THE GLOBAL ECONOMY

Global Economy Economies Associated With Economic

Globalization
Economic Globalization
▪ It refers to the increasing Protectionism – refers to government
interdependence of world policies that restrict international trade
economies as a result of the growing by imposing tariffs, quotas, product
scale of cross-border trade of standards, and subsidies.
commodities and services, flow of
international capital and wide and Reasons for the Implementation of
rapid spread of technologies Strict Policies
(Shangquan, 2000). ▪ Its goal is to improve the domestic
▪ It is not only limited in goods as it also economy by forcing its citizen either
involves capital, labor, migration direct or indirect to purchase local
and anything that is related to products instead of imported
goods and service. products.
▪ For safety and quality concerns of
Interconnected Dimensions of both imported and exported
Economic Globalization products.

1. Goods and Services: Goods are Primary Policy Tools

tangible objects that satisfy
people's wants. Services are 1. Tariffs: These are charges to
actions, such as haircuts and car importing countries in the form of
repair, which also satisfy people's either money or goods that will serve
wants. as a payment for allowing its
2. Capital: It is the total assets a international products to be sold in
company needs to stay solvent. A the local market. It also raises
company’s capital assets are revenues of the government and
significant because organizations use protects domestic products from
capital assets to create wealth. foreign competition due to the price
3. Communication and Technology: hike of imported goods.
Advances in Communication and 2. Import Quotas: This is a kind of
technology has allowed the tariffs that lessens the number of
integration of economies worldwide products that can be imported for a
through increases in trade, certain period of time. It protects its
investment flows, and technology domestic businesses by allowing its
transfer. local businesses to cover the shortfall
4. Market Exchange: it is an economic of certain products. Thus, it helps the
system in which goods and services local market to increase its
are produced, distributed, and production that may also increase the
exchanged by the forces of price, number of local products in market.
supply, and demand. 3. Product Standards: This is a kind of
barrier that imposes strict
standards in imported products
 which may make it difficult for while increasing efficiency and fostering
different importing countries to bring the growth of the economy.
their goods in the local market. Thus,
the restriction increases the volume The Effect of Trade Liberalization
of local products. to its Stakeholders
4. Government Subsidies: incentives
and cash payments are distributed Benefited from
to domestic businesses to encourage the Trade Liberalization
them to expand their market globally Consumer: they get products at lowest
by increasing international export. and cheapest price
Thus, the government may Worker: Low wage worker earned
strengthen its local market. more
Countries: they are able to gain out of
Advantages of Protectionism the trade for the cheaper price and sell
▪ Taxes imposed on exporter it to a higher price
countries may increase government Corporation who earned more profit
revenues. either due to increase in sale and low
▪ Strict and rigid policies may protect labor cost for manufacturing its good
domestic product. Did not benefit from
▪ Encourages the exportation of the Trade Liberalization
national products which may expand Consumer: they get products that are
their products globally. cheap yet have the least and lowest
Disadvantages of Protectionism quality
▪ Protectionism policies often time Worker: Low wage workers work in
support other countries to make their hazardous environment
