ECONOMIC

GLOBALIZATION
JOHN CARLO S. GABRIEL
Faculty, CSSP
Basic Economics
 Economics is a social science or branch of
study that deals with the production,
distribution, and consumption of products,
goods, and services
 It concerns the limited resources to reach
the maximum satisfaction of every
individual’s needs and wants
 Economics is the study of scarcity ; and the
study of choices

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 Scarcity is a n e ve n t o r p h e n o m e n o n o n
w h ic h th e lim it e d re so u rc e s a re
c o n t in u a lly b e in g u t ilize d fo r e ve ry
in d ivid u a ls u n lim it e d n e e d s a n d w a n t s
 Ma c ro e c e o n o m ic s is t h e b ra n c h o f
e c o n o m ic s t h a t d e a ls w it h t h e e c o n o m y
a s a w h o le
 Mic ro e c o n o m ic s is th e b ra n c h of
e c o n o m ic s t h a t d e a ls w it h in d ivid u a l o r
sm a ll e c o n o m ic e n t it ie s
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● 5 Key Economic Assumptions
 Scarcity – the limited resources are being
utilized ;
 Choices ;
 Trade -off – situational decision that involves
diminishing or losing one quality, quantity, or
property of a set or design in return for gains
in other aspects ;
 Marginal Analysis – additional value of
benefits and costs ;
 Life situations can be easily analyzed through
simple graphs . 4
● 4 Factors of Production
 Land – natural resources;
 Capital – equipment, tools, etc.;
 Labor – human resource/
activity;
 Entrepreneur – business ideas
and operations
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● 3 Economic System

 Centrally Planned Economic System – an economic system

where the government solely owns and controls the
distribution and production of the natural resources in its
jurisdiction

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● 3 Economic System

 Free Market (Capitalist) Economic System – an economic

system where the private or business entities owns and
controls the distribution and production of the natural
resources ;
- the government can not interfere with the resources
owned by the private or business entities

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● 3 Economic System

 Mixed Economic System – an economic system where the

government owns the resources within its jurisdiction and
the private or business entities can also acquire these
resources through compensation

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Economic Globalization
 According to International Monetary Fund or
IMF (2008 ) is a historical process
demonstrating the result of technological
progress and human innovation . It is
distinguished by the increasing integration
of economies around the world through the
movement of goods, services, and capital
across borders . These changes are all
products of people, organizations,
institutions, and technologies . 9
Economic Globalization
 But this definition of IMF according to
Benczes (2014) is not substantive as it only
reflects quantitative change than
qualitative transformation . Economic
globalization is not only about extending
and increasing economic activities (e.g
production, trade etc .) but more of
creating a functional integration among
the said activities across borders .
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Elements of Economic Globalization
 According to Stiglitz (2003 ), the
growth in cross -border economic
activities takes five principal forms :
(1) international trade ; (2) foreign
direct investment ; (3) capital
market flows ; (4 ) migration
(movement of labor) ; a n d (5)
diffusion of technology . 11
Elements of Economic Globalization

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Elements of Economic Globalization
 International trade is the economic
transactions made between countries . Trade
transactions include both goods (tangible
products) and services (intangible
commodities) . The production chains of
goods and services is getting more and
more complex and global (Ospina, 2018). It
allows products to be sourced, assembled,
packaged, and sold in different areas of the
world . 13
Elements of Economic Globalization
 According to Organization for Economic
Cooperation and Development (OECD), FDI is a
c a t e g o ry o f c ro ss-b o rd e r in ve st m e n t in w h ic h a n
in ve st o r re sid e n t in o n e e c o n o m y e st a b lish e s a
la st in g in t e re st in a n d a sig n ific a n t d e g re e o f
in flu e n c e o ve r a n e n t e rp rise re sid e n t in a n o t h e r
e c o n o m y. A p o sse ssio n o f 10 p e rc e n t o r m o re o f
t h e vo t in g p o w e r in a n e n t e rp rise in o n e
e c o n o m y b y a n in ve st o r in a n o t h e r e c o n o m y is
e vid e n c e o f su c h a re la t io n sh ip .
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Elements of Economic Globalization
 The term 'capital flows ' re fe rs t o t h e m o ve m e n t
o f c a p it a l (m o n e y fo r in ve st m e n t ) fro m o n e
c o u n t ry t o a n o t h e r a s a c o n se q u e n c e o f
in ve st m e n t flo w s. In t h is c a se , t h e m o n e y b e in g
re fe rre d t o is n o t t h e m o n e y t h a t flo w s b e t w e e n
c o u n t rie s t o p u rc h a se e a c h o t h e r‘s g o o d s a n d
se rvic e s, b u t ra t h e r re fe rrin g t o t h e m o n e y
flo w in g in t o a n d o u t a c ro ss t h e w o rld su c h a s
st o c k a n d b o n d , a s w e ll a s fa c t o rs su c h a s re a l
e st a t e and c ro ss-b o rd e r m e rg e rs and
a c q u isit io n s. 15
Elements of Economic Globalization
 Migration is the movement of people from one
country to another . In economics, it is in
consonant to the movement of labor . the short -
term economic advantage of emigration
(moving abroad) is located in remittances .
Remittances are funds that emigrants earn
abroad and send back to their home countries,
mainly in order to support families left behind .

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Elements of Economic Globalization
 According to the World Bank,
remittances totaled $689 billion
worldwide in 2018, with $529
billion of that money flowing into
developing nations (World Bank,
2019). Magnifying it locally,
Philippines is also on the map of
those countries with higher
remittances . According to World
Bank‘s Report, in 2018,
Philippines ranked fourth
among the top remittance -
receiving countries in the world
with a total of $33.8 billion .
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Elements of Economic Globalization
 Technology plays a vital role in expediting
the process of globalization . It is considered
as a major facilitator and a driving force in
the globalization processes . Technological
improvement has allowed companies to
rapidly globalize their products . Global food
chains are able to produce and standardized
their products across globe through wider
and fine connectivity facilitated by
technology . 18
Elements of Economic Globalization
 Technological globalization is speeded significantly
by technological diffusion , d e fin e d a s t h e sp re a d o f
t e c h n o lo g y a m o n g c o u n t rie s. Th e re h a s b e e n ra p id
a d va n c e m e n t in t h e sp re a d o f t e c h n o lo g y t o se m i-
p e rip h e ra l a n d p e rip h e ra l n a t io n s fo r t h e p a st t w o
d e c a d e s, a n d W o rld Ba n k in 20 0 8 re p o rt e d t h e
b e n e fit s a n d c h a lle n g e s o f t e c h n o lo g ic a l d iffu sio n . In
g e n e ra l, t h e re p o rt fo u n d t h a t t e c h n o lo g ic a l g ro w t h
a n d e c o n o m ic g ro w t h ra t e s w e re lin ke d , a n d t h a t
in c re a se in t e c h n o lo g ic a l p ro g re ss h e lp s im p ro ve
t h e sit u a t io n s o f t h e p o o r.
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● The North and The South
 The North are the superpowered countries (Western countries)
while the South are powerless/developing countries (Eastern
countries) ;

 The Northern countries are considered the advance countries

through their pertinent technological advancements, which results
to them being more enriched .

 On the other hand, the powerless/developing countries which are

being overpowered because the rich countries acquires their
resources which results to the powerless countries being more
scarce ;

 Economic globalization is the modern method of colonization

which does not require engaging wars, but by using their cultural
influence . 20