LESSON 3 MARKET INTEGRATION

• When markets are integrated, it becomes easier for buyers and sellers from different places to trade, leading to more efficient and interconnected economies.
• Global economy


  The interconnectedness and interdependence of economies worldwide. It encompasses all economic activities happening across borders and among countries
• Market integration


  The ease with which goods, services, and resources can move within or between specific markets or regions. It's about reducing barriers and making it easier for business and consumers to trade. It can happen within a single country, between neighboring countries, or among regions with common trade agreements
• Market integration

  A component of the global economy
• Market Integration 


  A smaller-scale concept that deals with the integration of markets or regions, while the global economy is a broader concept that encompasses all economic activities happening worldwide.
• Market Integration 


  means that different regions or areas are connected so that goods, services, or financial assets can move more easily between them. It's like removing barriers or obstacles that might make it hard for people and businesses to trade or do business with each other.
• Market Integration


  It is a process by which economies are becoming more interdependent and interconnected in terms of commodity flows including externalities and spillover of impacts (Genschel and Jacktenfuchs, 2017)
• Horizontal Integration 


  occurs when a company acquires or merges with other companies that operates the same stage of the supply chain or in the same industry. goal is to reduce competition
• Vertical Integration 


  involves company's expansion into different stages of the supply chain, either backward (upstream) toward supplier or forwards (downstream) toward distributors or retailers.

  enhances control and coordination over various aspects of production and distribution
• International Financial Institutions or IFIs 


  are institutions that provide support through loans and technical advice to promote a country's economic and social development

  ex. IMF, WB, ADB, Inter-American Development Bank, ASEAN, NAFTA, EU
• Corporations


  private institutions that produce or manufacture goods, products, and services for more expanded market
• Transnational Corporations or TNCs


  more complex setting where each foreign subsidiary is given some freedom to develop its own product lines and marketing

  • decentralized
  • focus on adaption
• Multinational Companies or MNCs


  have more of a home or country base taking care of the R&D and marketing, focus more on exporting their products and services

  • main carriers of economic globalization
  • impacts GDP and GNP
  • centralized
  • standardization
• Four Key issues with IFIs

  1. Legitimacy 


  Majority of its shareholders and policy making powers lie with powerful rich nations. Leaders have come from developed countries. Head of IMF have always been a European, head of WB is an American, EDRD is an European. Thus, people claims that IFIs must select a leaders based on merits and not on national origin
• Four key issues with IFIs

  2. Effectiveness


  Questions the effectiveness of the IFI's development assistance programs and policy advices. Some investments have been controversial such as support to large-scale land use conversion which has displaced numerous indigenous people in some areas like in the PH's case. Social safeguards to ensure human rights, community, environment well-being need to be instituted.
• four key issues of IFIs

  3. Support Conditionality


  With loans to provide capital for development initiatives of countries. However, it does not come for free and comes with certain conditions that the borrowing country has to meet. such as privatization, trade liberalization, elimination of subsidy, limits to public investments. Impose western free-market policies on developing countries which could be il-fated, inappropriate, or undesired, by receiving countries
• four key issues with IFIs

  4. Financial capacity & Sustainability 


  some middle income countries also limit their loans with IFIs due to higher transactional cost as well as the conditionality commons attached to these financial services. Some concessional financing has been transformed into grants from loans which may be more attractive to the recipient country but could take a toll to the financial sustainability of IFIs
• Global Corporations 


  major players in globalization and the modern capitalist market. Referred as multinational corporations and transnational corporations (MNCs and TNCs).
• Summarized History of the Global Economy

  1. modern capitalist world economy 


  flourished between 16th to 17th century.
• Summarized history

  2. Modern global trade 1914


  was considered the first period of globalization
• Summarized history

  3. architecture 


  when trade, capital, and immigration flows grew tremendously there is still limited global institution to manage.
• Summarized history

  4. Second world war - 1990s


  When did the modern international economic enables architecture to established?
• Summarized history

  5. third wave of market integration


  advent modern internet, WTO establishment, formal entry of China into trading system through its accession to international financial institutions
• Summarized history

  6. Fourth Industrial Revolution 


  the world enters in _______ which there will be slower economic growth, political destabilization, and diffusion of power