THE CONTEMPORARY WORLD

MARKET
INTEGRATION

Prepared by:
DIWATA V. DONATO
THE CONTEMPORARY WORLD – MARKET INTEGRATION

MARKET INTEGRATION

• The strength of trading networks that link

different market outlets
• Deepening international cooperation is crucial to
foster integration
• There is a need for economic policies and trade
agreements between countries
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HISTORY OF GLOBAL MARKET

INTEGRATION IN THE 20TH CENTURY

Background: 19th Century

• world transport was revolutionized
• opening of the Suez Canal
• rise of free trade, abandon tariffs
• introduction of electricity
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HISTORY OF GLOBAL MARKET

INTEGRATION IN THE 20TH CENTURY

SUEZ
CANAL
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HISTORY OF GLOBAL MARKET

INTEGRATION IN THE 20TH CENTURY

20th Century: 1901-1950s

• World War I (1914-1918)
• The Great Depression (1930s)
• “Beggar thy neigbhor” policy
• World War II (1939-1945)
• Bretton Woods Conference (1944)
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HISTORY OF GLOBAL MARKET

INTEGRATION IN THE 20TH CENTURY

Economic International Organizations

• The postwar planners proposed a framework for
international economic cooperation, in which
there would be international organizations for
• 1) international monetary cooperation;
• 2) reconstruction and development; and
• 3) international trade in goods and services.
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HISTORY OF GLOBAL MARKET

INTEGRATION IN THE 20TH CENTURY
Economic International Organizations
International Bank for Reconstruction and
Development (IBRD or more commonly as the
World Bank)
• original mandate was to rebuild the war torn
economies
• evolved into the world’s most influential
lender of foreign aid to developing nations
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HISTORY OF GLOBAL MARKET

INTEGRATION IN THE 20TH CENTURY

Economic International Organizations

International Monetary Fund (IMF)
• primary purpose was to maintain a fixed
exchange rate system known
• has become the world’s overseer of the
international financial system
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HISTORY OF GLOBAL MARKET

INTEGRATION IN THE 20TH CENTURY

Economic International Organizations

International Trade Organization (ITO)
• Its primary function of liberalizing world trade
was given to the General Agreement on
Tariffs and Trade (GATT)
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HISTORY OF GLOBAL MARKET

INTEGRATION IN THE 20TH CENTURY
Economic International Organizations
• General Agreement on Tariffs and Trade (GATT), is a
multilateral agreement regulating trade among countries.
• Purpose of GATT: substantial reduction of tariffs and other
trade barriers and the elimination of preferences, on a
reciprocal and mutually advantageous basis
• This agreement also created the World Trade
Organization (WTO).
• WTO implements the agreement, provides a forum for
negotiating additional reductions of trade barriers and for
settling policy disputes, and enforces trade rules.
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HISTORY OF GLOBAL MARKET

INTEGRATION IN THE 20TH CENTURY

20th Century: 1950s-2000

• decolonization and birth of new nations
• world economy as a whole was relatively stable
• oil price shocks of the 1970s
• 80s-90s financial economic crises
• new major global players
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FINANCIAL INSTITUTIONS

World Bank (WB)

• largest sources of funding and knowledge for
developing countries
• two goals: to end extreme poverty and
promote shared prosperity in a sustainable
way
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FINANCIAL INSTITUTIONS

International Monetary Fund (IMF)

• to foster global monetary cooperation, secure
financial stability, facilitate international trade,
promote high employment and sustainable
economic growth, and reduce poverty around
the world
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FINANCIAL INSTITUTIONS

WB and IMF
• The World Bank Group works with developing
countries to reduce poverty and increase shared
prosperity, while the International Monetary Fund
serves to stabilize the international monetary
system and acts as a monitor of the world’s
currencies.
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FINANCIAL INSTITUTIONS
WB and IMF
BASIS WB IMF
Promote economic Maintain economic
development. stability.
FUNCTION
Policy advice and Lends to countries and
technical assistance. gives practical help.
Microeconomics Macroeconomics
FOCUS Smaller loans Larger loans
Specific projects Macro-targets
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GLOBAL CORPORATIONS

• The contemporary global corporation is

simultaneously and commonly referred to either
as a multinational corporation (MNC), a
transnational corporation (TNC), an international
company, or a global company.
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GLOBAL CORPORATIONS
BASIS MNC TNC
MNC refers TNC refers
to multinational to transnational
corporations, usually a corporations, which
MEANING
large corporation operate in foreign
operated in the home countries individually, not
country. through the home country.
REGISTERED OR only registers in the home also registers in other
INCORPORATED country countries
made in the home made by company
DECISION-MAKING country and should affect managers in individual
all other countries host countries
faces restrictions when it free to make decisions
LOCAL MARKETS comes to the local independently based on
markets local markets
has a centralized system does not have a
where global centralized system
CENTRALIZED SYSTEM
management is
coordinated
EXAMPLES Microsoft, FedEx, Walmart McDonalds, Toyota
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GLOBAL CORPORATIONS

Reasons why a TNC might want to set up

in a country:
• cheap labour
• cheap raw materials
• good transportation links
• business friendly government
• low rates of corporation tax
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GLOBAL CORPORATIONS
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GLOBAL CORPORATIONS
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REFERENCES

MAIN READING/S:
Neubauer, D. (2014). The Rise of the Global Corporation. In M. Stegger, P. Battersby, & J. M.
Siracusa, The SAGE Handbook of Globalization (2014 ed.). SAGE Publications.
Krueger, A. O. (2006, April 6). The World Economy at the Start of the 21st Century.
Retrieved from International Monetary Fund:
https://www.imf.org/en/News/Articles/2015/09/28/04/53/sp040606
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REFERENCES
ADDITIONAL READING/S:
Canuto, O. (2013, January 16). Global Challenges of Integration. Retrieved from World Bank:
https://www.worldbank.org/en/news/speech/2013/01/16/otaviano-canuto-talking-
points-gaidar-forum-in-russia
Chen, J. (2021, March 9). Multinational Corporation (MNC). Retrieved from Investopedia:
https://www.investopedia.com/terms/m/multinationalcorporation.asp
Duke University School of Law. (n.d.). GATT/WTO. https://law.duke.edu/lib/research-
guides/gatt/
GK Education. (2021, June 18). Difference between MNC AND TNC.
https://gkeducation.epizy.com/difference-between-mnc-and-tnc-tabular-form-2/
International Monetary Fund. (n.d.). About the IMF. https://www.imf.org/en/About
Levitt, T. (1983, May). The Globalization of Markets. Retrieved from Harvard Business
Review: https://hbr.org/amp/1983/05/the-globalization-of-markets
World Bank. (n.d.). The World Bank Group and the International Monetary Fund (IMF).
https://www.worldbank.org/en/about/history/the-world-bank-group-and-the-imf
World Bank. (n.d.). Who We Are. https://www.worldbank.org/en/who-we-are
World Trade Organization. (n.d.). History of the WTO.
https://www.wto.org/english/thewto_e/history_e/history_e.htm
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How many and what

global corporations are
you familiar with?