Global economy

EIGHT MILLENNIUM DEVELOPMENT GOALS

The eight goals include:

Having a global partnership for development.

Improving maternal health

Combating diseases like HIV/AIDS and malaria

Ensuring environmental sustainability

Achieving universal primary education

Promoting gender equality and women empowerment

Reducing child mortality

ECONOMY

• The process or system by which goods and services are produced, sold, and bought in a country or region.

• The system of production, distribution , and consumption.

GLOBAL ECONOMY

• It refers to the increasing interdependence of world economies as 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 is a world-wide economic activity between various countries that are considered intertwined and thus can affect other countries negatively or positively.

Two types of economy

PROTECTIONISM

A policy of systematic government intervention in foreign trade with the objective of encouraging domestic production

TRADE LIBERALIZATION

Technological advances in transportation and communication means goods and services move around the world more easily than ever

It is the removal or reduction of restrictions or barriers on the free exchange of goods between nations.

FAIR TRADE

It is concerned with:

▪ Protection of workers

▪ Establishment of more just prices

▪ Engagement in sustainable production

▪ Creation of relationships between producers and consumers

▪ Promotion of safe working environment

as defined the International Fair Trade Association, is the concern for

social , economicand environmental well -being of marginalized

small producers

ECONOMIC GROWTH

an increase in the amount of goods and services produced per head of the population over a period of time.

• To be most accurate, the measurement must remove the effects of inflation.

GDP = private consumption + gross investment

+ government investment + government

spending + (exports – imports).

Gross Domestic Product (GDP) is the best way to measure economic growth. It takes into account the country's entire economic output.

STRATIFICATION

refers to a system by which a society ranks categories of people in a hierarchy.

It is perfectly clear that some groups have greater status, power, and wealth than other groups. These differences are what led to social stratification.

Multiplier effect

an increase in one economic activity can lead to an increase in other economic activities

THEORIES OF STRATIFICATION

(1) MODERNIZATION THEORY

This theory frames global stratification as a function of technological and cultural differences between nations.

Two pinpoints of modernization theory

Columbian exhange

• refers to the spread of goods, tech, education, and diseases between the Americas and Europe after Christopher Columbus’s so called discovery of the Americas.

INDUSTRIAL REVOLUTION

• This is when new technologies, like steam power and mechanization, allowed countries to replace human labor with machines and increase productivity.

(2) WALT ROSTOW’S STAGES OF MODERNIZATION

According to Walt Rostow, modernization in the West took place, as it always tends to, in 5 stages:

1. Traditional Stage

refers to societies that are structured around small, local communities with production being done in family settings, most of their time is spent on laboring, which creates strict social hierarchy.

2. Preconditions for Take-Off Stage

3. Take-Off Stage

People begin to use their individual talents to produce things beyond the necessities.

4. Technological Maturity Stage

Technological growth of earlier periods begins to bear fruit in the form of population growth, reduction in poverty levels, and more diverse job opportunities.

5. High Mass Consumption Stage

It is when a country is big enough that production becomes more about wants than needs.

(3) DEPENDENCY THEORY AND THE LATIN AMERICAN EXPERIENCE

This theory was the product of the Latin American experience. “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 (Cardoso and Felato, 1979). This theory argues that liberal trade causes greater impoverishment, not economic improvement, to less developed countries.

Core nations

more industrialized nations,received much of the world’s wealth.

Semi-peripheral nations

middle income nations, closer ties to the global economic core

Peripheral nations

less developed and receive unequal distributions

(4) THE MODERN WORLD-SYSTEMS

This history of colonialism inspired American sociologist Immanuel Wallerstein the model of what he called the capitalist world economy. In Wallerstein’s model ,the periphery remains economically dependent on the core in a number of ways; Poor nations tend to have few resources to export to rich countries.

North American Free Trade Agreement

(NAFTA)