Lesson 2.4: Market Integration

Question 1

A process by which economies are becoming more interdependent and interconnected in terms of commodity flows

This includes ____ and ____

(Genschel and Jacktenfuchs, 2017)

Answer 1

Market Integration

Includes externalities and spillover of impacts

Question 2

Two Kinds of Market Integration

Answer 2

• Horizontal
• Vertical

Question 3

Kind of market integration that happens when a firms performing similar marketing functions at the same level in the marketing sequence.

Answer 3

Horizontal Market Integration

E,g, Disney, META (Facebook-Instagram)

Question 4

Kind of market integration that happens when one company owns the operation and products from one stage to the other along the supply chain.

Answer 4

Vertical Market Integration

E.g. Apple, McDo, Netflix

Question 5

Institutions that provide support through loans or grants, and technical advices to promote a country’s economic and social development

Answer 5

International Financial Institutions (IFI)

(Bhargava, 2006: 393)

Question 6

Acronym

IFI

Answer 6

International Financial institutions

Question 7

Four (4) Issues of IFI

Answer 7

1. Legitimacy
2. Effectiveness
3. Support Conditionality
4. Financial Capacity and Sustainability

Question 8

Examples of International Financial Institutions (IFI)

Answer 8

• International Monetary Fund (IMF)
• The World Bank (WB)
• World Trade Organization (WO OMC)

Question 9

The turn inward of a nation in order to create as much economic self-sufficiency as possible

Answer 9

Autarky

Question 10

In the midst of WWII, the ____ began planning for a more open international economy, borne from fear of:

Answer 10

Western world

• Another Great Depression from occuring
• Resurrection to barriers of trade and free flow of money

Question 11

What happened on July 1, 1944?

Answer 11

Delegates from 44 nations met at the secluded Mount Washington Hotel in Bretton Woods, New Hampshire to participate in what became known as the Bretton Woods Conference

Question 12

Bretton Woods System

With states warry of each other, the lack of cooperation ushered in:

Answer 12

• The increase in tariffs and other import restrictions and protectionist practices
• Governments devaluing their currencies

Question 13

Purpose of the Bretton Woods System

Answer 13

To agree on a system of economic order and international cooperation that would help countries recover from the devastation of the war and foster long-term global growth.

Question 14

The Bretton Woods System created these global organizations (2)

Answer 14

1. IMF
2. IBRD (International Bank fir Reconstruction and Development), commonly known as World Bank

Question 15

Acronym

IBRD

Answer 15

International Bank for Reconstruction and Development

Commonly known as World Bank

Question 16

Key Elements of Bretton Woods System

Answer 16

1. Each participating state would establish a “par value” for its currency expressed in terms of gold or (equivalent) in terms of the gold value of the US dollar as of July 1944.
2. The official monetary authority in each country (a central bank or its equivalent) would agree to exchange its own currency for those of other countries at the established exchange rates, plus or minus a one-percent margin.
3. The International Monetary Fund (IMF) was created to establish, stabilize, and oversee exchange rates.
4. The member states agreed to eliminate, at least eventually, “all restrictions on the use of its currency for international trade.”
5. The entire system was based on the US dollar. The US agreed to make the dollar convertible into other currencies or gold at the fixed par value. The dollar became, in effect, a global currency.

Question 17

Key Elements of Bretton Woods System

1) Each participating state would establish a ____ for its currency expressed in terms of ____ or (equivalent) in terms of the ____ as of ____.

Answer 17

1) Each participating state would establish a “par value” for its currency expressed in terms of gold or (equivalent) in terms of the gold value of the US dollar as of July 1944.

Question 18

Key Elements of Bretton Woods System

2) The ____ in each country (a central bank or its equivalent) would agree to ____ for those of other countries at the established ____, plus or minus a ____ margin.

Answer 18

2) The official monetary authority in each country (a central bank or its equivalent) would agree to exchange its own currency for those of other countries at the established exchange rates, plus or minus a one-percent margin.

Question 19

Key Elements of Bretton Woods System

3) The ____ was created to establish, stabilize, and oversee ____

Answer 19

3) The International Monetary Fund (IMF) was created to establish, stabilize, and oversee exchange rates

Question 20

Key Elements of Bretton Woods System

4) The ____ agreed to eliminate, at least eventually, ____.”

Answer 20

4) The member states agreed to eliminate, at least eventually, “all restrictions on the use of its currrency for international trade”.”

Question 21

Key Elements of Bretton Woods System

5) The entire system was based on the ____. The ____ agreed to make the ____ convertible into other currencies or gold at the ____

Answer 21

5) The entire system was based on the US dollar. The US agreed to make the dollar convertible into other currencies or gold at the fixed par value.

Question 22

This became, in effect, the global currency

Answer 22

Dollar

Question 23

What led to the collapse of the Bretton Woods System?

Answer 23

The amount of dollars in existence kept increasing while the gold reserves of the US kept decreasing

Question 24

In 1949, the US owned ____ % of all the gold reserves ( ____ tons)

Answer 24

In 1949, the US owned 70 % of all the gold reserves ( 22,000 tons)

Question 24

A system for the liberalization of trade that came into existence in 1947 until 1995

Answer 24

General Agreement on Tariffs and Trade (GATT)

Question 24

By 1970, the reserves were reduced to ____

Answer 24

9800 tons

Question 24

- When did the ending of the dollars for gold happened? - Who announced that he was ending this exchange? - In this same year, what happened to the Bretton Woods System?

