CHAPTER 2

THE GLOBAL
ECONOMY
What is Global Economy?
The world economy or global economy is the
economy of all humans of the world, referring to the
global economic system, which includes all economic
activities which are conducted both within and between
nations, including production, consumption, economic
management, work in general, exchange of financial
values and trade of goods and services.
⮚ In 1990s, The United Nations (UN) tried to address the different problems in the world.
Their efforts were guided by the eight millennium Development Goals where poverty
and hunger ranked as the first.
⮚ According to the Un, (2015) is a condition characterized by severe deprivation of basic
human needs which includes food, safe drinking water, sanitation facilities, health
shelter, education and information. The UN defines extreme or absolute poverty as
living on less than $1.25 a day. The organization aims to eliminate extreme poverty for
all people by 2030
⮚ UN reported that 836 million people still live in extreme poverty but that is down from
1.9 billion, so there is success or at least a lot of progress.
⮚ The World Bank predicted that by 2030 the number of people living in extreme poverty
could drop to less than 400 million. Of course that assumes everything will keep
improving as it has been.
 The other 7 goals
•Achieving universal primary education
•Promoting gender equality and women empowerment
•Reducing child mortality
•Improving maternal health
•Combating diseases like HIV/AIDS and malaria
•Ensuring environmental sustainability
•Having a global partnership for development (United Nations, 2015)
UN tried to achieve all these by the year 2015.
 Economic Globalization
and Global Trade
According to the United Nations (as cited in Shangquan, 2000), "Economic globalization refers
to the increasing interdependence of world economies as a result of the growing scale of cross-border
trade of commodities and services, flow of international capital, and wide and rapid spread of
technologies. It reflects the continuing expansion and mutual integration of market frontiers, and is
an irreversible trend for economic development in the whole world at the turn of the millennium."

2 Categories of Economies Associated with Economic Globalization

1. Protectionism - it refers to government policies that restrict international trade domestic
industries
2. Trade Liberalization - the removal or reduction or barriers of restrictions on the free exchange
of goods between nations (such as tariffs and quotas)
• World War II influenced the shifting of dominant economic policy from
protectionism to trade liberalization of free trade.

• According to economist Jeffrey Sachs. "mobile phones are the 'single most
transformative technology" and call this Leapfrogging.

• Fair trade defined by the International Fairtrade Association is "the concern for
the social, economic, and environmental well-being of marginalized small
procedures." It aims for a more upright & equitable global system.

• Some products like bananas, coffee, cotton, tea, wine, flowers, sugar and
chocolate etc.
 ECONOMIC GLOBALIZATION AND
SUSTAINABLE DEVELOPMENT
ECONOMIC GLOBALIZATION
refers to the increasing interdependence of world economies as a result of the
growing scale of cross- border trade of commodities and services flow of international
capital and wide and rapid spread of technologies.

SUSTAINABLE DEVELOPMENT
development that meets the needs of the present without compromising the ability
of future generations to meet their own needs.
THERE ARE DIFFERENT ASPECTS OF
SUSTAINABLE
DEVELOPMENT
• ECONOMIC
• ENVIRONMENT
• SOCIAL
ECONOMIC-Must be able to produce goods and services on a continuing basis.
A. Adequate livelihood or productive assets.
B. Economic security when unemployed, disabled or otherwise unable to secure
livelihood.
ENVIRONMENT-Must maintain a stable resource base avoiding overexploitation of
renewable resource system and depleting non-renewable resources.
SOCIAL-Must achieve
A. Distributed equity
B. Adequate provision of social services
• Gender equity
• Political accountability
• Participation 
 ENVIRONMENTAL DEGRADATION

