MARKET INTEGRATION Flashcards
MARKET INTEGRATION
defined as by Koester, (2000), is a state of affairs or a
process of involving attempts to combine separate national
economies into larger economies. It is a means of stimulating
trade and improving the division of labor between participating
countries.
MARKET INTEGRATION WAS STATED BY
KOSTER 2000
3 BASIC KINDS OF MARKET INTEGRATION
HORIZONTAL I
VERTICAL I
CONGLOMERATION
HORIZONTAL INTEGRATION
occurs when an agency or firm gains control over…
Example: wholesaler assuming the function of retailing
FORWARD INTEGRATION
CONGLOMERATION
comibination of agencies or activities not directly related to each other…
VERTICAL I
occurs when a firm performs more than one activity…
5 FORMS OF MARKET INTEGRATION (KOESTER, 2000) PFCCE
- PREFERENTIAL AGREEMENT
- FREE TRADE AGREEMENT
- CUSTOM UNION
- COMMON MARKET
- ECONOMIC UNION
2 types of VERTICAL I
- FORWARD I
- BACKWARD I
If a firm assumes another function of marketing which is closer to
the consumption function,
FORWARD INTEGRATION
Represents a higher stage of economic
integration. In this form, countries agree to abolish tariff and
non-tariff to trade in goods flowing between them. They agree a
common external tariff.
CUSTOM UNION
is an international intergovernmental organization for providing
long-term loans on easy term for specific developmental projects.
WORLD BANK (WB)
involves ownership or a combination of sources of supply.
BACKWARD INTEGRATION
Example: when a processing firm assumes the function of
assembling/purchasing the produce from the villages.
BACKWARD INTEGRATION
From an initial strength of 31 members, it now commands a 125
strong membership.
INTERNATIONAL MONETARY FUND (IMF)
Free movement of labor and capital within the member-countries. Hence, the intention of a common market is to integrate both product and factor markets member-countries.
COMMON MARKET
It is the highest form of economic
integration. In addition to the conditions of a common market,
member-countries also agree to integrate monetary fiscal, and
other policies.
ECONOMIC UNION
reduces trade barriers among member
countries to zero but each member still has autonomy in deciding on
the external rate of tariff for its trade with non-member countries.
FREE TRADE AGREEMENTS
GLOBAL CORPORATIONS (4) MIGT
- MULTINATIONAL CORPORATIONS (MNC)
- INTERNATIONAL COMPANIES
- GLOBAL COMPANIES
- TRANSNATIONAL COMPANIES (TNC)
a trading block that
gives preferential access to certain products from the participating
countries.
PREFERENTIAL AGREEMENT
only global international organization dealing
with the rules of trade between nations. The goal is to ensure
that the trade flows as smoothly, predictably, and freely as
possible.
WORLD TRADE ORGANIZATION (WTO)
have investment in
other countries but do not have coordinated products offering
in each country.
MULTINATIONAL CORPORATIONS
The functions of IMF include: WPAPP
- Works as short-term credit institution;
- Provides for the orderly adjustment of exchange rates;
- Acts as a reserve member-countries to borrow from;
- Provide foreign exchange loans against current transaction, and;
- Provides international financial consultancy service.
Have invested in and are present in many countries
GLOBAL COMPANIES
