DATA CENTER COLLEGE OF THE PHILIPPINES OF LAOAG CITY

Lesson 2: The Structures of Globalization

Learning Objectives
At the end of this module, you should be able to:
 define economic globalization.
 identify the actors that facilitate economic globalization.
 define the modern world system. Page
 articulate a stance on global economic integration.

 THE GLOBAL
ECONOMY
 Global Economy
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 negative
impact on the countries involved.
The global economy comprises several characteristics, such as:
 Globalization: Globalization describes a process by which national and regional
economies, societies, and cultures have become integrated through the global
network of trade, communication, immigration, and transportation. These
developments led to the advent of the global economy. Due to the global economy
and globalization, domestic economies have become cohesive, leading to an
improvement in their performances.
 International trade: International trade is considered to be an impact of
globalization. It refers to the exchange of goods and services between different
countries, and it has also helped countries to specialize in products which they have
a comparative advantage in. This is an economic theory that refers to an economy's
ability to produce goods and services at a lower opportunity cost than its trade
partners.
 International finance: Money can be transferred at a faster rate between countries
compared to goods, services, and people; making international finance one of the
primary features of a global economy. International finance consists of topics like
currency exchange rates and monetary policy.
 Global investment: This refers to an investment strategy that is not constrained by
geographical boundaries. Global investment mainly takes place via foreign direct
investment (FDI).

Why Is The Global Economy Important?

We can understand the importance of the global economy by looking at it in relation to emerging
markets:
Economic importance at a micro and macro level: The increase in the world’s population has led
to emerging markets growing economically, making them one of the primary engines of world
economic growth. The growth and resilience shown by emerging markets is a good sign for the
world economy. Before delving into the next point, you need to understand the concept of
microeconomics. It refers to the study of the behaviour of households, individuals, and firms with
respect to the allocation of resources and decision-making. In simpler terms, this branch of
economics studies how people make decisions, what factors affect their decisions, and how these
decisions affect the price, demand, and supply of goods in the market. Therefore, from the
perspective of microeconomics, some of the largest firms with high market value and a few of the
richest individuals in the world hail from these emerging markets, which has helped in the higher
distribution of income in these countries. However, many of these emerging countries are still
plagued by poverty, and work still needs to be done to work towards eradicating it.
Long-term world economic outlook: According to financial and economic projections based on
demographic trends and capital productivity models, the GDP in emerging market economies in
2019 are likely to keep increasing at a positive rate. According to an emerging markets economic
forecast for 2019 conducted by Focus Economics, the economy is set to increase by 7.5% in India,
6.6% in Philippines, 6.3% in China, 5.3% in Indonesia, 5.1% in Egypt, 4.9% in Malaysia, 3.8% in
Peru and 3.7% in Morocco.
 DATA CENTER COLLEGE OF THE PHILIPPINES OF LAOAG CITY
Who Controls the Global Economy?
Many people think that the global economy is controlled by governments of the largest economies in
the world, but this a common misconception. Although governments do hold power over countries’
economies, it is the big banks and large corporations that control and essentially fund these
governments. This means that the global economy is dominated by large financial institutions.
According to world economic news, US banks participate in many traditional government
businesses like power production, oil refining and distribution, and also the operating of public
assets such as airports and train stations. This was proven when certain members of the US
Congress sent a letter to the Federal Reserve Chairman Ben Bernanke. Here’s an excerpt from the
letter:
 DATA CENTER COLLEGE OF THE PHILIPPINES OF LAOAG CITY

“Here are a few examples. Morgan Stanley imported 4 million barrels of oil and petroleum
products into the United States in June, 2012. Goldman Sachs stores aluminum in vast warehouses in
Detroit as well as serving as a commodities derivatives dealer. This “bank” is also expanding into the
ownership and operation of airports, toll roads, and ports. JP Morgan markets electricity in California. In
other words, Goldman Sachs, JP Morgan and Morgan Stanley are no longer just banks – they have
effectively become oil companies, port and airport operators, commodities dealers, and electric utilities
as well.” Page |
2
How Does the Global Economy Work?
The functioning of the global economy can be explained through one word —transactions.
International transactions taking place between top economies in the world help in the continuance of the
global economy. These transactions mainly comprise trade taking place between different countries.
International trade includes the exchange of a variety of products between countries. It ranges all the way from
fruits and foods, to natural oil and weapons. Such transactions have a number of benefits including:
Providing a foundation for worldwide economic growth, with the international economy set to grow by
4% in 2019 (source: World Trade Organization);

 Encouraging competitiveness between countries in various markets;

 Raising productivity and efficiency across countries;
 Helping in the development of underdeveloped countries by allowing them to import capital goods
(machinery and industrial raw materials) and export primary goods (natural resources and raw
materials).

