, and the dollar leading role enabled
New York City to retain its position as the world ‘s financial capital US policy
from 947 to the late 1950s was therefore based on a mixture of altruism and
self-interest, and other countries acquiesced to US monetary leadership because
of the benefits they received.

Despite the early emergence of the US as hegemon in the global monetary

regime, several changes in the late 1950s led to concerns about its continued
leadership. The US regularly had a substantial balance-of trade surplus to the
post war period, nut it had even a larger debt because of the economic and
military financing, it was providing through the Marshall Plan and other
assistance program. As a result, the US had an overall balance-of-payments
deficit beginning in 1950s. US payments deficit averaged about $1.5 billion per
year for most of the decade., but they increased rapidly in the late 1950s, and
observers began to speak of a dollar glut rather than dollar shortage. In 1960s,
the US payments deficit rose to $3.7 billion, and foreign dollar holdings
exceeded US gold reserve for the first time. Thus, European which have eagerly
sought to obtain dollar, became reluctant to accumulate excessive dollar
reserves. A major change that raised question about US control over military
relations was the growth of the Eurocurrency market. Eurocurrencies are
national currencies traded and deposited in banks outside the home country. As
the name connotes, Eurocurrencies originally develop in Europe.

A SHIFT TOWARD MULTILATERALISM

As US balance-of-payments deficits continued to increase the dollar slipped

from top currency to negotiated currency status during the 1960s. A top currency
is favored for international monetary transaction because other has confidence
in the strong economic position of the issuing state. A negotiated currency does
not benefit from this high degree confidence, do the issuing state must offer
inducement to others to continue accepting its leadership, and must be open to
more multilateral management. Thus, the G-10 established the General
Arrangement to Borrow (GAB) in 1962 under which they agreed to lend the IMF
to $6 billion in their own currencies if needed for supplementary resources to
cope with international monetary problem. The G-10 represented a shift from
unilateral US management to more collective management of monetary issues
because it had to approve each request for supplementary support.

THE GROUP OF TEN MEMBERS(F-10)

The G-10 could supply a substantial of financial resources, but there were
concerns that even G-10 resources were not sufficient to depend the dollars if
it came under attack, indeed, a rush to change the dollar into gold became more
likely as the U.S. balance-of-payments deficits to continue to increase. A series
of measures were therefore adopted to bolster the dollar, and the US sought to
improve its balance of payments by reducing capital outflows. In 1965, for
example the US impose limits on foreign investment and loans by US firms and
banks. Despite these efforts, US gold stocks fell from $22.7 billion on 1950 to
$10.7 billion in 1970. Thus, by 1968 the dollar in the effect had become
convertible into gold.
1. Belgium
2. Canada
3. France
4. Germany
5. Japan
6. Netherlands
7. Sweden
8. United States
9. Italy
 10. United Kingdom
11. Switzerland

THE FLEXIBLE EXCHANGE RATES REGIME

• The Breton Wood agreement had outlawed freely floating exchange rates,
so all the major trading nations were “living in sin” by 1973. The IMF
meeting to Jamaica in January in 1976 finally legalized this situation
by permitting each government to decide whether to establish a par value
for its currency markets, and the market alone determine currency
evaluations. In recent years IMF members have in facts relied extensively
on managed floating, in which central banks intervene to deal with
disruptive such as excessive fluctuation in exchange rates. Although
managed floating, or “manipulating exchange rates. In order to prevent
effective balance-of-payments adjustment or to gain an unfair
competitive advantage.” Today the monetary regime is mixed in nature.
Major industrial countries such as the US, Japan and Canada (and a
number of LDCs)) independently float their currencies, the EU countries
seek increase regional coordination of their policies: and many LDCs peg
the value of their currencies to key currencies or basket of currencies.
It is not surprising that some observers refer to the current system of
monetary relations as a “no system”.

• The move floating rates had an intellectual appeal for both some liberals
and realist. Orthodox liberals in particular argued that floating rates
were preferable because of adjustment of international exchange rates
would depend on market pressures rather than government investment.
Thus, as early as 1953, Milton Friedman wrote a classic article favoring
the establishment of “a system of exchange rates freely determined in
open market, primarily by the private transaction, and the simultaneous
abandonment of direct controls over exchange transaction.” Although some
liberal feared that floating rates would lead to Instability because of
speculative capital flows, as had occurred in 1930s, Friedman argued that
instability during the 1930s had resulted more fundamental economic and
financial problem. Ironically, floating rates were also appealing to some
realist because of the view that government would be able to adopt
independent monetary policies.

• In a fixed exchange regime, “monetary policy must be subordinated to the

requirements of maintain the peg, effectively eliminating the discretion
of authorities.” A floating regime by contrast “allows monetary policy to
be set autonomously, as deemed appropriate in the domestic context (e.g.,
 for stabilization purposes, and the exchange rates because a residual,
following whatever path is consistent with the stabilization policy. By
the 1970s there were additional reasons of liberal communist to favor a
shift to floating rates. With the marked increase in capital flows and
speculative pressure, governments could no longer defend fixed exchange
rates and floating rates would contribute to rapid adjustment of
international payments imbalance in response to market pressure (Cohn
2005)

GLOBAL ACTORS IN ECONOMIC GLOBALIZATION

• International Government Organization (IGO) - It refers to an entity

created by treaty involving two or more nations, to work in good faith,
on issues of common interest. The IGO strive for peace, security and deal
with economic and social questions. Examples include: The UN, the WB and
on a regional level are North Atlantic Treaty Organization (NATO) and
Association of South East Asian Nation (ASEAN) where the Phils. also
belong.

• International Non-Government Organization (NGOs) – The NGOs work

towards solutions that can benefit undeveloped countries that face the
backlash of economic globalization. Classifies as any non-profit,
voluntary citizen’s group which is organized on a local, national or
international level. NGOs perform various services and humanitarian
functions, bring citizen concerns to governments, advocate and monitor
policies and encourage political participation through provision of
information. Example of these is Red Cross, Greenpeace and Amnesty
International.

• Multinational Corporations (MNCs) – MNCs are corporation which have

overseas branches. One of the many changes they have brought to
developing countries is increase in automation. Automation means the use
of various control systems for operating equipment such as machinery
with minimal or reduced human interventions. It may damage less
automated= local firms and require workers to develop new skills in order
to transition into the changing economy, leaving some behind. Corporation
also outsourced in recent years. Example of MNCs which are also present
in the Philippines are Ford Motor Corp., Fujitsu, GE, GlaxoSmithKline, and
Adidas.
THE EFFECT OF ECONOMICS GLOBALIZATION ON DEVELOPING COUNTRIES

Mohr (2017), states that financial and industrial globalization is

increasingly substantially and is creating new opportunities for both
industrialized and developing countries. The largest impact has been on
developing countries, who are now able to attract foreign investors and foreign
capital? This has both positive and negative effect for those countries.
Increased Standard of Living – Economic Globalization gives government of
developing nations access to foreign lending. When these funds are used in
infrastructure including roads, health care, education, and social services, the
standard of living in the country increases. If the money is used selectively,
however, not all citizens will participate in the benefits.
Access to New Markets – Globalization leads to freer between countries. This is
one of largest benefits to developing nations. Home-grown industries see trade
barriers fall and have access to a much wider international market. The growth
this generates allows companies to develop new technologies and produce new
products and services.
Widening Disparity in Income – while an influx of foreign companies and
foreign capital creates a reduction in overall unemployment and poverty, it
can also increase the wage gap between those who are educated and those who
are not. Over the longer term, education level will rise as the financial health
of developing countries rise, but in short term, some of the poor become poorer.
Not everyone will participate in an elevation of living standard.
Decreased Employment – The influx of foreign companies into developing
countries increases employment in many sectors, especially for skilled workers.
However, improvements in technology come with the new businesses and that
technology spreads to domestic companies. Automation in the manufacturing and
agricultural sectors lessens for unskilled labor and unemployment rises in
those sectors.

LESSON II – MARKET INTEGRATION

INTERNATIONAL FINANCIAL INSTITUTIONS
• International Financial Institution (IMIs) are institutions that provide
financial support via grant and loans for economic and social
development activities in developing countries. IFI include public banks,
such as the world bank, International Monetary Fund, and Regional
 Development Banks. They provide loans, grants, and technical assistance,
to governments, as well. as loans to private business investing in
developing countries. They also play a significant role in the
privatization and regulation in public utilities and natural resources.
• These multilaterals share a mission of combating poverty. It is usually
chartered by more than one country and its owner and shareholder are
national governments. Some of the IFIs are created after the WWII to
assist the reconstruction of Europe and other countries affected by the
devastation of the war (Global Green fund Grants 2017).

INTERNATIONAL FINANCIAL INSTITUTION

1. World Bank (WB)
2. International Monetary Fund (IMF)
3. European Investment Bank (EIB)
4. Islamic Development Bank (IDB)
5. Asian Development Bank (ADB)
6. European Bank for Reconstruction and Development (EBRD)
7. Development Bank of Latin America (CAF)
8. Inter-American and Development Bank Group (IADB)
9. African Development Bank (AfDB)
10. Asian Infrastructure Investment Bank (AIIB)

THE WORLD BANK

• The World Bank is the world largest development institution. It has
worked to help more than 100 developing countries and countries
transaction adjust to these changes by offering loans and colored
knowledge and advice. The bank group work with country governments, the
private sector, civil society, organizations, regional development bank,
think tanks, and other international institutions on issues ranging from
climate change conflicts and food security to education, agriculture,
finance and trade. All of these efforts support the Bank Group’s twin
goals of ending extreme poverty by 2030 and hosting shared prosperity
of the poorest 40% of the population to all countries.

