GE-CW:
THE
CONTEMPORARY
WORLD
Lesson 3:
Market Integration
Lesson Overview
“Globalization is an immense global opportunity, for each and every
continent, because it forces us to act together with others. The alternative to
globalization would be shutting ourselves off from others, but this is not a viable
alternative. It would lead only to isolation and therefore misery.”- Angela Merkel.
Now that you have learned about the global economy and the
basic theories surrounding economic globalization, in this lesson you
will know about market integration. In the course of the discussion, you
will also learn about the role of global corporations as primary actors
of market integration. Lastly, the different international organizations
that promote international trade and organize global finance will also
be discussed.
LESSON 3: MARKET INTEGRATION 1
Intended Learning Outcomes
At the end of the lesson, you should be able to:
Discuss the concept, actors involved, and processes of market
integration.
Examine the role of global corporations in enhancing market
integration.
ONLINE/OFFLINE RECITATION:
1) Define market integration.
2) What is an international institution?
3) What is a global corporation?
4) How do international institutions and multinational corporations
facilitate market integration?
The Global Economy and Market Integration
“Market Integration refers to the process of economic
transformation within a region, bloc, or group of countries, aimed at
pegging one price for the same product, thereby directly or indirectly
merging previously separate markets or economic communities into
one single market or economic community” (San Juan, 2018, p. 17).
Governments and global institutions—the same sectors that lay
the groundwork for today's market integration—shape and impact
the global economy's activity under globalization. Governments play
a key role in shaping and implementing globalization's principles.
Governments and their representatives oversee and finance global
organizations in part. Meanwhile, multinational companies play a vital
role in ensuring that the gears of capitalism work as smoothly,
effectively, and profitably as possible.
LESSON 3: MARKET INTEGRATION 2
Global Corporations
and Globalization
Global market integration is impossible to achieve without the
emergence of multinational ccorporations (MNCs). The origins of
today's multinational companies can be traced back to the colonial
period, when colonizers used colonies as cheap sources of raw
materials and, in many cases, slave labor; or as markets for surplus
goods (San Juan, 2018).
Gold and silver
poured to the West
from the colonies.
Banks began lending
money to governments
throughout Europe and
the United States.
Meanwhile, the English,
Dutch, and Danish East
India Companies, as
well as other
prototypical ‘global
corporations,'
maintained networks of head offices and overseas posts to perform
their trade (Scholte, 2005 as cited by San Juan, 2018).
LESSON 3: MARKET INTEGRATION 3
These companies from
the colonial period were the
fore runners of the modern-day
global corporations. They had
their trade posts, mills, and
plantations in the colonies and,
their actions back up
Wallerstein's portrayal of a
society divided between
center and periphery (San
Juan, 2018). That is, the core
countries largely benefitting from international trade at the expense
of the periphery countries.
Nevertheless, it is notable that multinational corporations’
considerable ventures into research and development and
investments in new goods and services have aided the increase of
trade among nations, and in effect, furthers the expansion of
globalization. Global companies engaged in resource mining,
commodity processing, connectivity, or transportation, such as Toyota
Motor Corporation, Royal Dutch Shell, Glencore, Boeing Company,
and AT&T, are still included among Fortune's 2017 Global 500 list of
LESSON 3: MARKET INTEGRATION 4
firms (ranked by revenue), demonstrating how little MNCs has
changed over centuries (San Juan, 2018). Companies have come
and gone, but the majority of them continue to work in these lucrative
industries. Banks and financial companies with a worldwide presence,
such as HSBC and Citigroup, have also stood the test of time, as any
other business venture theoretically requires funding, which these
organizations offer. In recent decades, additional developments in
the information technology industry have aided the growth of high-
tech multinational companies such as Apple and Samsung
Electronics (San Juan, 2018).
With multinational companies gaining more influence of the
world's wealth and capital, opponents rightly argue that these
institutions should be regulated rather than deregulated. The
reluctance of public institutions to control the operation of capital in
the new world economy is one of the culprits behind capitalism's
inability to quickly pull economies out of crisis, according to Walden
Bello, who also states that with corporate-driven market powers
unchecked, systemic imbalances build-up (San Juan, 2018).
The World Trade
Organization (WTO)
and Market Integration
Trade among countries does not exist in a vacuum. International
organizations like the World Trade Organization facilitate the free and
smooth flow of exchange of goods and services across international
member-states. The WTO identifies with the following roles in relation
to global trade: (1)“It is an organization for trade opening.”; (2) “It is a
forum for governments to negotiate trade agreements”; (3) “It is a
place for them to settle trade disputes and (4) “It operates a system
of trade rules” (World Trade Organization, 2021,para. 1). Substantially,
LESSON 3: MARKET INTEGRATION 5
the WTO functions a significant role in facilitating global trade which
in effect also promotes market integration.