What Are The Effects Of Global Economy?

Nearly every country in the world is in some way affected by things that happen in what may seem at
times, like unrelated countries - due to the influence of the global economy. A good example of this is
the economic impact that the Brexit vote will have other countries, not only in Europe, but across the globe.
Brexit was referendum decision for the United Kingdom to withdraw from the European Union (EU).
The main cause of these effects is economics — based on the production and exchange of goods and
services. Restrictions on the import and export of goods and services can potentially hamper the economic
stability of countries who choose to impose too many.
The purpose of international trade is similar to that of trading within a country. However, international
trade differs from domestic trade in two aspects:
 The currencies of at least two countries are involved in international trade, so they must be exchanged
before goods and services can be exported or imported;
 Occasionally, countries enforce barriers on the international trade of certain goods or services which
can disrupt the relations between two countries.
Countries usually specialize in those products that they can produce efficiently, which helps in reducing
overall manufacturing costs. Then, countries trade these products with other countries, whose product
specialization is something else altogether. Having greater specialization helps countries take advantage of
economies of scale. Economies of scale refer to the proportionate saving in costs gained by an increased level
of production. Manufacturers in these countries can focus all their efforts on building factories for specialized
production, instead of spending additional money on the production of various types of goods.
Occasionally countries add barriers to international trade. Some of these barriers include trade tariffs
(taxes on imports) and trade quotas (limitation on the number of products that can be imported into a country).
Trade barriers often affect the economies of the trading countries, and in the long run, it becomes difficult to
keep employing such barriers.

What are the Benefits of Global Economy?

There are numerous benefits of a global economy, which include:
 Free trade: Free trade is 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.
 Movement of labour: Increased migration of the labour force is advantageous for the recipient
country as well as for the workers. If a country is going through a phase of high unemployment,
workers can look for jobs in other countries. This also helps in reducing geographical inequality.
 Increased economies of scale: The specialization of goods production in most countries has led
to advantageous economic factors such as lower average costs and lower prices for customers.
 Increased investment: Due to the presence of global economy, it has become easier for countries
to attract short-term and long-term investment. Investments in developing countries go a long way
in improving their economies.
 Factors Affecting Global Economy
According to the latest economic news, here are some of the key factors that influence and affect
how well the global economy works:

 Natural resources;
 Infrastructure;
 Population; Page | 3
 Labour;
 Human capital;
 Technology;
 Law.

Actors that Facilitate Economic Globalization

 International Economic and Financial Organization
o They provide the structure and funding for many unilateral and multilateral development
projects.
o They deal with the major economic and political issues facing domestic societies and the
international community as a whole.
o Their activities promote sustainable private and public sector development primarily by:
 Financial private sector projects located in the developing world;
 Helping private companies in the developing world mobilize financing in international
financial markets;
 Providing advice and technical assistance to businesses and governments.

Example. International Monetary Fund (IMF)

 The IMF’s mission is to promote global economic growth and financial stability,
encourage international trade, and reduce poverty around the world.
 The IMF was originally created in 1945 as part of the Bretton Woods agreement, which
attempted to encourage international financial cooperation by introducing a system of
convertible currencies at fixed exchange rates.

 International Government Organizations (IGOs)

 IGOs have international membership, scope and presence. Their primary
members consist of sovereign states.
 These organizations bring member states together to cooperate on a particular theme or
issues that have global impacts and implications such as human rights, trade,
development, poverty, gender or migration.

Example. World Trade Organization (WTO)

 Created in 1995, this international institution oversees the global trade rules among
nations. It superseded the 1947 General Agreement on Tariffs and Trade (GATT)
created in the wake of World War II.
 Based on agreements signed by the majority of the world’s trading nations. The main
function of the organization is to help producers of goods and services, exporters and
importers protect and manage their businesses.
 As of 2019 the WTO has 164 member countries, with Liberia and Afghanistan the most
recent members, having joined in July 2016, and 23 “observer” countries.
 Media
 As the world becomes ever more complex and interconnected, access to information must
play an increasingly central role in every problem facing development specialists.
 At the individual level, access to information allows people to make informed choces- to
decide how to vote, to educate themselves on critical health issues, to get the maret
data they need to sell their products, and ultimately to participate in the global
community.
Example. African Media Development Initiative, Global Forum for Media Development,
UNESCO Media Development, ALJAZEERA, CNN, BBC, TV PATROL, 24 ORAS