• It was founded in 1944, the International Bank of Reconstruction and

Development – soon called World Bank – has expanded to a closely
associated group of five development institutions. Originally, its loan
helped rebuilds countries devastated by WWII. Intime. The focus shifted
from reconstruction to development, with a heavy emphasis on
infrastructure such as dams, electrical grids, irrigation system, and
 roads. With the founding of the International Finance Corporation in
1956, the institutions became able to lend to private companies and
financial institutions in developing countries, And the founding of
International Development Association in 1960 put greater emphasis on
the poorest countries, part of a steady shift toward the eradication of
poverty becoming the Bank’s Group’s primary goal. The subsequent launch
of the International Center for Settlement of Investment Dispute and the
Multilateral Investment Guarantee Agency further rounded out the Bank’s
Group ability to connect global financial resources to the needs of
developing countries.
• Today the Bank Group’s work touches nearly every sector that is important
to fighting poverty, supporting economic growth, and ensuring
sustainable gains in the quality of people’s lives in developing countries.
While sound project selection and design remain paramount the Bank Group
recognizes a wide range of factors that are critical to success – effective
institutions, sound policies continuous learning through evaluation and
knowledge – sharing and partnership, including with the private sector
World Bank, 2017).

GOALS OF WORLD BANK (WB)

The WB is a vital source of financial and technical assistance to developing
countries around the world. We are not a bank in the ordinary sense but a
unique partnership to reduce poverty and support development According to WB
(2017) it has set 2 goals for the world to achieve by 2030.
1. End extreme of poverty by decreasing percentage of people living on less
than $1.90 a day to no more than 3 %.
2. Promote shared prosperity by fostering the income growth of the bottom
40 % every country.

THE FIVE ORGANIZATION OF WORLD BANK

• The International Bank for Reconstruction and Development (IBRD) – it
leads to government of middle-income and creditworthy low-income
countries.
• The International Development Association (IDA) – it provides interest
from loans – called credit – and grants to government of the poorest
countries. Together, IBRD and IDA make up the world bank.
 • The International Finance Corporation (IFC) – it is the largest global
development institution focused exclusively on the private sector. They
help developing countries achieve sustainable growth by financing
investment mobilizing, capital to international financial market, and
providing advisory services to business and governments.
• The Multilateral Investment Guarantee Agency (MIGA) – created in 1988 to
promote foreign direct investment into developing countries to support
economic growth, reduce poverty, and improve people lives. MIGA fulfills
this mandate by offering political risk insurance (guarantees) to
investors and lenders.
• The International Centre for Settlement of Investment Dispute (ICSID),
The ICSID provides international facilities for conciliation and
arbitration of investment dispute.

INTERNATIONAL MONETARY FUND (IMF)

The International Monetary Fund (IMF) – is an organization of 189 countries,
working to foster global monetary cooperation, secure financial stability,
facilitate international trade, promote high employment and sustainable
economic growth, and reduce poverty around the world. Created in 1945, the IMF
is governed by and accountable to the 189 countries that make up its near global
membership.

The IMF also known as the Fund, was conceived at a UN conference in Bretton
Woods, New Hampshire, U.S. in July 1944. The 44 countries at that conference
sought to build a framework for economic cooperation to avoid repetition of
the competitive devaluations that had contributed to the Great Depression of
the 1930s.

THE IMF RESPONSIBILITIES

The IMF’s primary purpose is to ensure the stability of the international
monetary system, the system of exchange rates and international payments that
enables countries and their citizens to transact with each other. The funds
mandate was updated in 2012to include all macroeconomic and financial sector
issues that bear on global stability.

THE MISSION OF IMF

• According to IMF (2017) and IMFs fundamental mission is to ensure the
stability if the international monetary system. It does so in three ways,
 keeping track of the global economy and the economies if member countries
lending to countries with balance- of payments difficulties, and giving
practical help to members.

Surveillance – the IMF oversees the international monetary system and

monitors the economic and financial policies of its 189 members countries. As
part of this process, which takes place both at the global level and in
individual countries, the IMF highlights possible risks to stability and advises
on needed policy adjustment.

Lending – A core responsibility of the IMF is to provide loans to member

countries experiencing actual or potential balance of payments problem. This
financial assistance enables countries to rebuild their international reserves,
stabilize their currencies, continue paying for imports, and resource conditions
for strong economic growth, while undertaking policies to correct underlying
problems/ Unlike development banks, the IMF does not lend for specific projects.

Capacity Development – IMF capacity development – technical implements

economic policies that foster stability and growth by strengthening their
institutional capacity and skills. The IMF seeks to build on synergies between
technical assistance and training to maximize their effectiveness.

WHERE IMF GETS ITS MONEY

• Most resources for IMF loans are provided by member countries primarily
through payments of their quotas. Multilateral and Bilateral borrowing
work as a second and third line of defense by providing a temporary
supplement to quota resources. These temporary resources played a
critical role in enabling the IMF to provide exceptional financial
support to its member countries during the global economic crisis.
Concessional lending and debt relief for low-income countries are finance
through separate contributions-based trust funds.

MARKET INTEGRATION
Market Integration is a term that is used to identify the phenomenon in which
market of goods and services are somehow related to one another being to
experience similar pattern of increase or decrease in terms of the prices of
those products. The term can also refer to a situation in which the pieces of
related goods and services sold in a defined geographical location also begin
to move in some sort of similar pattern to one another. At times the integration
may be intentional with a governmental implementing certain strategies as a
way to control the direction of the economy. At other times, the integrating of
the markets may be due to factor such as shifts in supply and demand that have
spillover effects on several markets.
When market integration exists, the events occurring within two or more markets
are exerting effects that also prompt similar changes or shifts in other market
that focus on related goods. For example, if the demand for baby dolls within
a given geographical market were to suddenly be reduced by 50% there is a good
chance that a demand for baby doll clothing would also decrease in proportion
within the same geographical market. Should the baby doll market increase, this
would usually, mean that the market doll clothing, would also increase. Both
markets would also have the chance to adjust pricing in order to deal with the
new circumstances surrounding the demand, as well as adjust other factors as
production.
Market integration may also occur with just about any type of related markets.
With a stock market integration, similar trends in trading prices for assets
related to a given industry may be found in two or more markets around the
world. In like manner, financial market integration may occur when leading
rates in several different markets begin to move in tandem with one another.
In some cases, the integration within a nation may involve the emergence of
similar patterns within capital stock and financial markets within trends
coming together to exert profound influence on the economy of that nation
(Shiferaw, 2017)

MARKET INTEGRATION AND HOW IT WORKS

Koester (2017) states that market integration is a state of affairs or a process
involving attempts to combine separate national economics into larger economic
regions. Integration as a means of stimulating trade and improving divisions
of the labor among countries has been recommended by many economists. The
foundation of General Agreement on Tariffs and Trade (GATT) in 1948 gave
further impetus to integration by promoting, gender acceptance of the most
favored nation principle. The Article 1 of the GATT states “all contracting
parties must accord any advantage favor, privilege of immunity granted to any
product from other country immediately and unconditionally to all other
members. This resulted in significant integration of world market in
manufactured goods.
Moreover, the eight GATT pounds have led to considerable tariff reductions for
trade in manufactured goals, with average tariff level of less than 4% of OECD
countries in 1997. Apart from integrating world markets there is an increasing
tendency to create new regional integration schemes. The European Union (EU)
is one of the most prominent examples
Integration can be achieved by different means (Reducing on-tariff barriers
to trade can be the main tool for integrating markets. This type of integration
is known as negative integration. The term implies that a government’s only
role if no withdraw from interference in the movement of goods and factors of
production across national borders. Indeed, this may be sufficient to integrate
some markets for manufactured goods, where governmental regulations play a
minor role.

FORM OF INTEGRATION
• Preferential Agreement – It involves lower trade barriers between those
countries which have signed the agreement. It is considered the first and
smallest step on the road to further integration such schemes imply that
a country or region grants other countries preferential access the
imports. Preferences can be given in the form of tariff reductions, for
unlimited volumes of imports from specific countries or for specified
import quantities.

• Free Trade Agreement – It reduces barriers to trade among member

countries to zero, but each member country has autonomy in deciding on
the external rate of tariff for its trade with non-member countries. The
European Free Trade Area Is one of the examples of it.

• Customs Union – It represents a higher stage of economic integration

than a Free Trade Area as the member countries adopt a common external
tariff. In the Custom Union, countries agree to abolish tariff and non-
tariff barriers to trade in goods flowing between them. In addition, they
agree to a common external tariff. This was in fact the first phase of
integration of the European Community on the way to Common Market.

• Common Market – It goes beyond a Custom Union in allowing for free

movement of labor and capital within the Union. Hence, the intention of
 a Common Market is to integrate both product and factors market of
member countries.
• Economic Union – It is the highest form of economic integration. In
addition to the conditions of a Common Market, member countries also
agree to ingrate monetary, fiscal and other policies.
It is obvious that the least developed forms of integration can rely on negative
integration alone. However, higher forms of integration demand agreement on
adjustment or even harmonization of national policies. For example, internal
free movement of goods and factors not only requires removal of border
restriction (negative integration), but also removal of non-tariff trade
barriers caused by different legislation in the member countries (positive
integration) Thus, deeper integration necessarily implies surrendering some
national autonomy.

THE EUROPEAN INTEGRATION

The European Union is a unique economic and political union between 28
European countries that together cover much of the continent. The EU was
created in the aftermath of the Second World War. The idea being that countries
that trade with one another become economically interdependent and so more
likely to avoid conflict.
The result was European Economic Community (ECC), created in 1958, initially
increasing economic cooperation between six countries, Belgium, Germany,
France, Italy, Luxembourg, and the Netherlands. Since then, a huge single market
has been created and continues to develop towards its potential.

