CHAPTER 2( Structures of Globalization)
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 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.
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.