THE GLOBAL

ECONOMY
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8 MILLENNIUM DEVELOPMENT GOALS
• Created by the United Nations (UN) in the 1990s to address the
different problems in the world.
• In September 2000, 189 countries recognized the importance of
developing this partnerships that aimed to reduce extreme
poverty by 2015 through the achievement of the set target.

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8 MILLENNIUM DEVELOPMENT GOALS

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INDICATORS
1. Reduce by half the
proportion of people
living on less than a
dollar a day.
2. Achieve full and
productive
employment and
decent work for all,
including women and
young people.
3. Reduce by half the
proportion of people
who suffer from
hunger.
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INDICATORS
1. Ensure that all
boys and girls
complete a full
course of primary
schooling.

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INDICATORS
1. Eliminate gender
disparity in
primary and
secondary
education
preferably by 2005,
and at all levels by
2015.

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INDICATORS
1. Reduce by two
thirds the
mortality rate
among children
under five.

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INDICATORS
1. Reduce by three
quarters the
maternal mortality
ratio.
2. Achieve, by 2015,
universal access
to reproductive
health.

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INDICATORS
1. Stop and begin to
reverse the spread of
HIV/AIDS.
2. Achieve, by 2010,
universal access to
treatment for
HIV/AIDS for all
those who need it.
3. Halt and begin to
reverse the incidence
of malaria and other
major diseases

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INDICATORS
1. Integrate the principles of
sustainable development into
country policies and
programmes; reverse loss of
environmental resources.
2. Reduce by half the
proportion of people
without sustainable access
to safe drinking water and
basic sanitation.
3. Achieve significant
improvement in lives of at
least 100 million slum
dwellers, by 2020

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INDICATORS
1. Develop further an open, rule-
based, predictable, non-
discriminatory trading and
financial system.
2. Address the special needs of the
least developed countries.
3. Address the special needs of
landlocked developing countries
and small island developing States
(through the Programme of Action
for the Sustainable Development
of Small Island Developing States
and the outcome of the twenty-
second special session of the
General Assembly).
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INDICATORS
4. Deal comprehensively with the debt
problems of developing countries
through national and international
measures in order to make debt
sustainable in the long term.
5. In cooperation with pharmaceutical
companies, provide access to
affordable essential drugs in
developing countries.
6. In cooperation with the private
sector, make available the benefits of
new technologies, especially
information and communications

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MILLENIUM DEVELOPMENT GOALS
• Poverty Line or Poverty Threshold
– a situation wherein a person is officially living in poverty if he makes
less than 100, 534 Pesos a year, around 275 Pesos a day.
• Poverty
– is a condition characterized by severe deprivation of basic human
needs including food, safe drinking water, sanitation facilities, health,
shelter education, and information.
• The organization aims to eliminate extreme poverty for all people by 2030.

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ACCORDING TO UNITED NATIONS (2015)
REPORT…

• From 1.9 billion people living in poverty it is now

down to 836 million.
• The World Bank predicted that by 2030 the number
of people living in extreme poverty could drop to less
than 400 million.

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WHY IS EXTREME POVERTY FALLING?
• There are different factors that contributes like better access to
EDUCATION, HUMANITARIAN AID, and the POLICIES of
International Organizations like the UN have MADE A
DIFFERENCE.
• However, the GREATEST contributor is ECONOMIC
GLOBALIZATION. The world’s economies have become more
interconnected and free trade has driven the growth of many
developing economies.

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THE GLOBAL ECONOMY:
A Historical Process

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ECONOMIC GLOBALIZATION AND GLOBAL TRADE

• BIMETALLISM
– is a monetary system where
the value of money is based
on two different metals -
the gold and silver.
– it was during 15th century

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ECONOMIC GLOBALIZATION AND GLOBAL TRADE
• GOLD STANDARD
– It is a monetary system where a country's
currency or money has a value directly
linked to gold.
– With the gold standard, countries agreed to
convert paper money into a fixed amount
of gold.