LEGAL BASIS OF EUROPEAN UNION

The European Union is based on the rule of law. This means that every action
taken by the EU is founded on treaties that have been approved voluntarily and
democratically by all EU member countries. For example, if a policy area is not
cited in a treaty, the Commission cannot propose a law in those areas.
A treaty is a binding agreement between EU member countries. It sets out Eu
objectives, rules for EU institutions, how decisions are made and the
relationship between the EU and its member countries. Treaties are amended to
make the EU more efficient and transparent, to prepare for new member
countries and to introduce new areas of cooperation – such as the single
currency.
THE EUROPEAN COUNTRIES
1. Austria
2. Belgium
3. Bulgaria
4. Croatia
5. Cyprus
6. Czech Republic
7. Denmark
8. Estonia
9. Finland
10. France
11. Slovenia
12. Luxembourg
13. Germany
14. Greece
15. Hungary
16. Ireland
17. Italy
18. Latvia
19. Spain
20. United Kingdom
21. Lithuania
22. Sweden
23. Malta
24. Netherlands
25. Poland
26. Portugal
27. Romania
28. Slovakia
According to European (2017) the main treaties that help created European Union
are:
• Treaty of Lisbon – signed on Dec 13, 2007 to make the EU more democratic,
more efficient and better able to address global problems such as climate
change, with one voice.
• Treaty of Nice – Signed on 26 February 2001 to reform the institutions so
that the Eu could function efficiently after reaching 25 member
countries.
• Treaty of Amsterdam – Signed on 2 October 1997 to reform the EU
institution in preparation for the arrival of future member countries.
• Treaty of European Union - Maastricht defined on 7 February 1992 to
prepare for European Monetary Union and introduce elements of a
 political union such as citizenship common foreign internal and affair
policy. Single European Act – Signed on 17 February 1986 in Luxembourg
and 28 February 1986 in Hague, Netherlands to reform the institutions in
preparation for Portugal and Spain’s membership and speed up decision
making in preparation for the single market.
• Merger Treaty – Brussels Treaty – Signed on 8 April 1965 to streamline
the European institution. It consists a single commission and a single
Council to serve the then three European Commission (EEC, Euratom, ECSC),
Repeal by the Treaty of Amsterdam.
• Treaties of Rome : EEC and EURATOM treaties, - Signed on 25 March 1957
to set up the Economic Community (EEC) and the European Atomic Energy
Community (Euratom)
• Treaty Establishing the European Coal and Steel Community – Signed on
18 April 1918 to create interdependence in coal and steel so that one
country could no longer mobilize the armed forces without others knowing
This eased distrust and tensions after WWII. The ECSC expired treaty 2002.

EUROPEAN UNION, AN ECONOMIC UNION TO POLITICAL UNION

What began as a purely economic union has evolved into an organization
spanning policy areas, from climate, environmental and health to external
relations and security, justice and migration. A name changes from European
Economic Community (ECC) to the European Union (EU) in 1993 reflected this.
The EU is based on the rule of law everything it does is founded on treaties,
voluntarily and democratically agreed by its member countries. The EU is also
governed by the principle of representative democracy, with citizens directly
represented at Union level in the European parliament and Member States
represented in the European Council and the Council of EU.

A UNION OF SINGLE CURRENCY

The Eu has delivered more than half a century of peace, capability and
prosperity, helped raise living standard and launched a single European
currency the sum. In 2012, the EU was awarded the Nobel Peace Prize for
advancing the causes of peace, reconciliation, democracy, and human rights in
Europe. Thanks to the abolition of border control between EU countries, people
can travel freely throughout most of the continent. And it has become much
easier to live, work and travel abroad in Europe.
The single or “internal market is the main economic engine, enabling most good
m services, money and people to move freely. Another key objective is to develop
also in other area like energy, knowledge and capital markets to ensure that
Europeans can draw the maximum benefit from it.

THE BENEFITS OF EURO

Being the euro area guarantee stable prices. The European Central Bank (ECB)
sets key interest rates at level designed to keep inflation close to, but below
2%. It also manages a portion of the euro area’s foreign exchange reserves and
can intervene in foreign exchange markets to influence the exchange rate of
the euro. The combined size and strength of the euro area also creates a
stronger and more stable currency that is better able to shield its members
from external shocks and currency market turbulence, then individual countries
alone could achieve.
Used about by 340 million EU citizens, the single currency benefits everybody;
1. People no longer need to change money when travelling doing business
within the Euro area, saving time and transaction cost.
2. It cost much less or nothing at all to make cross-border payments
3. Consumers and businesses can compare prices more easily, which encourage
businesses changing higher prices to bring them down.

A UNION OF HUMAN RIGHTS AND EQUALITY

One of the EU main goals is to promote human rights both internally and around
the world. Human dignity, freedom democracy, equality, the rule of law and
respect for human rights: these are the core values of the EU. Since the Lisbon
Treaty’s entry in force in 2009, the EU’s Charter of Fundamental Rights brings
all these rights together in a single document. The EU’s institutions are legally
bound to uphold them, as are EU governments whenever they apply EU law.
The enlarge EU remain focused on making its governing institutions more
transparent and democratic. More powers have been given to the directly elected
European Parliament, while national parliaments play a greater role, working
alongside the European institutions. In turn, European citizens have an ever-
increasing number of channels for taking part in the political services
(Europa. Eu 2017)

ASEAN INTEGRATION
On 8 August 1967, five leaders- the Foreign Ministers od Indonesia, Malaysia,
the Philippines, Singapore and Thailand – set down together in the main hall
of the Department of Foreign Affairs building in Bangkok, Thailand and signed
a document. By virtue of that document, the Association of Southeast Asian
Nation (ASEAN) was born. The five Foreign Minister who signed it – Adam Malik
of Indonesia, Narciso R. Ramos of the Philippines, Tun Abdul Razak of Malaysia,
S. Rajaratnam of Singapore, And Thanat Khoman of Thailand- would subsequently
be hailed as the Founding Fathers of probably the most successful governmental
organization in the developing world today. And the document that they signed
would be known as the ASEAN declaration.

Association of Southeast Asia Nation or the ASEAN was established in 8 August

1967 in Bangkok , Thailand, with the signing of the ASEAN Declaration (Bangkok
Declaration) by the Founding Fathers of ASEAN, Namely: Indonesia, Malaysia,
Philippines, Singapore and Thailand. Brunei and Darussalam then joined in 28
July 1995 . Vietnam on 28 July 1995, Laos PDR and Myanmar on 23 July 1997 and
Cambodia on 30 April 1999, making up what is today the ten Member States of
ASEAN.

ESTABLISHMENT OF THE ASEAN ECONOMIC COMMUNITY

The establishment of the ASEAN Economic Community (AEC) in 2015 is a major
milestone in the regional economic integration agenda in ASEAN offering
opportunities in the form in the huge market of US % 2.6 trillion and over 622
million people. IN 2014, AEC, was collectively the third largest economy in Asia
and the seventh largest in the world.
The AEC Blueprints 2025, adopted by the ASEAN Leaders at the 27th ASEAN Summit
on 22 November 2015 in Kuala Lumpur, Malaysia, provides broad directions
through strategic measures for the AEC from 2016 to 2025. Along with the ASEAN
Community vision 2025 and the ASEAN Political Security Community (APSC)
Blueprints 2025 and the ASEAN Socio-cultural Community (ASCC) Blueprint 2025,
the AEC Blueprint 2025 forms part of ASEAB 2025. Forging Ahead Together. It
succeeded the AEC Blueprint 2008-2015) which was adopted in 2007.
The AEC Blueprint 2025 is aimed towards achieving the vision of having an AEC
by 2025 that is highly integrated and cohesive competitive , innovative and
dynamic with enhanced connectivity and sectoral cooperation and a more
resilient inclusive and people oriented, people centered community, integrated
with the global economy.

THE FIVE INTERRELATED AND MUTUALLY REINFORCING CHARACTERISTIC OF ASEAN

ECONOMIC COMMUNITY ARE:
 1. A highly integrated and cohesive economy
2. A competitive, Innovative, and Dynamic ASEAN
3. Enhanced connectivity and Sectoral Cooperation
4. A Resilient, Inclusive, People-Oriented and People –centered ASEAN
5. A Global ASEAN
The AEV Blueprint 2025 sets outs the strategic measures under each of the five
characteristics of AEC of 2025. To operationalize the Blueprints
implementation, these strategic measures will be further elaborated in and
implemented trough the work plans of various sectoral bodies in ASEAN. The
sectoral work plans will be reviewed and updated periodically to ensure their
relevance and effectiveness. Partnership arrangement with the private sector,
industry, association and the wider community as the regional and national
levels will also be actively sought and fostered to ensure an inclusive and
participatory approach to the integration process. Institutions will be
strengthened and enhanced approaches to monitoring and public outreach will
likewise be developed to support the effective implementation of the blueprint.
The AEC blueprint 2025 Consolidated Strategic Action Plan (CSAP) comprises of
key action lines that will operationalize the strategic measure in the AEC
Blueprint 2025. It takes into account the relevant sectoral work plans, and will
be reviewed periodically to account for developments in each sector.
The inaugural issue of the ASEAN Economic Integrated Brief (AEIB) was released
on 30 June 2017. The AEIB provides regular updates on ASEAN economic
integration progress and outcomes, and is demonstration of ASEAN, commitment
to strengthen communication and outreach to raise stakeholder awareness of
the AEC.
The AEC Blueprint 2025 will lead towards an ASEAN that is more proactive m
having had in place the structure and frameworks to operate as an economic
community, cultivating its collective identity and strength to engage with the
world, responding to new developments, and seizing new opportunities. The new
Blueprint will not only ensure that the 10 ASEAN members States are
economically integrated m but also sustainably and gainfully integrated in the
global economy. Thus, contributing to the goal of shared prosperity.
The AEC Blueprint 2025 will lead countries towards an ASEAN that is more
proactive, having had in place the structure and frameworks to operate as an
economic community, cultivating its collective identity and strength to engage
with the world, responding to new developments and seizing opportunities. The
new blueprint will not only ensure that the 10 ASEAN Member States are
economically integrated, but are also sustainably and gainfully integrated in
the global economy, thus contributing to the goal of shared prosperity.
THE ASEAN FREE TRADE AREA (AFTA)
The ASEAN Free Trade Area (TAFA) has now neem virtually established. ASEAN
member countries have made significant progress in the lowering of intra-
regional tariff through the Common Effective Preferential Tariff (CEPT).
Scheme for AFTA. More than 99% of the products in the CEPT Inclusion List
(IL)of ASEAN-6, comprising Brunei, Darussalam, Indonesia, Malaysia, the
Philippines, Singapore and Thailand have been brought down to 0.5 % tariff
range.
ASEAN newer members Cambodia, Laos, Myanmar and Vietnam are not far behind
in the implementation of their CEPT commitments with almost 80 % of their
products having been moved into their respective CEPT ILS. Of these items about
66% already have tariffs within the 0.5 % tariff band. Vietnam has until 2006
to bring down tariff of products in the Inclusion List to no more than 5%
duties, Laos and Myanmar in 2008 and Cambodia 2010
Following the signing of the Protocol to amend the CEPR-AFTA Agreement for
the Elimination of Import Duties on 30 January 2003, ASEAN-6 has committed to
eliminate tariffs on 60% of their products in the IL, by the year 2003, As of
this date, tariffs on 60.12% of the products in the IL pf ASEAN -6 have been
eliminated. The average tariff for ASEAN-6 under the CEPT Scheme is now down
to 1.51% from 12.76% when the tariff cutting exercises started in 1993.
The implementation of CEPT-AFTA Scheme was significantly boosted in January
2004 when Malaysia announced its tariff reduction for completely built up
(Cbus) and completely knocked down (CKDs) automotive units to gradually meets
its CEPT commitment one year earlier than schedule. Malaysia has previously
been allowed to defer the transfer of 218 tariff lines of CBUs and CKDs until
1 January 2005 (ASEAN 2017)

