THE GLOBAL

ECONOMY
INTRODUCTION
The global economic system beginning in 1896, had reached
its peak in 1914. There are various changes and improvements
that characterize economic globalization before and at
present. Structures of transportation, communication, and
capital are comparable then and now.
In terms of transportation, railroads and steamships are the
significant inventions that hastened development in the past.
Today, airplanes have been transporting humans and objects
all over the world in a relatively shorter period of time.
When it comes to communication, the Internet today made
the world open to everyone. The access to different social
media and websites allows one to have access to overwhelming
information of other people, organizations, and countries.
SURPLUSES AND DEFICITS
A good place to get a quick snapshot of global trade (Mann
and Pluck,2007: 1159-66), as well as net economic flows in and
out of a nation-state, is by looking at nation’s trade surpluses
and deficits.
Economic Chains and Networks
Trade in goods and services is clearly central to the global
economy. Much of that trade takes place in interconnected
circuits of one kind or another. Gary Gereffi (2005:160-83) has
outlined several of the most important economic chains and
networks involved in global trade:
Supply chains. These are general label for value-adding
activities in the production process. A supply chain begins
with raw materials and follows the value-adding process
through a variety of inputs and outputs and ultimately to a
finished product.
International production networks. These involve the networks of
producers involved in the process of producing a finished product.
Multinational corporations (MNC’s) are seen as playing a central role,
as being the “flagships”, in these networks.
Global commodity chains. Gereffi and Korzeniewicz (1994) bring
together the idea of value-adding and the global organization of
industries. They also accord a central place to the growing importance
of the sellers of global products. This includes buyer-driven chains
such as Wal-Mart which play an increasing role in determining what
industries produce and how much they produce. Since such as
companies do not manufactured their own products, they are buyers
of products that are then sold under their brand names.
Global value chains. Gereffi argues that global value chains
are emerging as the overarching label for all work in this area
and for all such chains. He describes it as:
These highlight the relative value of those economic activities
that are required to bring a good of service from conception
to, through the different phases of production (involving a
combination of physical transformation and the input of
various producer services), delivery to final consumers, and
final disposal after use. (Gereffi,2012)
Global Value Chain: China and the US
To give specificity to the idea of global value chains, look at
the several specific examples of such chains, all of which
involves trade between China (Brandt and Rawski 2008) and
the US, although many other countries in the world are
involved in these or similar chain.
RACE TO THE BOTTOM AND UPGRADING
A dominant idea in thinking about less developed economies
from a global perspective is the so called “race to the bottom”.
It is often the case that one nation is willing to go further than
the others in order to attract the interest of Multinational
Corporations (MNCs).
Waste Paper
Zhang Yin-one of the richest women in world (estimitated to
be worth $1.5 billion and her family has worthd billions more).
- the source of her wealth is her business.
 -Nine dragons paper (72% of which is controlled by the
Zhang Family. Los Angeles-based America chung nam (largest
exporter to china)
Waste Paper
 -Take mountains of waste paper from the united states, ship it
to china, recycle it into corrugated boxes. The boxes are used to
ship goods to various places around the world-including the US.
-Nine dragons paper is already one of the world's largest
producers of paper. Surpassing such well-known giants as
weyerhaeuse. It is difficult to compete with nine dragons paper
because the works with less paper, its factory burns
comparatively inexpensive coal, and it uses the latest
technologies while competitors like weyerhaeuse are saddled
with less efficient technologybthat is three or four decades old.
Consumers
increasing numbers of people throughout the world are
spending more and more time as consumers.
it was very different as most people spent most of their time as
producers. Not only do more people spend more time
consuming but they are increasingly more likely to define
themselves by what they consume than by their roles as
producers and works
Consumer object and services
much of consumption revolves around shopping for and
purchasing objects of all kinds, ut in recent years, increasing
amount of consumption relate to various services(legal,
accounting, educational among othets)
there are global services such as those offered by accounting firms
as well as package delivery of particular importance in terms of
object and services is the issue of brand and branding (holt 2004)
brands are of great importance both within nation as well as
globally. Much money and effort is invested in creating brand
names that are recognized and trusted throughout the world.
