MODULE 2: The Structures of Globalization
LESSON 3: The Global Economy & The Global Interstate System & Global
Governance
Week 5-6
Introduction
You are already equipped with the different concepts of
globalization and how it works. Let us focus more on the economic
aspect of globalization, which is the root of all economic processes
that is happening right now. Did you ever imagine that the world is like
a big market where all buyers and consumers meet? Since this market
is so big, it should be governed by an organized institution that implement policies and
regulations to have an efficient and effective market. In addition to learning about the
global economy, you will also learn how the world is being governed.
Learning Objectives:
1. Define economic globalization.
2. Identify the actors that facilitate economic globalization.
3. Determine the challenges of global governance in the twentieth century.
Lesson Proper
Are you familiar with the story the blind men and the elephant? The story of the
three blind men examining an elephant acts as a metaphor for the global economy. Each
man touching a different part of the elephant, leg, trunk and tail, has a very different
impression of what is an elephant. The same is true about the global economy. Countries
and regions are economically very different from each other. Its defining characteristic is
the wide disparities in economic achievement and consequent standards of living.
But what do we mean
by the global economy and
economic globalization? The
global economy refers to the
interconnected worldwide
economic activities that take
place between multiple
countries. These economic
activities can have either a
positive or a negative impact
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on the countries involved. For
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Szentes (2003) economic globalization is a process of making the world economy an
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organic system by extending transnational economic processes and economic relations
to more and more countries and by deepening the economic interdependencies among
them. Benczes (2014) follows this definition and emphasizes that he interpretation of the
current trends in the world economy.
Toward the end of the Second World War, in July 1944, representatives from the
United States, Great Britain, France, Russia, and 40 other countries met at Bretton
Woods, a resort in New Hampshire, to lay the foundation for the post-war international
financial economic system that gave birth to IMF, GATT, WB and furthers with WTO. The
main objectives of these economic systems are to prevent another worldwide economic
cataclysm like the Great Depression, to aid the recovery of war-torn countries and to
foster economic cooperation among states. The following are the functions of the
aforementioned economic systems.
International Monetary Fund
Important functions of IMF
• Facilitate the cooperation of countries on monetary policy, including
providing the necessary resources for both consultation and the
establishment of monetary policy in order to minimize the effects of
international financial crises.
• Help stabilize exchange rates between countries.
• Provide a safeguard to members of the IMF against balance of payments
crises.
World Bank
Important functions of WB
• Aims to reduce poverty in middle-income and creditworthy poorer countries
by promoting sustainable development, through loans, guarantees, and
non-lending-including analytical and advisory-services.
• Tries to foster social reforms to promote economic development, such the
empowerment of women, building schools and health centers, provision of
clean water and electricity, fighting disease, and protecting the
environment.
General Agreements on Tariffs and Trade (defunct)
Important functions of GATT before
• Avoid trade wars by raising protectionist barriers.
• Aid economic recovery through reconstructing and liberalizing global trade.
World Trade Organization
Important functions of WTO
• Providing forum for trade negotiations
• Handling trade disputes
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• Monitoring Members’ trade policies
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• Providing technical assistance and training to developing and least
developed economies
These International Economic System (IES) has been anchored in the neoliberal
paradigm since 1980s. It involves reducing the government regulation in order to extend
the role of the private sector in the market and the society. Global justice movements
have sought to expose the inadequacies of the system in addressing the needs of
developing world and its frailties and vulnerability to financial crises. The IES’s are pillars
of globalization. Designed to help manage the international financial system, they have
taken on major roles as drivers of closer economic integration of all of the world’s
countries, from the advanced to the least developed. They have provided funds and
advice to assist countries with their economic development and policy-making.
You already equipped with the basic concepts related to world economy, now let
us explore how the world is. Let us start by defining what global governance is!
