Market integration

Global market integration means that price differences between countries are eliminated
as all markets become one. One way to the progress of globalization is to look at trends how
prices converge or become similar across countries.
Integration shows the relationship of the firm in a market. The extent of integration
influences the conduct of the firms and consequently their marketing efficiency. The behaviour
of a highly integrated market is different from that of a disintegrated market. Markets differ in
the extent of integration and therefore, there is a variation in their degree of efficiency.
Market Integration is a situation in which separate markets for the same product become
one single market, for example when an import tax in one of the market is removed.
Integration is taken to denote a state of affairs or a process involving attempts to
combine separate national economies into larger economic regions.

The law of one price

States that the prices of identical security, commodities or asset traded anywhere that is
exchanged in two or more markets must be the same regardless of location and currency. In an
efficient market, there must be only one price for commodities regardless of where they are
traded. Identical goods must have identical prices. For EXAMPLE, an ounce of gold must have
the same price expressed in terms of dollars in London as it does in Tokyo.

Types of Market Integration

There are three basic kinds of market integration
1. Horizontal integration
This occurs when a firm or agency gains control of other firms or agencies performing
similar marketing functions at the same level in the marketing sequence but different location.
In most markets, there are a large number of agencies which do not effectively compete
with each other. This is indicative of some element of horizontal integration. It leads to reduced
cost of marketing. In this reduced competition possible.
2. Vertical integration
This occurs when a firm performs more than one activity in the sequence of the
marketing process. It is linking together of two or more functions in the marketing process
within a single firm or under a single ownerships.
This type of integration makes it possible to exercise control over both quality and
quantity of the product. Vertical integration reduces the number of middleman in the marketing
channel.
3. Conglomeration
A combination of agencies or activities not directly related to each other may, when it
operates under a unified management.

In economics research, globalization means trade integration. As market liberalization and trade
integration climb to the top of the economic policy agenda in many countries, development
economists increasingly focus their attention on market imperfections that may inhibit trade
and create welfare losses.
FREE TRADE
Free Trade wherein international trade (the importation and exportation) left to its natural
course without tariffs and non-tariff trade barriers such as quotas, embargoes, sanctions or
other restrictions.
Tariffs - taxes or duties to be paid on a particular class of imports or exports
Embargo - a government-instituted prevention of exports to a certain country. Official ban on
trade or other commercial activity.
Economic sanctions - commercial and financial penalties applied by one or more countries
against a targeted country, group, or individual.

Free Trade Areas - a group of countries within which tariffs and non-tariff trade barriers
between the members are generally abolished but with no common trade policy toward non
members. Both in the sense of geography and price, is the foundation of these trading
agreements. However, tariffs are not necessarily completely abolished for all products.
Free trade areas impose exclusivity among its members since the world is not entirely a free
trade economy.

GLOBAL CORPORATIONS
A corporation is an artificial being created by operation of law, having the right of succession
and the powers, attributes and properties expressly authorized by law or incident to its existence
(Batas Pambansa Blg. The Corporation Code of The Philippines, Section 2 – Corporation
defined).
According to Investopedia, a corporation is a legal entity that is separate and distinct from its
owners. Corporations enjoy most of the rights and responsibilities that an individual possesses;
that is, a corporation has the right to enter into contracts, loan and borrow money, sue and be
sued, hire employees, own assets and pay taxes.

Migration
Migration is the principal mechanism by which households in less developed countries
(LDCs), especially in rural areas, become directly inserted into the global economy
Globalization is not internationalization, but the effective erasure of national boundaries-
opening the way not only to free mobility of capital and goods but also, in effect, to free
movement (or uncontrolled migration) of vast labor tools from regions of rapid population
growth and the impacts on national economies could be tragic.

MICROECONOMICS
“MICROECONOMICS OF GLOBALIZATION” refers also to the myriad ways in which economic
actors also may become inserted into the global economy indirectly, through their relations with
other economic agents within local, regional, and national markets.
It is the study of the economic behavior of individuals, households and firms. Where
macroeconomics looks at the big picture of the economy, microeconomics looks at the
individual behaviors that drive economic processes.