Consumer object and services
In her best selling book No Logo: taking aim at the brand
bullies, Naomi Klein details the importance of the brand in
the contemporary world and the degree to which brands are
both globalized ( logos are ritually an international language)
and having a global impact (Klein 2000).
Consumption sites
•American and western style consumption sites °shopping
malls, fast-food restaurants, clothing chains. Discounters such
as Wal-Mart. Disney like theme parks. Las Vegas-style casino
hotels
Consumption Process
Increasing numbers of people know what is expected of them
as consumers; they generally know what to do in the
consumption process.
This includes knowing how to work their way through a
shopping malls, use a credit card, or make a purchase online.
where these processes are known, there is a remarkable
similarity throughout the world in the process of consuming
in a supermarket and shopping mall, or fast food restaurant.
Increasing Competition for Commodities
One of the most striking developments of late has been the increasing
global competition for commodities.
Demand for commodities like oil and natural gas, precious metals like
gold, silver, among others, as well as even the more mundane products
such as rice, wheat, corn, to name a few, has been fueled by massive
development in emerging markets, especially China.
 Massive industrialization in China place large and increasing demand
for all sorts of commodities to power the same. Also, demand for
commodities goes well beyond that of specific industries needing
specific commodities for their production processes.
For example, specific products like airplanes to transport people
anywhere in the world, trucks to deliver consumable things, to
cars that are used both as consumables and as technologies to be
used for personal use or even for tourism purposes, are results of
increased industrialization.
All of these planes, trucks and cars require gasoline and need to be
produced in facilities that consume huge amount of energy,
leading to demand for a wide range of commodities. Again, global
commodities ranging from oil to base metals to grains are moving
higher as billions of people in China and around the world get
wealthier and are consuming more as they produce for others and
increasingly for themselves.
Second is Consumption
 While aspect of globalization that relate to consumption have
been mentioned above, this section focuses more directly on
consumption itself in a global context (sassatelli 2008)
 Consumption is highly complex, involving mainly consumer
objects, consumers, the consumption process, and
consumption sites .
Before we get to those topics it is important to note that there
has been a tendecy to closely associate consumption, as well as
the globalization of consumption, with america and
americanization.
This is largely traceable to the affluence of the US after the
close of WWII and the economic difficulties encountered by
most other societies in the world during this period. Thus, the
US developed an unprecedented and unmatch consumer
society for several decades after the end of the war, and at the
same time, began exporting it and its various elements to
much of the rest of the world.
Scrap Metal
An important example of global value chain involves scrap metal.
This seems like a rather prosaic commodity, but it is more important
than many think its fate tells us a great deal about globalization.
 For one thing, about two-thirds of the steel made in US comes from
recycled steel rather than iron ore and coke (“virgin steel”).
For another, this is a big business, especially since prices for scrap
metals (e.g., steel and copper) have increased dramatically as a result
of skyrocketing global demand for such commodities. Scrap metal is
interesting in this regard because, by definition, its origins go back
to other chains involved in the use of raw materials and the
production of finished products.
INCREASING COMPETITION
One of the most striking developments in recent years have been the
increasing global competition for various commodities. The best
known and obvious example is oil, but much the same big has
happened in the market of natural gas, copper, lithium (especially
for batteries for electric cars) nickel, silver, gold, as well as even more
mundane commodities such as rice, wheat, corn, and soybean.
The increasing demand for these commodities, and many others, is
no longer fueled mainly by the needs of the countries we
traditionally of as highly developed but now, by massive
development in other parts of the world, especially India and China.
OUTSOURCING
The transfer of activities once performed by an entity to a business or
businesses in exchange for money. It is a complex phenomenon that is
not restricted to the economy, not only a macro-level phenomenon, and
not simply global in character.
Dealing with the first issue, while outsourcing in the economic realm is of
greatest importance and the issue of concern here, it also occurs in many
other constitution such as health care and military. In terms of health
care, one example is the work of radiologist, which is increasingly being
outsourced.
 This is made possible because the material with which radiologist deal
(x-rays, result of MRI's) is now usually digitized and therefore sent easily
and quickly via Internet to radiologist anywhere in the world.