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GLOBAL ECONOMYEconomy - System according to which the money, industry (goods, services, etc.), and trade of a country or region are organized. World Economy or Global Economy - International exchange of goods and services that is expressed in monetary units of account (money). Globalization - The pr...

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GLOBAL ECONOMY MARKET INTEGRATION Economy - System according to which the money, industry (goods, services, etc.), and trade of a country or region are organized. World Economy or Global Economy - International exchange of goods and services that is expressed in monetary units of account (money). Globalization - The process by which countries’ economies become increasingly interwoven and affected by each other. International Financial Institutions (IFI’s) - These organizations give loans to governments for large-scale projects that IFIs believe will boost economic growth. World Bank (International Bank for Reconstruction and Development) The World Bank provides loans and development assistance to middle-income and lower income countries with a stated aim of reducing poverty. - 5-year grace period and must be repaid over a period of 15-20 years. - Funds through international capital markets.  International Finance Corporation (IFC) An arm of the World Bank Group that assists with private sector investments. International Monetary Fund (IMF) - The IMF is an international organization of 183 member countries to promote international monetary cooperation and exchange stability; to foster economic growth and high employment; and to provide short-term financial assistance to countries to help ease balance of payments adjustments. World Trade Organization Monitors international agreements on trade, investment, government procurement, intellectual property and the like.  Top 10 Economist Countries in the World 1. United States 2. China 3. Japan 4. Germany 5. United Kingdom 6. India 7. France 8. Brazil 9. Italy 10.Canada The Philippine Economy  34th largest economy by nominal GDP  13th largest economy in Asia  3rd largest economy in the ASEAN  6th richest in Southeast Asia by GDP  Projected to be the 5th largest in Asia and 16th biggest in the world by 2050 Factors affecting Economic Growth  Natural Resources  Physical Capital or Infrastructure  Population or Labor  Human Capital  Technology  Law

Integration - Relationship of the firm in a market. Market Integration - A process which refers to the expansion of firms by consolidating additional marketing functions and activities under a single management.  Horizontal Integration - a firm or agency gains control of other firms or agencies performing similar marketing functions (e.g. Disney, Pixar) Advantage Disadvantage Economies of Scale Provoking Monopoly Economies of Scope Time Management International Trade Weak Adaptability  Vertical Integration - A firm performs more than one activity in the sequence of the marketing process. - Linking together of two or more functions in the marketing process under a single ownership. - E.g. Meat Industry, Apple Company - Types: o Forward Integration o Balanced Integration o Balanced Vertical Integration Advantages Disadvantages More control of the Very-high Expense business High certainty of the Reduction of Flexibility quality’s product Positive Differentiation Loss of Focus  Conglomeration - Combination of agencies or activities not directly related to each other (e.g. Unilever, SMC) - Effects: Risk reduction through Diversification, Acquisition of financial leverage, Empire- building urge  Degree of Integration: a. Ownership integration - All the decisions and assets of a firm are completely assumed by another firm. b. Contract Integration - An agreement between two firms on certain decisions which each firm retains its separate identity. Integration among spatially separated markets - Extent to which prices in spatially separated markets move together.  Price correlations - Degree of correlation between two prices  Spatial price differential and Transportation costs - Correlation Method - Ravallion Procedure - Co Integration Approach - Parity Bound Models

GLOBAL INTERSTATE SYSTEM Globalization - Worldwide movement towards economic, financial, trade, and communications integration. State  Permanent population  Defined territory  Government  Capacity to enter into relations with other states Interstate System - Connecting or existing between two or more states system for international relations. - System of competing and allying states. Effects of Globalization on Governments Benefits Harm positive outlook on the net increases risk of failure for smaller companies that effects of globalization on cannot compete globally economic growth Overuse and abuse of lower increases in natural resources government outlays and taxes lower levels of corruption Institutions Governing International Relations  United Nations - Franklin Roosevelt on January 1, 1942 - October 24, 1945 with 50 countries as first members - 193 Member States - Guided by the purpose of maintaining international peace, friendly relations and international co-operations, and the principle of equality Specialized Agencies of the United Nations  International Labor Organization - Deals with labor issues.  Food and Agriculture Organization of the United Nations - Defeat hunger and rural poverty  Organization for Economic Cooperation and Development - Stimulates economic progress and world trade  UN Regional Commissions - Group of officials in different countries that instruct, debate, and is in-charge in making certain laws and rights to develop the economy and society (e.g., human rights, science and technology) Selected Institutions Associated with World Trade  World Bank - Provides loans  World Trade Organization - Regulates international trade Other Specialized International Institutions  International Telecommunication Union - Connects all the world’s people  International Maritime Organization - safety and security of shipping and the prevention of marine pollution  International Civil Aviation Organization - planning and development of international air transport. Internationalism