Environmental degradation is the

deterioration of the environment through
depletion of resources such as air, water and
soil; the destruction of ecosystems and the
extinction of wildlife. It is defined as any
change or disturbance to the environment
perceived to be deleterious or undesirable.
TYPES of Environmental Degradation
• Land and soil degradation: Degradation of soil quality from
poor farming practices, excessive use of fertilizers and
pesticides, leakage from landfills etc.
• Water degradation: Pollution of water from trash dumped in
oceans, illegal dumping, disposal of large amounts of
industrial waste into nearby rivers or lakes etc.
• Atmospheric degradation: This includes air degradation,
particle pollution and the depletion of the ozone layer.
• Several other kinds of pollution: Apart from land, water and
atmospheric degradation, many other kinds of pollution such as
noise pollution, light pollution that are part of
environmental degradation.
CAUSES of Environmental Degradation
1. Land Disturbance- A more basic cause of environmental degradation
is land damage. Numerous weedy plant species, for example, garlic &
mustard, are both foreign and obtrusive.
2. Pollution- Pollution, in whatever form, whether it is air, water,
land or noise is harmful to the environment. Air pollution pollutes
the air that we breathe, which causes health issues.Water pollution
degrades the quality of water that we use for drinking purposes.
Land pollution results in the degradation of the earth’s surface as
a result of human activities. Noise pollution can cause irreparable
damage to our ears when exposed to continuous large sounds like
honking of vehicles on a busy road or machines producing large noise
in a factory or a mill.
3. Overpopulation- Rapid population growth puts strain on natural
resources, which results in the degradation of our environment.
Mortality rate has gone down due to better medical facilities, which
has resulted in an increased lifespan.
4. Landfills- Landfills pollute the environment and destroy the
beauty of the city. Landfills come within the city due to the
large amount of waste that gets generated by households,
industries, factories and hospitals.
5. Deforestation- Deforestation is the cutting down of trees to
make way for more homes and industries. Rapid growth in
population and urban sprawl are two of the major causes of
deforestation.
6. Natural Causes- Things like avalanches, quakes, tidal waves,
storms, and wildfires can totally crush nearby animal and plant
groups to the point where they can no longer survive in those
areas.
EFFECTS of Environmental Degradation

1. Impact on Human Health

Human health might be at the receiving end as a result of
environmental degradation. Areas exposed to toxic air pollutants
can cause respiratory problems like pneumonia and asthma.
Millions of people are known to have died due to the indirect
effects of air pollution.
2. Loss of Biodiversity
Biodiversity is important for maintaining the balance of the
ecosystem in the form of combating pollution, restoring
nutrients, protecting water sources and stabilizing climate.
Deforestation, global warming, overpopulation and pollution are a
few of the major causes of loss of biodiversity.
3. Ozone Layer Depletion
The ozone layer is responsible for protecting the earth from
harmful ultraviolet rays. The presence of chlorofluorocarbons,
hydrochlorofluorocarbons in the atmosphere, is causing the ozone
layer to deplete. As it will deplete, it will emit harmful
radiation back to the earth.
4. Loss For the Tourism Industry
The deterioration of the environment can be a huge setback
for the tourism industry that relies on tourists for their daily
livelihood. Environmental damage in the form of loss of green
cover, loss of biodiversity, huge landfills, increased air and
water pollution can be a big turn off for most of the tourists.
We can heal our mother nature by many processes like avoiding
deforestation, following proper government regulation, reducing
consumption level, reusing the resources, recycling
environmental products, waste management, and spreading
 FOOD SECURITY
WHAT IS GLOBAL FOOD SECURITY?
•Is when ALL PEOPLE have regular ACCESS  to enough nutritious
food to live healthy and active lives.
•Better food security means improving their livelihoods.
•Global food security achieving the goal of ending global
hunger

MODELS OF FOOD SECURITY

•Food stability
•Food access
•Food availability 

HOW DO YOU ACCESS FOOD?

•You can buy it, produce it yourself, or do both. 
•A safety net is needed for people to access food.
•You can get food and income by growing crops, gathering food,
By 2050, the demand for food will be 60% greater than it is
today. (Breene, 2016)
-by 2050, the world must feed 9 billion people. 
-the UN set ENDING HUNGER, ACHIEVING FOOD SECURITY, AND
IMPROVED NUTRITION.
-And promoting sustainable agriculture.

WHY IS FOOD SECURITY SUCH A MAJOR GLOBAL CHALLENGE?

