Chapter 2

CHAPTER 2
THE GLOBAL ECONOMY

INTRODUCTION
 United Nations (UN) – have Eight Millennium Development Goals (1990)
1. extreme poverty and hunger
2. achieving primary universal education
3. promoting gender equality and women empowerment
4. reducing child mortality
5. improving maternal health
6. combating diseases
7. ensuring environment sustainability
8. having global partnership for development
They tried to achieve them by the year 2015.

 In Philippines a person is officially living in poverty if he makes less than 100,534
pesos a year, or around 275 pesos a day. This is called the poverty line or poverty
threshold.
 The UN organization aims to eliminate extreme poverty for all people by 2030.
 The UN(2015) 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.
 World bank predicted that by 2030 the number of people living in extreme
poverty could drop to less than 400 million.
Why is extreme poverty falling?
 The answer is really complicated a set of factors like better

access to education, humanitarian aid, and the policies of
international organizations like UN. However, the greatest
contributor is economic globalization.
Economic Globalization and Global Trade
 According to UN – economic globalization refers to

the increasing interdependence of the world
economies as a result of growing scale of cross
border trade of commodities and services, and wide
and rapid spread of technologies.
2 different types of economies associated with
economic globalization
 PROTECTIONISM – a policy of systematic government intervention in
foreign trade with the objective of
encouraging domestic
production. This encouragement
involves giving preferential treatment to domestic
producers and discriminating against foreign
competitors.
 TRADE LIBERALIZATION OR FREE TRADE – agreements and

technological advances in
transportation and
communication mean goods and services move
around the world more easily than ever.
Economic Globalization and Sustainable
Development
 One significant global response or approach to economic
globalization is that of sustainable development, which seeks
to chart a middle path between economic growth and
sustainable environment.
 Continuous production of the world’s natural resources such as
water and fossil fuel allows humanity to discover and innovate
things. We were able to utilize energy, discover new
technologies, and make advancements in transportation and
communication.
Environmental Degradation
 Economic development, was hastened by the industrial

revolution. This is the period of human history that made
possible the cycle of efficiency. This cycle harms the
planet in a number of ways. Earth’s atmosphere is
damaged by more carbon emissions from factories around
the world.
Food Security
 Global food security means delivering sufficient food to the entire world
population, therefore a priority of all countries, whether developed or less
developed.
 Security of food also means the sustainability of society such as population

growth, climate change, water scarcity, and agriculture.
e.g:
 India is the second biggest producer of fruits and

vegetables in the world. Yet according the Food and
Agriculture Organization(FAO) of the United Nations,
some 194 million Indians are undernourished, the largest
number of hungry people in any single country. A third of
the world’s malnourished children live in India.
Economic Globalization, poverty and
Inequality
 Swedish statistician Hans Rosling said the 1 to 2 billion poorest in the world who
don’t have food for the day suffer from the worst disease, globalization
deficiency. The way globalization is occurring could be much better, but the worst
thing is not being part of it.
 Economic and trade globalization is the result of companies trying to

outmaneuver their competitors. They find the cheapest sources and of course
labor. This process creates winners and losers. The winners include corporations
and their stockholders who earn more profit. They also include consumers who
get products at a cheaper price. The losers are the high wageworkers who use to
make those products.
Microcredit – a simple idea of Bagladeshi professor named
Muhammad Yunos who won nobel peace prize in 2006.
 He gave small loans on average around $100, to low income people in rural areas
to start small businesses.
 Microcredit was a success to developing countries throughout the world. By itself

microcredit is not going to solve the problem of extreme poverty but it supports
the idea that enabling people to participate in the economy can make their lives
better.
 Yunus (2012) explained “ in my experience, poor people are the world’s greatest
entrepreneurs. Every day they must innovate in order to survive. They remain
poor because they do not have the opportunities to turn their creativity into
sustainable income.
Global Income Inequality
 TWO MAIN TYPES OF ECONOMIC INEQUALITY:
WEALTH INEQUALITY – speaks about the distribution of assets. However there is

no widely recognized, monetary measure that sums up these assets.
WEALTH – net worth of a country.
INCOME INEQUALITY – mean the new earnings are being distributed; it values the
flow of goods and services, not a stock of assets.
Branco milanovic(2011) an economist in
global inequality
 Explained by describing “economic big bang” wherein the
industrial revolution caused the differences among the
countries. Through this “explosion” of industry and
modern technology, some nations become economically
developed while others were developing. Ultimately the
result is the economic gap among countries. The gap
between the richest and the poorest nations are greater
today than in the past.
 Access to technology also contributed to worldwide income
inequality. WHY IS IT?
 Because it complemented skilled workers but replaced many

unskilled workers. This is what economists referred to skill-based
technological change. As a result workers who are more educated
and more skilled would thrive in those jobs by receiving higher
wages. On the other hand the skilled workers fall behind.
 In addition, manufacturing jobs that require low skills are moved

overseas. The result is the widening gap between rich and poor as
well as between high-skilled and low-skilled workers.
A BRIEF REMINDER THAT WE
MUST REMEMBER ALWAYS!!!
ECONOMIC GLOBALIZATION HAS
HELPED MILLIONS OF PEOPLE GET
OUT OF EXTREME POVERTY BUT THE
CHALLENGE OF THE FUTURE IS TO
LIFT UP THE POOR WHILE AT THE
SAME TIME KEEP THE PLANET
LIVABLE.
THE THIRD WORLD AND THE
GLOBAL
SOUTH