 Multilateral Development Bank

 These are international financial institutions owned by countries
 In addition to the World Bank Group, there are four regional multilateral development banks:
the Inter-American Development Bank, the African Development Bank, The Asian
Development Bank and the European Bank for Reconstruction and Developemnt.
Example. Wolrd Bank
 Founded in 1944, the Wolrd Bank has 189 member nations and aims to reduce poverty in
the developing wolrd.
  An international organization dedicated to providing financing, advice and research
to developing nations to aid their economic development.

 Nation States
 It refers to a certain form of the state that derives its political legitimacy from serving as a
sovereign entity for a nation within its sovereign territorial space.
 The term “nation-state” implies that the two geographically coincide and this distinguishes
the nation state from the other types of state, which historically preceded it. Page |
4
 Non Government Organizations (NGOs)
 Non-governmental organization (NGO) refers to a legally constituted organization
created with no participation or representation o any government and driven.

 In many jurisdictions these types organization are defined as “civil society organizations.”

 Philippine Red Cross

 The Philippine Red Cross provides six major services: blood services , disaster
management services , safety services , community health and nursing services ,
social services and the volunteer services .

 Child Hope Asia

 An international, non-sectarian organization advocating for the cause of street
children throughout the world

 Trans-National Corporations (TNCs)

 A transnational corporation is “ any enterprise that undertakes foreign direct investment ,
owns or controls income gathering assets in more than one country, produces goods or
services outside its country of origin, or engages in international production” (Biersteker
1978,p.xii)
Example: Nestle, Cadbury-Schweppes, Uniliver, BP-Amoco

Modern World System

Immanuel Wallerstein
 American sociologist and historian
 In 1974, he is best known for his world-system approach

Modern World System

 It is specifically a capitalist world economy with capitalism defined as “the endless
accumulation of capital”
 It is geographical division of labor. While the basic linkage is economic, the system is
reinforced by political and cultural factors.
 The world system divides the nations and areas of the world into three units, the tripartite
world-system such as core, peripheral and semi-peripheral (in the past some areas
remained external.

Core
 First World Countries
 Wealthy, powerful countries that import raw ,materials, manufacture finished products,
then export those product for sale
 Highly independent of outside control
 Dominate the capitalist worl-economy
 Japan, Canada, United States, Australia, New Zealand and Northwestern Europe (United
Kingdom, Sweden, Norway, etc.)
 Periphery Countries
 Third world countries
 Countries that lack of strong central governments and controlled
 Poor countries that export raw materials to core countries and import finished products
 Relied on coercive labor practices and heavily exploited.
 Philippines, Russia, African Countries, Asia and some Latin American Countries
(Columbia, Chile, Uruguay, Peru) Page | 5

Semi-Periphery Countries
 Second World Countries
 Countries that serve as peripheries to the core countries, and as core to the periphery
countries
 They are buffers.
 They are either exploiting or exploited.
 Latin America (Brazil, Argentina), South Africa, Iran, India, China, South Korea,
Malaysia and Indonesia

External Areas
 Countries that maintained their own economic systems.
 They managed to remain outside of the modern world economy.
 Limited foreign commercial influence

 MARKET
INTEGRATION Learning
Objectives
At the end of this module, you should be able to:
 explain the role of international financial institutions in the creation of a global economy.
 narrate a short history of global market integration in the twentieth century.
 identify the attributes of global corporations.

Market Integration
Market integration allows price signals to be transmitted from one market to another. When
markets are well-integrated, prices become more stable, and household food security is likely to be
improved as poor households can obtain food at more affordable prices. Well integrated markets
can help avoid localized food shortages. This section examines how global market becomes
coherent through local corporations and international financial institutions.

INTERNATIONAL FINANCIAL INSTITUTIONS

In many parts of the world, International Financial Institutions (IFIs) play a major role in the
social and economic development programs of nations with developing or transitional economies. This
role includes advising on development projects, funding and assisting in their implementation with the
following goals and objectives:
 to reduce global poverty and improve people’s living conditions and standards.
 to support sustainable economic social, and institutional development; and
 to promote regional cooperation and integration.
IFIs achieve these objectives through loans, credits and grants to national government.
Such funding is usually tied to specific projects that focus in economic and socially sustainable
development. It also provides technical and advisory assistance to their borrowers and conduct
extensive research and development issues.