Answer 24

- August 15, 1971 - President Robert Nixon - Abolished

Question 24

# Acronym GATT

Answer 24

General Agreement on Tariffs and Trade

Question 24

The GATT was superseded by ____

Answer 24

World Trade Organization (WTO)

Question 24

Brought about the **biggest reform of the world's trading system** since GATT was created and resulted in the agreement to create the WTO

Answer 24

The Uruguay Round | (1986-1994)

Question 24

The Uruguray Round led to the creation of:

Answer 24

- TRIPS - TRIMS

Question 24

# Acronym WTO

Answer 24

World Trade Organization

Question 24

# Acronym TRIPS TRIMS

Answer 24

**TRIPS** (Trade-Related Aspects of Intellectual Property Rights) **TRIMS** (Trade-Related Investment Measures)

Question 25

# IMF by the numbers The IMF is **governed by and accountable to** ____ that make up its near-global membership

Answer 25

**191** countries

Question 25

Intangible ideas, knowledge, and expressions that require their use to be approved by their owner

Answer 25

TRIPS (Trade-Related Aspects o Intellectual Property Rights)

Question 25

Difference of GATT and WTO

Answer 25

**GATT** (1947-1995) - Focus on trade in goods - Forum for the meeting of representatives of countries - Focus on tariff reduction **WTO** (1996-present) - Focus on trade in goods, services, and intellectual property - An independent organization - Focus more on non-tariff barriers to trade

Question 25

# IMF by the numbers The IMF is able to **lend** about ____ to its member countries

Answer 25

$Trillion

Question 25

# IMF by the numbers The IMF was **founded** by ____ that sought to ____

Answer 25

The IMF was founded by **44 member countries** that sought to **build a framework for economic cooperation**

Question 25

# IMF by the numbers The IMF was **established** in ____ in the aftermath of ____

Answer 25

The IMF was established in **1944** in the aftermath of **the Great Depression of the 1930s**

Question 25

Range of operating or performance measures that host-country governments impose on foreign firms to keep them from having a distorting effect on trade in goods and services

Answer 25

TRIMS (Trade-Related Investment Measures)

Question 25

Goal of the International Monetary Fund

Answer 25

Macroeconomic stability for both member nations and the global economy

Question 26

Functions of the International Monetary Fund (3)

Answer 26

- Managed the exchange rate system created at Bretton Woods - Could also give adjustment loans to nations - Lender of last resort for developing countries | (Aldama, 2018)

Question 27

An international development organization with the role of **reducing poverty** by lending money to the governments of its poorer members. This is to improve what? (2)

Answer 27

**World Bank** *To improve:* - Their economies - The standard of living of their people

Question 28

The World Bank is owned by how many countries?

Answer 28

187 countries

Question 29

The World Bank officailly became the ____ that was established in ____ at ____a

Answer 29

The World Bank officailly became the **International Bank for Reconstruction and Development (EBRD)** that was established in **1944** at **Bretton Woods**

Question 30

TRUE OR FALSE Membership is only limited to founding countries in the IMF

Answer 30

**False** Membership is open to all member states of the IMF

Question 31

Are private institutions that produce or manufacture goods, products, and services for a more expanded market, usually at the reach of regions or the world

Answer 31

Corporations | (Iwan, 2007)

Question 32

Two types of Corporations

Answer 32

- Multinational Corporation - Transnational Corporation

Question 33

# Types of Corporations Operates in multiple countries but have a home or country base taking care of the R&D and marketing, and focus more on exporting their products and services.

Answer 33

Multinational Corporation | E.g. Apple, Toyota, Starbucks

Question 34

# Types of Corporation Operates in multiple countrise where each foreign subsidiary is given some freedom to develop its own product lines and marketing

Answer 34

Transnational Corporation | E.g. Nestle, Unilever

Question 35

# SKIP if necessary “We have to get used to the fact that, thanks to the ____, ____ rather than ____ will be the leading actors in the ____.

Answer 35

“We have to get used to the fact that, thanks to the **globalization process**, **companies** rather than **states** will be the leading actors in the **world economy**. | (Dehesa, 2006)

Question 36

# Corporations by the Numbers Companies globally

Answer 36

359 million

Question 37

# Corporations by the Numbers MNCs operating worldwide (UNCTAD)

Answer 37

80,000+

Question 38

# Corporations by the Numbers World economic activity

Answer 38

25%-30%

Question 39

MNC Activities

Answer 39

- Foreign Direct Investment (FDI) - Portfolio Investment

Question 40

# MNC Activities Investments by one party in another country to a business or corporation that exists abroad in a different nation-state, with the intention of **gaining control over the latter’s operations.**

Answer 40

Foreign Direct Investment (FDI)

Question 41

# MNC Activities The purchase of equity in companies in other countries, with the intention of **financial gain**

Answer 41

Portfolio Investment

Question 42

# Acronym FDI

Answer 42

Foreign Direct Investment

Question 43

Why do companies become multinational or transnational? (2)

Answer 43

1. Geographic unevennes of **markets** 2. Geographic unevenness of **assets**

Question 44

# BONUS Good job! ^-^

Answer 44

Laban <33