own protection policy as well. Hence, Countries: they did not gain as much as
it inhibits the exportation of each the countries who have bought their
other products that may result in less raw materials for a cheaper price.
profit.
Corporation who lose out to foreign
competition
Trade Liberalization
It is the process of removing or reducing
Main Actors of Economic Globalization
the barriers or restrictions in the
1. Multi-National Companies – a
exchange for goods between and among
company that does business in a
nations. With the reduction of barriers
select few countries around the
such as tariffs and import quotas in the
world and operates facilities such as
process of exchanging goods and
warehouses or distribution centers in
services, it significantly reduces the cost
at least one foreign country.
of goods sold by the importing countries.
2. State – the role of the nation-state in
Thereby, allowing an increase of
a global world is largely a regulatory
exchange between and among countries.
one as the chief factor in global
Thus, the proponents of trade
interdependence.
liberalization believe that reduction of
3. Regulatory Institutions – the
barriers ultimately lessen consumer costs
primary purpose and role of
 regulatory agencies is to protect the of free trade agreements is to
health and safety of the public. develop economies of scale and
4. Laborers – it represents the human comparative advantages, which
factor in producing the goods and promotes economic efficiency.
services of an economy. 3. Custom Union – It almost the same
5. Consumer – they are the people who with free trade agreement as it aims
buy or use goods and services to to reduce and abolish the tariff, but it
satisfy their wants. differs from free trade as the
member country has common
Economic Integration external tariffs among member
▪ El-Agraa (1998) defines the term countries, implying that the same
economic integration as the tariffs are applied to third countries;
discriminatory removal of all trade a common trade regime is achieved.
impediments between at least two 4. Common Market – It is an
participating countries and the integration by which member
establishment of certain elements of countries are able to move their
coordination and cooperation capital and services within their
between them. organization. This leads to the
▪ Economic integration is an expansion of scale economies and
arrangement among nations that the maximization of comparative
typically includes the reduction or advantages. However, each national
elimination of trade barriers and market has its own regulations such
the coordination of monetary and as product standards.
fiscal policies. Economic integration 5. Economic Union – known as a single
aims to reduce costs for both market. In this integration, Tariffs
consumers and producers and to are eliminated within the member
increase trade between the countries countries by which they are able to
involved in the agreement. exercise free trade among other
countries. Likewise, workers from a
Levels of Economic Integration member country of this organization
can migrate and work to another
1. Preferential Trading Area – allow member country.
member countries to have access to 6. Political Union – It is a form of
some of their products. Tariffs are integration wherein member
not eliminated but it is lessened as countries abide by the rules
compared to nonparticipating presented by a common government
countries. in which the member country’s
2. Free trade – It aimed to reduce the sovereignty is reduced significantly.
tariff significantly between or among
partnered countries. In regard to
external countries which are not part
of their agreement, each of them has
its own decision making in regard to
the tariff they will impose on those
external countries. The general goal
 MARKET INTEGRATION

