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Market Integration: The Contemporary World

This document discusses market integration and its history. It defines market integration as separate markets becoming a single market. It describes how World War 1 and the Great Depression disrupted international economic integration. It then discusses the role of international financial institutions like the World Bank and IMF in fostering international cooperation and monetary policies. The document outlines different types of market integration like negative integration which reduces trade barriers and positive integration which harmonizes policies. It provides examples of preferential trade agreements, free trade areas, customs unions, common markets and economic unions to illustrate varying forms of integration.

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6K views20 pages

Market Integration: The Contemporary World

This document discusses market integration and its history. It defines market integration as separate markets becoming a single market. It describes how World War 1 and the Great Depression disrupted international economic integration. It then discusses the role of international financial institutions like the World Bank and IMF in fostering international cooperation and monetary policies. The document outlines different types of market integration like negative integration which reduces trade barriers and positive integration which harmonizes policies. It provides examples of preferential trade agreements, free trade areas, customs unions, common markets and economic unions to illustrate varying forms of integration.

Uploaded by

KMDO SHBJYXBW
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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MA RKET

INTEG RATION
THE CONTEMPORARY WORLD

BY: KARLA MAE D. OLVIS


WHAT IS MARKET INTEGRATION?
• A SITUATION IN WHICH SEPARATE MARKETS FOR THE
SAME PRODUCT BECOME ONE SINGLE MARKET.

• A STATE OF AFFAIRS OR A PROCESS INVOLVING ATTEMPTS TO


COMBINE SEPARATE NATIONAL ECONOMIES INTO LARGER
ECONOMIC REGIONS
BRIEF HISTORY
• THE INTERNATIONAL ECONOMIC INTEGRATION WAS
UNRAVELD DURING THE WORLD WAR AND THE GREAT
DEPRESSION.

• WORLD WAR 1 BROUGHT THE LIBERAL ECONOMIC


ORDER OF THE LATE 19TH CENTURY TO AN ABRUPT END.

• EXPORT RATIOS ROSE IN NEUTRAL ECONOMIES SUCH AS


SWEDEN, JAPAN AND NORTH AMERICA WHERE GRAIN
PRODUCTION EXPANDED SHARPLY DURING THE WAR
YEARS TO MEET ALLIED DEMAND
BRIEF HISTORY (CONT.)
• THE ABSENCE OF EUROPEAN MANUFACTURED EXPORTS
ON WORLD MARKETS STIMULATED THE EXPANSION OF
INDUSTRIAL CAPACITY

• THE END OF WAR DID NOT IMPLY AN END TO


PROTECTION. DIFFERENT TARIFF ACTS AND
RESTRICTIONS WERE MADE.

• THE GREAT DEPRESSION WAS A MAJOR REASON FOR THE


ADOPTION OF SEVERE PROTECTION
BRIEF HISTORY (CONT.)
• IN 1932, THERE WERE COUNTRIES TRYING TO MODERATE
AND REVERSE THE INCREASE IN PROTECTIONISM OF THE
PREVIOUS YEAR OR TWO.

• POST WAR ECONOMIC REINTEGRATION WAS SUPPORTED


BY SEVERAL FACTORS BOTH TECHNOLOGICAL AND
POLITICAL
INTERNATIONAL FINANCIAL INSTITUTIONS (IFI S )

• are international financial organizations which


multiple nations founded.
• such organizations are subject to international laws
of any one single country
• usually owned by national governments of the
founding members
EXAMPLES OF IFIs
• EUROPEAN INVESTMENT BANK
– LARGEST INTERNATIONAL FINANCIAL INSTITUTION WITH A
BALANCE SHEET RECORDED IN THE YEAR 2013 AMOUNTING TO
512 BILLION EUROS.

• WORLD BANK
– FOCUSES ON DEVELOPING THE ECONOMIES AND REDUCING
THE POVERTY OF MEMBER STATES OVER THE LONGER TERM
– THEY OFFER FINANCIAL AND TECHNICAL ASSISTANCE TO AID
COUNTRIES WHICH ARE TRYING TO REFORM SECTIONS OF
THEIR ECONOMIES
EXAMPLES OF IFIs (CONT.)
• INTERNATIONAL MONETARY FUND (IMF)
– CONCENTRATES ITS EFFORTS IN MACROECONOMIC ISSUES.

– OPERATES UNDER A MANDATE TO FOSTER MONETARY


COOPERATION ON AN INTERNATIONAL LEVEL

– IT OFFERS TECHICAL ASSISTANCE AND POLICY TO ADVICE


COUNTRIES TO DEVELOP AND KEEP MORE PROSPEROUS AND
STRONGER ECONOMIES
EXAMPLES OF IFIs (CONT.)
• BOTH WORLD BANK AND INTERNATIONAL
MONETARY FUND ARE FOUNDED UNDER THE
BRETTON WOODS AGREEMENT IN 1944

• THEIR GOAL IS IMPROVING THE STANDARDS OF


LIVING IN THEIR RESPECTIVE MEMBER NATIONS
TYPES OF MARKET INTEGRATION

1. NEGATIVE INTEGRATION

2. POSITIVE INTEGRATION
NEGATIVE INTEGRATION
• REDUCES NON-TARIFFS AND TARIFF
BARIERS TO TRADE AS A MAIN TOOL
FOR INTEGRATIING MARKETS
POSITIVE INTEGRATION
• ADJUSTS DOMESTIC POLICIES AND
INSTITUTIONS THROUGH THE
CREATION OF SUPRANATIONAL
ARRANGEMENTS.
SUPRANATIONAL ARRANGEMENTS
• IS A TYPE OF MULTINATIONAL POLITICAL UNION
WHERE NEGOTIATED POWER IS DELEGATED TO
AN AUTHORITY BY GOVERNMENTS OF MEMBER
STATES.

• THE GOVERNMENT OF GOVERNMENTS


FORMS OF INTEGRATION
1. PREFERENTIAL AGREEMENT
2. FREE TRADE AREA
3. CUSTOMS UNION
4. COMMON MARKETS
5. ECONOMIC UNION
PREFERENTIAL AGREEMENT
• INVOLVES LOWER TRADE BARRIERS
BETWEEN THOSE COUNTRIES WHICH HAVE
SIGNED THE AGREEMENT
• EXAMPLES:
(1)NORTH AMERICAN FREE TRADE AGREEMENT 
(2)THE ASEAN FREE TRADE AREA
FREE TRADE AREA
• REDUCES BARRIERS TO TRADE AMONG
MEMBER COUNTRIES TO ZERO BUT EACH
MEMBER COUNTRY STILL HAS AUTONOMY IN
DECIDING THE EXTERNAL RATE OF TARIFF FOR
ITS TRADE WITH NON-MEMBER COUNTRIES.

• EXAMPLE: EUROPEAN FREE TRADE AREA (EFTA)


CUSTOMS UNION
• IN THIS FORM, COUNTRIES AGREE TO ABOLISH
TARIFF AND NON-TARIFF BARRIERS TO TRADE
IN GOODS FLOWING BETWEEN THEM

• EXAMPLE: EUROPEAN UNION


COMMON MARKETS
• ALLOWS FOR FREE MOVEMENT OF LABOR
AND CAPITAL WITHIN THE MEMBER
COUNTRIES.

• EXAMPLE: EUROPEAN COMMON MARKET


ECONOMIC UNION
• IS THE HIGHEST FORM OF ECONOMIC
INTEGRATION

• EXAMPLE: EUROPEAN UNION (EU)


END
THANK YOU FOR LISTENING.

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