HISTORY OF GLOBAL MARKET INTEGRATION

 In 1944, it became clear that the war was coming to an end, and the western Allied powers
decide to again to attempt building a new world order. Meeting at the Mount Washington Hotel
in Bretton Woods, New Hampshire, the US and English representatives, H.D. White and J.M.
Keynes set out create institutions so to prevent the recurrence of the conditions which led to
World War II. They proposed the creation of three organizations, with each organization playing
a role in the smooth functioning of global economy. These were:
 The International Bank for Reconstruction and Development (IBRD or the World Bank)
whose original mandate was to rebuild the war torn economics of Europe and Asia. It has
evolved into the world’s most influential lender of foreign aid to developing nations.
 The International Monetary Fund (IMF) whose primary purpose was to maintain a fixed
exchange rate system known as the Bretton Woods System. Recently it plays a highly
visible and controversial role in the aftermath of the East Asian Crisis.
 
The International Trade Organization (ITO), which was not ratified by the US Congress
and consequently did not become a reality. However, its primary function of liberalizing
world trade was given to the General Agreement on Tariffs and Trade (GATT).
 The post World War II era marked by two geopolitical events, the Cold War and the period of
decolonization. The latter saw the birth of many new nations as the European powers
decolonized. This means that many developing countries are relatively young, especially those
in Africa, the Middle East and South Asia. These newly liberated countries have to choose
which economic structure to adopt to achieve their developmental goals. These new nations Page |
adopted government controlled economies that relied on import substitution industrialization 6
strategies to achieve industrialization. Import substitution means that these countries fostered
the growth of industries that produced goods and were being imported, usually from former
colonialist.
 The oil price shocks of 1970’sforced many Americans for the first time to realize that the US
economy was not independent from the rest of the world. The recessions following the oil crises
of 1973 and in 1979 led both recession and inflation simultaneously. The oil price shocks set
into motion events that are still present in today’s global economy.
 On the other hand, most developing countries saw the benefits of becoming linked to the global
economy. Industrial nations were no longer viewed as neo-colonial exploiters, but as markets
for developing countries goods. Further integration of capital markets led to emerging market
phenomena. The global movement towards more market friendly economic markets, both
internally and externally, have created a world of growing interdependence. The events across
the globe are transmitted everywhere through the global economy.

Attributes of Global Corporations

 The rise of global corporations is a reflection of globalized market integration. The Transnational
Corporations (TNCs) and Multinational Corporation (MNCs) are no longer limited to their home
countries. They are able to expand their influence to other continents and countries. These
global corporations have common attributes. Neubauer (2014) identifies three of them; an agent
of desired economic development, an economic prominence, and a very powerful entity that can
create a crisis. These corporations ay hit their target of economic development by making their
consumer products available in many parts of the world.
 Finally, international financial institutions play an important role in the social and economic
development programs of developing and transitional countries. They are instrumental in the
functionality of the global economy which is reliant on global corporations.

Mindanao Context
This figure illustrates how farming sector in Bukidnon are being integrated in the market with the aid of
contract farming that exists between the big firm, San Miguel Corporation, Inc., and the small hold cassava
farmers in Mantibugao and Maramag through their respective intermediaries, the cooperative. The contract
between these small farmers (whether coop members or non-coop members) and big firm is informal, which
means no written agreement. The formal arrangement, however, exists between the big firm and the
cooperative upon which quality assurance and standards are observed. Further, the study revealed the
efficiency of contract farming in integrating small farmers to the market. Through contract farming, the farmers
have better access to farm technology, cash advances to fund production expenses, opportunities to acquire
knowledge through seminars and educational tours to other farm villages, and better price negotiations.

Figure 1. A market integration involving contract farmingarrangement between abigfirm in Northern Mindanao and small cassava and corn farmers in
Bukidnonthrougha local intermediary
1
Dupa,H.J.P.(2019).UnpublishedDissertationentitled“RestructuringtheMarket:TheCaseofSmallCassava Farmers In Bukidnon,Philippines
  THE GLOBAL INTERSTATE SYSTEM
Learning Objectives
At the end of this module, you should be able to:
 explain the effects of globalization on governments.
 differentiate internationalism from globalism.

Political Globalization- The amount of political co-operation there between countries

Page | 7
Four Key Attributes of World Politics
 There are states that are independent from one another
 These states interact with one another through diplomacy.
 International Organizations exist to facilitate these interactions.
 Beyond facilitating meeting among states, these organizations also take lives on their own.

