Market Integration

Question 1

• A process by which economies are becoming more interdependent and interconnected in terms of commodity flows including externalities and spillover of impacts (Genschel and Jacktenfuchs, 2017)

Answer 1

MARKET INTEGRATION

Question 2

MARKET INTEGRATION HAS TWO KINDS:

Answer 2

HORIZONTAL
VERTICAL

Question 3

Happens when a firm gains control of other firms performing similar marketing functions at the same level in the marketing sequence.

Answer 3

Horizontal

Question 4

Happens when one company owns the
operations and products from one stage to
the other along the supply chain.

Answer 4

Vertical

Question 5

INTERNATIONAL FINANCIAL INSTITUTIONS (IFI)

Answer 5

• Are institutions that provide support through loans or grants and technical advices to promote a country’s economic and social development (Bhargava, 2006: 393).

Question 6

There are four issues:

Answer 6

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

Question 7

IFI stands for?

Answer 7

International Financial Institutions

Question 8

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

Answer 8

• Autarky

Question 9

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

Answer 9

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

Question 10

delegates from forty-four nations met at the secluded Mount Washington Hotel in Bretton Woods, New Hampshire to participate in what became known as the Bretton Woods Conference.

Answer 10

July 1, 1944

Question 11

BACKDROP:
With states warry of each other, the lack of cooperation ushered in:
* The increase in tariffs and other import restrictions
and protectionist practices
* Governments devaluing their currencies

Answer 11

BRETTON WOODS AND THE BRETTON WOODS SYSTEM

Question 12

Their purpose was 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.

Answer 12

BRETTON WOODS AND THE BRETTON WOODS SYSTEM

Question 13

• Created IMF and the International Bank for
  Reconstruction and Development (IBRD),
  commonly known as the World Bank

Answer 13

BRETTON WOODS AND THE BRETTON WOODS SYSTEM

Question 14

IBRD stands for

Answer 14

International Bank for Reconstruction and Development

Question 15

IMF stands for

Answer 15

International Monetary Fund

Question 16

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

Answer 16

“par value”

Question 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.
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.

Answer 17

BRETTON WOODS AND THE BRETTON
WOODS SYSTEM KEY ELEMENTS:

Question 18

The amount of dollars in existence kept
increasing while the gold reserves of the US
kept decreasing.
* If in 1949, the US owned 70% of all gold
reserves (22,000 tons), by 1970 the reserves
were reduced to 9800 tons.

Answer 18

COLLAPSE OF THE BRETTON WOODS SYSTEM

Question 19

• August 15, 1971- “____” announced that he was ending the exchange of the dollars for gold, and soon the Bretton Woods System was abolished

Answer 19

President Robert Nixon

Question 20

GATT stands for?

Answer 20

General Agreement on Tariffs and Trade

Question 21

WTO stands for?

Answer 21

World Trade Organization

Question 22

A system for the liberalization of trade that came into existence in 1947 and operated until 1995 when it was superseded by the World Trade Organization (WTO)

Answer 22

GATT and WTO

Question 23

• 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 23

The Uruguay Round (1986 - 1994)

Question 24

1947-1995
* Focus on trade in goods
* Forum for the meeting of representatives of countries
* Focus on tariff reduction

Answer 24

GATT (General Agreement on Tariffs and Trade)

Question 25

1995-present * Focus on trade in goods, services, and intellectual property * An independent organization * Focus more on non-tariff barriers to trade

Answer 25

(WTO) World Trade Organization

Question 26

The Uruguay Round (1986 – 1994) Led to the creation of:

Answer 26

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

Question 27

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

Answer 27

- TRIPS (Trade-Related Aspects of Intellectual Property Rights)

Question 28

o 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 28

- TRIMS (Trade-Related Investment Measures)

Question 29

TRIPS stand for?

Answer 29

Trade-Related Aspects of Intellectual Property Rights

Question 30

TRIMS stands for?

Answer 30

Trade-Related Investment Measures

Question 31

Goal of IMF:

Answer 31

Macroeconomic stability for both member nations and the global economy

Question 32

The Functions of IMF:

Answer 32

* Managed the exchange rate system created at Bretton Woods * Could also give adjustment loans to nations * Lender of last resort for developing countries

Question 33

The IMF is governed by and accountable to ___ countries that make up its near-global membership

Answer 33

191

Question 34

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

Answer 34

44

Question 35

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

Answer 35

1944

Question 36

The IMF is able to lend about $____ to its member countries.

Answer 36

$1 trillion

Question 37

An international development organization owned by 187 countries. Its role is to reduce poverty by lending money to the governments of its poorer members to improve their economies and to improve the standard of living of their people.

Answer 37

WORLD BANK

Question 38

Officially the International Bank for Reconstruction and Development (IBRD) was established in 1944 at Bretton Woods

Answer 38

WORLD BANK

Question 39

Membership is open to all member states of the IMF

Answer 39

WORLD BANK

Question 40

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. (Iwan, 2007)

Answer 40

CORPORATIONS

Question 41

There are two kinds of corporations:

Answer 41

MULTINATIONAL CORPORATION and TRANSNATIONAL CORPORATION

Question 42

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 42

MULTINATIONAL CORPORATION

Question 43

Operates in multiple countries where each foreign subsidiary is given some freedom to develop its own product lines and marketing.

Answer 43

TRANSNATIONAL CORPORATION

Question 44

Corporations have ____ companies globally

Answer 44

359 million

Question 45

Corporations have ____ MNCs operating worldwide (UNCTAD)

Answer 45

80,000+

Question 46

Corporations have _____ world economic activity

Answer 46

25% - 30%

Question 47

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 47

Foreign Direct Investment (FDI)

Question 48

MNC Activities: – The purchase of equity in companies in other countries, with the intention of financial gain.

Answer 48

Portfolio Investment

Question 49

WHY DO COMPANIES BECOME MULTINATIONAL OR TRANSNATIONAL?

Answer 49

* Geographic unevenness of markets * Geographic unevenness of assets