Global governance is the formal and informal arrangements that produce a degree of
order and collective action above the state and non-state
actors (Young, 1999:2). In order to maintain international
peace and to prevent future wars, The United Nations (UN)
was created in 1945 by the Allied Powers, the victors of the
Second World War. The mandate of this organization is to
maintain international peace and security and to foster
international cooperation in addressing humanitarian and,
social, economic and cultural issues. This is the only
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organization that can authorize the use of force against
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aggressor. On the other hand, UN can be a conflict actor in
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itself or an instrument for action driven by the interests of particular states. It also
comprises of six principal organs in which the objectives of the UN are being carried out.
Among the six organs of the UN, the Security Council is considered as the most potent
organ with the power to make legally binding resolutions and comprises of the strongest
military states.
Functions the Security Council
• To veto a substantive resolution.
• To determine the existence of a threat to the peace or act of aggression and to
recommend what action should be taken.
• To investigate any dispute or situation that might lead to international friction.
• To implement sets of instruments or intervention to maintain peace and order.
(sanctions, peacekeeping and peace enforcement)
The SC is composed of 15
members, five of them are
considered as the five permanent
members (PM) and the rest are
considered as the non-permanent
members of the council.
The five permanent members are
all allies of the Second World War,
and are nuclear states. The other 10
non-permanent members of the
council are elected by the General
Assembly for overlapping two-year
terms.
The Purpose of UN Sanctions
• to change undesirable behavior (e.g. Syria);
• to limit opportunities for undesirable behavior (e.g. Iran, extensive restrictions on
technology/knowledge in the nuclear sector);
• to deter other countries from choosing an undesirable course of action.
Functions the Economic and Social Council
• Responsible for the direction and coordination of the economic, social
humanitarian and cultural activities carried out by the UN. It is also the largest and
most complex subsidiary body.
• This organ is supported by WB and IMF.
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Functions the Trusteeship Council
• To supervise the administration of territories as they transitioned from colonies to
sovereign nations.
Functions the International Court of Justice
• To settle legal disputes between states (contentious cases) and provides advisory
opinions on legal questions referred by the UN organs and specialized agencies,
in accordance to international law.
Functions the General Assembly
• The only UN organ with universal representation with all 193-member states
represented in the body. This remains to be the primary decision maker of the UN.
Functions the General Assembly
• To carry out the substantive and administrative work of the United Nations as
directed by the General Assembly, the SC and other councils.
How the United Nations work?
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Although the UN is an organization that ensures peace and security and resolves
conflicts, there are issues that arises inside this organization. Gould and Rablen (2017)
state two distinct sets of criticisms relating to the efficiency of the council and the degree
of equity regarding power allocation. For the inequity in the country level, the problem lies
in overrepresentation of the PM countries; in the regional level, there is lack of
representation for Asia and Africa while Eastern and Western Europe are
overrepresented – an overt manifestation of the North and South Divide. Thus, different
reforms have been raised to change the structure particularly the Security Council to
distribute the concentration of power and to foster inclusive decision making for
marginalized and excluded member-states.
e-Learning Materials
• Better understanding global trade
• Access your Ubian LMS to download/view the slide presentation under LESSON.
Self-Assessment
1. Why is there a need for economic integration among nation-states?
2. Does Gross Domestic product per capita influence toward globalization?
3. What has led to increase the economic globalization?
4. Why there is a need for global governance?
5. How important is the ASEAN in building ?
6. Why there are still war going on? Can we conclude that the UN failed to
address and fulfills its mandate in the realm of Global governance?
Expected Output
• Access your Ubian LMS to answer the post-test.
References
Classrooom, G. (n.d.). Introduction to the United Nations. Retrieved July 26, 2020, from
[Link]
introduction_to_the_un_middle_school.pdf
Coronacion, D. C., & Calilung, F. C. (2018). Converge: A College Textbook in
Contemporary World. Mandaluyong City: Books Atbp. Publishing Corp.
[Link]. (n.d.). Retrieved August 06, 2020, from Sanct56ns:
[Link]
with-international-sanctions
The world's biggest economies in 2018. (2018, April 18). World Economic Forum.
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Retrieved August 05, 202
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