1.1

• Economy


  The social institution that has one of the biggest impacts on society, composed of people who organise all production, consumption and trade of goods in the society
• Gross Domestic Product (GDP)


  A measure of the economic activity in a country
• Market Integration


  The process of creating a unified marketplace where goods, services, and capital can flow freely between countries or regions
• Market Integration


  • It is a central aspect of economic globalization, which refers to the increasing interconnectedness of economies and societies around the world
• Market Integration


  1. Reduction of trade barriers such as tariffs

  2. Adoption of common currency

  3. Harmonization of regulatory standards

  4. Development of infrastructure to facilitate transportation and communication
• Economic Sectors


  • Primary Sector (extracts raw materials)
  • Secondary Sector (transforms raw materials into manufactured goods)
  • Tertiary Sector (provides services)
• When a greater/powerful economy catches a cold

  The rest of the world economies sneeze
• Crises in greater/powerful economies may bring weakness or weak effect in other countries, while crises on weaker states or economies have less effect on other countries
• Major economies in the world had suffered

  After World War I, Great Depression in the 1930s and World War II
• To avoid lack of cooperation, political instability and economic turmoil, major economies focused on restructuring the world economy and ensuring global financial stability by reducing barriers to trade and free flow of money among nations
• Bretton Woods System


  A system established to restructure the world economy and ensure global financial stability
• Five Key Elements of the Bretton Woods System


  • Expression of currency in terms of gold or gold value to establish "a par value"
  • Official monetary authority in each country (a central bank) would agree to exchange its own currency for those of other countries at the established exchange rates, plus or minus a one percent margin
• In the case of the Philippines, the central bank is the Bangko Sentral ng Pilipinas (BSP)