History of Global Market Integration Two world Wars (1 & 2) and the Great
Depression; Post World wars and Post
Roman Period and Early Voyages Great Depression
The history of economic globalization can The heightened economic integration
be traced back to the early years of the achieved during the early 19 th century
Roman Empire, as evidenced by their was ruined by the two world wars and the
extensive transportation network and the great depression. The major powers of
existence of everyday language, the legal those times, the United States, Western
system, and currency. Years went by, and Europe, and Japan, have undertaken the
during the early 15th century, the task of rebuilding the economic system,
different voyages of Vasco Da Gama, including Infrastructure, International
Columbus, Magellan, and others have Trade, and Monetary policies
proved that technological advances have
made it possible to sail over the other The Bretton Wood System – this
continents and to facilitate agreement was enacted during the post-
intercontinental trade. Different global world wars. It is the United States of
powers that exist during those times, such America who was at that time owned the
as Spain, Portugal, Britain, and Italy, have two-third of world’s Gold had led this
controlled international trade, which conference in July 1944 with delegates
further their territory and sovereignty. from 44 countries at Bretton Woods,
Thus, from this point onwards, the New Hampshire. Hence, the name
Expansion of international trade was Bretton Woods Agreement. The goal of
evident, and the growth of economic this agreement was to create an
globalization was vividly experienced by efficient foreign exchange system,
different countries. prevent competitive devaluations of
currencies, and promote international
Napoleonic Wars in 1815 and the economic growth. As mentioned earlier,
Beginning of World War 1 the scenario has led the delegates of this
During this time, the international trade conference to establish the fixed
expanded significantly as did cross- exchange rate with the U.S. dollar to be
border flows of financial capital and labor. pegged to the value of Gold. Moreover, all
Technological advancement in this year other currencies in the system were then
can be seen from the replacement of the pegged to the U.S. dollar's value. During
sail and railroads by the steam power. The those times, the exchange rate applied at
opening of the Suez Canal has helped to the time set the price of Gold at $35 an
reduce travel times between Europe and ounce. As mentioned earlier, the scenario
Asia. Trade expanded the variety of has led the delegates of this conference to
available goods, both in Europe and establish the fixed exchange rate with the
elsewhere. As the trade monopolies of U.S. dollar to be pegged to the value of
earlier times were replaced by intense Gold. Moreover, all other currencies in the
competition, prices converged globally for system were then pegged to the U.S.
a wide range of commodities, including dollar's value. During those times, the
spices, wheat, cotton, pig iron, and jute exchange rate applied at the time set the
(Findlay and O'Rourke, 2002). price of Gold at $35 an ounce.
The International Monetary Fund (IMF) interest-free loans to the government
and the World Bank of low-income countries.
These two institutions were established 3. International Finance
as part of the Bretton woods Corporations – focuses on private
agreement in 1945. Both of these two sectors and developing countries
institutions were created to address with investment financing and
specific concerns in regard to the financial advisory services.
economic crisis that the world has 4. Multilateral Investment
experienced. Guarantee Agency – that promotes
investment in developing countries e.
International Monetary Fund (IMF) – International Centre for Settlement of
this Institution was created to oversee Investment disputes is an institution
the world’s monetary system’s that provides arbitration on
stability. The IMF was compromised of international investment disputes.
189 member countries that 15 cooperate
and collaborate towards the goal of The General Agreement on Tariffs and
fostering global monetary cooperation, Trade (GATT) – the agreement was
establishing financial stability, signed into law on January 1, 1948 with
maintaining international trade, and 23 countries after the world war to
promoting growth in the economy. monitor world trade that may lead to
economic recovery. Its main objective
World Bank – this Institution was was to eliminate barriers in
established to provide financial international trade by either reducing
assistance and strategic advice to or removing tariffs and quotas. As time
nations profoundly affected by the passed by, the agreement was replaced
previous world wars. The two main by the world trade organization in
goals of the world bank are to end 1995.
extreme poverty and increase overall
prosperity. It supplies qualifying World Trade Organization – is a global
governments with low-interest loans, organization made up of 164 member
zero-interest credits, and grants to countries that deals with the rules of
support the development of individual trade between nations. It was born out of
economies. the General Agreement on Tariffs and
Trade (GATT), which was established in
World Banks’ Other Branches or 1947.
Organizations
Market Integration – is a term used to
1. International Bank for identify a phenomenon in which markets
Reconstruction and Development – of goods and services that are related to
that provides debt financing to one another is experiencing similar
government that is considered patterns of increase or decrease in
middle income. terms of the prices of those products. The
2. International Development term can also refer to circumstances in