-the complexity of delivering sufficient food to a national
population shows why food security is such a priority for all
countries, whether developing or developed. This is a global
challenge because it's not just about food and feeding people
but also about practically all aspects of an economy and
society. 
WHAT CAUSES IT?
1.POPULATION GROWTH- Africa is expected to double its
population from 1 to 2 billion by 2050. Populations in the
developing world are also becoming increasingly urbanized,
with 2.5 billion additional urban residents projected in
Africa and Asia.
 2.CHANGING TASTES - As people become more affluent they start
eating food that is richer in processed food, meat, and dairy.
But to produce more meat means growing more grain. 

Per capita food losses and waste, at consumption and pre-consumptions stages, in different regions, Source:
United Nations Food and Agriculture Organization
3.CLIMATE CHANGE- currently, 40% of the world’s landmass is arid
(which means no rain), and rising temperatures will turn yet
more of it into a desert. At current rates, the amount of food
we’re growing today will feed only half of the population by
2050.
4.WATER SCARCITY- Another significant environmental challenge is
the decline in the availability of freshwater or the lack of
freshwater resources to meet the standard water demand. 
5.TROUBLED FARMERS 
•insufficient water supply
•less use of modern farming equipment
•over-dependence on traditional crops
•poor storage facilities
•transportation problems
•high-interest rates 
•and Government Schemes are yet to reach Small Farmer
 ECONOMIC GLOBALIZATION, POVERTY AND INEQUALITY
ECONOMIC GLOBALIZATION
Economic globalization is one of the three main dimensions of
globalization commonly found in academic literature, with the two others
being political globalization and cultural globalization, as well as the
general term of globalization.
POVERTY
Poverty entails more than the lack of income and productive resources to
ensure sustainable livelihoods. Its manifestations include hunger and
malnutrition, limited access to education and other basic services,
social discrimination and exclusion as well as the lack of participation
in decision-making.
INEQUALITY
Inequality refers to the phenomenon of unequal and/or unjust distribution
of resources and opportunities among members of a given society. The term
inequality may mean different things to different people and in different
GLOBAL INCOME INEQUALITY
THE THIRD WORLD AND THE GLOBAL SOUTH
Word trade-has three elements core, semi-periphery, periphery.
1. Core
2. Semi-Periphery
3. Periphery

DURING COLD WAR (ECONOMIC STANDARD)

4. (FIRST WORLD) – USA and its allies
5. EASTHERN BLOCK (SECOND WORLD) – USSR (UNION SOVIET
SOCIALIST REPUBLIC) and its allies.
6. (THIRD WORLD) – AALA countries (ASSIA, AFRICA, LATIN
AMERICA)
THIRD WORD
• Countries that not aligned to USA nor USSR.
• AALA countries such as Africa and Latin America and other
nations that are not aligned.
• Undeveloped/underdeveloped or developing countries.
CHALLENGES OF THIRD WORLD COUNTRIES
▪ Basic Amenities
▪ Infrastructure
▪ Social
▪ Econo
BASIC AMENESTY SOCIAL

∙ Shortage of food ∙ Social and culture

∙ Scarcity of drinking ∙ Self-centered
∙ Traveled / Visa restriction
water
∙ Proper sanitation ∙ Population
∙ Cleanliness ∙ Environment
∙ Health and hygiene- home ECONOMIC
to diseases ∙ Over population
INFRASTRUCTURE ∙ Poverty
∙ Energy crisis ∙ Exploitation
∙ Transportation ∙ Unemployment
∙ Illiteracy
∙ Communication
∙ Lack of professionals and
specialist
THE GLOBAL SOUTH
⮚ Comprises of 49 countries least develop.
 
⮚ Used as alternative to “Third World” during cold war to
distinguish the developing nations.
 
⮚ Nations are often described as newly industrialized or in the
process of industrializing.
 
⮚ Unable to evolve an indigenous technology appropriate to their
own resources.
THE GLOBAL CITY
LEARNING OUTCOMES:
1. explain why globalization is a spatial phenomenon
2. identify the attributes of a global city, and
3. analyze how cities serve as engines of globalization

A global city is also known as a power city, world city, alpha

city, world center serves as a primary node in the
global economic network,  with varying degrees of influence over
finance, trade, and culture worldwide. 