State vs.
Nation State
Political Term:
 Has 4 Essential Elements:
People, Territory , Government and Sovereignty
 It does not exist if one element is lacking
Ex. Philippines, USA, Great Britain
The Four Elements of a State
1. Population is essential for the state. Greek thinkers were of the view that the population should
neither too big nor too small.
 According to Plato the ideal number would be 5040.
 According to Aristotle, the number should be neither too large nor too small. It should be
large enough to be self sufficing and small enough to be well governed.
 Greek thinkers like Plato and Aristotle thinking on the number was based on small city –
states like Athens and Sparta. Modern states vary in population. India has a population of
102,70,15,247 people according to 2001 census.
2. Territory- There can be no state without a fixed territory. People need territory to live and
organize themselves socially and politically. It may be remembered that the territory of the state
includes land, water and air – space. The modern states differ in their sizes.
 Territory is necessary for citizenship. As in the case of population, no definite size
with regard to extent of area of the state can be fixed. There are small and big states.
3. Government- . Government is the working agency of the state. It is the political organization of
the state.
 Prof. Appadorai defined government as the agency through which the force of the
State is formulated, expressed and realized.
 According to C.F. Strong, in order to make and enforce laws the state must have
highest authority. This is called the Government.
4. Sovereignty- The word ”sovereignty” means supreme and final legal authority above and
beyond which no legal power exists
 Sovereignty has two aspects :
 Internal sovereignty means that the State is supreme over all its citizens, and
associations.
 External sovereignty means that the state is independent and free from foreign or
outside control.
Nation
Ethnic Term
 Shared common Characteristics
History of origin,Culture, religion, language
 Consists of many states
Ex. American Nation, European Nation, Arab Nation

Nation-State- cultural group (a nation) that is also a state (and may, in addition, be a sovereign state).

The Effect of Globalization in the Government

Pros of Globalization
 Globalization broadens access to goods and services.
 Globalization can lift people out of poverty.
 Globalization increases cultural awareness.
 Information and technology spread more easily with globalization.
  It led to a sharp increase in trade and economic exchanges, but also to a multiplication of
financial exchanges.
 It contributed to the rise of a global financial market in which contracts and capital
exchanges have multiplied.
 Makes production more affordable
 Promotes working together
Page | 8
Cons of Globalization
 It homogenized the world’s culture that is why specific cultural characteristics from some
countries are disappearing.
 The consequences of globalization are far from homogeneous: income inequalities,
disproportional wealth and trades that benefit parties differently.
 Unequal economic growth. While globalization tends to increase economic growth for
many countries, the growth isn’t equal—richer countries often benefit more than
developing countries.
 Lack of local businesses. The policies permitting globalization tend to advantage
companies that have the resources and infrastructure to operate their supply chains or
distribution in many different countries, which can hedge out small local businesses—for
instance, a local New York hamburger joint may struggle to compete with the prices of a
multinational burger-making corporation.
 Increases potential global recessions. When many nations’ economic systems become
interdependent, the likelihood of a global recession increases dramatically—because if
one country’s economy starts to struggle, this can set off a chain reaction that can affect
many other countries simultaneously, causing a worldwide financial crisis.
 Exploits cheaper labor markets. Globalization allows businesses to increase jobs and
economic opportunities in developing countries, where the cost of labor is often cheaper.
However, overall economic growth in these countries may be slow or stagnant.
 Causes job displacement. Globalization doesn’t result in an increased number of jobs;
rather, it redistributes jobs by moving production from high-cost countries to lower-cost
ones. This means that high-cost countries often lose jobs due to globalization, as
production goes overseas.
 The massive development of transport that has been the basis of globalization is also
responsible for serious environmental problems such as greenhouse gas emissions, global
warming or air, water, land and even plastic pollution.

Globalization in the Philippines

 The Philippines Globalization can be seen in the increase of literacy. It is considered
globalization because the influence of the United States created an increase of English
literacy; it introduced a new culture to the Philippines. The increase in literacy allowed the
Philippines to communicate and trade with more countries.
 Another example of Globalization in the Philippines can be seen in the increase of industry.
After the Philippines joined the WTO, World Trade Organization, there have been several
opportunities for other countries to trade and create work for those in the Philippines. These
foreign companies have helped boost the economy. It is an example of globalization
because through foreign trade countries have helped boost each other’s economies.
 A third example of Globalization in the Philippines is the remittance sector of the economy.
Overseas workers send about 10.7 billion dollars back home to their families. Which in
return helps the Philippine’s economy. This is considered an example of globalization
because it opened the economy to foreign trade and policy.