PRINCIPLES OF THE ASEAN ECONOMICCOMMUNITY

The ASEAN countries are engaged in a process to transform ASEAN into a real
economic community by the end of 2015. Originally built as a political alliance
to limit the spread of communism in Southeast Asia. ASEAN gradually became a
diplomatic organization to manage regional issue and expand trade with the
inclusion Vietnam, Cambodia and Laos and their opening in a market economy.
Having stood on a minimalist “smallest common denominator approach that
emphasized harmonious relation and respect of sovereignties, ASEAN countries
nonetheless also came to great develop trade through quite ambitious economic
treaties and free-trade agreements for Southeast Asia.
ASEAN leaders have now embarked the Southeast Asian association to the next
step of economic development, which will also ultimately bring the Southeast
Asian peoples closer. They have engaged since 2007 towards the integration of
ASEAN into an ASEAN Economic community based on 4 economic pillars (ASEAN
2017).

THE FOUR PILLARS OF THE ASEAN ECONOMIC COMMUNITY

Single Market and Production Base – The region as a whole must become a single
market and production base to produce and commercialize goods and services
anywhere to ASEAN.
Competitive Economic Region – The region must emphasize on the competitiveness
of its production and capacity for export, as well as the free competition inside
of its frontiers.
Equitable Economic Development – To receive the benefits of the AEC the people
and businesses of ASEAN must be engaged into the integration process of the
AEC.
ASEANs –integration into globalized economy. ASEAN must not be isolated but
an integrated part of the global economy.

THE FIVE CORE PRINCIPLES OF THE ASEAN SINGLE MARKET AND PRODUCTION BASE
1. Free flow of goods
2. Free flow of services
3. Free flow of investment
4. Free flow of capital
5. Free flow of skilled labor

THE GLOBAL ECONOMY AND OUTSOURCING

Outsourcing means finding a partner with which a firm can establish a
bilateral relationship and having the partner undertake relationship specific
investment so that it becomes able to produce goods or services that fit the
firm’s particular needs. We live in an age of outsourcing; Firms seem to be
subcontracting an ever-expanding set of activities, ranging from product
design to assembly. From research and developments to marketing, distribution
and after sales service. Some firms have gone so far as to become “virtual”
manufacturers, owning design for many products but making almost nothing
themselves. Virtual disintegration is especially evident in international trade.
A recent annual report of the World Trade Organization (WHO) details, for
example, the production of a particular “American” car.
• 30% to the car’s value
• 17.5% to Japan for components
• 7.5% to Germany for design
• 4% to Taiwan and Singapore for minor parts
• 2.5% to the United Kingdom for advertising and marketing services
• 1.5% to Ireland and Barbados for data processing
• 37% only for the production value generated in the US
Similarly, the production of a Barbie doll procures raw materials such as
plastic and hair from Taiwan and Japan conducts assembly in Indonesia and
Malaysia, buys the molds in the US, the doll clothing in China and the paint
used in decorating the dolls in the US. Indeed, many observers use the term
“globalization” they have in mind a manufacturing process similar to these.
Outsourcing means more than just the purchase of raw materials and
standardized intermediate goods. Often, but not always the bilateral
relationship is governed by a contract, but even in those cases the legal
document does not ensure that the partners will conduct the promised activities
with the same care that the firm would use if it were to perform the tasks.
Because outsourcing, involves more than just the purchase of particular type
of good or service, it has been difficult to measure the growth in international
outsourcing (Grossman et. Al. 2016)
In the Philippines, the call centers dominate the Filipino outsourcing industry
with voice-based services accounting for more than 70% of the Business Process
Outsourcing (BPO) revenue generated in 2010. The Philippines is currently
ranked #1 in the world in terms of offshore voice-based services. The strong
growth of this BPO sector is likely to continue for at least another decade. The
reason behind all of this growth is simple the Philippines is the best source
for fluent English language speakers who are accent-neutral and familiar with
Western diction and figures of speech. Filipinos are also very service-oriented
people making in overall customer satisfaction (Micro sourcing, 2017)

GLOBAL CORPORATION
Global Corporation is a business that operates in two or more countries. It also
goes by the name “multinational company”. Expanding your business globally can
offer several advantages over running a strictly domestic company, but
operating in multiple countries also posed logistical and cultural challenges.
A major motive of becoming a global corporation is to expand revenue
opportunities and to diversity business risks. If you have a model that works
well domestically and translates well in foreign markets, you gain success to
more customers and capital. Operating in multiple countries allow you to achieve
success in different types of economies. If your local or domestic company is
stagnant or your market share has hit a plateau, you might find more customers
in a country whose economy is vibrant and expanding.

GLOBAL CORPORATIONS AND GLOBALIZATION

Globalization can also offer the benefits of economies of scope and economies
of scale. Economies of scope means that you can take advantage of different
skill sets and market advantages. Many companies for instance take advantage
of efficient call center operations that Philippines and India offer. Economies
of scale means that where you use more equipment in production or by supplies
and resale products in larger quantities, you can get better coats per unit,
increasing profitability. Culture variance is a major challenge for global
corporations. Developing a positive, effective work culture can be challenging
enough in another country. Getting workers to think globally when their values
differ from that value of colleagues in other countries is even harder.
(Kokemuller, 2017).

LESSON III – THE GLOBAL INTERSTATE SYSTEM

THE INTERSTATE SYSTEM
State has been long recognized as fundamental actor in global politics. Within
the borders, there is no doubt that each State is expected to maintain its
unchallengeable power because of its possessed sovereignty. Eventually states
begun to interact with other states and constitution beyond its territorial
boundaries as motivated by certain factors and events that demands cooperation
and interdependence.
The attempt to explain these decisions, interactions and behavior that occur
across boundaries of states are what scholars refer as international relations,
international studies or international politics. While the relation of states
(which traditionally in military), diplomatic and strategi9c terms) have been
the center of this discipline, its nature and focus has been significantly
changing over particularly under the realm of globalization.
Globalization is defined as the widening, intensifying speeding up and growing
impact of worldwide interconnected. (Held and McGrew, 1999). Thus, it expectedly
results to intensification of relationship among nation-state which may either
Increase, decrease, or transform states that its usual position. However, not all
processes of globalization occur on the level of states as this extends to the
politics and political patterns of international institutions and organizations
which are equally important to what states and other political actors do.

STATE AND SOVEREIGNTY

The state emerged in 15th and 16th century Europe as a system of centralized
rule that succeeded in subordinating all other institutions and groups,
temporal and spiritual (Heywood, 2011). The concept of statehood was attributed
to the Peace of Westphalia (1648), a package of treaties that ended the 30-year
war (1618-1648), where Europe’s ruler would recognize each other’s right to rule
their own territories and free from outside interference. In turn, the
Westphalian system guarantees stability and unification for the nations of
Europe which was expressed by Giuseppe Mazzini (1805-72), an Italian
nationalist. The characteristic theme of this classical nationalism reflected
in Europe is linked with the idea of the nation based on the belief in popular
sovereignty. This was mostly signified in US president Woodrow Wilson’s
“Fourteen Points” in 1918, a blueprint which proposed for the reconstruction of
Europe after WWII. Nations in Europe, according to Wilson, should achieve
statehood that is anchored from principle of national-determination. Its goal
eventually led to the construction of a nation (Heywood, 2011)
During French Revolution the Westphalian system, was challenged by Napoleon
Bonaparte, a French leader who implemented the Napoleonic Code, with his
principle of liberty, equality and fraternity against the power of kings,
nobility, and religion in Europe. But after his defeat in Battle of Waterloo in
1815, the Royal power founded an alliance of great powers or the Concert of
Europe-Austria, Russia, Prussia and United Kingdom, and created a new system,
which in effect revived the Westphalian system and restored the sovereignty of
states.
Therefore, these historical events established that the doctrine of sovereign
statehood was significant not only as the legal basis of modern statehood but
also the constitution of modern world order. In fact, it was stated in 1933
Montevideo Convention on the Rights and Duties of State as one of the four
qualifying elements (a.) a defined territory, (b) a permanent population, (c) an
effective government, and the (d) capacity to enter into relation with other
states (Heywood, 2011)
While internal sovereignty refers to the state’s authority within, external
sovereignty defines the relationship of states to other states and
international actors as it establishes state’s capacity to act as an independent
and autonomous entity in world affairs (Heywood, 2011) It is the same principle
of how international law was created. Thus, United Nations, as the principal
framework and venue for convening member state’s leader, guarantee equal
participation in international relations that is according to the principle of
sovereign equality.

