Market Integration  Second element is the “official monetary

 Economy is a social institution that has one of authority in each country would agree to
the biggest impacts on society. exchange rates, plus or minus a one-percent
 Economy is not only numerical but it is also margin”.
people.  Third element is the establishment of an
 It is a social institution that organizes all overseer for these excahnge rates, thus the IMF
production, consumption and trade of goods in was founded.
the society.  Eliminating restrictions on the currencies of the
Economic Sytem member states in the international trade is the
 Vary from one society to another. fourth key element.
 Production typically splits in 3 sectors; primary  The final element is that the US dollar became
sector which extracts raw materials from the global currency.
natural environments. Workers and farmers fit Have a simple research on the following: To be
well in this category. Secondary sector gains the passed at the end of class time.
raw materials and transforms them into  General Agreement on Tariffs and Trade (GATT)
manufactured goods. Primary sector extracts oil  World trade Organization (WTO)
from the earth then someone  International Monetray Fund (IMF)
 from the secondary sector refines the  World Bank (WB)
petroleum to gasoline. Tertiary sector involves  The Organization of Petroleum and
service rather than goods. It offers services by Development (OECD)
doing things rather tham making things.  Organization of Petroleum Exporting Countries
International Financial Institutions (OPEC)
 World economies have been brought closer  European Union (EU)
together than globalization. When American  North African Free Trade Agreement (NAFTA)
economy sneezes, the rest of the world catches
cold. Other economies in the world also have a 1. General Agreement on Tariffs and Trade (GATT)
significant impact on global market and finance. Purpose: GATT aimed to promote international
Example the financial crises experienced by trade by reducing or eliminating trade barriers such
Russia and Asia affected the world economy. as tariffs, quotas, and subsidies.
The strength of a more powerful economy History: GATT was established in 1947 as a legal
brings greater effect on other countries. agreement between many countries, and it was the
 Likewise crises on weaker economies have less outcome of the failure of negotiating governments
effect on other countries. to create the International Trade Organization (ITO).
Bretton Woods System It lasted until 1994.
 WW I, great Depression in 1903 and WW II Significance: GATT was instrumental in laying the
brought fear to nation-states the need to re foundation for the modern global trade system. It
structure the world economy and ensure global conducted several rounds of negotiations (called
financial stability. These consists the "rounds") where member countries negotiated
background for the establishment of Bretton mutual reductions in trade barriers. The most
Woods system. significant rounds were the Kennedy Round (1964-
 The Bretton Woods system had 5 key elements. 1967), the Tokyo Round (1973-1979), and the
1 is the expression in terms of gold or gold value Uruguay Round (1986-1994), the last of which led to
to establish a par value. the creation of the WTO.
 Example the 35 US dollar pegged by US per
ounce of gold is the same as 175 Nicaraguan 2. World Trade Organization (WTO)
cordobas dor one dollar
Purpose: The WTO regulates international trade by Significance: The World Bank focuses on long-term
providing a framework for negotiating trade economic development and poverty reduction. It
agreements and a dispute resolution process aimed provides low-interest loans, zero to low-interest
at enforcing participants' adherence to WTO credits, and grants to developing countries for
agreements. investments in education, health, public
History: The WTO was established on January 1, administration, infrastructure, financial and private
1995, following the conclusion of the Uruguay sector development, agriculture, and environmental
Round negotiations and replacing GATT. and natural resource management.
Significance: The WTO oversees the
implementation, administration, and operation of 5. Organization for Economic Co-operation and
the covered agreements. It serves as a forum for Development (OECD)
trade negotiations and handles trade disputes. The Purpose: The OECD promotes policies that improve
WTO also monitors national trade policies and the economic and social well-being of people
provides technical assistance and training for around the world. It provides a platform for
developing countries. governments to compare policy experiences, seek
answers to common problems, identify good
3. International Monetary Fund (IMF) practices, and coordinate domestic and
Purpose: The IMF promotes international monetary international policies.
cooperation and provides policy advice and capacity History: The OECD was established in 1961,
development support to help countries build and succeeding the Organization for European Economic
maintain strong economies. It also provides Co-operation (OEEC), which was founded in 1948 to
financial assistance to countries to help correct help administer the Marshall Plan for the
balance of payments problems. reconstruction of Europe after World War II.
History: Established in 1944 at the Bretton Woods Significance: The OECD works on a broad range of
Conference along with the World Bank, the IMF economic, social, and environmental issues. Its
aimed to reconstruct the international payment research and publications are used to shape policies
system post-World War II. and inform public debate. The OECD also conducts
Significance: The IMF monitors the global economy peer reviews and monitors economic trends and
and the economies of its member countries, developments.
providing financial assistance and policy advice. It
offers various forms of financial assistance, 6. Organization of Petroleum Exporting Countries
including Stand-By Arrangements, the Extended (OPEC)
Fund Facility, and the Rapid Financing Instrument. Purpose: OPEC coordinates and unifies the
The IMF's work is crucial in times of economic crisis, petroleum policies of its member countries and
providing loans to stabilize economies. ensures the stabilization of oil markets in order to
secure an efficient, economic, and regular supply of
4. World Bank (WB) petroleum to consumers, a steady income to
Purpose: The World Bank provides financial and producers, and a fair return on capital for those
technical assistance to developing countries for investing in the petroleum industry.
development programs that are expected to History: OPEC was founded in Baghdad in 1960 by
improve economic prospects and quality of life. five countries: Iran, Iraq, Kuwait, Saudi Arabia, and
History: Founded in 1944 at the Bretton Woods Venezuela. It has since expanded to include several
Conference, the World Bank comprises two other oil-producing nations.
institutions: the International Bank for Significance: OPEC has significant influence on
Reconstruction and Development (IBRD) and the global oil prices by setting production targets for its
International Development Association (IDA). member countries. Its decisions can impact the
global economy, affecting everything from promoting international trade, financial stability,
transportation costs to inflation rates. OPEC's economic development, and cooperation among
policies can also affect geopolitical relations among nations.
member and non-member countries.

7. European Union (EU)

Purpose: The EU is a political and economic union
that aims to foster economic cooperation by
creating a single market, where goods, services,
people, and capital can move freely. It also works
on common policies in areas such as agriculture,
fisheries, regional development, and external
relations.
History: The EU traces its origins to the European
Coal and Steel Community (ECSC) and the European
Economic Community (EEC) established by the
Treaty of Rome in 1957. It has since evolved
through various treaties into the current EU.
Significance: The EU has become one of the world's
major economic and political entities. It has its own
currency, the euro, used by 19 of its 27 member
countries. The EU's regulatory framework and
standards often set benchmarks worldwide. It also
plays a crucial role in global diplomacy and
international relations.

8. North American Free Trade Agreement (NAFTA)

Purpose: NAFTA aimed to eliminate barriers to
trade and investment between the U.S., Canada,
and Mexico, creating one of the world's largest free
trade zones.
History: NAFTA came into effect on January 1, 1994.
It was replaced by the United States-Mexico-Canada
Agreement (USMCA) on July 1, 2020, which updated
and revised many NAFTA provisions.
Significance: NAFTA significantly increased trade
and investment flows between the three countries,
contributing to economic growth and integration. It
removed tariffs on most goods traded among the
three countries and established mechanisms for
resolving trade disputes. NAFTA also set a
precedent for future trade agreements and
influenced global trade policy.

These organizations and agreements have

collectively shaped the global economic landscape,