SOCSCI032

Market Integration
ECONOMY GENERAL AGREEMENT ON TARIFFS AND
 The social institution that has one of the TRADE (GATT)
biggest impacts on society.  This is one of the systems born out of Bretton
 The social institution that organizes all Woods
productions, consumption, and trade of  Established in 1947, currently having 23
goods in the society. member countries.
 It focused on trade goods through
ECONOMIC SYSTEM IN 3 SECTORS: multinational trade agreements
 PRIMARY SECTOR - extracts raw materials
conducted in many “rounds” of
from natural environments.
negotiation.
 SECONDARY SECTOR- gains raw materials
and transforms them into manufactured WORLD TRADE ORGANIZATION (WTO)
goods.  It was established in 1995, and as of 2005, it
 TERTIARY SECTOR- involves services rather has 152 member states. Its headquarters is
than goods. located at Geneva, Switzerland.
 It is an independent multilateral organization
MARKET INTEGRATION that became responsible for trade in services,
A situation in which separate markets for the
non-tariff-related barriers to trade, and other
same product become one single market. it is an
broader areas of trade liberalization.
indicator that explains how much different
markets are related to each other. IMF AND WB
 Both the International Monetary Fund
INTERNAL FINANCIAL INSTITUTIONS (IMF)and World Bank (WB) were founded
1. The Bretton Woods System after the World War II mainly because of peace
2. The General Agreement on Tariffs and advocacy.
Trade (GATT) and The World Trade  These institutions aimed to help the
Organization (WTO) economic stability of the world.
3. The International Monetary Fund (IMF) and  They started by organizations not individual
The World Bank regular banks designed to complement each
4. OECD, OPEC, and EU other.
5. North American Free Trade Agreement
(NAFTA) INTERNATIONAL MONETARY FUND (IMF)
 Its goal was to help countries which were in
THE BRETTON WOODS SYSTEM trouble at that time and who could not obtain
•Bretton woods system of monetary money by any means.
management established the rules for  IMF served as a lender or a last resort for
commercial and financial relations among its countries which needed financial assistance.
members. WORLD BANK (WB)
•It was the first example of a fully negotiated  Its goals had more long-term approach which
monetary order intended to govern monetary revolved around the eradication of poverty
relations among independent states. and it funded specific goals and it funded
•The Bretton Woods System was established specific projects that helped them reach their
because of the fear of recurrence of lack of goals.
cooperation among nations, political instability,
and economic turmoil. OECD, OPEC, and the EU
THE BRETTON WOODS SYSTEM FIVE KEY  Organization for Economic
ELEMENTS: Cooperation and Development
1. The expression of currency in terms of (OECD)
gold or gold value to establish a par value. -It has 35 member states as of 2016. This
2. The official monetary authority in each emanates from the member countries’
country (central bank) would have to resources and economic power.
agree to exchange its own currency for  Organization of Petroleum
those of other countries at the established Exporting Countries (OPEC)
exchange rates, plus or minus a one -It has 14 member countries. This
percent margin. organization was formed because member
3. The establishment of an overseer for countries wanted to increase the price of
these exchange rates thus the oil, which in the past had relatively low
international monetary fund was founded. price and had failed in keeping up with
4. Eliminating restrictions on the currencies inflation.
of member states in the international  European Union (EU)
trade.
5. The US dollar became the global currency.

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 SOCSCI032

Market Integration
-It is made up with 28 member states. most countries are not purely capitalist
Most members in the Eurozone adopted societies.
the euro as basic currency. SOCIALISM
- Government plays an even larger role
NORTH AMERICAN FREE TRADE AGREEMENT in socialism.
(NAFTA) - The means of production are under
A trade pact between the United States, Mexico, collective ownership –property is owned
and Canada which helps in developing and by the government and allocated to all
expanding world trade by broadening citizens, not only those with the money to
international cooperation. afford it.
It aims to increase corporation for improving - Socialism is a stepping stone to
working conditions in North America by reducing communism.
barriers to trade as it expands the markets of
the three countries.
MULTINATIONAL CORPORATIONS
 Positive consequence- it lowered prices
- It is also referred as Global corporations
by removing tariffs, opened up new
- It is a company that operates in its home
opportunities for small and medium sized
country, as well as in other countries
business to establish a name for itself,
around the world.
quadrupled trade between the three
- It maintains a central office located in one
countries, and created five million US jobs.
country, which coordinates the
 Negative consequence- excessive
management of all other offices such as
pollution, loss of more than 682,000
administrative branches or factories.
manufacturing jobs, exploitation of
workers in Mexico, and moving Mexican
farmers out of business.
HISTORY OF GLOBAL MARKET INTEGRATION
1. Agricultural Revolution and Industrial
Revolution
2. Capitalism and Socialism
3. The Information Revolution
Agricultural Revolution
- First big economic change.
- Farming helped societies build surpluses,
meaning, not everyone had to spend their
time producing food. Thus, it led to major
developments.
Industrial Revolution
- The second major economic revolution in
1800s.
- With the rise of industry came new
economic tools, factories popped up
and change how work functioned.
Capitalism and Socialism
There were two competing economic models
that sprung around the time of Industrial
Revolution, as economic capital became more
and more important to the production of goods
–the capitalism and socialism.
CAPITALISM
- A system in which all natural resources
and means of production are privately
owned.
- It emphasizes profit maximization and
competition as the main drivers of
efficiency.
- In practice, an economy does not work
well if it is left completely on auto pilot. It
would lead to market failure such as
monopoly. Market failures are the reasons

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