STATE AND GLOBALIZATION

In the advent globalization, debates about the power and significance of state
in the world system have been found. Two contrasting positions argue about the
impact of the widening and speeding interconnectedness brought about by the
process of globalization. Some believed that it brings about the demise of the
sovereign states as global forces weaken the power of the states to control
their own economies and societies. (Ohmae, 1995 Scholte 2000; Baylis et., al, 2011).
Oppositely, some assumed that states remain as primary agent which could even
shape the world order (Krasner, 1999; Baylis et. Al, 2011) Between these two views
lies another perspective, which recognizes that globalization would transform
the role, significance and nature of the sovereignty of the state.
Globalization as process is more than simply growing connections or
interconnectedness between states. Rosenau (1997) suggests that globalization
implies a cumulative scale, scope, velocity and depth of contemporary
interconnectedness is dissolving the significance of the borders and boundaries
that separates the world into its many constituent states or national economic
and political spaces (Baylis et. Al, 2011) Instead of looking at the
interdependence or internationalization between nation-states, the concept of
globalization presents s dramatic shift leading to the organization of human
affairs – from the world of discreet but interdependent nation-states to the
world as a shares social space, in sense concern about economies and security
transcend the world’s major regions and continents.
Similarly, globalization represents the process of deterritorialization, when
social, political, and economic activities are increasingly stretched across the
globe and making geography and distance posing relative significance. For
instance, terrorist and criminal networks operate both locally and globally.
Some is true for national economic space which is no longer equivalent with
national territorial space, under the condition of globalization since UK’s
largest companies have overseas headquarters. In this sense, globalization can
be defined as (Baylis et. Al, 2011)
As the definition enable us to differentiate globalization from spatially
delimited processes such as internationalization and regionalization, the
nation state may no longer have the monopoly of power resource. This is because
of relative denationalization of power brought by globalization where power
is organized and exercised on a trans regional, transnational, or
transcontinental basis while many actors, from international organization to
criminal networks. Exercise power from within, across, and against states in
an increasingly interconnected global system (Baylis et. Al, 2011)

SHIFTING FROM INTERNATIONAL POLITICS TO GLOBAL POLITICS

The politics in the world stage has been conventionally understood in
international terms. But the term international relations have not been used
despite of the conflict and co-operation between and among territorially based
political units had been existed. Not until Jeremy Bentham, a British
philosopher and legal reformer, coined the term international relations that
was introduced in his Principles of Moral and Legislation (1789). In the late
18th century, the said term eventually was recognized as ‘Inter-national’ as the
territorially based political units, have gained clearer and genuine national
character. Based on this shifting concept from nationhood to statehood why
most modern state and interact could effectively act with one another on the
global (world) system or also described as inter-state system. The origin of this
view is drawn from aforementioned Peace of Westphalia which center on the
principle of sovereignty. Thus, state sovereignty became the fundamental
organizing principle of international politics.
However, internationalization should be differentiated from globalization. The
former refers to growing interdependence between states, its very idea presumes
that state remain discrete national units with clearly demarcated borders while
the latter refers to a process in which the very distinction between the domestic
and the external breaks down. The distance and time are irrelevant in the sense
that level events and impacts may be diffused rapidly around the globe (Baylis
et. At, 2011)
The growing number of complex political issues has eventually acquired a global
character which in that effect, extend actually or potentially to all parts of
the world. For instance, the issue of terrorism and climate change are two of
the most important events that had been affecting all states because of
increasing impact and expansion of various terrorist group and from the nature
operates it’s an interconnected whole.
These events and the following significant changes resulted to a shift of
paradigm from the usual ‘international’ politics to ‘global’ politics (Heywood,
2011).
New Actors on the World Stage - Because of globalization, it is responsible to
regard state as the only significant actors in world stage. New key players
have come to exert influenced and identified as transnational corporation.
(TNCs), non-government organization (NGOs) and a range of non-state
institutions. Similarly, groups and organizations like terrorist group of Al
Qaeda, anti-capitalist movement and Amnesty International to google HP and
also contribute in shaping the world politics.
Increased Interdependence and Interconnected - As globalization results to a
substantial growth in cross-border or transnational, flows and transaction, -
movements of people, good, money, information and ideas the phenomenon also
increased the relations among states with interdependence and
interconnectedness. Problems and issues that are global in nature like global
warming, terrorism, and pandemic disease are impossible to resolve by any states
alone, except for powerful states. Thus, states generally resort on collective
effort as they work together to address the global issues. However, these may
asymmetrical rather than symmetrical where interdependence can lead on
domination and conflict rather than peace and harmony (Heywood, 2011).
The Trend towards Global Governance – Since 1946, a new framework of global
governance and (regional governance) has been recognized. This is attributed
to established international organization such as IMF, World Trade
Organization, (WTO), the European Union, and must significantly, the United
Nations, A member of UN for instance, states observe accountability to
international norm and principles set for: Most importantly, the increasing
number of member states reflects a growth of states who profess commitments
human rights and the rules of law.

CONCLUSION
The idea about international system was explained in this lesson. Starting with
the recognition of the state and the principle of sovereignty ; identifying a
range of new actors; significant factors and events that resulted to interstate
relations; and the relative impact of globalization paved the way for a creation
of global governance or what others identified as the ‘new international order’
as reflected by the operating international organization particularly, the
United Nation.

LESSON IV – CONTEMPORARY GLOBAL GOVERNANCE

CONTEMPORARY GLOBAL GOVERNANCE
When people travel in multiple states; goods and services delivered to and from
different countries by air, land, sea, and cyberspace: Filipino working as OFWs
(Filipino overseas Workers) ; and a different range of cross-border
transactions, are quite puzzling for some since there is no government or world
government that regulates, Even though, these activities still expect to be
reliable safer, and secure for the people, firms and government involved. While
these are evidently effective with domestic sphere because of the government
which controls, how could exchange among states beyond their borders become
possibly in order; inevitable and stable.
For instance, as the world continuously expands and global mobility increases,
the borders of states expectedly are to be flooded of goods, services, persons,
and information. This became possible when the Universal Postal Union, the
first modern international organization, was established in 1863.
Similarly, the growing number of worldwide problems like terrorism , climate
change, threat of maritime conflicts, nuclear proliferation and among others
which are beyond the capacity of individual states to solve on their own, has
been receiving attention with the aim of securing international order and
recognition of sovereignty of every states. Analysis of these global activities
and international problem are taken up in a complex phenomenon called ‘global
governance.
However, global governance is oftentimes confused with international
organizations, an institutions with states’ membership like European Union, UN,
or ASEAN. This chapter explains how one must understand the global governance
and the role of international organization, particularly the UN, in framing
and contributing improvement which may lead to the desired International
order.

UNDERSTANDING THE IDEA OF GLOBAL GOVERNANCE

With the absence of world government, the order, stability and predictability
of various international transaction are still possible because of the idea of
global governance. Global governance is the sum of laws, norms, policies and
institutions that define, constitute and mediate trans-border relations between
states, culture, citizens, intergovernmental and non-governmental organization
and the market—the wielders and the object of the exercise of international
public order (Weis and Thakur, 2010). As such, it infers that engagement and
relations between states in global system are regulated as everyone are expected
to observe. With the same idea. Karns and Mingst (2009) described global
governance as the collection of governance-related activities, rules and
mechanism, formal and informal, existing at a variety of levels in the world
today (cited by Haywood, 2011).
Thus, it also refers to a collective and cooperative arrangements involving
international institutions and states as common features who are believed to
facilitate governance i.e. coordination of social life—ordered rule operating
through a system of enforceable decisions- rather than government (Haywood,
2011), Being so, global governance is an order based on set rules without
government.
Moreover, as a dynamic and complex process of interactive decision making at
the global level, it also puts emphasis to different international actors which
are involved in formal and informal mechanisms. Global governance is not only
limited to states and governments, as the fundamental institutions for
articulating public interest that is extended to global community, but also
involves intergovernmental and non-state agencies. The growth and importance
of non-state actors like civil society (activist, environmentalist, feminist,
scientist, etc.) and market are undeniably observed. They too, play an active
role in shaping norms, laws and policies in global system. Thus, the states
centered structure (i.e., IGOs and particularly of the UN system) share the
governance stage with the pool of other factors with the purpose of ensuring
international system that made up the global politics. To simplify, the term
global governance according to Haywood (2011), is used more to refer to the
institutions through which these interactions take place.
In global system, the following are commonly identified categories of political
actors who are interacting with a range of non-state actors (Baylis et. Al, 2011)
Nearly 200 government including 193 members of the UN (with the inclusion of
Sudan in 2011; 82,100 transnational companies (TNCs) such as Wal-Mart,
Mitsubishi, Volkswagen, General Electric, Microsoft, Nestle, Hewlett-Packard,
with these parent companies having 807, 400 foreign affiliates. Around 9,500
single-country non-governmental organization, like Population Concern (UK) or
the Sierra Club (USA), which engage in significant international activities;
- 240 intergovernmental organization (INGOs) like Amnesty International, the
International Chamber of Shipping, Red Cross, plus a similar number of less-
established international caucuses and networks of NGOs.