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Principle of cooperation among nations, for the promotion of their common good Globalism - Group of ideologies advocating globalization CONTEMPORARY GLOBAL GOVERNANCE (Having one government at modern times) Pieces of Global Governance  International Law - Rules that control or affect the rights of nations in their relations with each other.  International Norm of Soft Laws - Standards of behaviors.  International Organizations (IGOs) - Global mandates, generally funded by contributions from national governments. (e.g. ASEAN, WHO)  Non-Governmental Organization - Non-profit, citizen-based group that functions independently of government. (ex. Doctors Without Borders, Red Cross)  International Regimes - Encompassing rules, norms and principles as well as the practices of actors that show both how their acceptance converge and their acceptance of and compliance with rules. (ex. IAEA, Kyoto Protocol)  Global Conference - A meeting of people who "confer" about global topics. (ex. The Summit of 1990, Rio Earth Summit of 1992)  Ad hoc Agreements - Signifies a solution designed for a specific problem or task, non-generalizable, and not intended to be able to be adapted to other purposes. (ex. G7, G8)  Private Governance - Third party groups that make rules and/or standards which have a binding effect on the "quality of life and opportunities of the larger public." Techniques • Agenda-setting - Describes the ongoing process by which various groups attempt to transfer their interests to be the interests of public policymakers. • Policymaking - Act of creating laws or setting standards for a government or business. • Implementation and Enforcement - Process of ensuring compliance with laws, regulations, rules, standards, or social norms. • Evaluation, Monitoring and Adjudication - Formal judgment on a disputed matter. Advantages Disadvantages  No Lasting Wars  Loss of culture and  Combined Technologies individual identities  Accelerated Space Program  Lack of keeping corruption  Standardized in check environmental laws  Increased rebellious groups  Standardized judicial laws  General fear/distrust of a  Open travel/migration one world government GLOBAL DIVISION

Divided in two blocks:  Global North (richer and developed region)  Global South (poorer and less developed region) North United States Canada Western Europe Australia New Zealand Japan South Korea Hong Kong Macau Singapore

Global North “developed countries” or the “first world” 1/4 of total population and controls 80% of the total income earned Home to 4 of the 5 permanent members of the UN security councils

enough shelter, food, security appropriate infrastructure stable macroeconomic framework well-functioning public and private institution

South Africa South America Developing countries in Asia Armenia Austria Georgia

Global South “less developed countries” 3/4 of the total population and controls only 1/5 of the total income earned Many in the global south faces poverty, war, tyranny, and lacks well-developed domestic market economies based on entrepreneurship and private enterprise relatively low GDP high population lack of trade and aid abundance of debt lacks appropriate technology no political stability

Factors affecting the Global Division  Economical (Industry Vs. Agriculture) - stable macroeconomic framework and GDP - well-functioning public and private institutions and technology  Social (Life In The Cities) - enough shelter, food, security, peace and appropriate infrastructure - population and birth/death rates - organization of education and religion - access to improved sanitation  Political - trade and external threats - debt and political stability  Environmental  Historical Why Did Global Division Occur?  Colonialism  Immigration

 Debt  Trade History of Global Division  The origin of dividing countries into the North-South Divide arose during the Cold War of the mid-20th century.  In the west, the United States and its allies were labelled as First World countries. This division left out many countries which were poorer than the First World and Second World countries. The poor countries were eventually labelled as Third World countries.  During the cold war, the primary global division was between east and west, and predicated upon security and power balance.  After the cold war, many see primary global division as being between north and south and predicated upon economic inequality  This categorization was later abandoned after the Second World countries joined the First World countries. New criteria was established to categorize countries which was named the North-South Divide where First World countries were known as the North while Third World countries as the South. How does Global Division affect us?  distribution of income around the world  economic competition  standard of living  migration  segregation and discrimination among nations Millennium Development Goals  Eradicate Extreme Poverty and Hunger  Achieve Universal Primary Education  Promote Gender Equality and Empower Women  Reduce Child Mortality  Improve Maternal Health  Combat HIV/AIDS, Malaria, and other diseases  Ensure environmental Sustainability  Global Partnership and Development...