The Globalization of

World Economics
International
Trading
Systems
 International Trading Systems

Economic Globalization
Protectionism
Protecting one’s economy from foreign competition by
creating trade barriers.

Trade Liberalization
Reducing trade barriers to make international trade easier
between countries.

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 International Trading Systems

Tariff
Required fees on imports and exports.

Free Trade
Trading of goods or services between two or more countries
without tariffs or taxes

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 International Trading Systems

Trade Bloc

Agreement made between government to reduce or eliminate

trade barriers.

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 International Trading Systems

Sustainability
The degree to which the Earth can provide resources for
human needs.

Stewardship
Taking responsibility of Earth’s resources so that future
generations will be able to have access to them.

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 International Trading Systems

Knowledge Economy

Individuals or business that use education, research, innovative

ideas, and informative technologies, for a variety of constructive
purposes.

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 International Trading Systems

Silk Road
Was an ancient network of trade routes that connected the East
and West. It was central to cultural interaction between the
regions for many centuries.
It was international but not truly global for it had no ocean routes
to reach American continent.

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 International Trading Systems

On 1867, a more open trade system emerged

Gold Standard

Common basis for currency and fixed exchange rate system

(All are based on the value of gold)

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 International Trading Systems

Great Depression
Started during the 1920s and extended up to 1930s.

The world never returned to Gold Standard.

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 International Trading Systems

Today, the World economy operate based on what are called

“Fiat Currencies”

It’s a currency whose cost are determined by the cost relative to

other countries.
This system allows governments to free and actively manage
their economies by increasing or decreasing the amount of money in
circulation of what they see fit.

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THE BRETTON
WOODS
SYSTEM
● inaugurated in 1944 during the United
Nations Monetary and Financial
Conference
● largely influenced by the ideas of British
economist John Maynard Keynes
● Global Keynesianism

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- Two Financial Institutions that Bretton
Woods created:

a. International Bank for Reconstruction and

Development (IBRD or World Bank)
b. International Monetary Fund (IMF)

- General Agreement on Tariffs and Trade

(GATT)
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NEOLIBERALISM
- became the codified strategy of United
States Treasury Department, World Bank,
the IMF and World Trade Organization
(WTO)
- it was a term first used in 1989 by John
Williamson
- Washington Consencus

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Neoliberalism was created for:
1. Economic Stability
2. Reform trade and exchanged-rate policies
3. Privatization

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The Global Financial
Crisis and the
Challenge to
Neoliberalism
 Neoliberalism
It is a policy model of social studies and economics that
transfers control of economic factors to the private sector from
the public sector. It takes from the basic principles of
neoclassical economics, suggesting that governments must limit
subsidies, make reforms to tax laws in order to expand the tax
base, reduce deficit spending, limit protectionism and open
markets up to trade.

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❏ Russia’s case was just one example of how the “shock
therapy” of neoliberalism did not lead to ideal outcomes
predicted by economists who believed in perfectly free
markets.

❏ The greatest repudiation of this thinking was the recent

global financial crisis of 2008-2009

❏ The great depression (1980s)

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❏ To mitigate the risk of these loans, banks that were lending
house owners’ money pooled these mortgage payments
and sold them as “mortgage-backed securities” (MBSs). One
MBS would be a combination of multiple mortgages that
they assumed would pay a steady rate.

❏ They began extending loans to families and individuals with

dubious credit records- people who were unlikely to pay
their loans back. These high-risk mortgages became known
as sub-prime mortgages.

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❏ Banks also assumed that housing prices would continue to
increase. Therefore, even if homeowners defaulted on
their loans, these banks could simply reacquire the homes
and sell them at a higher price, turning a profit.

❏ In 2007, home prices stopped increasing as supply caught

up with demand. And it's slowly became apparent that
families could not pay off their loans.

❏ The rapid reselling of MBSs

❏ The loss of their money spread like wildfire back to their

countries

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❏ Until now, countries like Spain and Greece are heavily indebted, and
debt relief has come at a high price.

❏ Greece, in particular, has been forced by Germany and the IMF to

cut back on its social and public spending, affecting services like
pensions, health care, and various forms of social security.

❏ Reduction in government spending has slowed down growth and

ensured high levels of unemployment

❏ Only individuals and groups who had accumulated wealth under the
previous system had money to purchase such industries.

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 Economic
Globalization Today
➢ Exports, not just the local selling of goods and services,
make national economies grow at present.

➢ The United States, Japan and the member-countries of the

European Union were responsible for 65% of global exports
, while the developing countries only accounted for 29%

➢ By 2011, developing countries like the Philippines, India, China,

Argentina & Brazil accounted for 51% of global exports
while the share of advanced nations including the United
States had gone down to 45%

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➢ Developed countries are often protectionists.

➢ Japan’s determined refusal to allow rice imports into the

country to protect it’s farming sector. “Rice is sacred.”

➢ United States likewise fiercely protects it’s sugar industry,

forcing consumers and sugar-dependent business to pay
higher prices.

➢ “Race to the bottom” refers to countries’ lowering their

labor standards.

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➢ Governments weaken environmental laws to attract
investors, creating fatal consequences on their ecological
balance and depleting them of their finite resources.

➢ Many Philippine industries were devastated by unfair trade

deals under the GATT and the WTO.

➢ One sector that was particularly affected was Philippine

Agriculture.

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➢ According to Walden Bello & a team of researchers at
Focus on the Global South, the US used its power under the
GATT system to prevent Philippine importers from
purchasing Philippine poultry and pork (even as it sold meat
to the Philippines)

➢ Bello & company noted that the Philippines became a net

food importer under the GATT.

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❏ Economics is just one window into the phenomenon of
globalization; it is not the entire thing.

❏ In the recent decades, partly as a result of increased

exports, economic globalization has ushered in an
unprecedented spike in global growth rates.

❏ Yet, economic globalization remains an uneven process.

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❏ Some countries, corporations, and individuals benefiting a
lot more than others.

❏ Series of trade talks under the WTO were seen to be

unfair, most often.

❏ International policy makers should strive to think of ways to

make trading deals fairer.

❏ Governments must also continue to devise ways of

cushioning the most damaging effects of economic
globalization, while ensuring that its benefits accrue for
everyone.

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1. GATT provides for fair trade rules and the gradual
reduction of tariffs, duties and other trade barriers, for
goods, services and intellectual property. The General
Agreement on Tariffs and Trade (GATT) is the predecessor
to the World Trade Organization (WTO)

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2. The World Trade Organization (WTO) is the only global
international organization dealing with the rules of trade
between nations. The goal is to help producers of goods
and services, exporters, and importers conduct their
business.

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 Thank you for
listening!

God Loves You and

so do We!!!

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