THE ROLE OF INTERNATIONAL ORGANIZATION IN GLOBAL POLITICS

The ASEAN, IMF, WTO, WB, and UN are some of the high-profile international
organizations which the Philippines and most of sovereign state are members
of. As a well-observed phenomenon, international organizations foster
cooperation among states particularly on global issues.
Sometimes called international governmental organization (IGOs), as opposite
of international non-government organization (INGOs), international
organization is an institution with formal procedure and a membership
comprising three or more states. They are characterized by rules that seek to
regulate the relations amongst member states and by a formal structure that
implement and enforces these rules (Haywood, 2011).
International Organization, according to Rittberger and Zangl (2006), may be
viewed as instrument, arenas or actors. As instrument, they are mechanism
through which states pursue their own interest. As they facilitate debate and
information exchange, it also serves as permanent institution of conference
diplomacy thus, regarded as arenas. And when states are enabled by IOs to take
concern action, they are acting as an actor.
Historically, the earliest considered international organization is the Concert
of Europe after the Napoleonic war and continued until WWI. The number and
membership grew into 49 which had been in existence until 1944 and 1929, it had
reached an inter-war peak of 83, just at the onset of world economic crisis.
Then at the end of WWII, the number of international organizations soared into
123 in 1949 that includes UN and the institutions of the Breton Woods system.
(INF, WB, WTC) . This shows not only an increasing awareness of interdependence
among states but more concerned with world economic crisis, human rights
violation, environmental degradation, disparities in terms of development and
the hegemonic role of the USA (Heywood, 2011). In mid-1980s, it had reached 378
but subsequently decline after Cold War due to the dissolution of Soviet Bloc
organizations. This result to s substantial increase in international agencies
and similar institution along with the continued growth of international
organizations.
Although the rise of international organizations, Illustrate the emergence of
a global governance system., the latter is wider and more extensive phenomenon
than the former. Nevertheless, international organization are often considered
as key element in global governance, particularly in the process of cooperative
problem–solving that lies at the heart of global governance is usually
facilitated by international organization (Weiss and Kamran, 2009) This
international organization are vital as formal or institutional face of global
governance.

THE UNITED NATIONS

The UN is considered as the world’s leading institutional organization that has
indispensable part of the global political arena. According to Thakurr (2011),
it is both global governance actor and site. Composed of universal state
membership and mechanisms for involving non-state actors, the UN is also
regarded as a central clearing house for information and actions. The UN was
founded on October 24, 1945(since known as UN day by 51 countries of which
Philippines was the one the founding members. It has, to date, a total of 193
members, nearly every state in the world, and counting. As a result of
initiatives moved by the government od states that had led the war against the
Germany and Japan in WWII, the UN Charter clearly spelled out the following
basic principles of international relations.
1. To maintain international peace and security
2. To develop friendly relations among nation
3. To cooperate in solving international problems and in promoting respect
for human rights and
4. To be a center for harmonizing the action of nations.
In this sense, every member—rich and poor, large and small, with differing
political views and social system is givens voice and a vote in UN processes
(Baylis et. Al, 2011). Is not the first constructed international organization to
ensure global peace and security. The League of Nation, is predecessor, was
established at the Paris Peace Conference of 1919 with very similar goals—
enable collective security, to arbitrate over international disputes and to
bring about Disarmament. Heywood, (2011). Indeed, the league and UN were both
set up in the aftermath of world wars. But the former evidently suffered from
major drawbacks which even doubted its name as it was never properly a league
of nations. Key states did not join particularly USA (because of the isolationist
Congress to ratify membership while other states abandoned the League. For
instance, Germany joined in 1926 but leave the organization after Nazis came
to power in 1933, as Japan was criticized for its invasion of Manchuria, also
left in 1933; Italy walked out o in 1936 after its occupation of Abyssinia; while
the Soviet Union which entered in 1933 was eventually expelled in 1939 when it
attacked Finland (Heywood, 2011)
And by end of second World War, the league had failed to address the number of
state’s set of aggression, thus blamed to its ineffective power. Failure was
likewise attributed to the absence of clear division between m the main
executive committee the League Council) and the League Assembly, both of which
could only make recommendation had to be unanimous. Moreover, there was no
mechanism existed for coordinating military or economic action against
miscreant states. As a result, these defects led to the outbreak of WWII The UN
structure was intended tom prevent some of the problems encountered by the
League of Nations. It has main six organs (bailey et al, 2011)
• The Security Council – Principally responsible for maintaining
international peace and security. Composed of 15 states including five
permanent five members, namely the USA, Britain, France, Russia (former
Soviet Union), and China and ten permanent members. Its decisions are
binding and must only be passed by a majority of nine out of 15 members,
as well as each of the five permanent members, which also were seen as
major powers as they hold veto power over Security Council decisions.
• The General Assembly – regarded as parliament of nations as this is
represented by all UN members. The assembly meet to consider the world’s
 pressing problems while each has one vote, Decisions on key issues like
international peace and security, UN budget and admission of new members
must acquire the two-third majority vote of the General Assembly. But the
decisions which are reached have only the status of recommendation

• The Secretariat – this carries the administrative and substantive work

of the UN as directed by the General Assembly, the Security Council, and
the other organs. It is headed by the Secretary General, who provides
administrative guidance. The Secretariat consists of departments and
office with a total staff pf 40,000 around the world. As primarily
bureaucratic, the Secretariat lacks the political power and the right of
initiative.

• The Economic and Social Council (ECOSOC) – under the overall authority
of the General Assembly, the ECOSOC is mandated to coordinate the
economic and social work of UN and the UN family organizations. Is serves
as a link between UN and civil society, thus consultations with non-
governmental organizations are maintained.

• The Trusteeship Council – as UN was created, (this provides international

supervision for 1 Trust Territories administered by seven member states
and to ensure that adequate steps were followed to prepare the territories
for self-government or independence. In 1994, all Trust Territories had
attained independence. As works was completed, the Council now consist of
5 permanent members of Security Council and had amended the role of
procedure.
• International Court of Justice – serves as the main judicial organ of UN.
It consists of 5 judges elected jointly by General Assembly and the
Secretary Council. The court not only decides dispute between countries
but also provides advisory opinions to other UN organs and Specialized
Agencies upon request.
Furthermore, the UN also includes a range of specialized agencies, funds and
programs, including the International Monetary Fund (IMF) World Bank (WB), and
the World Health Organization (WHO), the UN Educational, Scientific and
Cultural Organization (UNESCO) and the UN Children’s Fund (UNICEF)
GLOBALIZATION AND THE UN SYSTEM
While globalization is understood as a term that refers to the expansion and
intensification of social relations and consciousness across world-time and
world-space (Steger, 2003) which is not only concern with expansion of economic
activities across state borders increasing volume of finance investment, goods,
and service flows; ideas, information, organization and people and cultural
exchanges, but also reflects the rapidly and intensity of the interactions in
real time.
From these occurrences, there are opposing views when analyzing the effect of
globalization. Some consider it is equally desirable and an important engine
of growth that paved the way for progress and higher standard pf living while
others see it as form of Western dominance and that only big countries have
positive things to say.
Weis and Thakur 2010 raised points for clarifications
• That even in globalization era, people’s movements remain restricted and
strictly regulated, more so the 9/11 attack.
• Economic independence is highly symmetrical industrialized developing
countries are either interdependent in their relations or largely
independent in economic relations with one another and developing
countries are highly dependent on industrialized countries.
• Growing divergence, not convergence, in income levels between countries
and people, with widening inequality among and within nations.
• It has unleashed many uncivil society forces like international
terrorism, drugs, people and gun trafficking and illicit money flows
(Heine and Thakur, 2011)
Thus, globalization is believed to create both losers and winners and could also
entail risk and opportunities for involving players actors. But according to
an International Labor Organization (ILO) blue-ribbon panel the problems are
not caused by globalization but in the deficiencies in its governance. Poverty
and inequality as global concerns are vividly felt and observed in the actual
arena since there is no economic and social institution which can effectively
tackle these problems with greater legitimacy, lesser transaction and
compliance costs and higher comfort levels for most countries, than the system
of UN do (Weis and Thakur, 2010)

ROLE OF UN IN GLOBAL POLITICS

Among the operating international organization, UN has more comparative
advantage in identifying and resolving global concerns. And as world
organization, it will continue to play four essential roles according to Weis
and Thakur, (2011).
• Managing Knowledge – from a range of issues such as atomic bombing to
HIVAIDS and climate change, and to various kinds of services like
regulations of the skies and seas, internet traffic and nail, all had
successfully reached the attention of every state that prompted them
eventually to be involved and acts towards revolution. Before addressing
the problems, which directs state to recognize its existence, it is
important to gather first solid information about the nature and causes
of the problems. Though UN system is comprised of members states,
accredited NGOs, media contacts, basic research about these global
problems and issues are done in universities or which should be by a
knowledge-based and knowledge-management organization. UN makes use of
convening capacity and mobilizing power to help generate knowledge from
outside and ensure its discussion and dissemination among the
governments
• Developing Norms – key actors in international arena are institutions
operated by human beings or social actors, thus, norms or standards of
behavior are necessary to the society’s functions and existence. As data
has been collected and knowledge gained that a problem is serious to
warrant attention by the international policy community, new norms are
thereby developed. This is turn was articulated, disseminated and
institutionalized.
• Formulating Recommendations – as norms are developed a myriad of
possibilities must be formulated as how key actors i.e., government and
IGOs can alter the behaviors. However, by the 21st century, the growth and
presence of civil societies has led them to warrant attention as they
became louder and holder in voicing their positions in various issues.
Civil societies of NGOs have been recognized as they were present in
signing of the Charter-Article 71 which provides their participation.
However, formulated recommendations and proposals may wither as the
next step would be given to the member states, who shall the
responsibility.
• Institutionalizing Ideas – Once the knowledge has been acquired, norms
articulated and policies formulated, and existing institutions can
oversee their implementation and monitoring (Weis and Thakur, 2011). Based
on UN’s history, every problem identified has several global institutions
which are working on important solutions. Once created, institutions can
facilitate problem solving despite of non-coercive power. In some cases,
when the problem is distinctive, particularly in term of gravity and
scale, from other problems, international community of states would
create a new IGO which focus on addressing such problems. For instance,
 the Joint UN programs on HIV/AIDS (UNAIDS), established in 1996 following
a resolution of WHO’s World Health Assembly, was created serving as
principal instruments for global action on HIV/AIDS and provide actions
to the epidemic.