Third world countries, which started as just a vague catchall term for non-alliance
countries, came to be associated with impoverished states.
 First world countries was associated with rich, industrialized countries. --Western
Capitalist were labelled as “first world”.
 Soviet Union and its allies were termed the ”Second World”.
 The terms date back to the Cold War, when Western policymakers began talking
about the world as three distinct political, economic blocs.
 Nowadays, social scientists sort countries into groups based on their specific
levels of economic productivity. To do this, they use the;
 Gross Domestic product (GDP) – Which measures the total output of

a country.
 Gross National Income (GNI) – Which measures GDP per capita

First World Countries
 United States, Canada, Western Europe, and developed part of Asia are regarded
as the “Global North”.
 While “Global South” includes the Caribbean, Latin America, South America,
Africa, and parts of Asia.
 These countries were used to be called the Third World during the cold war.
 The terms ” Global North” and “Global South” are a way for countries in the
south to make a stand about the common issues , problems, and even causes in
order to have equality all throughout the world.
 These distinctions point largely to racial inequality, specifically between the Black
and White.
 According to Ritzer (2015), “ at the global level, whites are disproportionately in

the dominant north, while backs are primarily in the south; although this is
changing with South-to-North migration”.
 In other words the difference between the Global North and the Global South are
shaped by migration and globalization. Nevertheless the economic differences
between the wealthy Global North and poor Global South “have always possessed
a racial character”.
THE GLOBAL CITY
 The rural-urban differentiation has a significant relationship to globalization.
 Sassen (1991) used the concept of global cities to describe the three urban centers
of New York, London, and Tokyo as economic centers that exert control over the
world’s political economy. World cities are categorized as such based on the
global reach of organizations found in them. Not only are there inequalities
between these cities, there also exists inequalities within each city.
THEORIES OF GLOBAL
STRATIFICATION
 For much of human history, all of the societies on earth
were poor. Poverty was the norm for everyone but
obviously, that is not the case anymore. Just as you find
stratification among socioeconomic classes within a
society like the Philippines, you would also see across the
world a pattern of global stratification with inequalities in
wealth and power between societies.
MODERNIZATION THEORY
 This theory frames global stratification as a function of technological and cultural
differences between nations.
 Two historical events that contributed to Western Europe developing at a faster
rate than much of the rest of the world.
 First event is known as the Columbian Exchange. This refers to the spread of
goods, technology, education, and diseases between the Americas and Europe
after Christopher Columbus so called “discovery of the Americas”
 The second historical event is the industrial revolution in the eighteenth and
nineteenth centuries. This is when new technologies, like steam power and
mechanization, allowed countries to replace human labor with machines and
increased productivity .
WALT ROSTOW’S FOUR SATGES OF
MODERNIZATION
 1. TRADITIONAL STAGE – refers to societies that are structured around
small, local communities with
production
typically being done in family settings. Because
these societies have limited resources and
technology, most of their
time is spent on
laboring to produce food, which create a strict
social hierarchy.
 2. TAKE-OFF STAGE – people begin to use their individual talents to

produce things beyond the
necessities. This
innovation creates new markets for trade.
 3. DRIVE TO TECHNOLOGICAL MATURITY – which technological
growth of
the earlier periods begins to bear
fruit in the form of population growth,
reductions in absolute
poverty levels, and
more diverse job opportunities .
 4. HIGH MASS CONSUMPTION – it is when your country is big enough that

production becomes more about wants than needs.
Modernization Theory
 Argues that if you invest capital in better technologies, they will eventually raise
production enough that there will be more wealth to go around and overall well-
being will go up.
Critics of Modernization Theory
 Argue that in many ways it is just a new name for the idea that capitalism is the
only way for a country to develop. The critics point out that even as technology
has improved throughout then world, a lot of countries have been left behind. And
the critics also see it as blaming the victim.
THE END!!!
GOD BLESS US
ALL!!!

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CHAPTER 2

THE GLOBAL ECONOMY

They tried to achieve them by the year 2015.

 The answer is really complicated a set of factors like better

 According to UN – economic globalization refers to

 TRADE LIBERALIZATION OR FREE TRADE – agreements and

 Economic development, was hastened by the industrial

 Security of food also means the sustainability of society such as population

 India is the second biggest producer of fruits and

 Economic and trade globalization is the result of companies trying to

 Microcredit was a success to developing countries throughout the world. By itself

 TWO MAIN TYPES OF ECONOMIC INEQUALITY:

WEALTH INEQUALITY – speaks about the distribution of assets. However there is

 Because it complemented skilled workers but replaced many

 In addition, manufacturing jobs that require low skills are moved

 Gross Domestic product (GDP) – Which measures the total output of

 Gross National Income (GNI) – Which measures GDP per capita

 According to Ritzer (2015), “ at the global level, whites are disproportionately in

 The rural-urban differentiation has a significant relationship to globalization.

 2. TAKE-OFF STAGE – people begin to use their individual talents to

 4. HIGH MASS CONSUMPTION – it is when your country is big enough that

Critics of Modernization Theory

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