If you had the chance, would you move to other countries?

 Why do we need to study global cities?
In this lesson will emphasize, that globalization is spatial 
1.First, globalization is spatial because it occurs in physical
spaces.
2.Second, globalization is spatial because what makes it move
is the fact that it is based in places.- 
•cities act on globalization and globalization acts on
cities.
Defining global city:
•Sociologist Saskia Sassen popularized the term "global city"
in the 1990s. identified three global cities: Newyork,
London, and Tokyo. The center of global finance at
capitalism. New York has the New York Stock Exchange (NYSE),
London has the Financial Times Stock Exchange (FTSE), and
Tokyo has the Nikkei. The global economy has changed
significantly since Sassen wrote her book, and any account
of the economic power of cities today must take note of the
latest developments. 
•movie-making mecca Los Angeles can now rival the Big Apple's
cultural influence. San Francisco must now factor in as
another global city because it is the home of the most
powerful internet companies-Facebook, Twitter, and Google.
Finally, the growth of the Chinese economy has turned cities
like Shanghai, Beijing, and Guangzhou into centers of trade
and finance. 

•The Chinese government reopened the Shanghai Stock Exchange

in late 1990 and since then, it has grown to become the
fifth-largest stock market in the world. In Australia, Sydney
commands the greatest proportion of capital. However,
Melbourne is described as Sydney's rival "global city"
because of many magazines. and lists have now referred to it
as the world's "most livable city" 
 Indicators for Globality

• Economic power-  Sassen remains correct in saying that

economic power largely determines which cities are global.
For example, New York may have the largest stock market in
the world but Tokyo houses the most corporate headquarters
(613 company headquarters as against 217 in New York, its
closest competitor) Shanghai may have a smaller stock
market compared to New York and Tokyo, but plays a
critical role in the global economic supply chain ever
since China has become the manufacturing center of the
world. Shanghai has the world's busiest container port,
moving over 33 million container units in 2013.
• Economic Opportunities- IT programmers and engineers from Asia
have moved to the San Francisco Bay Area to become some of the
key figures in Silicon Valley's technology. London remains a
preferred destination for many Filipinos with nursing degrees.
London remains a preferred destination for many Filipinos with
nursing degrees.
•Economic Competitiveness- To measure the economic
competitiveness of a city, The Economist Intelligence Unit has
added other criteria like market size, the purchasing power of
citizens, the size of the middle class,  and the potential for
growth. Based on these criteria, “tiny” Singapore is considered 
Asia’s most competitive city because of its strong market,
efficient and incorruptible government, and livability. It also
houses the regional offices of many major global corporations.

•Center of Authority- Global cities are also centers of

authority. Washing D.C. may not be as wealthy as New York, but
it is the seat of American state power. People around the world
know it major landmarks:
• White House 
• Capitol Building (Congress)
•  Supreme Court
• Lincoln Memorial
• Washington monument
•Political influence- The cities that house major
international organizations may also be considered
centers of political influence. The headquarters of the
United Nations is in New York, and that of the European
Union is in Brussels. An influential political city near
the Philippines is Jakarta, which is not just the capital
of Indonesia, but also the location of the main
headquarters of the  Association of   Southeast Asian
Nations (ASEAN). Powerful political hubs exert influence
on their own countries as well as on international
affairs. The European Central Bank, which oversees the
Euro (the European Union’s currency), is based in
Frankfurt. A decision made in that city can, therefore,
affect the political economy of an entire continent and
beyond. 
 
•Center of Higher Learning and Culture- global cities are
centers of higher learning and culture. A city’s intellectual
influence is seen through the influence of its publishing
industry. Many of the books that people read are published in
places like New York, London, or Paris. The New York Times
carries the name of New York City, but it is far from being a
local newspaper. People read it not just across America, but
also all over the world. One of the reasons many tourists
visit Boston is because they want to see   Harvard  
University   –   the world’s top   university. Education is
currently   Australia’s third largest export, just behind coal
and iron ore, and significantly ahead of tourism. Many  
Asianteenagers are moving to cities in  Australia because of
the leading   English-Language universities there. In 2015,
the   Australian government reported that it made as much as  
19.2   billion Australian dollars (roughly 14 billion US
dollars) from education alone. 
THEORIES OF GLOBAL STRATIFICATION

● A comparison of the
economic stability,
power, status, and
wealth between
countries; focusing on
the unequal
distribution of
resources.