UN CHALLENGE AND RESPONSES TO ISSUES

For more than seventy years of operation, UN has been continuously challenging
of different controversy and criticism. Given the ideational role. It is
inevitable that expectations do not meet UN’s actual performance as the
principal global governance actor.
While UN was assumed to be active in area such as refuge protection,
environment, counter-terrorism, human rights, disarmament, economic, and social
development, UN’s main role that is widely accepted is that of maintenance of
peace and security that is carried out by Security Council, as it’s the main
organ. Thought it has gained successes in peacekeeping (such as in Mozambique
and El Salvador) and peace-building (East Timor,) in mid 1990s, UN failed to
prevent the large-scale slaughter in Rwanda and Bosnia which damaged its
reputation (Heywood, 2011). These and other issues continue to challenge UN to
take on a stranger role in maintaining global order.

MARITIME DISPUTE IN WEST PHILIPPINE SEA

Similarly, the growing threat of maritime conflict defies UN’s authority over
its member states. The growing tensions and continued display of coastal power
in order to retain control are significant in from the East China Sea to the
Eastern Mediterranean, from the South China Sea to the South Atlantic, Where
Philippine is one of the claimants, the risk is more threatening in the maritime
area of South China Sea. The dispute center on a collection of largely
uninhabited island in the East China Sea are the Paracels in the Northwest
know Spratlys in the Southwest and the Maclesfield Bank in the Northwest
(known in China as the Xisha, Nansha, and Zhongsha island, respectively. While
Brunei Malaysia and Vietnam, and Philippines claim some among them
particularly those that are near their shorelines (Klare, 2017)
However, when the Tribunal issued 2016 its decision in favor of the Philippines
and China has violated the Philippine Sovereign Rights, China was absent
throughout the proceedings and refuse to recognize the case. The Tribunal ruled
that
“.. . . That there was no legal basis for China to claim historic right to resources
within the sea areas fulling within the nine-dash-line. Having found that none
of the features claimed by China was capable of generating an exclusive
economic zone, the Tribunal found that it could---without delimiting a
boundary—declare that certain sea areas are within the exclusive economic zone
of the Philippines, because these areas are not overlapped by any possible
entitlement of China.
Having found that certain areas are within the exclusive economic zone of the
Philippines, the Tribunal found that China violated the Philippines’ sovereign
rights in its exclusive economic zone by (a) interfering with Philippine fishing
and petroleum exploration (b) constructing artificial island and (d) failing to
present Chinese fishermen from fishing in the zone”
China said and that it was the victim in the maritime dispute over the West
Philippine Sea and it would never accept any decision by the UN arbitral
tribunal. Moreover, it was reported that China “will never accept any imposed
solution or unilaterally reporting to third-party settlement” (www.
globalnation.inquirer.com)
Non-recognition of China to arbitration’s decision resulted to different
reaction from members of the international community. As more countries an
international organization agree with the use of peaceful means and this must
be according the principle of international law, including the UNCLOS, China
continuously ignored. It was reported that China had almost finished
transforming the seven reefs claimed by the Philippines into military bases
After issuing its decision, (UN was found silent when it Comes to strict
imposition of its verdict against China. According to Klare (2017), the legal
machinery for adjudicating offshore boundary remains underdeveloped, and
because many states are reluctant to cede authority over those matters, this
makes the resolution more difficult.

UNIT III – A WORLD OF REGIONS

LESSON I -GLOBAL DIVIDES THE NORTH AND THE SOUTH
THE GLOBAL DIVIDES

• Filipinos are obviously coffee lovers. Branches of various international coffee

shops like Coffee Bean and Tea Leaf, Starbucks, Figaro UCC Coffee, and Seattle’s
Best, are like mushroom found in every metro area in the Philippines. As
Filipinos patronize imported coffee brands, this oftentimes perceived as one of
the effects of globalization. Similarly, when a Filipino experience of
globalization as customers. Similarly, when a Filipino enters in one of these
shops is another experience of globalization as customers are not only Filipinos
but different nationalities as well. While this show global interconnectedness
and global modernity, multi- national corporation (MNCs) and transnational
 corporations (TNCs) operating in countries like in the Philippines and in other
corporation countries are likewise believed to create problems like cheap labor,
exploitation and the like.

• This is why globalization is viewed as a process that presents two sides-good

or bad, and positive or negative. While this book, discusses Globalization as a
multidimensional phenomenon, it is imperative to look into the differing impacts
of globalization to the states and explain WHY there is growing division between
rich and poor, developed and Developing. First and Third world, and global North
and global South.
• Previously, the “Third World” was used by those who criticize cold war-era
politics. This pertain to the parts of the world that did not fall into the
Capitalist(also called First World) or the communist termed as Second World
During Cold War.” Third Worldism” on the other hand, was linked to being Non-
aligned of these countries but eventually the term was abandoned as the Soviet
Bloc or the “Second World” collapsed. The countries which are less Developed in
Africa, Asia and Latin America are also categorized as “third” because Of the
prevailing poverty and economic dependence to First World states (Heywood, 2011).
• With the changing global scenarios, historical event are still relevant for these
Terms. But as Third Worldism and non-alignment (due to collapsed of Soviet Bloc)
are no longer practically used, all these points only to a certain phenomenon:
that there is under-development of states/people and lack of representation in
global Political process (Claudio, 2014).
• However, as they could be different effects of world political event like
imperialism and Cold war-era, the term “global South” may still evolve, especially
when affected by globalization. In this sense, the important question may not
be what the global south is but for whom and under what condition the global
South becomes relevant. (Levander And Magnolo, 2011 cited by Claudio, 2014) Same
is true when one supposes that the global South is everywhere, but it is also
somewhere, and that somewhere, located at the Intersection of entangled
political geographies of dispossession and repression (Sparke,2007) cited by
Claudio, 2014). To make sense global south can be found between the objective
realities of the global inequality and the objective response to these (Claudio,
2014)

• For instance, when global financial crisis but most of the European countries
in 2008, Greece in particular , experienced what undeveloped countries in global
South have. Citizens were reported to have lost their job and government out
public spending; issues which are common to global South such as prostitution,
heroin addiction and epidemic arises. Thus, the problems of the global South are
globalized. These terrible conditions wonder the British daily news to question
“is Greece becoming a third world country” (Moran, 2012 cited by Claudio, 2014).

• Similarly, as US President Donald Trump issued policies that restrict immigrant

as anchored on economic nationalism, implies unemployment (even poverty) also
exists in the global North, While metro district like Makati where MNCs and
large corporations operate in a manifestation that spaces of developed countries
are also found in the global South of which the Philippines is classified . In
 this sense, the spaces of underdevelopment in developed countries may mirror
the qualities of the global South and spaces of the affluence in the developing
world mirror those of the global North.

THIRD WORLD VERSUS GLOBAL SOUTH

•To locate what are the states in global South, Grovogui (2011, cited by Claudio, 2014),
contends that

• The global South is not a directional designation or a point due to South from
a fixed north. It is a symbol designation meant to capture the semblance of
cohesion that emerged when former colonial entities in political projects of
decolonization and moved toward the realization of a postcolonial international
order.

• Thus, Grovogui suggest that the states in the international system of governance
are those that have common experience i.e. colonization. In the early phase of
Globalization in 19th century, anti-colonial ideas reached former colonial
territories which eventually had been enlightened and developed the nation of
solidarity. Such solidarities were believed to be the foundation of contemporary
concept of global south (Claudio, 2014).

• After WWII, more countries are decolonized particularly when UN was created in
1945 when over 80 ex-colonies achieved interdependence (UN, 2011). This
reconstructed the world politics which was aforementioned terms as the
first(capitalist). Second (communist) and Third (non-aligned) world engaged. The
vision of non-aligned countries and its solidarity was significantly observed
when Asian and African countries in Bandung, Indonesia, or what was eventually
referred as the Bandung Conference in 1995. This assembly of 29 participants
according to Buzdugan and Payne, (2016) is one of the defiance to many forms of
colonialism both imperial and communist (Espiritu, 2006, cited by Claudio, 2014).

THE NORTH-SOUTH DIVIDE

• Previously interstate inequalities often pointed in the geographical area where

the state if located, But more than this criterion of categorization is the
degree of economic and political power which countries possess and are evidently
observable in the interstate politics. The figure below identifies the
characteristics of the global North as differentiated from the global South.
• Another way of classifying states as either developed or underdeveloped is by
the concept of human development that was first used by UN in 1993. Human
Development is a standard of human well-being that takes account of people‘s
ability to develop their potential and lead fulfilled and creative lives in
accordance with their needs and interest (Heywood, 2011). UN Development report
rank countries according to human development indicators (HDI) which include
life expectancy and health profile education and literacy, fuel, sanitation,
shelter: food, jobs, crime, personal distress, careers/jobs and political
participation.

• The table on the next page shows that the countries in bottom ten are located
in sub-Saharan Africa and ranked in the category of the human development. In
2010 UN Development report in sub-Saharan African states are where life
expectancy, malnourished population, access to clean water and improved
sanitation are very low or poor.
 • While geographical structures show location of states which are characterized
by poverty and Affluence, the concept of “North-South divide must have been
reinforced by certain indicators which are associated with globalization. The
idea was derived from Brandt Report, entitled North-South: A Program for
Survival (1980 and Common Crisis: North-South Cooperative for World Recovery
(1983), which was conducted by Independent Commission on International
Development Issues. This was chaired by Willy Brandt, the former Chancellor of
Germany. The report suggests that instead of concentrating on geographical
split, the terms are essentially conceptual and theoretical although it is prone
to assume that in the global North’ is where industrial development is to be
concentrated while in global South (except Australia) is where poverty and
disadvantages exists. The concept points out that structural inequalities
between high investment while geographical structures show location of states
which are characterized by poverty and affluence, the concept of “North-South
“must have been reinforced by certain indicators which are associated with
globalization.

• However, such classical image of TNCs was altered at the start of the 21st century
where TNCs from developing countries have reported to how become Increasingly
important (UNCTAD, World Investment Report 2006 and 2009). According to the
report, the top ten TNCs in 23007 were from 16 developing countries China,
Hongkong, Taiwan, India, Malaysia, Singapore, Korea, Philippines, Thailand,
Brazil, Mexico, Venezuela, S. Africa, Kuwait, Qatar, and Turkey. Furthermore, most
of the developing country TNCs, though small, are found to become major players
in particular industries like the cars, electronics, steel and container shipping.