Association (IDA) – which gives which the prices of related goods and
services sold in a defined geographical
location also begin to move in some sort external rate of tariff to nonmember
of similar pattern to one another. countries.
4. Common Market – is second to the
Types of Market Integration highest degree of economic
integration by which labor and capital
Negative Integration – this implies are included in the trade. It is to
eliminating barriers that restrict the integrate both product and factor
movement of goods, services, and factors markets of member countries.
of production. Also, the Government 5. Economic Union – is considered to
plays a minor role in policymaking be the final step in complete
regarding manufacturing, distribution, integration by which the member
and flow of goods. countries have common policies
Positive Integration – the Government that involve common currency
may adjust domestic policies and among member nations, fiscal and
institutions through the creation of political policies.
supranational arrangements. Likewise, It
is often identified with positive values like International Financial Institutions –
social protection and the correction of were founded by groups of countries to
market failures. promote public and private investment
to foster economic and social
Degree of Economic Integration development in developing and
transitioning countries.
1. Preferential Agreement – is
considered to be the first stage to International or Regional
which it lessens tariffs and quotas Organization and Alliances
between member countries who
have signed the agreement. It allows 1. Organization for Economic
member countries to have access to Cooperation and Development
some of their products. Tariffs are (OECD) – is an international
not eliminated but it is lessened as organization that works to build
compared to non-participating better policies for better lives. Their
countries goal is to shape policies that foster
2. Free Trade Area – is considered to be prosperity, equality, opportunity
the second stage of economic and well-being for all. Together with
integration for which it reduces governments, policymakers and
barriers to trade among member citizens, they work on establishing
countries to zero, but each member evidence-based international
country has its own decision when standards and finding solutions to a
it comes to the external rate of tariff range of social, economic and
to nonmember countries. environmental challenges.
3. Custom Union – is almost similar to
the free trade area but it differs from 2. The Organization of Petroleum
the former economic integration as Exporting Countries – is a
Custom Union has a common permanent intergovernmental
organization, created at the
 Baghdad Conference on living of its people. The EU remains
September 10–14, 1960, by Iran, focused on making its governing
Iraq, Kuwait, Saudi Arabia and institutions more transparent and
Venezuela. It was established to democratic.
monitor and stabilize the price of
oil that is both beneficial and fair with 6. North American Free Trade
the stakeholders such as the Agreement (NAFTA) – was formed in
producer and consumer. 1994 by the Canada, Mexico and
America for the reason of
3. Association of South East Nations elimination of barriers when it
(ASEAN) – was formed in 1967 by comes to trade and investment. The
Indonesia, Malaysia, the agricultural sector, production and
Philippines, Singapore, and manufacturing sector, investment,
Thailand to promote political and and other services are some of the
economic cooperation and economic sectors wherein tariffs are
regional stability. The Economic, eliminated.
Political-Security, and Socio-
Cultural Community are the 3 Global Corporations
pillars of ASEAN Community. Also known as a global company, is
coined from the base term ‘global’, which
4. Asia Pacific Economic Cooperation means all around the world. It is a
(APEC) – was established in 1989. company that operates beyond its
Currently, the APEC has a 21 member local boundary. Thus, most of the global
over the four continents. APEC companies works in more than one
Member Economies works together country and has some foreign
to sustain economic growth investment. Global corporations are
through a commitment to open deemed to be one of the major players in
trade, investment and economic economic integration as their goods and
reform. The economic growth is commodities allow other countries to
usually accomplished through the engage in foreign trading and exchange
reduction of barriers such as tariffs
and import quotas. Its Goal is to Types of Global Corporations
ensure the sustainability of growth
and development of the region for International Companies – this
the good of its people. company operates primarily in a single
country but has some exposure to
5. European Union – adheres to the foreign markets. These are basically
economic and political union where importers and exporters. The most
its member countries have a single common type of American international
currency, Euro. Through its business is one that purchases products
harmonization of its political and or raw materials from international
economic policy, the European Union markets. Best Buy is an example of this
was able to deliver peace, prosperity, type of business.
and stability for more than fifty years Multinational Companies – this
by which it increases the standards of Company operates in more than one
country and receive substantial income
from these foreign operations qualify as
multinational in nature. Usually
controlled by management based in a
single country, cater to markets in
individual countries. It invests directly in
foreign nations, but this is usually limited
to a few areas. Products are customized
to local preferences, rather than
homogenized, limiting the ability to create
economies of scale.