Example of Microeconomics
 Microeconomics Demand
How demand for goods is influenced by income, preferences, prices and other factors
such as expectations.
 Microeconomics Supply
How producers decide to enter markets, scale production and exit markets.
 Law of Supply and Demand.
When demand falls, Supply Rises and when demand rises, supply falls
 Microeconomics Prices
How individuals, households and firms react to prices and influence prices with their
supply and demand. For EXAMPLE, the observation that some customary prices appear
to be sticky in that consumers resist buying above a particular historically established
price.
 Microeconomics Elasticity
Elasticity is how supply and demand reacts to change. For EXAMPLE, a household that
demands less of a good when the price increases due to the availability of substitutes.
 Microeconomics Opportunity Cost
The tradeoffs that individuals and firms make to manage constrained resources such as
time, money, capital and land. EXAMPLE, you spend time and money going to a movie,
you cannot spend that time at home reading a book, and you can't spend the money on
something else. Time is precious
 Microeconomics Labor Economics
Focus on human capital (referring to the skills that workers possess, not necessarily their
actual work). For EXAMPLE, looking at how expectations for economic growth impact
the labour participation rate.
 Microeconomics Competition
Competition is the rivalry between companies selling similar products and services with
the goal of achieving revenue, profit, and market share growth. Market competition
motivates companies to increase sales volume by utilizing the four components of the
marketing mix, also referred to as the four P's. These P's stand for product, place,
promotion, and price
Three types of competition
1) Direct competitors- offers the same product and services aimed at the same target
market and customer base, with the same goal of profit and market share growth.
2) Indirect competitor- is another company that offers the same products and services,
much like direct competitors; however, the end goals are different. These competitors are
seeking to grow revenue with a different strategy.
3) Replacement competitors-
For EXAMPLE, the use of game theory to model a price war between competitors
 Microeconomics Competitive Advantage
Competitive advantage is the ability of certain firms to outcompete all competition in a
particular area.
3 Tips to Determine Your Competitive Advantage
1. Price
2. Product
3. Customer experience
For EXAMPLE, a sporting goods company with superior brand recognition and a
positive brand image that can charge premium prices and still enjoy high demand for its
products.
 Microeconomics Consumer Choice
How needs, perceptions and information shape consumer choices.
2 influences on a person’s consumption choice:
1. their income
2. prices of the goods
For EXAMPLE, the idea that consumers maximize their expected utility of purchases
meaning that they buy the things they expect to be most useful to them.
 Microeconomics Consumer Confidence
How consumer expectations for the future influence spending, saving, investment and
labor participation. Is an economic indicator that measures the degree of optimism that
 consumers feel about the overall state of the economy and their personal financial
situation? EXAMPLE, when consumer confidence is high, consumers make more
purchases.
 Microeconomics Business Confidence
How producer expectations for the future influence hiring, capital investment and
supply. Business confidence index (BCI) -provides information on future developments,
based upon opinion surveys on developments in production, orders and stocks of
finished goods in the industry sector.

INTERNATIONAL ECONOMIC INSTITUTIONS

1. THE INTERNATIONAL MONITARY FUND (IMF) --would oversee the international
monetary system. IMF lends money to members having trouble meeting financial
obligations to other members, but only on the condition that they undertake economic
reforms to eliminate these difficulties for their own good and that of the entire
membership.
2. WORLD BANK (WB) -- would provide loans for European reconstruction but later
expanded its activities to the developing world. Multinational financial institution
established at the end of World War II (1944) to help provide long-term capital for the
reconstruction and development of member countries. it provides much of the planning
and financing for economic development projects involving billions of dollars.
3. THE GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT)--would oversee
multilateral trade agreements. For about 30 years, this system remained in place and
provided economic stability and prosperity to Western nations.
4. WORLD TRADE ORGANIZATION (WTO)—it focuses on trade places it at the heart of
economic globalization and has made it a magnet for those opposed either to the broader
process of trade liberation and promotion.

REASONS FOR THE MARKET INTEGRATION

to remove transaction cost
Foster competition
Provide better signals for optimal generation and consumption decisions
Improve security of supply

GLOBAL INTERSTATE SYSTEM

Internationalization -a phenomenon deepening of interactions between states does not equal
globalization, but a major part of globalization.
Globalization -encompasses a multitude of connections and interactions that cannot be reduced
to the ties between governments.
The Attributes of Today’s Global System Four key attributes of world politics
1. There are countries or states that are independent and govern themselves.
2. These countries interact with each other through diplomacy.
3. There are international organizations, like the United Nations (UN), that facilitate these
interactions.
4. Beyond simply facilitating meetings between states, international organizations also take on
loves of their own.

Nation-State -is a relatively modern phenomenon in human history, and people did not always
organize themselves as countries.
The two interchangeable terms of nation – state “Not all states are nations and not all nations
are states”.
Examples
1. The nation of Scotland has its own flag and national culture but still belongs to a state called
United Kingdom.
2. Many believe that Bangsomoro is a separate nation within Philippines but the authority still
recognizes it as a Philippine State

State -refers to a country and its government.

