Chapter 2 GE 104 (Contemporary World).docx - CHAPTER 2...

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CHAPTER 2( Structures of Globalization) Learning outcomes At the end of the lesson, the students should be able to: Define economic Globalization Identify the factors that facilitate economic globalization Define modern world system Articulate a stance on global economic integration Global Economy Global economy is also referred to as world economy. It refers to the international exchange of goods and services that is expressed in monetary units of money. It may also maen as free movement of goods, capital, services, technology and information. World economy is exclusively limited to human economic activity and is typically judged in monetary terms. Typical examples are illegal drugs and other black market goods which by standard are a part of world economy, but for which these is by definition no legal market of any kind. Global economy or economic globalization is concerned on the globalization of production, finance, markets, technology, organizational regimes, institutions corporations and labor. Market integration When prices among different location or related goods follows the same patterns over a long period of time, MARKET INTEGRATION EXIST. Similarly when groups of prices often move proportionally to each other and when this relation is very clear among different markets it is said that the markets are integrated. Hence, it could be concluded that the market integration is an indicator that explains how much different markets are related to each other. Role of International Financial Institution in the Creation of Global Economy Let us first define International Financial Institution (IFIS). An international institution is chartered by more than one country and therefore are subjects to international law. Its owners or shareholders are generally national governments, although other international institutions and other organizations occasionally figure as shareholders. The most prominent IFIs are creations of multiple nations, although some bilateral financial institutions (created by two countries) exist and are technically IFIs. The best known IFIs were established after World War II to assist in the reconstruction of Europe and provide mechanisms for international cooperation in managing the global financial system.
Today, the world’s largest IFI is the European Investment Bank, with a balance sheet size of €573 billion in 2016. This compares to the two components of the World Bank, the IBRD (assets of $358 billion in 2014) and the IDA (assets of $180 billion in 2014). For comparison, the largest commercial banks each have assets of c.$2,000-3,000 billion. (Source Website) The International Financial Institutions (IFIs) are: 1. International Monetary Fund (IMF) 2. Multilateral Development Banks (MDBs) which include a. World Bank Group b. African Development Bank c. Asian Development Bank d. Inter-American Development Bank e. European Bank for Reconstruction and Development The last four (4) of these each focus on single world region and thus are often called Regional Development Banks (RDB).

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