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Lesson 6 Contworld With Activities

This document discusses the role of various international financial institutions in promoting global market integration over the 20th century, including the Bretton Woods System, IMF, World Bank, GATT/WTO, NAFTA, OECD, OPEC, and EU. It examines how these organizations reduced trade barriers and established standards to facilitate the free flow of capital, goods, and services internationally. The growth of multinational corporations is also attributed to efforts to integrate national economies into a globalized market.

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Angelyn Mortel
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77 views

Lesson 6 Contworld With Activities

This document discusses the role of various international financial institutions in promoting global market integration over the 20th century, including the Bretton Woods System, IMF, World Bank, GATT/WTO, NAFTA, OECD, OPEC, and EU. It examines how these organizations reduced trade barriers and established standards to facilitate the free flow of capital, goods, and services internationally. The growth of multinational corporations is also attributed to efforts to integrate national economies into a globalized market.

Uploaded by

Angelyn Mortel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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CHAPTER 3: MARKET INTEGRATION

OBJECTIVES:

At the end of the semester, the students shall be able to:

1. explain the role of international financial institutions in the creation of a global


economy;

2. narrate a short story of global market integration in the twentieth century; and

3. identify the attributes of global corporations.

Lesson 6:

INTRODUCTION
This chapter will show the contributions of different financial economic institutions
that facilitated the growth of the global economy. The history of the global
market will be discussed by looking at the different economic revolutions. The
growth and dynamics of multinational corporations that are emerging in today’s
world economy will also be examined.
So what is Integration? According to Ulrich Koester;
It simply means that it is the process of combining different national economies
to build larger economic regions. These are the connection, arrangement and
agreement between nations and institutions to create a bigger and stronger
union.

INTERNATIONAL FINANCIAL INSTITUTIONS


What is International Financial Institutions?

Some examples are World Bank, Asian Development Bank, Islamic Development
Bank. Each of these international banks has their own goal for the global
economy. Each one of them greatly affect the growth of the world’s economy,
like in the phrase saying “When the American sneezes, the rest of the world
catches a cold” but always remember this only applies to those high income
countries, for instance would Philippines affect the global market if it will suffer
from financial crisis? I would rather say not, but if China, Russia or America is
suffering from a financial dilemma the answer is definitely yes.
The following are financial institutions and economic organizations that made
countries even closer together, at least, when it comes to trade.

THE BRETTON WOODS SYSTEM


It was established after the Second World War, to create a new world
financial system to avoid lack of cooperation among nations, political stability,
and economic turmoil. It focuses on the reduction of barriers to trade and free
flow of money and ensures global financial stability. Americans played the
biggest role in the Bretton Woods System among the 44 delegates who joined

the conference of establishing the Bretton Woods System, since USA holds 2/3 of
the gold reserves after the war. Central Bank of each country was also
established during this period and also World Bank and International Monetary
Fund (IMF) are founded.
THE GENERAL AGREEMENT on TARIFFS and TRADE (GATT) and THE WORLD TRADE
ORGANIZATION (WTO)
GATT or General Agreement on Tariffs and Trade was established in 1947.
Due to the effect of the Bretton Woods System, GATT was created to concentrate
on trade goods through multinational trade agreements conducted in many
“rounds” of negotiation.
The WTO or World Trade Organization is an independent multilateral
organization that became responsible for trade in services, non-tariff-related
barriers to trade, and other broader areas of trade liberalization. The
headquarters of WTO is located at Geneva, Switzerland with 152 member states
as of 2008. The general idea where the WTO is based was that of neoliberalism.
This means that by reducing or eliminating barriers, all nations will benefit.
These entities are created to manage global trade among nation and to
formulate rules that will help the proper flow of trade within the globe. However,
there are still some negative impact brought by these entities like less limitations
among countries in terms of trading, mass productions of product which resulted
to pollutions that weakened the environment and also weak countries are having
difficulties competing around the world with richer countries which causes
unemployment for smaller countries.
THE INTERNATIONAL MONETARY FUND (IMF) AND THE WORLD BANK
In the end of World War II, the economic stability and political stability of the
world became ambiguous. The economy started to rise again. The WORLD BANK
and INTERNATIONAL MONETARY FUND helped the world to get up again. Their
clients are not individual persons, instead they cater countries who are having
problems with their financial status.
The IMF’s main objective is to assist countries which were in trouble looking for
financial aids due to economic crisis. IMF’s serves as lending center of countries
meaning they lend cash to countries to help them with their struggles.
Unlike with the World Bank, it aims to eradicate poverty around the globe. It
funded projects of a certain country which would help to achieve their goals.
Mainly the investment of a country in education to help their citizens became
well-educated and competitive to other countries.
These two institutions have helped a lot of countries to get back on their feet,
along with this they also helped some corrupt political leaders and sometimes
they are having problems in collecting back their money.