Pros of Globalization in the Philippine

 Boost to the developing economy
 Employment rates have increased and national debts have decreased since the
industrialization of the Philippines.
Cons of Globalization in the Philippines
 Many of Filipino workers have been sent overseas and separated from their families in
which it conflicts with their values as a family oriented society..
 Internationalism Vs. Globalism
Internationalism
 Internationalism is a political principle that advocates greater political or economic cooperation
among states and nations.
Types of Internationalism
 Hegemonic Internationalism- The dominance of one country over a nation-state.
 Liberal Internationalism- Nation-state should give up some of their freedom and Page | 9
establish a continuously growing global system working together to prevent lawlessness
in the world.
 Revolutionary Internationalism- Conflicts in the society are due to international factors
and alliances.
 Socialist Internationalism- Working class nation unite to protect themselves against
exploits, abuses and oppressions done by the capitalist class.
Globalism
 An ideology based on the belief that people, goods and information ought to be able to cross
national borders unfettered.
 A socio-economic system dedicated to free trade and free access to markets.
Types of Globalism
 Economic Globalism- The long distance flow of goods, services, capital and
information that accompany market exchange.
 Environmental Globalism- The distant transportation of materials in the serial, fluvial or
terrestrial aspects.
 Military Globalism- The long distance networks in which force, and the threat or
promise of force are deployed.
 Social & Cultural Globalism- Movement of information, idea, images and of people
who carry those people themselves.

 CONTEMPORARY GLOBAL
GOVERNANCE Learning Objectives
At the end of this module, you should be able to:
 identify the roles and functions of the united nations.
 identify the challenges of the global governance in the twenty-first century.
 explain the relevance of the state amid globalization

Global Governance
Global governance brings together diverse actors to coordinate collective action at the level
of the planet. The goal of global governance, roughly defined, is to provide global public goods,
particularly peace and security, justice and mediation systems for conflict, functioning markets and
unified standards for trade and industry.

United Nations
The leading institution in charge of global governance today is the United Nations. It was
founded in 1945, in the wake of the Second World War, as a way to prevent future conflicts on that
scale.
The United Nations does not directly bring together the people of the world, but sovereign
nation states, and currently counts 193 members who make recommendations through the UN
General Assembly. It is headed by the Secretary General.

Roles and Functions of United Nations

 The UN’s main mandate is to preserve global security, which it does particularly through the
Security Council.
 The UN can settle international legal issues through the International Court of Justice, and
implements its key decisions through the Secretariat, led by the Secretary General.
 It ensures greater shared prosperity, as a desirable goal in itself, and as an indirect way to
increase global stability.
 The UN articulated the Sustainable Development Goals, creating common goals for the
collective future of the planet.
Beyond the UN, other institutions with a global mandate play an important role in
global governance. Of primary importance are the so-called Bretton Woods institutions: the
World Bank and the IMF, whose function is to regulate the global economy and credit
markets.
 Worldwide Governance Indicators
The Worldwide Governance Indicators (WGI) project reports aggregate and individual
governance indicators for over 200 countries and territories over the period 1996–, for six
dimensions of governance:
1. Voice and Accountability: the extent to which a country’s citizens are able to participate in
selecting their government, as well as freedom of expression, freedom of association, and a
free media. Page | 10
2. Political Stability and Absence of Violence/Terrorism: the likelihood that the government
will be destabilized by unconstitutional or violent means, including terrorism.
3. Government Effectiveness: the quality of public services, the capacity of the civil
service and its independence from political pressures; and the quality of policy
formulation.
4. Regulatory Quality: the ability of the government to provide sound policies and regulations
that enables and promotes private sector development.
5. Rule of Law: in and abide by the rules of society, including the quality of contract
enforcement and property rights, the police, and the courts, as well as the likelihood of crime
and violence.
6. Control of Corruption: the extent to which public power is exercised for private gain,
including both petty and grand forms of corruption, as well as “capture” of the state by elites
and private interests.

References:

How does the Economy Work. Retrieved from https://www.edology.com/blog/accounting-finance/how-does-

global-economy- work/#:~:text=The%20global%20economy%20refers%20to,take%20place%20between
%20multiple%20countri es.&text=It%20refers%20to%20the%20exchange,have%20a%20comparative
%20advantage%20in.

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