Market Integration
What is marke Integration?
Market integration is the interconnectivity of
Prices among different locations or related
Goods. Reduced transportation costs, the
Minimisation of trade barriers, and
Advancements in communication technology
Have all contributed to increased market
Integration.
The three-sector
Model in economics
1. Primary Sector of an economy removes or harvests products
directly from the earth in order to produce raw materials or
food.
2. Secondary Sector this involves taking those raw materials and
turning them into products.
3. Tertiary Sector this focuses on providing services instead of
making goods.
The economy has become more Complex. This chapter will look at
How various financial institutions Have helped the global economy
Grow. It will also discuss the history Of the global market through
Different economic changes and Examine how multinational
Companies impact today’s Economy.
International
Financial Institutions
Strengthening sustainability policies and governance in
strategically important institutions—including the multilateral
development banks to promote financing for sustainable activities
and discourage financing for unsustainable ones.
The Bretton Woods System
Was created after World War II to help stabilize the global economy
and promote cooperation among countries, especially after the
chaos of earlier wars and the Great Depression.
The Bretton Woods system had five Main parts
1. Gold Value countries based their money on gold, with
The U.S. dollar valued at 35 dollars for one ounce of gold,
And other currencies linked to it.
2. Currency Exchange Agreement central banks agreed
To exchange their currencies at fixed rates, allowing
Slight changes (1%).
3. IMF Oversight the International Monetary Fund (IMF) was
Created to monitor exchange rates and ensure stability.
4. Free Trade countries allowed their currencies to be used
Freely for international buying and selling.
5. U.S. Dollar Dominance the U.S. dollar became the main
Currency for global trade, making it very important.
The General Agreement on Tariffs and Trade (GATT) and The World
Trade
Organization (WTO)
The Bretton Woods system significantly impacted global trade and
Finance, leading to the establishment of the General Agreement on
Tariffs and ,Trade (GATT) in 1947. The World Trade Organization
(WTO) emerged in 1986, focusing on trade in services, non-tariff
Barriers, and broader areas of trade liberalization. However,
criticisms
Include trade barriers created by developed countries, influenced
Decision-making, and lack of involvement from INGOS.
The International Monetary Fund (IMF) and the World Bank
Were established after World War II to promote peace and economic
stability. They were designed to complement each other, with IMF
providing financial assistance to troubled countries and the World
Bank focusing on poverty eradication.
The Organization for Economic Cooperation and Development
(OECD), The Organization of Petroleum Exporting Countries (OPEC),
and the
European Union (EU)
The OECD, OPEC, and EU are influential global organizations with 35
member states. OECD is influential due to member countries’
resources and economic power. OPEC, formed in 1960, aims to
increase oil prices. EU, with 28 member states, has faced criticism
for increasing prices and affecting economic growth.
North american free Trade agreement (nafta)
Is a trade pact between the United States,mexico and Canada on
january 1,1994 when mexico joined the two other nations. It was
first created in 1989 with the only canada and the United States as
trading partners.
NAFTA helps in developing and expanding world trade by
broadening international cooperation. It also aims to increase
cooperation for improving working conditions in North America by
reducing barriers to trade as it expands the markets of three
countries.
History of global
Market integration
Before the rise of today’s modern economy people only produce
for their family. Nowadays economy demands the different sectors
to work together in order to produce distribute and exchange
product and services.
What cause this shift in the way people Produce for their needs?
In order to understand this we will be going back In time 12,000
years ago
The agricultural revolution And industrial revolution
The first big economic change was the agricultural revolution.
(Pomeranz,2000). When people learn how to domesticate plants and
animals they realize that it was much more productive than hunter
gatherer societies. This became the new agricultural economy.
Farming help societies build surpluses meaning not everyone had to
spend their time producing food. This in turn, led to major
developments like permanent settlements, trade networks, and
population growth.
INDUSTRIAL REVOLUTION
The second major economic revolution of 1800s. With the rise of
industry came new economic tools, like steam engine’s,
manufacturing and mass production. Factories popped up and
change how work functioned.
People began working as wage laborers and then becoming more
specialized in their skills. This period led the people have access to
a wider variety of goods due to mass production.
Capitalism
A system in which all natural resources and means of Production are
privately owned. It emphasizes profit Maximization and competition
as the main drivers of
Efficiency.
Economist Adam Smith in the 1770’s called the “invisible hand” of
the market. The idea is that if one leaves a capital economy alone,
consumers will regulate things themselves by selecting goods and
services that provide the best value.
However, an economy does not work very well if it is left completely
autopilot. There are many sectors where a hands-off approach can
lead to what economist call market failures
In a socialist system, the means and Production are under collective
Ownership. It rejects capitalism private Property and hands-off
approaches. Instead in socialism property is owned by The
government and allocated to all Citizens, not only those with money
to Afford it.
Socialism
Emphasizes collective goals, expecting everyone to Work for the
common good and plasing a higher Value on meeting everyone’s
basic needs than on Individual profit.
When Karl Marx first wrote the socialism, he viewed it as a
stepping stone toward communism, a political and economic system
in which all members of a society are socially equal.
The information Revolution
Technology has reduced the role of human labor and shifted it from
manufacturing-based economy to one that is based on service work
and production of ideas rather than goods. Computers and other
technologies are beginning to replace many jobs of automation or
outsourcing job offshore. Agricultural jobs which once were a
massive part of the Philippines labor force, have fallen drastically
over the last century.
Types of job according To sociologist
1. Primary Labor Market – includes job that provide many benefits
to worker, like high incomes, job security, health insurance, and
retirement packages.
2. Secondary Labor Market – provide fewer benefits and include
lower-skilled jobs and low-level service sector jobs. They tend to
pay less, have more unpredictable schedules, and typically do
not offer benefits like health insurance.
International trade has grown due to international regulatory
groups like the World Trade Organization(WTO) and transnational
agreement like North American Free Trade Agreement(NAFTA) These
groups regulate the flow of goods and services between countries
including tarrifs and making custom procedures easier
Global Corporations
Companies that extend beyond the boarders of one country also
called multinational corporations(MNCs) or transnational
corporations(TNCs) also referred to as global corporations. They
intentionally surpass national boarders and take advantage of
opportunities in different countries to manufacture, distribute
market, and sell their products.
Global corporations often locate their factories in countries which
can provide the cheapest labor in order to save up for expenses in
the making of a product. As a result, developing nations will provide
incentives, like tax-free trade zones or cheap labor. The companies
will set up shop in their country in hopes of bringing job and
industry to beleaguered agricultural area.
The same thing happens when companies outsource their labor to
other countries. Outsourcing has been abled by technological
advances, allowing immediate communication across the world and
the ease of transporting people, goods, and information.
International trade not only leads to economic changes but also
cultural changes. As International trade becomes more widespread,
cultural practices and expressions are passed between nations,
spreading from group to group. This is called diffusion.
