betty

• Market Integration


  A situation in which separate markets for the same product become one single market, for example when an import tax in one of the markets is removed
• High Integration


  Low barriers to trade = prices are similar in these markets
• Low Integration


  High barriers to trade = prices fluctuate between these markets
• China


  • US
• China


  US
• Chapter 3: Market Integration
• International Financial Institutions


  • The Bretton Woods System
  • IMF and the World Bank
  • GATT and WTO
  • OECD, OPEC, EU
  • NAFTA
• International Financial Institutions


  Financial and economic institutions that facilitated the growth of the global economy
• Goals and Objectives of IFI

  • To reduce global poverty and improve people's living conditions and standards
  • To support sustainable economic, social, and institutional development
  • To promote regional cooperation and integration
• Bretton Woods System


  Main Goal: To restructure the world economy and ensure global financial stability
• The major economies in the world had suffered because of World War I, the Great Depression in the 1930s, and World War II. Because of the fear of the recurrence of lack of cooperation among nation-states, political instability, and economic turmoil (especially after the Second World War), reduction of barriers to trade and free flow of money among nations became the focus to restructure the world economy and ensure global stability
• 5 Key Elements of Bretton Woods System


  • Expression of currency in terms of gold or gold value to establish a par value
  • The official monetary author in each country (a central bank or its equivalent) would agree to exchange its own currency for those of other countries at the established exchange rates, plus or minus one-percent margin
  • The establishment of an overseer for these exchange rates; thus the International Monetary Fund (IMF) was founded
  • Eliminating restrictions on the currencies of member states in the International trade
  • U.S. dollar became the global currency
• The gold standard is a monetary system in which a currency's value is pegged to gold
• With its large discoveries of gold, England became the first country to implement the gold standard
• The Bretton Woods agreement established that the U.S. dollar was the dominant reserve currency and that the dollar was convertible to gold at the fixed rate of $35 per ounce
• In 1971, President Nixon stopped the convertibility of the U.S. dollar to gold
• The Bretton Woods, New Hampshire conference had 730 people or delegates from 44 different countries
• Institutions established at Bretton Woods


  • IMF
  • World Bank
  • GATT
  • WTO
• IMF


  Its main goal was to help countries that were in trouble at that time and who could not obtain money by any means. IMF served as a lender or a last resort for countries that needed financial assistance
• World Bank


  Its main goals revolve around the eradication of poverty. An example of such is their investment in education since 1962 in developing nations like Bangladesh, Chad, and Afghanistan
• GATT


  (1) an international agreement, (2) an international organization created later to support the agreement. It focused on trade goods through multinational trade agreements conducted in many "rounds" of negotiation
• WTO


  Unlike GATT, WTO is an independent multilateral organization that became responsible for trade in service, non-tariff-related barriers to trade, and other broader areas of trade liberalization. Neoliberalism (by reducing or eliminating barriers, all nations will benefit)
• Other International Institutions


  • OECD
  • OPEC
  • EU
• OECD


  The most encompassing club of the richest countries in the world with 38 member states as of 2022, with Costa Rica as its latest member. Its stated goal is to shape policies that foster prosperity, equality, opportunity and well-being for all
• OPEC


  In accordance with its Statute, the mission of the Organization is to coordinate and unify the petroleum policies of its Member Countries and ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry
• EU


  The world's first supranational organization. It eliminates all border controls between most EU members. The open border allows the free flow of goods and people
• NAFTA


  The world's largest free trade agreement when it was established on January 1, 1994, among Canada, the United States, and Mexico
• Pros and Cons of NAFTA

  • Positive: It lowered prices by removing tariffs, opened up new opportunities for small- and medium sized businesses to establish a name for itself, quadrupled trade between the three countries, and created five million U.S. jobs
  • Negative: Excessive pollution, loss of more than 682,000 manufacturing jobs, exploitation of workers in Mexico, and moving Mexican farmers out of business
• NAFTA was replaced by the United States-Mexico-Canada Agreement (USMCA) on July 1, 2020
• Before the rise of today's modern economy, people only produced for their families
• Economic Revolutions


  • Agricultural Revolution
  • Industrial Revolution
  • Information Revolution
• Agricultural Revolution


  When people learned how to domesticate plants and animals, they realized that it was much more productive than hunter-gatherer societies. Farming helped societies build surpluses, meaning, that not everyone had to spend their time producing food
• Industrial Revolution


  With the rise of industry came new economic tools. Factories popped up and changed how work functioned. Instead of working at home where people worked for their families by making things from start to finish, they began working as wage laborers and then became more specialized in their skills. Overall, productivity went up, standards of living rose, and people had access to a wider variety of goods due to mass production
• Two Competing Economic Models

  • Monopoly
  • Competition
• Monopoly


  In this economic system, there is no competition for customers. That is why it can change higher prices without worrying about losing customers
• Types of Jobs


  • Primary Labor Market (high incomes, job security, health insurance, and retirement packages)
  • Secondary Labor Market (fewer benefits, lower-skilled jobs and lower-level service sector jobs, tend to pay less, have more unpredictable schedules, and typically do not offer benefits like health insurance, have less job security)
• Global corporations are companies that do business all over the world
• Multinational or Transnational Corporations (MNCs or TNCs) / Global corporations


  Companies that extend beyond the borders of one country. They intentionally surpass national borders and take advantage of opportunities in different countries to manufacture, distribute, market, and sell their products. They influence the economy and politics by donating money to specific political campaigns or lobbyists. They 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
• Benefits of Global Corporations

  • Better allocation of resources
  • Lower prices for products
  • More employment worldwide
  • Higher product output
• Advantages for Producers/Business Owners

  • You can increase your customer base
  • You can reduce your operating costs
  • You don't need to be bogged down by seasonality
  • You can boost the growth rate of your company
  • You can create new jobs