CHAPTER 1

GLOBALIZATION CONCEPTS
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Globalization Concepts, Meanings, Features, and
Dimensions
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Globalization is the process in which people, ideas and
goods spread throughout the world, spurring more interaction
and integration between the world's cultures, governments and
economies.
Globalization is a process of interaction and integration
among the people, companies, and governments of different
nations, a process driven by international trade and investment
and aided by information technology. This process has effects on
the environment, on culture, on political systems, on economic
development and prosperity, and on human physical well-being
in societies around the world.
Globalization is about growing worldwide connectivity.
There were similarities in features of those prevailing wave
of globalization before the outbreak of the First World War in
1914 to the current wave. There is an increase cross border-
trade, investment, and migration due to policy and technical
developments in the past few decades. It is in the area of
economic development that observers believe the world has
entered a new phase. Today’s globalization is farther faster,
cheaper, and deeper in compared to earlier wave of
globalization.
One principal driver of globalization is technology. Economic
life is dramatically transformed by advancement in information
technology. All sorts of individual economic actors like
consumers, investors, and businesses which are valuable new
tools for identifying and pursuing economic opportunities,
including faster and more informed analyses of economic trends
around the world, easy transfers of assets, and collaboration with
far-flung partners are provided by information technologies.
 Globalization is the process of integration of economies
across the world through cross-border flow of factors product and
information. According to the International Monetary Fund (IMF)
globalization is the growing economic interdependence of
countries worldwide through increasing volume and variety of
cross border transactions in goods and services and of
international capital flows and also through the more rapid and
wide diffusion of technology.
Globalization is an expansion, and intensification of social
relations and consciousness across world time and world space.
It is about growing worldwide connectivity according to Steger.
Globalization is considered a multi-dimensional process
involving economic, political, technological, cultural, religious
and ecological dimensions. It suggests a dynamic process of
change that results in either positive or negative development. It
leads to the creation of something new; it involves the
multiplication of social connections and various activities that
transgress traditional and political, economic, cultural and
geographical lines.
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Attributes, Qualities or Characteristics of Globalization
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1. It involves both the creation of new social networks and the
multiplication of existing connections that cut across
traditional, political, economic, cultural, and geographical
boundaries.
2. Globalization is reflected in the expansion and the stretching
of social relations, activities, and connections.
3. Globalization involves the intensification and acceleration of
social exchanges and activities.
4. Globalization processes do not occur merely or an objective,
material level but they also involve the subjective plane of
human consciousness. Without erasing local and national
attachments, the compression of the world into a single place
has increasingly made global the frame of reference for
human thought and action.
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 Historical Periods of Globalization
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1. The Prehistoric Period (10000 BCE – 3500 BCE)
In this earliest phase of globalization, contacts among
hunters and gatherers–who were spread around the world –
were geographically limited. In this period due to absence of
advanced forms of technology, globalization was severely
limited.

2. The Pre-modern Period (3500 BCE – 1500 CE)

In this period the invention of writing and the wheel were
great social and technological boosts that moved
globalization to a new level. The invention of wheel in
addition to roads made the transportation of people and
goods more efficient. On the other hand writing facilitated the
spread of ideas and inventions.

3. The Early Modern Period (1500 – 1750)

It is the period between the Enlightenment and the
Renaissance. In this period, European Enlightenment project
tried to achieve a universal form of morality and law. This
with the emergence of European metropolitan centers and
unlimited material accumulation which led to the capitalist
world system helped to strengthen globalization.

4. The Modern Period (1750 – 1970)

Innovations in transportation and communication
technology, population explosion, and increase in migration
led to more cultural exchanges and transformation in
traditional social patterns. Process of industrialization also
accelerated.

