I.

INTON ON THE STUDY OF GLOBALIZATION

A. Differentiate the competing conceptions of globalization
B. Identify the underlying philosophies of the varying definitions of globalization
C. Agree on a working definition of globalization for the course

Objectives:
At the end of the lesson, the students should be able to
- Differentiate the concept of globalization
- Identify the underlying philosophies of the varying definitions of globalizations;
- Agree on a working definition for the course

A. HISTORICAL FOUNDATION OF THE TERM GLOBALIZATION

- 1930 - the word “globalize” as a noun appeared in a publication entitled “Towards new education” where it
denoted a holistic view of human experience in education.
- Late 1970’s - globalized was coined
- Early 1981 - globalization was used in an economic sense
- Late 1980’s - it was popularized by Theodore Levitt
- Late 2000’s - the IMF identified four aspects of globalization
- 2013 - it was used to define a borderless society
- 2017 - it was used in the academe
- 2018 - globalization was now used in all discipline

B. WHAT IS GLOBALIZATION?
- it is the increasing interaction of people, states, or countries through the growth of the international flow of
money, ideas, and culture.
- it is the inter-connectedness of people and business across the world that eventually lead to global, cultural,
political, and economic integration.
- it is the ability to move and communicate easily with others all over the world in order to conduct business
internationally.
- It is the free movement of goods, services, and people across the world in a seamless and integrated manner.
- It is the liberalization pf countries of their impact protocols and welcome foreign investments into sectors that are
the mainstays of the economy.
- it refers to countries acting like magnets attracting global capital by opening up their economies to multinational
corporations.

OTHER MEANINGS FROM KNOWN SOCIOLOGISTS:

- “Globalization is a process by which the people of the world are incorporated into a single world society - Martin
Albrow and Eliabeth King
- “It is the intensification of worldwide social relations which link distant localities in such a way that local
happenings are shaped by events occurring many miles away.” - Anthony Giddens
- “Globalization as the compression of the world and the intensification of the consciousness of the world as a
whole.” - Prof. Roland Robertson
C. CHARACTERISTICS OF GLOBALIZATION
1. There is social mobility of movement of people regardless of reason
2. There is an intensification of interactions
3. It is an active process
4. Borderless interaction
5. Spread of ideas, knowledge, technology, culture, religion

D. INDICATORS OF GLOBALIZATION
1. Interdependence of countries in different social aspects
2. Advancement of science, technology, etc.
3. Environmental issues across borders
4. Economic globalization, cultural globalization, and political globalization

E. NATURE OF GLOBALIZATION
1. A conglomerate of various multiple units (people) located in different parts of the globe which are linked by
common ownership.
2. Multiple units draw a common pool of resources such as money, credit, information, patents, trade names and
control system.
3. The units respond to some common strategy . Product presence is in different markets of the world. Human
resources are highly diverse. Transactions involving intellectual properties such as copyrights, patents,
trademarks, and process technologies are across the globe.

F. REASONS FOR GLOBALIZATION

1. Rapid shrinking of time and distance across the globe. One can easily cross the bridge going to the other side
of the market place due to advance tools of technology than before.
2. Domestic markets are no longer rich as a consequence of many interlocking factors.
3. Companies and institutions go global to find political and economic stability which is relatively good in other
countries than the country of origin.
4. To get technological and managerial know-how of other countries due to their advancement in science,
technology, education, health, and other fields of specialization.
5. To reduce high transportation costs if one goes globally using the advance tools of communication and
information
6. To be close to raw materials and to markets for their finished products which are not available in the country of
origin
7. The creation of the World Trade Organization (WTO) had made it possible in stimulating increased across
border trade. There are other world bodies like the UN and several arbitration bodies where countries agree.

G. STAGES OF GLOBALIZATION
* Stage 1: The first stage is the arm’s length service activity of an essentially domestic company/institution which
moves into new market overseas by linking up with local dealers and distributors.
* Stage 2: In this stage, the company/institution takes over these activities on its own.
* Stage 3: The domestic-based company/institution begins to carry out its own manufacturing marketing and sales in
key foreign markets.
* Stage 4: The company/institution moves towards a genuinely global mode of operation. Global localization happens,
that is, the company serves local costumers in markets around the globe responding to their needs.