● A system by which
society ranks
categories of people
in a hierarchy. 
 Modernization Theory
⮚ This theory frames global stratification as a function of
technological and cultural differences between nations.

⮚ Modernization theory is used to explain the process

of modernization within societies.

⮚ Modernization refers to a model of a progressive

transition from a "pre-modern" or "traditional" to a "modern"
society. Modernization theory suggests that traditional
societies will develop as they adopt more modern
WALT ROSTOW’S FOUR STAGES OF MODERNIZATION

Traditional stage
This is the primal stage of
any economy, small region or
entire country. To begin
with, there is no notion of
a centralized nation or
political system. The
economy survives qith the
most basic agricultural
methodologies and is still
largely dependent on hunting
and gathering.
Preconditions For Take-Off
As society stabilizes and increase in size, there is a need for
better,more productive and more efficient ways to carry out
agricultural tasks. These methods are not only required for food
crops, but also cash crops that need to be exported.
Take-off Stage
During the take-off stage, societies become largely economy-
based; instead of being driven by traditions, it is now driven
by economic processes. With increased internal and external
trade, globalization and urbanization increase.
Industrialization further proceeds with new and constant
technological breakthroughs.
 After an economy takes off,
there is continued growth, which
Drive To Maturity
is the economy’s drive to
maturity. This, according to
Rostow, is the stage where
economies have successfully
applied various modern
technologies to the majority of
their resources. This effort is
further applied to the entire
bulk of its economic activity.
The economy now finds its place
in the global frontier. It
produces things that it once
imported and new import demands
arise. As technology develops
further, new sectors emerge and
accelerate as old ones level
Age of Mass Consumption
The agriculture industry takes a further backseat as a new
industries begin to dominate the economy. Higher individual
economic mobility gives way to higher spending power for
individuals, which is used for buying secondary goods for
consumption.
Dependency Theory and the Latin American Experience

● 1500’s – European explorers spread throughout the

Americas, Africa and Asia claiming land or Europe.
● 1900’s – The United states soon sprawled out through the
North America and took control of Haiti, Puerto Rico,
Guam, the Philippines, the Hawaiian Islands and parts of
Panama and Cuba.
With colonialism came the exploitation of both natural and
human resources.

● The Transatlantic slave trade followed a triangular route

between Africa, the American and Caribbean colonies, and
Europe.
● The colonial model kept going strong.
– In 1870, only 10% of Africa was colonized. By 1940, only
Ethiopia and Liberia were not colonized.
• Under this colonial regime, European countries took control
of land and raw materials to funnel wealth back to the west.
• Most colonies lasted until the 1960’s and the last British
Colon, Hong Kong was finally granted independence in 1997.
After the Second World War
Why are so many countries in the world not developing?
• Traditional answer: because these countries are not
pursuing the right economic policies or their government are
authoritarian and corrupt.
• Latin Americans were critical of this answer and are
intrigued by their regions development which lead to the
conceptualization of the Dependency theory.
Dependency Theory
• Dependency is the condition in which the development of the
nation-states of the South contributed to a decline in their
independence and to an increase in economic development of the
countries of the North.
• It argues that liberal trade (free trade) causes greater
impoverishment, not economic improvement to less developed
countries.
Dependency theory
• Moreover, it sees trade protectionism through import
substitution as the key to self-sustaining path to development
not liberal trade or export.
• It also focuses on how poor countries have been wronged by
richer nations.
• It argues that in a world of finite resources, we cannot
understand why rich nations are rich without realizing that
those riches came at the expense of another country being poor.
• Global stratification starts with colonialism, in this view.
Dependency theory
• It was initially developed by Hans Singer and Raul Perish in
the 1950’s.
 Dependency theory
• Peripheral nations are counties that are less developed and
receive an unequal distribution of the world’s wealth.
• Core countries on the other hand are more industrialized
nations who receive the majority of the world’s wealth.
Its major assumptions
• Although generally divided into core or periphery, dependency
theorist recognize that there are a number of different kind of
states in the world.
• Even after de-colonization, there are still important ties
between the developed and less developed countries, which mainly
consists in the exploitation of peripheral natural resources and
workforce by the center.
• It argues that the development of peripheral nations is
stagnant because of the exploitative nature of the core nations.
• Less developed countries are said to primarily serve the
interests of wealthier countries and end up having little to no
resources to put toward their own development.
 Two main sub theories:
• North American Neo-Marxist Approach
• Latin American structuralism Approach