5. The Contemporary Period (from 1970 to present)

The creation, expansion, and acceleration of worldwide
interdependencies occurred in a dramatic way and it was a
kind of leap in the history of globalization.
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Dimensions of Globalization
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1. Economic Dimension
This refers to the extensive development of economic
relations across the globe as a result of technology and the
enormous flow of capital that has stimulated trade in both
sources and goods.
 Major players in the current century’s global economic
order
- Huge international corporations (General Motors,
Walmart, Mitsubishi)
 International Economic Institutions (IMF, World Bank,
The World Trade Organization)
 Trading Systems
2. Political Dimension
This refers to an enlargement and strengthening of
political interrelations across the globe.
3. Cultural Dimension
This refers to the increase in the amount of cultural flows
across the globe. Cultural interconnections are at the
foundations of contemporary globalization.
4. Religious Dimension
Religion is a personal or institutionalized set of attitudes,
beliefs, and practices relating to or manifesting faithful
devotion to an acknowledged ultimate reality or deity. It is the
most important defining element of any civilization as
contrasted with race, language, or way of life.
5. Ideological Dimensions
Ideology is a system of widely shared ideas, beliefs, norms
and values among a group of people. It is often used to
legitimize certain political interests or to defend dominant
power structures. Ideology connects human actions with
some generalized claims. Globalization is a social process of
intensifying global interdependence while globalism is an
ideology that gives the concept of neo-liberal values and
meanings to globalization.

CHAPTER 2
LESSON 1: THE GLOBAL ECONOMY
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Origin of Economic Globalization
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It can be traced from history the time when there was an
economic movement in Asia, Africa, and Europe called the Silk
Road, a trade route which connects the East, particularly China,
and the West. This route brings us to the history of how
Philippines was discovered by the Portuguese and Spain envoys
in search of spices and eventually led to colonization.
At this present-day time, foreign expatriates come to the
country to manage their company’s foreign subsidiaries.
Likewise, the Philippines send thousands of skilled workers to the
Middle East as construction workers, seafarers, nurses, etc.
Economic globalization refers to the expanding
interdependence of world economies.
The term global economy also refers to the interconnected
worldwide economic activities that take place between multiple
countries.
These economic activities can have either a positive or
negative impact on the countries involved.
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International Monetary Fund (IMF)
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The International Monetary Fund (IMF) also defined Economic
Globalization as a historical process, the result of human
innovation and technological progress (IMF,2008)
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How does global economy work?
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A global economy is one in which goods and services are
traded across national borders. Because the trade is among
sovereign nations, those nations may enact trade restrictions
that alter free market out comes.
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The New World Economy is characterized by:
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1. More options for production. No matter what your production
process, the chances are that the same capabilities exist
elsewhere.
2. The chance to create new markets
3. Small firms can think big
4. A more level playing field
5. Networks are important
6. Culture is no constraint
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Economic globalization is one of the three main dimensions
of globalization commonly found in countries, academic
literature, with the two others being political globalization and
cultural globalization, as well as the general term of
globalization. It refers to the widespread international movement
of goods, capital, services, technology, and information. It is the
increasing economic integration and interdependence of
national, regional, and local economies across the world through
an intensification of cross-border movement of goods, services,
technologies, and capital.
There are numerous benefits of a global economy, which
include the free trade, an excellent method for countries to
exchange goods and services. It also allows countries to
specialize in the production of those goods in which they have a
comparative advantage. International forces are reshaping the
world of business, but also creating new opportunities and a
more level playing field for small firms. Economy is considered
very important because it is the thing that allows us to survive
and thrive. A system where no money is involved and trade is
done as direct exchange of goods is an economy too. Having
enough is extremely important for stability, low crime levels and
cultural, scientific and technological progress.
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 Specific actors that facilitate economic globalization:
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1. The International Economic and Financial Organization
2. The International Governmental Organization (IGOs)
3. The Media
4. The Multilateral Development Banks
5. The Nation-States
6. The Non-Governmental Organizations (NGOs)
7. The Trans-National Corporations (TNCs)
8. The United Nations (UN) System
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These are the agents that bring about the
interdependencies of global economies. Some experts believe
that these actors are the global corporations and that it is still
the nation-states but of different levels. Brodie (2006) calls the
government as the “midwives of globalization” which means that
the role of nation-states is being redefined by globalization and
are relevant despite assuming a global perspective. It acts as
mediators between the effects of globalization and the national
economy.