H. MERITS OF GLOBALIZATION
1. An open economy spur fast innovation with fresh ideas from abroad
2. Exports jobs often pay more than other jobs
3. Productivity grows more quickly when countries produce goods and services in which they are of comparatively
advantageous

I. DEMERITS OF GLOBALIZATION
1. Exploitation of underdeveloped countries
4. Widening gap of the rich and the poor
5. Harmful effects on small industries and small businesses
 II. STRUCTURES OF GLOBALIZATION

THE GLOBAL ECONOMY

A. WHAT IS GLOBAL ECONOMY?

- Referred to as “world economy”

- Refers to the international exchange of goods and services

- It may also mean as the free movement of goods, capital, services, technology and information

B. GLOBAL ECONOMY OR ECONOMIC GLOBALIZATION

- it is concerned with globalization of production, finance, markets, technology, institutions, corporations,

and labor.
- it is expanding since the emergence of trans-national trade and increased exponentially due to the
increase rate of communication and technology
- the creation of world trade organizations made countries cut down trade barriers and open up their
current accounts and capital accounts.

- ECONOMIC GLOBALIZATION IS A HISTORICAL PROCESS, THE RESULT OF HUMAN INNOVATION AND

TECHNOLOGICAL PROGRESS.

- IT REFERS TO THE INCREASING INTEGRATION OF ECONOMIES AROUND THE WORLD, PARTICULARLY

THROUGH THE MOVEMENT OF GOODS, SERVICES, AND CAPITAL ACROSS BORDERS. (INTERNATIONAL
TRADING)

- THE TERM SOMETIMES REFERS TO THE MOVEMENT OF PEOPLE (LABOR) AND KNOWLEDGE
(TECHNOLOGY) ACROSS INTERNATIONAL BORDERS.

C. WHEN DID THIS ECONOMIC GLOBALIZATION BEGIN?

INTERNATIONAL TRADING SYSTEM:

- 1492 (Christopher Colombus stumbles on the Americas in search of spices) and 1498 (Vasco da Gama
makes an end run around Africa and snatches monopoly rents away from the Arab and Venetian spice
traders).
- GALLEON TRADE - SPANISH TIME (idea of mercantilism during the 16th century)

- China’s long standing business with the rest of the world.

- Barter Trade among provinces.

D. WHAT IS THE PURPOSE OF WORLD TRADE ORGANIZATION?

a. The WTO has many roles: it operates a global system of trade rules, it acts as a forum for negotiating
trade agreements, it settles trade disputes between its members and it supports the needs of developing
countries
b. to open trade for the benefit of all.
c. to help its members use trade as a means to raise living standards, create jobs and improve people’s
lives.
d. to help developing countries build their trade capacity
E. ADVANTAGES OF BEING A WTO MEMBER
a. Participation in the development of new rules and principles of international trade
b. export diversification
c. transparent, predictable, and attractive investment regime
d. increase of sovereign credits rating
e. strengthening positions in trade disputes

F. DISADVANTAGES OF BEING A WTO MEMBER

a. Limited Success in Achieving Comprehensive Global Trade Liberalization
f. Unequal Distribution of Benefits Among Member Countries
g. Economic Challenges for Certain Industries and Workers
h. Challenges in Addressing Non-tariff Barriers
i. Difficulties Faced by Developing Countries

G. HOW DOES WTO AFFECT THE PHILIPPINE ECONOMY

a. through changes in tariff structure
b. through the expansion of world trade
c. it has generally worked against labor rather than provide employment
 LESSON 3: MARKET INTEGRATION

Objective:
At the end of the lesson, you should be able to:
1. Distinguish the concept of market integration
2. Narrate a short story of global market integration in the 20th century
3. Articulate the relationship of global corporations in the emergence of market integration.

INTRODUCTION:
Market integration is central in economic globalization as it refers to the increasing interconnectedness of economies
and societies around the world.

