CHAPTER 2: THE GLOBAL ECONOMY

Is the world economy or the worldwide economy

Global Economy

Is the economy of every country

Global Economy

A one giant entity

Global Economy

A system of trade and industry

Global Economy

It operate as one system

Global Economy

Dimensions of Global Economy

1) Globalization of trade of goods and services

2) Globalization of financial and capital markets

3) Globalization of technology communication

4) Globalization of production

Is about extension of economic activities of nation states across borders

Internalization

Is functional integration between internationally dispersed activities

Global Economy/Economic Globalization

The worst economic downturn in the history

Great Depression

A sustained, long-term downturn in economic activity in on or more economies

Economic Depression

An extreme form of recession

Economic Depression

Causes of the Great Depression

1) Over production

2) High demand and prices during WW1

3) Decrease in consumer spending

4) Rising prices, low wages

5) High tariffs

A global war that lasted from 1939 to 1945 worsen the Great Depression

World War 2

What year was the WW2 lasted?

From 1939 to 1945

Formally known as the United Nations Monetary and Financial Conference

Bretton Woods Conference

Bretton Woods Conference is formally known  as the _____

United Nations Monetary and Financial Conference

Agenda of Bretton Woods Conference

1) Establishment of an International Monetary Fund (IMF)

2) Establishment of the International Bank for Reconstruction and Development (IBRD)

To promote stability of exchange rates and financial flows

Establishment of International Monetary Fund (IMF)

To foster economic development through lending to build infrastructure

Establishment of International Bank for Reconstruction and Development (IBRD)

IMF

International Monetary Fund

IBRD

International Bank for Reconstruction and Development

Three Bretton Woods Institutions

1) International Monetary Fund

2) World Bank

3) General Agreement on Tariffs and Trade

How many countries are there in International Monetary Fund?

189 countries

The first country to borrow in International Monetary Fund

France

Designed to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment, sustainable economic growth, and reduce poverty

International Monetary Fund

IMF Fundamental Mission

1) Economic Surveillance

2) Lending

3) Capacity Development

Designed to finance projects that enhance the economic development of member states

World Bank

It provides technical assistance and advice

World Bank

It was later replaced by the World Trade Organization (WTO)

General Agreement on Tariffs and Trade

Served as forum for trade negotiations

General Agreement on Tariffs and Trade

Two Types of Economic Policy

1) Liberal Policy

2) Protectionism

Liberalization, deregulation, privatization

Liberal Policy

Tariff and non-tariff barrier, quotas, subsidies

Protectionism