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ECONOMIC GLOBALIZATION AND GLOBAL TRADE
• GOLD STANDARD
– A country that uses the gold standard
sets a fixed price for gold and buys
and sells gold at that price. That
fixed price is used to determine the
value of the currency.”
– It was proposed by the U.S during
18th century which makes this as the
first international currency.
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ECONOMIC GLOBALIZATION AND GLOBAL TRADE
• PUMP PRIMING
– is the action taken to
stimulate an economy.
– is funding the local
businesses but in exchange
those businesses should
pay 5% tax to the
government.

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ECONOMIC GLOBALIZATION AND GLOBAL TRADE

• GREAT DEPRESSION
– was a severe worldwide
economic depression preceding
the World War II.
– 1929 to1939 when USA
experienced Great Depression.

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THE COMING OF GREAT DEPRESSION
During the 1920s, many Americans enjoyed what seemed like an endless era of prosperity. But in
1929, the stock market crashed.

World Wars loans.

Declining trade.
Production fell, unemployment rose, and the economy went into a period of
dramatic decline.
Years after the Great Depression began, periodic contraction was seen as part of the
business cycle.
Economic historians usually attribute the start of the Great Depression to the sudden devastating
collapse of US stock market prices on October 29, 1929, known as Black Tuesday.
By mid-1930, interest rates had dropped to low levels, but expected deflation and the continuing
reluctance of people to borrow meant that consumer spending and investment were depressed.
By May 1930, automobile sales had declined to below the levels of 1928. Prices in general began to
decline, although wages held steady in 1930; but then a deflationary spiral started in 1931.
Conditions were worse in farming areas, where commodity prices plunged, and in mining and
logging areas, where SOCSCI
unemployment was highWORLD
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HOW DID GREAT DEPRESSION END?

• INVENTIONS
1. HENRY FORD
– He is the owner of Ford
Motors.
– Supplier of Military
Jeepney.

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HOW DID GREAT DEPRESSION END?

• INVENTIONS
– Railings or Train System that used coal or steam to
function

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HOW DID GREAT DEPRESSION END?

• ALDRICH – VREELAND ACT

– aims to help the local businesses
inside the USA by giving
financial support/funds in
exchange of 5% tax.
– that 5% tax goes to emergency
fund.

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ALDRICH – VREELAND ACT

NELSON W. ALDRICH EDWARD B. VREELAND

(1841 – 1915) (1856 – 1936)
U.S Senator from Rhode Island U.S Representative from New York
(1881 – 1911) (1899 – 1913)

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AFTER WORLD WAR II
The ECONOMIC POLICY shifted from PROTECTIONISM to
TRADE LIBERALIZATION.

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ECONOMIC GLOBALIZATION AND GLOBAL TRADE
Free Trade Agreements and Technological Advances in
transportation and communication means that the goods and
services move around the world more easily than ever.

There are INNOVATIONS on the products and services which will

benefit the customers as well as the producers.

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BANKING AND
PAYMENT SYSTEM

TRANSPORTATION EDUCATION

COMMUNICATION INFORMATION

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ECONOMIC GLOBALIZATION AND GLOBAL TRADE

• LEAPFROGGING
– is the idea that countries can skip straight to more efficient and
cost-effective technologies that were not available in the past.
• FAIR TRADE
– is the concern for the social, economic, and environmental well-
being of disregarded small producers.
– more moral and equitable global economic system

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FAIR TRADE
is concerned with PROTECTION OF WORKERS and
PRODUCERS, establishment of more FAIR PRICES, engagement in
ENVIRONMENTALLY SOUND PRACTICES and
SUSTAINABLE PRODUCTION, creation of RELATIONSHIPS
between PRODUCERS in the South and CONSUMERS in the North,
and promotion of SAFE WORKING ENVIRONMENT.

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TRANSPORTATION AND
COMMUNICATIONS REVOLUTION
Improving Technology for Transportation and Communication System

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HOW DID THIS AFFECT THE INDUSTRIAL
REVOLUTION?

1. When technology did improve, it allowed

more food and supplies to be conveyed to
and from everywhere, bringing more
money into the country.

