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Global Market Integration Module 3

The document discusses the history and process of global market integration. It begins with how the global economy is shaped by interactions between countries, institutions, and multinational companies. This has led to a fusing of markets where prices follow similar patterns over long periods. Key developments included the Agricultural Revolution, Industrial Revolution, and Information Revolution. These reduced trade barriers and advanced technology, mass production, and services. Globalization intensified as markets integrated further and corporations expanded across borders. Stages of economic integration progressed from preferential trading to free trade agreements and monetary unions. Overall, integration harmonizes institutions, establishes trade blocs, and reduces costs, while potentially limiting countries' economic sovereignty.

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Erika Joyce Runas
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368 views

Global Market Integration Module 3

The document discusses the history and process of global market integration. It begins with how the global economy is shaped by interactions between countries, institutions, and multinational companies. This has led to a fusing of markets where prices follow similar patterns over long periods. Key developments included the Agricultural Revolution, Industrial Revolution, and Information Revolution. These reduced trade barriers and advanced technology, mass production, and services. Globalization intensified as markets integrated further and corporations expanded across borders. Stages of economic integration progressed from preferential trading to free trade agreements and monetary unions. Overall, integration harmonizes institutions, establishes trade blocs, and reduces costs, while potentially limiting countries' economic sovereignty.

Uploaded by

Erika Joyce Runas
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Global Market Integration

The Economy is significant and influential factor in the process of globalization in the contemporary
world. It involves:

•People/ Employment

•Services

•Goods

•Production

•Consumption

•Trade

•Money

•Gross

•Prices

In our contemporary world, the global economy is shaped and influenced by economic interactions of
countries, global institutions and multinational companies that paved the way for global market
integration.

Global Market Integration…

❑fusing of markets into one

❑the situation in which markets for the same product becomes one single market

A market is a composition of systems, institutions, procedures, social relations or infrastructures whereby


parties engage in exchange.

Market Integration…

occurs when prices among different locations or related goods follow similar patterns over a long period
of time. Groups of goods often move proportionally to each other and when this relation is very clear
among different markets it is said that the markets are integrated.

History of market Integration

• Before the rise of modern economy, people only produced for their family. Nowadays, economy
demands the different sectors to work together in order to produce, distribute, and exchange products
and services.

Agricultural Revolution: farming helped societies build surpluses that led to major development like
permanent settlements, trade networks and population growth.
Industrial Revolution(1800s)

✓ rise of industry came with new economic tools (steam engines) that improved manufacturing and
mass production. This elevated the productivity, standard of living and people’s access to variety of
goods.

✓ But this economic changes exposed the workers to dangerous working condition. 19th century
industrialists were known as robber baron- more productivity came greater wealth but also greater
economic inequality.

✓ Labor unions sought to improve wages and working conditions through collective action, strikes and
negotiations.

✓ 2 Systems:

• Capitalism - resources and means are privately own. More on profit maximization and competition.

• Socialism – means of production are under collective ownership. Property is owed by the government
but will be allocated to the all citizens. Collective goals and working for the common goals and values are
emphasized and not on individual profit.

• Information Revolution (21st century)

• The contemporary world

• Advent of technological development

• Reduce human labor and shifted from manufacturing based to service work and goods to
production of ideas.

• With technology, work is automatic which has replaced many jobs.

• Globalization is expanded and intensified

End of the 20th Century

• Markets are more integrated

• Most tariffs have been scrapped altogether

• Countries practiced liberalization – open economy

Global Corporations

• Multinational or transnational corporations (MNCs OR TNCs)

• These are companies that extend beyond the borders of one country with opportunities to
manufacture, distribute, market their products.

• Growth of global corporations paved the way for global market integration.

• MNCs bold ventures into research and development and investments in new products and services
facilitated growth of trade between countries and spread of globalization.
Economic Integration

the arrangement among nations that typically includes the reduction or elimination of trade barriers and
the coordination of monetary and fiscal policies.

… aims to reduce costs for both consumers and producers and to increase trade between the countries
involved in the agreement.

Stages of Economic Integration

1. Preferential trading: trading bloc that gives preferential access to products to certain countries.
Reduction of tariffs

2. Free trade: agreement made between countries where the countries agreed to trade freely among
themselves but are able to trade with other countries outside of the free-trade area in whatever way
they wish.

3. Customs union: agreement made between countries, where the countries agreed to trade freely
among themselves, and they also agreed to adopt common external barriers against any country
attempting to import into the custom unions

4. Common market: a custom unions with common policies on product regulation, and free movement
of goods, services, capital and labor (EU)

5. Economic and monetary union: common market with a common currency and common central-bank.(
EU adopted euro and have European Central Bank)

6. Complete economic integration: final stage at which point the individual countries involved would
have no control of economic policy, full monetary union and complete harmonization of fiscal policy.

Advantages of Global Market Integration

• Harmonizes institutions across countries

• Establishes trade bloc (intergovernmental agreement), where barriers to trade (tariffs and others) are
reduced or eliminated among the participating states.

• Reduces the costs of trade, improves the availability of goods and services

• Increases consumer purchasing power in member nations

• Improvement of employment opportunities because trade liberalization leads to market expansion,


technology sharing, and cross-border investment.

Problems in Global Market Integration

• Institutional Differences between countries

• Incompatibility with democracy and sovereignty

• Removal of institutional variations between countries

• It suffocates countries’ economic development

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