Transnational Companies – are the

largest multinational businesses with
separate divisions that operate with a
significant independence in their
assigned markets. They invests directly
in dozens of countries and has a global
headquarters that distributes decision-
making capabilities to its various local
operations

Global Companies – This kind of

company would usually operate on a
worldwide scale, but it would not be tied
legally to any nation. They have an
investment in many countries but
maintain a strong headquarters in one
country. They typically market their
products and services to each individual
global market
 THE GLOBAL INTERSTATE SYSTEM

Effects of Globalization on South Sudan as its newest member.

Governments The UN has four functions, which
As globalization became the most heated include military, economic,
topic among scholars, some would environmental issues, and human
suggest that the state was being displaced protection.
as the Primary Vehicle through which ▪ North Atlantic treaty
political communities would organize Organizations (NATO) – is a
themselves in the century to come. defensive treaty or a military alliance
Although, the early years of the 21 st among the United States, Canada,
century have shown us that globalization and other European Countries. This
has not displaced the state due to treaty was signed in 1949, and it is
recognized sovereignty of the state to set based on the idea of collective
economic policies for a country that is security. This treaty adheres to
honored across the 21 world. The treaty collective self-defense. The member
of Westphalia of 1648 established the countries have agreed to combine
notion of the nation-state and the idea of their military power against the other
state sovereignty which creates an nation who would be raising their
atmosphere that states have sovereignty arms against anyone of its members.
and government control over its own
affairs. Social and Economic Growth
▪ Red Cross (Red Crescent in Muslim
There have been several challenges to the Countries – They are organized in
government particularly with state 1863 to help those wounded by wars.
autonomy. These challenges can be They are an independent and neutral
divided into four. TRADITIONAL organization that would be sent to
CHALLENGES, CHALLENGES FROM areas affected by war, conflict, and
NATIONAL OR IDENTITY MOVEMENTS, disasters.
GLOBAL ECONOMICS, AND GLOBAL ▪ Doctor Without Borders – they are
SOCIAL MOVEMENTS. an independent, global movement
providing medical aid where it’s
International Relations – is defined as needed most and was founded in
political activities and other kinds and 1971.
aspects of interactions among states, ▪ Oxford Committee for Famine
inter-governmental organization, non- Relief (Oxfam) – it is a global
government organizations, and movement of people who are fighting
Multinational corporations. inequality to beat poverty.
▪ Save the Children – It is an
Institutions that Govern organization that helps children
International Relations across the world. It gives children a
healthy start of life, the opportunity
Peace Treaties and Military Alliances to learn, and protection from harm. It
▪ United Nations (UN) – it was was founded in 1919 by Eglantyne
founded in 1995, and it has 193 Jebb and her sister Dorothy Buxton to
member states with the republic of alleviate hunger and starvation of
 children in Germany during World ▪ Liberal Internationalism – It is the
War 1. belief that certain goals such as peace
▪ Amnesty International – was and prosperity can be attained
founded in 1961 by Peter Benenson through cooperation and
and it is a global movement that collaboration between and among
campaigns for the human rights of countries. For example, the
everyone. The original intention of Humanitarian efforts by nation-
this movement was to appeal in states and nongovernmental
Britain with aim of acquiring amnesty organizations (NGOs) to improve the
for prisoners of conscience all over welfare of people in poorer countries.
the world who have been arrested for
their convictions, ethnic group, or of Globalism – is a national policy of
their religious belief but provided treating the whole world as a proper
that they haven’t used force or resort sphere for political influence (Merriam-
to violence. Webster, 2020). This is almost similar to
the definition given by the Cambridge
Internationalism and Globalism dictionary wherein Globalism is the idea
that events in one nation cannot be
Internationalism – can be defined as the separated from those in another and that
principle of cooperation among nations, economic and foreign policy should be
for the promotion of their common good planned in an international way. Likewise,
(Dictionary.com, 2020). Moreover, others would define globalism as a broad
Internationalism can be defined as the ideological commitment in favor of the
idea that cooperation among countries is process of globalization that embraces a
beneficial for everyone. In most cases, variety of interlinked economic,
nations adhere to this doctrine to communicational, environmental, and
cooperate economically and avoid political phenomena (Encyclopedia.com,
conflict. According to Halliday (1998), 2020).
Internationalism is the idea that we both
are and should be part of a broader ▪ Economic Globalism – It involves
community than that of the nation or the long-distance flows of goods, services
state. and capital and the information and
perceptions that accompany market
▪ Hegemonic Internationalism – The exchange.
belief that the world is being ▪ Environmental Globalism – It refers
integrated is based on unequal terms to the long-distance transport of
with the dominance of one nation or materials in the atmosphere or
nation-state over others. This means oceans or of biological substances
that a particular country has exerted such as pathogens or genetic
a dominating influence over other materials that affect human health
groups or societies. and well-being
▪ Revolutionary Internationalism – ▪ Military Globalism – It refers to
It is the belief that conflicts within long-distance networks in which
societies ascend due to international force, and the threat or promise of
factors and alliances. force, are deployed
▪ Social and Cultural Globalism – It
involves movements of ideas,
information, images and people, who
of course carry ideas and information
with them.
 GLOBAL GOVERNANCE