• Therefore, these evolving conditions, and structures in interstate politics

suggest that we must not limit the conception of global South and global North
in their conventional characterization but could be representative of an
emerging form.

MAJOR LENSES OF GLOBAL RELATIONS

• In order to make sense of north-south divide idea, we have to understand the

Theories, values and assumption through which global relations have been
Interpreted. How do theories see the world? What are the major lenses on Global
relations?

REALISM

• Perhaps the criticized perspective yet most dominant and influential realist
can be traced from Niccolo Michiavelli and Thomas Hobbes. Realist vision is
Pessimistic, i.e. international system is uneven, highly conflictual and marked
by power struggle which based from how the human nature is being characterized
 Selfishness and greed. States, as key global actors, prioritizes self-interest
and Survival. Being so, the degree of peace is believed to be relative and
temporal And can be disrupted anytime. Thus, in interpreting the concept of
north-south divide, realist postulate that the states in the global North and
intersecting with the countries in the global South in order to promote their
very own interest.

LIBERALISM CONSTRUCTIVISM

• Liberals and constructivist have almost the same assumption. However, liberals
are opposites of realism because of a more optimistic vision in international
system. They offer that the principle of balance and harmony is found in all
forms of social intersections. As reflected in Immanuel Kant’s belief, universal
and perpetual peace is possible because states are capable of cooperation and
value mutual respect. Liberals assume that through trade and economic
interdependence, division and war are less likely to happen . On the other hand,
constructivist also convey cooperation, trust and peace among international
actors. However, these goals are possible only if these are based on existing
norms and conduct which are institutionalized. Hence, institutions play a vital
role in promoting peace in international system.

CRITICAL PERSPECTIVE MARXISM AND POST MODERNISM

• Critical approaches to global relations have been increasingly considerably

since the late 1980s. These approaches are critical in the sense that they oppose
in their different ways, the dominant forces and interests in modern global
relations.

MARXISM

• Regarded as the principle alternative to mainstream perspective of realism and

Liberalism. Marxism offers a distinctive approach highlighting the structure
of economic power rather that patterns of conflict and cooperation . It suggest
inequalities in global system. As state in global South engage in trading with
the parts of global North, this would only results to unequal benefits between
the players because generally, the capitalist or industrialized countries in
global North tend to dominate and exploit the global South. This is true for
Marxism since the playing fields or the economic structure is inherently uneven
further complicated by the impact of globalization.

POST MODERNISM

• Post modernist debunks the ideas of hierarchy, dogmas of existing structure in

global relations. Represented by the writings of Michel Foucault, postmodernism
is believed to be based on the belief that truth is always contested and plural.
Hence, emphasis was given that all ideas and concepts are expressed in language
 which itself is caught in complex relations of power. The use of language is
referred as ideas of discourse power—human interactions which can disclose or
illustrate power relations (Heywood, 2011).

CONCLUSION

• As globalization prevails increase intensification of global problems are also

directed. But these are not only evident among the geographical parts of South
but as well as in the North. Hence, this validates that the ills/poverty of the
Global South are continuously globalized.

• But some countries in the global South had struggle and eventually achieved
affluence or development. In this way, the global North may draw inspiration
from the South experiences. Similarly, the global South countries which were
ex-colonies, may serve as models of resistance for the world. For instance,
India’s non-violence revolution headed by Mahatma Gandhi and the Philippines’
war against Spanish colonizers and the bloodless of dictatorship in 1986 may
serve as such.

• However, among global problems, global warming continues to challenge both

North-South states. Between the two global South has been more vocal a decisive
on addressing the threat of climate change through government initiatives
collective movements. This and other prevailing global problems significantly
demand for those state people from the North to support alternatives, initiative
and collective actions from the global South. A network of solidarity is a must.

• The global South is therefore a metaphor and symbol—a term which does not only
pertains to the specific geographic ideas but also reflects a developing concept
of interactionism which is expected to anchor from the moral potent of universal
Human equality (Claudio, 2014).

LESSON II – ASIAN REGIONALISM

WHAT IS REGIONALIZATION
The term regionalization can be explained from different perspective and
fields, however, in this study we will discuss regionalization in the context of
economy and politics. In economics – regionalization or sometimes termed as
localization – is a strategy in economics which focuses on a particular region
or area – it employs differentiation based on region. For example, a product
may have different marketing strategies in terms of packaging and advertising
depending on the region it will be promoted. Globalization is a strategy that
refers to the use of the same business strategies by multinational companies
in all the markets they operate in. Globalization exceeds regional boundaries;
products are being promoted without region-specific focus. For example, the
company offers the same product without any form of differentiation. Twitter
is a good example – has the same look feels and functionalities regardless of
whether one is accessing it in Africa or Europe or Asia. However, the trending
section of the site’s page is region sensitive and display only content that is
trending in the particular region a use is accessing it from.
Regionalization can also be seen in a broader sense as a political and economic
tool for cooperation and integration. It could also mean a way of recognizing
our own identity. In Asia particularly in the Southeast Asia, there are a lot
of similarities of the countries within the region from culture to their
history.

HISTORY OF REGIONALIZATION IN SOUTHEAST ASIA

After the Great War, regional leaders around the world look for a new structure
on how they will manage their shared interest, threats and opportunities.
Marginalized economies that had been excluded from the world market, were
increasingly seeing renewed opportunities in the collaboration with
neighboring countries. Different actors (like non-state actors and ideological
groups) also progressively entered the vacuum that was left in global
governance, Hettne as cited by Akkerman (2007), New regionalism is a process of
construction and deconstruction by different players and changes according to
the global processes-firms are established in particular region that can be
collectively react to global pressure, tensions and challenges. The ASEAN
(Association of Southeast Asian Nation) is a perfect example of successful
regional cooperation that responds to external pressure and common challenges.
On October August 1967, five leaders of Southeast Asian counties- the Foreign
Minister of Indonesia, Malaysia, the Philippines, Singapore and Thailand – met
together in the Department of foreign affairs building in Bangkok, Thailand
and signed document. By virtue of that document, the Association of Southeast
Asian Nations (ASEAN) was born.
The five Foreign Ministers who signed it – Adam Malik Indonesia. Narciso R.
Ramos of the Philippines, Tun Abdul Razak of Malaysia, S. Rajaratman of
Singapore, and Thanat Khoman of Thailand- would later be hailed. As the
Founding Father of probably the most successful intergovernmental
organization in the developing world today. And the document that they would
be known as the ASEAN Declaration. The goal of ASEAN is more of cooperation
in terms of economic, social, cultural, technical, educational and other fields.
Also, it is a promotion of regional peace and stability through abiding respect
for justice and the role of law and adherence to the principles of the UN
Charter. It was stipulated that the association will be open for participation
by all states in the Southeast Asian region, subscribing to its aims, principles
and purposes. It proclaims ASEAN as representing the collective will of the
nations of Southeast Asia to bind themselves together in friendship and
cooperation and, through joint efforts and sacrifices, secure for their peoples
and for posterity the blessings of peace freedom and prosperity ASEAN.com)
From the article of Akkerman (2007) she stated that the main reason for the
ASEAN cooperation is primarily from the outside – the US feared that communism
will spread out all over the region – to prevent this it sponsors the creation
the association for stability purposes. After the Cold War, ASEAN started to
expand its own path- it developed cooperation with Lao PDR, Vietnam, Cambodia
and Myanmar and adopting the ASEAN Free Trade Area to attract Foreign Direct
Investment.

THE MARITIME
The crisis that hit Asian region in 1997-1998, made ASEAN realize the importance
of cooperation, among members and non-members. One of the results of the crisis
is the creation of Asian monetary policy despite of being allied with IMF –
that Asia is imposing their own financial framework for future crisis and that
countries will no longer depend on US assistance. Furthermore, ASEAN created
bilateral agreements with China, Japan, and South Korea (ASEAN + 3), a
framework that besides financial issues also include deeper economic
cooperation. Other primary regional organization are Asia-Pacific Economic Co-
operation (APEC) and the Shanghai Cooperation Organization (SCO). There are
global forces that meet in the region. US, the European Union, China, and Russia.
US has encouraged economic cooperation in APEC, for it had no role in the
ASEAN. Since ASEAN is a member of APEC and has implemented its open
regionalism rhetoric, based on sovereignty non-interference and consensus in
order to retain a certain degree of independence within the organization
(Akkerman, 2007).
The SCO is a forum between Chia, Russia and the Central Asian (oil rich)
countries. The initiative is being closely watched and ASEAN has been trying
to create a dialogue with the SCO, aware of the importance of its involvement
in this cooperation. After the 9/11 bombing, regionalism had increased once more
in the region. The US encouraged war against terrorism forcing the member
(APEC) to take action towards their Muslim terrorist population. ASEAN, not
willing to arouse extreme responses on its population, acts with caution. In
this situation, ASEAN will have to assess its position that will not jeopardize
the access to the US market, but neither grants a US influence in the
association’s affairs. The war against is not fully backed by all countries,
besides the reactions of US during the Asian financial crisis had caused a lot
of resentment and the unilateral world order that is advocated by the US is a
much-contented form in Asia, as in the most other parts of the worlds (Akkerman,
2007).
The success of ASEAN (as of the moment), be another proof that there is an
increase regionalism in the Southeast Asian region. According to Prime Minister
Lee Kuan Yew, a wider regionalism, under auspices of ASEAN is “an idea that
would not go away”. Probably, it is still early to predict the consequences of
regionalism, and Asian role in it, but the China- ASEAN Free Trade Area is a
sign for increased integration. And despite China challenges the region and
the world, more likely it will benefit from the growth of ASEAN.
Many regions are challenged since ASEAN is referred to as a Third World
Regional cooperation with countries so diverse with each other and yet it is
successful. It amazing that despite of diversity in many aspect countries in
Southeast and East Asia come together with just one slogan “Unity in diversity”.