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Chapter 2 FINAL CONTEMPORARY

This document discusses the global economy and how it has changed over time. It defines the global economy as the economic interdependence and aggregate output of influential countries that drives worldwide economic conditions. While international trade has occurred for centuries, the modern global economy is characterized by three new aspects: the rise of intra-industry and intra-product trade in intermediate goods, the ability of producers to separate production processes geographically across borders, and the emergence of global production networks that have altered governance structures and the distribution of gains worldwide. Transnational corporations have become primary drivers of the global economy by coordinating supply chain operations in multiple countries.

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Chantra Marie Forgosa Amodia
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4K views16 pages

Chapter 2 FINAL CONTEMPORARY

This document discusses the global economy and how it has changed over time. It defines the global economy as the economic interdependence and aggregate output of influential countries that drives worldwide economic conditions. While international trade has occurred for centuries, the modern global economy is characterized by three new aspects: the rise of intra-industry and intra-product trade in intermediate goods, the ability of producers to separate production processes geographically across borders, and the emergence of global production networks that have altered governance structures and the distribution of gains worldwide. Transnational corporations have become primary drivers of the global economy by coordinating supply chain operations in multiple countries.

Uploaded by

Chantra Marie Forgosa Amodia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
  • Chapter 2: The Global Economy: Introduces the focus on economic globalization, actors involved, and processes of global economic integration.
  • Global Economy Introduction: Discusses changes in the global economy over the decades and its structural organization.
  • Understanding Global Economy: Defines economic interdependence among influential countries and the concept of global economy.
  • Evolution of the Global Economy: Explores the distinctions within globalization and internationalization and their impact on economic roles.
  • Development of a World Trading System: Analyzes the evolution and theory behind global trade systems and economic mobility.
  • Reorganization of Production and Trade: Examines the role of Transnational Corporations in redefining trade through global networks and value chains.
  • Emergence of Trade Networks: Focuses on trade networks influenced by global trade agreements and political reforms.
  • Modern World Trade Aspects: Discusses new trade aspects like intra-industry trade and global production networks.
  • Process Questions: Poses questions to review understanding of global economy concepts.
  • Assessment: Instructions for essay writing on the impacts of global economic flows and systems.

CHAPTER 2: THE GLOBAL ECONOMY

LEARNING OUTCOMES:
At the end of this topic, you should be able to:
• Further explain economic globalization;
• Determine the actors that facilitate economic
globalization; and
• Articulate a stance on global economic integration.
GLOBAL ECONOMY
The Global Economy has changed in very significant ways
during the past several decades, and these changes are
rooted in how the global economy is organize and governed.
Policymakers, managers, workers, social activist, and many
other stakeholders in developed as well as developing
nations need a firm understanding of how the contemporary
global economy works if they hope to improve their position
in it, or forestall an impending decline.
THE TOPIC OF THE GLOBAL ECONOMY
IS INHERENTLY INTERDISCIPLINARY.
WHAT DOES GLOBAL
ECONOMY MEAN?
A global economy is an economic interdependence
established between the most influential countries that
drives the worldwide economic environment. It is also the
aggregate economic output, movement and influence of all
countries.
THE GLOBAL ECONOMY CAN ALSO BE
DEFINED AS EACH COUNTRY’S
ECONOMY ADDED TOGETHER BUT
THAT IS NOT THE ONLY WAY TO
PORTRAIT HOW THE WORD ECONOMY
WORKS.
HOW NEW IS THE GLOBAL ECONOMY?
HOW NEW IS THE GLOBAL
ECONOMY?
Much of the globalization debate has been fueled by different
conceptions of what is happening- out therell in the global
economy, and whether it really represents something new.
We need to distinguished the process of internationalization,
which involves the mere extension or geographic spread of
economic activities across national boundaries, from
globalization, which is qualitatively distinct because it
involves the functional integration of internationally
dispersed activities. (Dicken 2003, 12).
DEVELOPMENT OF A WORLD
TRADING SYSTEM
According to world-systems theory, the upward or downward
mobility of nations in the core, semi-periphery, and periphery
is determined by a country’s mode of incorporation in the
capitalist world-economy, and these shifts can only be
accurately portrayed by an in-depth analysis of the cycles of
capitalist accumulation in the longue duree of history
(Wallerstein 1974, 1980, 1989; Arrighi 1994).
AT THE GLOBAL SCALE, THE-CLASSIC
INTERNATIONAL DIVISION OF LABOR
WAS BETWEEN THE INDUSTRIAL
COUNTRIES PRODUCING
MANUFACTURED GOODS, AND THE
NON-INDUSTRIALIZED ECONOMIES
THAT SUPPLIED RAW MATERIALS AND
AGRICULTURAL PRODUCTS TO THE
INDUSTRIAL NATIONS AND THAT
BECAME A MARKET FOR BASIC
MANUFACTURES.
THE REORGANIZATION OF
PRODUCTION AND TRADE IN THE
GLOBAL ECONOMY
The Role of Transnational Corporations while the post-war
international economic order was defined and legitimized by
the United States and the other core powers that supported it
in terms of the ideology of free trade, it was the way in which
TNCs linked the production of goods and services in cross-
border, value-adding networks that made the global economy
in the last half of the twentieth century qualitatively distinct
from what preceded it.
TRANSNATIONAL CORPORATIONS
HAVE BECOME THE PRIMARY MOVERS
AND SHAKERS OF THE GLOBAL
ECONOMY BECAUSE THEY HAVE THE
POWER TO COORDINATE AND CONTROL
SUPPLY CHAIN OPERATIONS IN MORE
THAN ONE COUNTRY, EVEN IF THEY DO
NOT OWN THEM (DICKEN 2003, 198).
THE EMERGENCE OF
INTERNATIONAL TRADE AND
PRODUCTION NETWORKS
The growth of world trade has probably received the most
attention in the globalization literature because of its direct
relevance to employment, wages and the rising number of
free trade agreements around the world. The most common
causes usually given to explain expanding world trade are
technological (improvements in transportation and
communication technologies) and political (e.g., the removal
of protectionist barriers, such as tariffs, import quotas, and
exchange controls, which had restricted world markets from
1913 until the end of Second World War).
THREE NEW ASPECTS OF MODERN
WORLD TRADE RELEVANT
The three new aspects of modern world trade relevant here
are (1) the rise of intra-industry and intra-product trade in
intermediate inputs; (2) the ability of producers to –slice up
the value chain in Krugman’s (1995) phrase, by breaking a
production process into many geographically separated
steps; and (3) the emergence of a global production
networks framework that highligs how these shifts have
altered governance structures and the distribution of gains
in the global economy.
PROCESS
QUESTIONS:
What is global economy? Discuss how the development of
world trading system changes over a period of several
centuries.
ASSESSMENT
Directions: Make a 2-paragraph essay about the global
economy. Write your answer in your own words.
GUIDE QUESTIONS:
How does the global economy affect not only the flows of
goods and services across national borders?

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