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HOW DID THIS AFFECT THE INDUSTRIAL
REVOLUTION?
2. This destroyed “cottage industry” and it forced
people to move to the city if they wanted to make
money.
– “COTTAGE INDUSTRY is a small business that is run
from someone’s house.

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ATTRIBUTES OF ECONOMIC GLOBALIZATION

The globalization of trade of goods and services.

The globalization of financial and capital markets.

The globalization of technology and communication.

The globalization of production.

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GROSS DOMESTIC PRODUCT
• It measures the value of economic activity within
country. It is the sum of the market values, or prices, of
all final goods and services produced in an economy
during a period of time.
• It is a number the expresses the worth of the output of
a country in local currency.

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HOW DO YOU CALCULATE THE GDP?
• FORMULA:
GDP = C + I + G (X-M)
• WHERE:
 C= private CONSUMPTION
 I= gross INVESTMENT
 G= GOVERNMENT spending
 X= EXPORTS
 M= IMPORTS
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LET’S SOLVE…
GDP = C + I + G (X-M)
C= $ 650
I= $ 150
G= $ 200
X= $50
M= $30
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SOLUTION…
GDP = $650 + $150 + $200 ( $50-$30)

GDP = $1000 ($20)

GDP = $20,000

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GDP COMPUTATION: CONTRIBUTION TO GDP

Final good Price Quantity Contribution to GDP

2011 Bread $3 100 $ 300

Butter $2 50 $ 100
Total 400

2012 Bread $4 125 $ 500

Butter $2.50 60 $ 150
Total 650

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THERE ARE TWO WAYS THAT GDP
CAN INCREASE:

1. An increase in the PRICES of goods and

services.
2. An increase in the QUANTITY of goods and
services.

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WHAT IS NOMINAL AND REAL GDP?
• NOMINAL GDP
– is the GDP evaluated at CURRENT MARKET PRICES.
– will include all of the changes in market prices that have
occurred during the current year due to inflation or deflation.
• REAL GDP
– is the sum-total of the economic output produced in a year values
at a PRE-DETERMINED BASE MARKET PRICE.

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GROWTH RATE
– measures how fast the economy is growing.
– It does this by comparing one quarter of the
county’s gross domestic product to the previous
quarter.

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GDP DEFLATOR
–is a tool used to measure the level of price
changes over time so that current prices can be
accurately compared to historical price.
PRICE LEVEL
– a measure of the average prices of goods and
services in the economy.

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THE ACTORS OF ECONOMIC
GLOBALIZATION
1. Nation
2. Global Corporations
3. International Monetary Systems
4. International Financial Institutions

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THE ACTORS OF ECONOMIC GLOBALIZATION

1. NATION
People consume highly standardized global products and
services produced by global corporations in a borderless
world.
There is no national product and national companies.

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THE ACTORS OF ECONOMIC GLOBALIZATION
2. GLOBAL CORPORATIONS
Multinational/Transnational Corporations
– is registered in more than one country or that has operations in
more than one country.
– is a large corporation which both produces and sells goods and
services in various countries.
– the country where the head quarter is located is called the
HOME COUNTRY, whereas the other countries with
operational branches are called the HOST COUNTRIES.
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THE ACTORS OF ECONOMIC GLOBALIZATION
3. INTERNATIONAL MONETARY SYSTEM
- Rules, customs, instruments, facilities, and
organizations for effecting international payments
- Facilitates cross-border transactions involving trade
and investments.
- It is an institutional arrangements that countries adopt
to govern exchange rates.

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FLOATING EXCHANGE RATE
– It is a system exist when a country allows the foreign exchange
market to determine the relative value of a currency.
– The U.S. dollar, the EU euro, the Japanese yen, and the British
pound – all float freely against each other.
– Their values are determined by market forces and fluctuate
day to day.
THE ACTORS OF ECONOMIC GLOBALIZATION
4. International Financial Institutions
- World Bank (WB)
- International Monetary Fund (IMF)
- Asian Development Bank
- African Development Bank

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END

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