Global Governance – is a continuous governance because a single nation-state

process of balancing different interests cannot tackle these issues on their own.
and initiating cooperative action
between different countries. Mass Migration of People and the Flow
Governments in countries need of Criminal Elements – The migration of
cooperation and integration to have a people may result in some forms of
just system for conflict resolution. unlawful activities such as sex trafficking
However, there is no such thing as a and the pushing of illegal drugs. This calls
“world government”. Set of norms, for global governance as it needs strong
policies, laws, or regulations are needed regulatory policies, international
to facilitate relations within countries and cooperation, and effective
amongst countries, organizations and implementation of the law for the
market. This is an example of global protection of the citizens.
governance. Global Governance is
needed when a state or a country do not Internal Events or Problems Which
have the capacity to solve problems on Nation-States Either Instigate or are
their own. There are cases whereby Unable to Control to Control on their
groups of countries have problems with Own – One great example of this is the
each other. These countries cannot solve extrajudicial killings in the Philippines. The
the problem by themselves. Global drug policy of the Philippine government
Governance is also needed. or also known as the “war on drugs” has
led to mass protests and violence. This
Factors Behind the Emergence of calls for intervention from international
Global Governance organizations, however, the Philippine
With the increasing economic prowess in government has resisted.
key areas such as energy, food, transport,
and healthcare, global corporations are Global Problems That a Single Nation-
becoming more powerful. They yield a State is Unable to Tackle on Their Own
strong influence on many global policies. – The global financial crisis is an example
Global civil society organizations also of a problem wherein states do not have
have a strong voice and influence on the capacity to solve on their own. This
global matters as they have established calls for global governance. Another
historical credibility, relevance, and example: The COVID-19 Pandemic
effectiveness in resolving problems in
times of conflict or disaster. Roles of the United Nations in Global
Governance (un.org)
Permeability of Nation-States to Vast There is no “Central Authority” in Global
Flows of Things – Fake news, Governance, but the United Nations
cyberbullying, invasion of privacy and comes close to being a “Central Authority”
other digital fraudulent activities are to raise and resolve global issues as they
the results of easy, fast, and difficult-to- have the capability to involve many non-
control flow of digital information through state actors (governmental and non-
social media. This calls for global governmental organizations, etc).
United Nations – is an international principal judicial body of the United
organization founded in 1945 after Nations. It is the only one of the main
World War II. It is currently made up of bodies of the United Nations not located
193 Member States. It fosters cooperation in New York, USA. The Peace Palace in
among nation-states to address global Hague, Netherlands provides the venue
problems. Main Bodies of the United for countries to settle disputes inside a
Nations General Assembly General court of law.
Assembly is the main deliberative, Policy -
making, and representative body of the Secretariat – It assists the other bodies
United Nations. It is where all member- and committees while performing varied
states come together to discuss and tasks. It comprises the Secretary-General
resolve various global issues. and tens of thousands of international UN
staff members who carry out the day-to-
Security Council – It has primary day work of the UN as mandated by the
responsibility for the maintenance of General Assembly. The Secretary-General
international peace and security. It is is chief administrative officer of the
composed of 15 members: the United Organization, appointed by the General
States of America, Britain, Russia, China, Assembly on the recommendation of the
and France as permanent members and Security Council.
ten other non-permanent members on a
two-year term. Roles and Functions of the United
Nations (un.org)
Economic and Social Council – it is the ▪ Maintain International Peace and
principal body for coordination, policy Security
review, policy dialogue and ▪ Protection of Human Rights
recommendations on economic, social, ▪ Deliver Humanitarian Aid
environmental, and other related ▪ Promote Sustainable Development
concerns along with specialized agencies ▪ Uphold International Law
and organizations such as IMF, UNESCO,
WHO and etc. It is the United Nations’ Challenges of Global Governance in the
central platform for reflection, debate, 21st Century
and innovative thinking on sustainable ▪ Indistinct and diffused authority
development. Vast disparities in power and
influence among state and non-state
Trusteeship Council – It provides actors
international supervision for eleven Trust ▪ Lack of resources of the UN and other
Territories to ensure that adequate steps actors
were taken to prepare the Territories for ▪ Incoherent policies of global
self-government and interdependence. governance actors
But it suspended its operations after the ▪ Decentralized and informal self-
last of the trust territories attained regulatory groups
independence in 1994.
Globalization and the States – States’
International Court of Justice – it is legitimacy is not based on how it can
referred to as the World Court, is the handle globalization. It is based on how
effective it can utilize its public goods
rather than the other actors in the
process of globalization.

