MARKET INTEGRATION

Integration is taken to denote a state of affairs or a process

involving attempts to combine a separate national economies
into larger economic regions (Robson, 1990).
Integration shows the company’s market relationship.
The extent of integration affects the company’s status and thus
their marketing efficiency.
Markets differ in the degree of integration, and thus
their degree of efficiency varies.
 Common Term in Market Integration:
▪ General Agreement on Tariffs and Trade (GATT) is a legal
agreement between many countries, whose overall purpose
was to promote international trade by reducing or
eliminating trade barriers such as tariffs or quotas. Signed
by 23 countries in 1947 at Geneva canton, Switzerland and
was implemented in 1948 (Wikipedia).

▪ International Financial Institutions (IFIs) are institutions

that provide financial support and professional advice for
economic and social development activities in developing
countries and promote international economic cooperation
and stability.
 The term international financial institutions typically
refers to the International Monetary Fund (IMF) and the five
multilateral development banks (MDBs):

1.World Bank Group

2. African Development Bank
3. Asian Development Bank
4. Inter-American Development Bank
5. European Bank for Reconstruction and Development

The last four of these, focus on a single world region and

hence are often called regional development banks.
 The Multilateral Development Banks (MDBs)
provide financing for development through developing
countries through the following:
1. Long-term loans (with maturities of up to 20
years) based on market interest rates. To obtain the
financial resources for these loans, MDBs borrow on
the international capital markets and re-lend to
borrowing governments in developing countries.
2. Very-long-term loans (often termed credits, with
maturities of 30 to 40 years) at interest rates well below
market rates. These are funded through direct
contributions by government in the donor countries.
 3. Grant Financing is also offered by some MDBs,
mostly for technical assistance, advisory services, or project
preparation. All IFIs are active in supporting programs that
are global in scope, in addition to their primary role of
financing and providing technical assistance to programs at
the country level.
Some other publicly owned international banks and funds
also lend to developing countries, and these are often grouped
together as other multilateral financial institutions rather than
as IFIs. Among these are: the European Investment Bank,
International Bank for Agricultural Development, Islamic
Development Bank, Nordic Development Fund, Nordic
Investment Bank, and the Organization of the Petroleum
Exporting Countries Fund for International Development.
 THE INTERNATIONAL MONETARY FUND
IMF was established by international treaty in
1945 as the central institution of the international
monetary system, the system trading and exchange
rates that enables business to take place between
countries with different currencies. IMF aims to
prevent crisis in the system by encouraging countries
to adopt sound economic policies and monitoring their
adherence to such policies.
IMF headquartered in Washington D.C. and is
governed by its almost-global membership of 184
countries.
 International Monetary Fund statutory
purposes include the ff:
1. Promoting the balanced expansion of
world trade;
2.The stability of exchange rates;
3.The avoidance of competitive currency
devaluations; and
4. The orderly correction of balance of
payments problems.
 IMF engages in three types of activities to serve its
purposes.
1. It monitor economic and financial developments and
policies, both in its member countries and at the global level,
and offers policy advice to its members based on its more than
50 years of experience;
2. It lends to member countries experiencing balance of
payments problems, not just to provide temporary financing
but also to support economic adjustment and reforms aimed at
correcting the underlying problems; and
3. It provides the governments and central banks of its
member countries with technical assistance and training in its
areas of expertise.
 THE WORLD BANK GROUP
Founded in 1945, the World Bank at first was involved
mainly in the construction of countries devastated by World
war II. As those countries recovered, the bank turned its
primary focus to its second tasks for the economic
development of the World’s non industrialized countries,
with the goal of lifting the world out of poverty.
The World Bank is organized much like a cooperative,
whose shareholders are the same 184 countries that make
up IMF’s membership. The shareholding countries are
represented by a Board of Governors, which is the Bank’s
ultimate policy making body.
 The World Bank Group, which is also
headquartered in Washington D.C. is made up of
five institutions:
1. International Bank for Reconstruction and
Development (IBRD) focuses on middle-income
countries and creditworthy low-income countries.
2. International development Association
(IDA) focuses on the poorest countries in the
world. It is the largest source of interest-free loans
and grant assistance to the government of poorest
countries.
 3. International Finance Corporation (IFC) focuses
on financing private sector projects, in which it may take
an equity stake in addition to lending.
4. Multilateral Investment Guarantee Agency
(MIGA) promotes foreign direct investment in
developing countries by insuring investors against
political or noncommercial risk in those countries.
5. International Centre for Settlement of Investment
disputes (ICSID) provides a forum for mediating
disputes between investors and governments, and
advises governments in their efforts to attract
investment (Bhargava 2006).
RELATIONSHIP BETWEEN THE IMF AND WORLD BANK
The World Bank was formed to help with European
post-war reconstruction. It later shifted its focus to
assisting development efforts in the Third World.
In the 1980s, while continuing the project lending,
the bank began shifting its loans toward structural
adjustment and sectoral adjustment loans. Presently,
two-thirds of the bank’s lending goes to both
adjustments.
The IMF and World Bank jointly administer a
program called the Heavily Indebted Poor Country/
Poverty Reduction and Growth Fund that provides very
modest debt relief to the world’s poorest countries.
 1. A structural adjustment is a set of economic
reforms that a country must adhere to in order to secure
a loan from the International Monetary Fund and/or the
World Bank. Structural adjustments are often a set of
economic policies, including reducing government
spending, opening to free trade, and so on.
2. Sectoral adjustment means a settlement of a
claim or debt relating to the various economic sectors of
a society or to a particular economic sector.
The World Bank respects the IMF’s role and
generally will not make loans to countries that have not
received an IMF seal of approval.
THE IMF AND WORLD BANK’S RELATIONSHIP TO THE
WORLD TRADE ORGANIZATION (WTO)
The IMF, World Bank and the WTO share a
commitment to “free trade” and binding developing
countries into the global economy. The WTO implements
agreements governing world trade and administers a
binding mechanism to resolve trade disputes between
nations.
In Nov. 1999, the IMF, World Bank and WTO
announced a new “coherence agreement” in which they
pledged to coordinate future activities, that the first two
may incorporate the very particularized elements of
WTO agreements into their lending conditions.
 REFERENCES
▪ Andrada, J.F. , et. al. 2018. The Contemporary World.
Philippines: Mutya Publishing House.

▪ Castells, M. 1998. End of Millenium . Vol. III of The

Information Age: Economy, Society and Culture,
Oxford: Blackwell.