North American Neo-Marxist Approach

• Its proponent Andre Gunder Frank (1969) argued against the idea
that less developed countries would develop by following the path
taken by less developed countries.
• As the path taken by the developed countries does not guarantee
the same fate for the underdeveloped countries.
• Frank also rejected the idea that internal sources/ problems
cause a country’s underdevelopment.
• Rather, it is their dependency to capitalist system that causes
lack of development.
 Latin American Structuralist Approach
• Palma (1978) noted that the main reason for Latin
American’s underdevelopment was the excessive reliance on
exports of primary commodities (agricultural products and
food) which were the object of changing process and a downward
trend in the relative value in the long term.
• As a result of the influence of structuralist approach, most
Latin American countries adopted strategies to achieve
autonomous and self-sustaining development.
• By diversifying exports, accelerating industrialization
through import substitution, erecting High tariff walls –
which reduced the regions dependence on foreign goods and
thus, the developed North.
Historical-structural Approach

• Cardoso and Faletto argues that dependency is not a general theory of

underdevelopment but a methodology for the analysis of concrete
situations of dependency.
• Cardoso and Faletto believed that Latin American economies were the
results of capitalist expansion in the United States and Europe.
• This approach did not just focus on the asymmetrical relations
between countries but also among groups and classes both between and
within nation.
• What differentiates it form other approaches is: “the identification
of interest networks – business, technocrats, the military, the middle
class – that bind the dynamics of local political and economic
processes to material and political interests in the industrialized
world.
• It saw development as historically open-ended and allowed for the
possibility that the nature of dependent relations could change over
time.
• What differentiates it form other approaches is: “the
identification of interest networks – business, technocrats,
the military, the middle class – that bind the dynamics of
local political and economic processes to material and
political interests in the industrialized world.

• It saw development as historically open-ended and allowed

for the possibility that the nature of dependent relations
could change over time.
THE MODERN WORLD SYSTEM
• Immanuel Wallerstein
• He called the capitalist world economy
• Wallerstein describe "high-income nation" as the "core" of the world
economy.
• Wallerstein called the "periphery" those "low income countries"
•While "semi-periphery" are considered as "middle-income countries"
• CORE (U.S, Japan, Germany)
— Is the manufacturing base of the planet where resources funnel in to
become the technology and wealth enjoyed by the western world today.
• PERIPHERY (most African countries and low income countries in South
America)
— Whose natural resources and labor support the wealthier countries first
as colonies and now by working multinational corporations under
neocolonialism.
• SEMI-PERIPHERY (South Korea, Taiwan, Mexico, Brazil, India,
Nigeria)
— Countries that have closer ties to the global economic core.
THE CIRCUMSTANCES
• Poor nations tend to have few resources to export to rich
countries.

• Corporations can buy these raw materials cheaply and then

process and sell them in richer nations.

• Poor countries are also more likely to lack industrial

capacity, so they have to import expensive manufactured goods
from richer nations.

It is not that there is last of global wealth: it is that we do

not distribute it well.
 Group 2
Cordova, Jessa Nuñez, Ericka Mae
Canilang, Mary Jane Ofiana, Maydalyn
Capacite, Rose Mia Sabitchana, Jaychelle Ann
Ferrer, Marlene May Villegas, Jellienel
THANK YOU FOR LISTENING!