The Difference Between Nation and

the State

State – Is a distinctive political community

with its own government which asserts
sovereignty over its land and people.
Nation – is a large group of people who
inhabit a specific territory and are
connected by history, culture, or another
commonality.
Nation-state – is a sovereign institution
that governs individuals sharing a
collective history and culture within a
bounded territory. The state is considered
as the representative of “the people” and
the people are the source of the state’s
legitimacy and sovereignty.
 THE NORTH AND THE SOUTH

Globalization creates divisions between capitalist economies, and high standards

various countries. It is not really difficult of living.
to understand the concept of Second World – communist countries
globalization. and their allies. The Eastern bloc of the
communist-socialist states, where the
Global Divides During The Cold War political and economic power should
come the up to now oppressed peasants
The Cold War – rivalry between the and workers. (North Korea, Cuba,
United States and the Soviet Union Vietnam, Laos and China)
lasted for decades and resulted in anti- Third World – least developed
communist suspicions and international countries that were formerly colonized.
incidents that led two superpowers to the Third World which means
brink of nuclear disaster. “underprivileged people” was coined by
a French demographer Alfred Sauvy in
Worlds within the World? 1952.
▪ The era known as the “Cold War” was ▪ Countries are also referred to as
a political constellation of countries impoverished countries because
with two different world–views. On it composed of mostly poor
one side were the industrialized countries. It is also a group of
capitalist nations aligned with the non- alliance countries from the
USA, called the Western Bloc, which first and second world which
likes to call the “Free World” or the refused capitalism and
“Western world.” communism during the Cold
▪ On the other side were the War.
Communist workers and peasants
states of the Eastern Bloc, the End of the Cold War
socialist countries within the power During the 1989 and 1990, the Berlin
fabric of the Soviet Union, and Wall came down, borders opened, and
Mao’s China. In Europe, there were free elections ousted Communist regimes
some neutral countries, and there everywhere in Eastern Europe. In late
was the rest of the world, the Third 1991 the Soviet Union itself dissolved
World. into its component republics. With
stunning speed, the iron Curtain was
First, Second, and Third World lifted and the Cold War came to an end.
The terms originated during the Cold War
when the world was divided into three Global North and Global Sout
classifications based on politics and At the end of the Cold War, New and
economics. simpler Classification was created – The
North and South Divide. The previous
First World – An antiquated term for First World countries became the
developed and industrialized countries Global North and the Third countries
characterized by political and economic became the Global South.
stability, democracy, the rule of law,
North-South Divide or Rich Poor Divide America, and the islands of
is the socio-economic and political Caribbeans are still
division that exists between the wealthy underdeveloped because they
developed countries, known collectively were colonized by the Spaniards
as “the North,” and the developing and Portuguese. This is also an
countries or least developed countries, example of Dependency Theory.
or “the South.” ▪ This theory explains that the South’s
economic development decreases
Global North – comprises of wealthy, and it increases the North’s economic
industrialized, and democratic development because these rich
countries such as: USA, Canada, Western countries exploit the poor
Europe, Australia, New Zealand, countries.
Developed parts of Asia.

▪ First world countries

▪ Comprised of countries which have
developed economies
▪ Account for over 90% of all
manufacturing industries in the
world.

Global South – comprises generally of

developing or the least developed
countries such as: Regions of Asia, Africa,
Middle East, Latin America.

▪ The term emerged to avoid the

“poor” stigma associated with the
term “Third World”. It reflects
underdevelopment and imbalances
of economic and political power
between countries.

Struggles in the Global South

Made Global
Global South can also be a metaphor,
implying that the problems of the south
like poverty and environmental issues are
getting globalized.

Example: Flood
The Latin American Experience and
Dependency Theory
▪ After World War II, Latin American
countries such as Mexico, Central