Four attributes of State
1. Citizen
Bases in determining principles
 Jus Sanguinis
 Jus Soli
 Naturalization
 Smallest State- Singapore & Vatican
 Largest State-China & Russia
2. Territory
3. Government -agency in which the will of the people are established, limited &defined.
3 structures of government
1. Executive
2. Judiciary
3. Legistative
Forms of government
1. Monorchial
2. Republican
3. Dictatorial
4. Democratic
5. Presidential
4. Sovereignty -one of the fundamental principles of modern state politics.
Internal Sovereignty -no one can operate in a given national territory by ignoring the state.
External Sovereignty -a state’s policies and procedures are independent of the interventions of
other states.
Nation - “imagined community” - It is limited because it does not go beyond a given “official
boundary”

The modern world-system is now a global economy with a global political system (the modern
interstate system). Refers to the relationship between different state unions. It also includes all
the cultural aspects and interaction networks of the human population
The World-Systems Theory
World-systems theory is a macro-scale approach to analyzing the world history of the mankind
and social changes in different countries. The definition of the theory refers to the division of
labor, be it inter- regionally or transnationally. Currently, the theory divides the world into the
core, semi-periphery and periphery countries.

Core Nations
- Appear to be powerful, wealthy and highly independent of outside control. They are
able to deal with bureaucracies effectively; they have powerful militaries and can boast with
strong economies. Due to resources that are available to them (mainly intellectual), they are able
to be at the forefront of technological progress and have a significant influence on less developed
non-core nations.
Semi-Peripheral Nations
-These regions have a less developed economy and are not dominant in the international
trade. In terms of their influence on the world economies, they end up midway between the core
and periphery countries. However, they strive to get into a dominant position of the core nation,
and it was proved historically that it is possible to gain major influence in the world and become
a core country.
Peripheral Nations
-These are the nations that are the least economically developed. One of the main
reasons for their peripheral status is the high percentage of uneducated people who can mainly
provide cheap unskilled labor to the core nations. There is a very high level of social inequality,
together with a relatively weak government which is unable to control country’s economic
activity and the extensive influence of the core nations.

Civil society - is state or situation of people living in particular community or nation having
shared interest , values and purpose getting benefit to have right of individuals, enjoying liberty ,
and to have resources to develop personal potential.

CONCEPT OF GLOBAL GOVERNANCE

Global governance or world governance is a movement towards political cooperation
among transnational actors, aimed at negotiating responses to problems that affect more than
one state or region.
ROLE OF GLOBAL GOVERNANCE
The emerging field of global governance has produced a number of breakthroughs, as
well as failures, aimed at managing global problems through the voluntary and ad hoc
cooperation of a diverse range of international actors.
IS THERE A NEED FOR GLOBAL GOVERNANCE?
Global governance is necessary because humanity increasingly faces both problems and
opportunities that are global in scale. Today, transnational problems such as violence and
pandemics routinely reach across borders, affecting us all. The most important challenge for
humanity to overcome is that of existential risks.

5 Forms of Global Governance

1. Top-Down Governance
2. Bottom-Up Governance
3. Market Governance
4. Network Governance
5. Complex Web Governance

1. TOP-DOWN GOVERNANCE. A top-down approach to governance presents a clear

divide between top-level policy formulation and the subsequent implementation of these
preset goals by administrators and service providers. The process of enacting policy is
viewed as an implementation chain where links must be forged between various
agencies.
2. BOTTOM-UP GOVERNANCE. The bottom-up implementation approach initiates with
the target groups and service deliverers, because they find that the target groups are the
actual implementers of policy. The top-down implementation approach is a clear-cut
system of command and control—from the government to the project, which concerns
the people.
3. MARKET GOVERNANCE. Market governance mechanisms (MGMs) are formal or
informal rules, which have been consciously designed to change the behaviour of various
 economic actors. This includes actors such as individuals, businesses, organisations and
governments - who in turn encourage sustainable development.
4. NETWORK GOVERNANCE. Network governance is "interfirm coordination” that is
characterized by organic or informal social system, in contrast to bureaucratic structures
within firms and formal contractual relationships between them.
5. COMPLEX WEB GOVERNANCE. Web governance is the process of maintaining and
managing an online presence in an organized way. The idea is to set certain standards for
your website and hold yourself to them. That can include both your own organization’s
standards and external regulations or compliance standards. The ultimate goal is to
provide the best user experience possible for your website visitors by ensuring quality,
consistency, accessibility, searchability, and more.