THE ORGANIZATION FOR ECONOMIC COOPERATION and DEVELOPMENT (OECD),


THE ORGANIZATION OF PETROLEUM EXPORTING COUNTRIES (OPEC), and THE
EUROPEAN UNION (EU)
Why do these two institutions keep on helping underprivileged countries? What
do they get in return of their help? Is there any impact in the world economy
when they help these countries?
The richest countries in the world have a club or organization which was
established in 1961. They named it as the Organization for Economic Cooperation
and Development. At present OECD is trying to shape the international policies
through its activity, from publishing papers and data base and assessing the
academic performance of students from various countries and many more.
The Organizations of Petroleum Exporting Countries in 1960 was originally
composed by Kingdom of Saudi Arabia, Iraq, Kuwait, Iran, and Venezuela but
today United Arab Emirates, Algeria, Libya, Qatar, Nigeria, and Indonesia are
included as members. OPEC was established because members of petroleum
exporting countries wanted to increase the price of oil, because in the past it has
a really low price compare at the present and had failed in keeping up with
inflation. Today the most important export product in the world is oil. Almost all of
the factories, machineries and other equipment used in production are being
powered by petroleum.

.
3 Facts about European Union
If you wanted to be part of the European Union you must pay a membership
fee. After being a member your citizens are automatically EU Citizens which
means you can cross all borders of the EU without needing a passport.
There are 28 states inside the European Union, all of these states use a common
currency which is euro, however, Western European nations, like the Great Britain,
Sweden, and Denmark still used their own currency even if they are part of the
EU.

NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA)

NAFTA was created in January 1, 1994 between UNITED STATES, MEXICO


and CANADA. Before only Canada and the United States have this agreement
in 1989. This is free trade agreement between the three nations, they removed
barriers in terms of trading so there is a free flow of trading among them.
Due to the reductions of barriers between these three countries,
manufacturing jobs transferred to the least developed country which is Mexico
because the cost of production is less expensive in Mexico which causes loss of
jobs for the Canadians and Americans. However business in developed countries
made a fortune with this and became richer because they save more in the
production cost. That is why NAFTA has its negative and positive impact within
the economic development of these three countries.

Activity 6A
Answer these:

1. Search for 3 more reasons regarding why the USA became the main character
of the Bretton Woods System, and briefly explain.
2. Give an international bank and identify its goal that may help the
improvement of the global economy.

Activity 6B
Answer these:

1. Briefly explain the difference between GATT and WTO and choose 1 topic only.

2. Why do these institutions keep on helping underprivileged countries? What do


they get in return of their help? is there any impact in the world economy when
they help these countries?
3. In your own opinion, what would be the best way or idea to avoid the negative
impact of NAFTA among United States, Mexico and Canada? Explain it briefly.

Activity 6C

1. Name at least 3 countries who are member with OECD.


2. Name at least 3 countries who are member with OPEC.
3. Name at least 3 countries who are member with EU.

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