CHAPTER 2
LESSON 2: Market Integration
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Market Integration
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Market integration occurs when prices among different
locations or related goods follow similar patterns over a long
period of time.
 Groups of goods often move proportionally to each other
and when this relation is very clear among different markets it is
said that the markets are integrated.
Integrated marketing allows you to spread your marketing
messages across multiple channels and increases the chances of
it being heard. Best of all customers engaged through multiple
channels tend to spend more than other customers. Therefore,
spreading your marketing message can increase your return on
investment.
Global market integration did not happen overnight. It was
the result of the establishment of a global economy that involved
the homogenization of trade and commerce. Prior to the trends
in globalization in the 20 th century, international trade of goods
and services were already practiced.
The integration of the global market started when big
American corporations began to emerge after the Second World
War with the rise of new conglomerates. International Telephone
and Telegraph bought Avis Rent-a-Car, Continental Barking,
Sheraton Hotels, and Hartford Fire Insurance (American History,
2018). Later, Japan and Europe followed suit. Japanese global
automobile corporations like Toyota, Nissan, and Isuzu took off
after the giant American economies flourished. These companies
prospered as the primary and global markers of trucks for the
Japanese military (Dower 1992). Renault automobiles, a French
multi-national automobile manufacturer was also used to help in
the military post-war operations.
Colonization and imperialism rose as the new ways of
putting order to the economic interrelationships among
countries.
Through colonialism, equity, corporate ownership,
management subsidiaries, and central headquarters which
supply goods and services were establish through colonialism.
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Types of Related Markets where Market Integration
Occurs
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1. Stock Market Integration
This is a condition in which stock markets in different
countries trend together and depict same expected risk
adjusted returns. Two markets are perfectly integrated if
investors can pass from one market to another without paying
any extra costs and if there are possibilities of arbitration
which ensures the equivalence of stock prices on both
markets.

2. Financial Market Integration

It is an open market economy between countries
facilitated by a common currency and the elimination of
technical, regulatory and tax differences to encourage free
flow of capital and investment across borders. It occurs when
lending rates in several different markets begin to move in
tandem with one another. Emergence of similar patters within
the capital, stock, and financial markets with those trends
coming together to exert a profound influence on the
economy of that nation is involved in the integration within
the nation.

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Global Corporation
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A global corporation is a business that operates in two or
more countries. It also goes by the name “multinational
company”. Several advantages are offered by global expansion
of business over running a strictly domestic company. Success in
different types of economies is achieved by means of multiple
countries operation while it causes also logistic and cultural
challenges. Expanding revenue opportunities and diversifying
business risk are the purposes of becoming global corporation.
Access to more customers and capital is obtained through a
model that works domestically well and translates foreign
markets well.
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The Finance Function in a Global Corporation
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As corporations go global, capital markets open up within
them, giving companies a powerful mechanism for arbitrage
across national financial markets. Chief financial officers (CFOs)
must balance the opportunities with the challenges of operating
in multiple environments in managing their internal markets in
building an advantage. These three functions can be created by
CFOs through exploiting their internal capital markets.
1. Financing - A group’s tax bill can be reduced by the CFO like
borrowing in countries with high tax rates and lending to
operations in countries with lower rates.
2. Risk Management - Global firms can offset natural currency
exposures through worldwide operations instead of managing
currency exposures through financial markets.
3. Capital budgeting - Getting smarter on valuing investment
opportunities CFOs can add value.

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Foreign Direct Investment
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Foreign Direct Investment (FDI) was of corporate origin. It is
a major driver of extended global corporate development. It is an
investment made by a company or individual in one country in
business interests in another country, in the form of either
establishing business operations or acquiring business assets in
the other country, such as ownership or controlling interest in a
foreign company and the key feature of foreign direct investment
is that it is an investment made that establishes either effective
control of, or at least substantial influence over, the decision
making of a foreign business.
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BRICS ECONOMIES
Brazil, Russia, India, China and South Africa (BRICS) is an
acronym for the combined economies of Brazil, Russia, India,
China and South Africa. BRIC, without South Africa, was originally
coined in 2003 by Goldman Sachs, which speculates that by
2050 these four economies will be the most dominant. South
Africa was added to the list on April 13, 2011 creating "BRICS"
GENERAL AGREEMENT ON TRADE IN SERVICES (GATS)
The General Agreement on Trade in Services (GATS) is the
first multilateral agreement covering trade in services which was
negotiated during the last round of multilateral trade
negotiations, called the Uruguay Round, and came into force in
1995.
GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT)
It deals with trade in goods. The two primary objectives of
GATTS are to ensure that all signatories are treated equitably
when accessing foreign markets; and second, to promote
progressive liberalization of trade.