A. WHAT IS MARKET INTEGRATION?

1. refers to the process of creating a unified marketplace where goods, services, and capital can flow freely between
countries and regions
2. it is a central aspect of economic globalization, which refer to the increasing interconnectedness of economies
and societies around the world
3. a phenomenon in which markets for good and services that are in some way related to one another experience
similar patterns of price increase or decrease.
4. a situation in which the prices of related goods and services sold in a specific geographical area begin to move in
a similar pattern
5. Prices among different location or related goods follow the same pattern over a long period of time, then market
integration exist
6. When group of prices often move proportionally to each other and when this relation is very clear among different
markets, then market is integrated
7. The market integration is an indicator how much different markets are related to each other.
8. is a term that is used to identify a phenomenon in which markets of goods and services that are somehow related
to one another being to experience similar patterns of increase or decrease in terms of the prices of those
products.
9. The term can also refer to a situation in which the prices of related goods and services sold in a defined
geographical location also begin to move in some sort of similar pattern to one another.
10. At times, the integration may be intentional, with a government implementing certain strategies as a way to control
the direction of the economy.
11. At other times, the integrating of the markets may be due to factor such as shifts in supply and demand that have
a spillover effect on several markets.

B. BENEFITS OF MARKET INTEGRATION

1. it allows firms to access a larger pool of costumers and suppliers
2. can increase profits and lead to higher levels of economic growth

C. DOWNSIDE OF MARKET INTEGRATION

1. it can create winners and losers with some industries and regions benefiting more than others
2. firms that are not globally competitive may suffer
3. some countries employ forms of protectionism, which leads to higher tariffs and less free trade between other
countries.
4. loss of monetary CONTROL policy
5. It leads to less national sovereignty

D. MARKET INTEGRATION POINTS TO HOW TWO OR MORE MARKETS CAN TRADE WITH EACH OTHER.
a. high integration
- happens when prices are similar in the markets

- that means there is low barriers in trade

b. low integration
- there is high barriers to trade

- prices fluctuate in the markets, so foreign trades help the integration of markets because it reduces barrier to trade
and increases fluidity between markets.

E. TYPES OF MARKET INTEGRATION

a. Horizontal integration
- This occurs when a firm or agency gains control of other firms or agencies performing similar marketing functions at
the same level in the marketing sequence
Example:
- a company will acquire a similar company in the same industry

-expanding company’s market

- Increasing market power
- increasing product or service differentiation

- lowering competition
b. Vertical integration
- this occurs when a firm performs more than one activity in the sequence of the marketing process.
Example:
- Strengthening company’s supply chain

- lowering production cost

- capturing upstream or downstream 3profits

- gaining access to new distribution channels

c. Conglomeration
- when a corporate group made up of two or more business entities engaged in a completely different or similar
businesses, usually with a parent company and a numerous subsidiaries
- made up of two or more business entities engage in completely different or similar businesses.
Example:
- Amazon

- Facebook

- Procter & Gamble

 - Unilever

F. FORMS OF MARKET INTEGRATION

1. PREFERENTIAL AGREEMENT - formed when countries within geographical region agree to lower or eliminate
tariff barriers on certain goods imported from other members of the area.
2. FREE TRADE AREAS - formed when two or more countries in a region agree to reduce or eliminate trade barriers
on all goods imported from other countries
3. CUSTOMS UNION - entails the elimination of tariff barriers between members and the acceptance of a single
(unified) external tariffs against non-members.
4. COMMON MARKETS - the expansion of free trade beyond tangible goods to include all economic resources.
This means that all barriers to the free movement of goods, services, capital, and labor are removed.
5. ECONOMIC UNION - refers to a trading bloc that has a common market among its members as well as a
common trade policy with non-members, despite members’ freedom pursue their own macroeconomic policies.
6. the development of infrastructure to facilitate transportation and communication

G. What is the impact of market integration to the global economy?

More specifically, economic integration typically leads to a reduction in the cost of trade, improved availability
of goods and services and a wider selection of them, and gains in efficiency that lead to greater purchasing
power.

51344. Increased economic efficiency: Market integration allows for the efficient a llocation of
resources, enabling countries to specialize in the production of goods and services in which they have a
comparative advantage.
51345. Enhanced competitiveness: By expanding markets and encouraging competition, market integration stimulates
innovation, fosters technological advancements, and encourages the adoption of best practices.
51346. Gives us access to new opportunities: Market integration opens up doors to new markets, providing businesses
with expanded customer bases and opportunities for growth.

H. Challenges and Barriers

60064. Infrastructure and connectivity: Inadequate infrastructure and connectivity gaps can hinder the smooth flow of
goods, services, and investments.

60065. Socioeconomic implications: Market integration can bring about rapid changes that may have social and
economic implications, including job displacement and income inequality.

I. How can Philippines benefit from market integration?

Deepened trade integration under the AEC could lead to both economic and employment growth in the Philippines that
could contribute to 3.1 million more jobs.