Role of International Financial Institutions in the
Creation of a Global Economy
Essential to the establishment of the global economy is the
financial power wielded by international financial institutions. These
international financial institutions as well as private banks and other
financial institutions further spreads and smoothens the liquidity of
economic globalization. The international financial institutions and
their corresponding characteristics are enumerated in the
proceeding sections.
The World Bank Group
(WBG)
The World Bank Group has
for its mission two objectives
namely: (1)” To end extreme
poverty” (by reducing the share of the global population that lives in
extreme poverty to 3% by 2030); and (2) “To promote shared
prosperity” (by increasing the incomes of the poorest 40% of people
in every country) (World Bank, 2021). Obtaining these objectives
would assist developing countries in strengthening their capacity to
participate in free trade, industrialization, and other critical growth
policies.
The WBG is composed of five entities that vary in terms of core
goals and purpose. These entities are the following: (1) International
Bank for Reconstruction and Development (IBRD), (2) the International
Development Association (IDA), (3) the International Finance
Corporation (IFC), the (4) Multilateral Investment Guarantee Agency
(MIGA), and the (5) International Center for Settlement of Investment
LESSON 3: MARKET INTEGRATION 6
Disputes (ICSID). In essence, the World Bank—particularly the IBRD and
the IDA—lends money to developing countries for projects that will
assist them in alleviating poverty and achieving long-term
development (San Juan, 2018).
The International Monetary Fund (IMF)
The IMF is known as the World Bank’s twin
organization. Its primary mission is “to ensure the
stability of the international monetary system—
the system of exchange rates and international
payments that enables countries and their
citizens to transact with each other”
(International Monetary Fund, 2021).
The IMF's last original aim, without euphemism, is to serve as a de
facto "lender of last resort." Simply put, the IMF is expected to “provide
liquidity in the form of loans to those countries suffering an economic
slowdown and unable to boost aggregate demand with domestic
resources.” Portugal and Greece, the IMF's top two creditors,
demonstrate the IMF's status as a global lender of last resort. Both crisis-
hit countries are now recovering economically, at least on a
macroeconomic level (San Juan, 2018, p.25).
International economic institutions are equally criticized as they
are praised as facilitators of economic globalization. Many scholars
argue that these institutions are perpetrators of debt trap among
developing and least developed countries. “The debt trap refers to
the developing countries’ inability to free themselves from debts
acquired from First-World countries for the past decades” (Lichauco
1988 as cited by San Juan, 2018, p. 25). What do you think of this
criticism about international financial institutions? Can you relate this
criticism with the experience of the Philippines?
LESSON 3: MARKET INTEGRATION 7
Assessment Tasks
QUIZ. Please prepare for a short test. Your test is
divided into two:
(a) Identification
(b) Essay
Brochure or Pamphlet Making.
1. This is an asynchronous task. This activity will get
you more acquainted with the Global Economic
Institutions.
2. Choose an International Economic
Organization. Go to the web and accomplish
these tasks:
a. Research the origins and history of the institution
that you have chosen.
b. Map the international connections it has
created.
c. Identify the major-country leaders of this
institution.
d. Locate the Philippines in this map if
interconnections.
3. Create a pamphlet or a brochure about your
chosen Global Economic Institution. Include the
information that you have gathered from the
preceding number
LESSON 3: MARKET INTEGRATION 8
Evaluation
Rubric for the Brochure or Pamphlet
5 4 3 2 1
Writing All questions Almost all Most Less than One or more
Content in the questions in questions in half of the questions in
activity were the activity the activity questions in the activity
answered were were the activity were
and the answered answered were answered
instructions and the and the answered and the
were instructions instructions and the instructions
followed. were were instructions were
followed. followed. were followed.
followed.
Grammar There are no There are There are 3 There are There are
and grammatical almost no to 4 more than 5 more than 7
Organization mistakes in grammatical grammatical to 7 grammatical
the activity. mistakes in mistakes in grammatical mistakes in
the activity. the activity. mistakes in the activity.
the activity.
Accuracy All facts in Almost all Half of the Less than None of the
the activity facts in the facts in the half of the facts in the
are activity are activity are facts in the activity are
accurate. accurate. accurate. activity are accurate.
accurate.
Graphics/ Images go Images go Images go Graphics do There are no
Pictures well with the well with the well with the not go with images at
text and text but text, but they the text or all.
there is a there are so are blurred appear to
good mix of many that or too small. be randomly
text and they chosen.
images. overpower
the text.
LESSON 3: MARKET INTEGRATION 9
References
Bello, Walden F. (2006). “The Multiple Crises of Global Capitalism,” In
Deglobalization: Ideas for a New World Economy. Quezon City:
Ateneo de Manila University Press, pp. 1-31
International Monetary Fund. (2021). “The IMF at a glanvce”.
International Monetary Fund Website. Retrieved from
https://www.imf.org/en/About/Factsheets/IMF-at-a-Glance
San Juan, David Michael M. (2018). Journeys Through Our
Contemporary World. Manila: Vibal Group
World Bank. (2021). “Who we are”. World Bank Website. Retrieved
from https://www.worldbank.org/en/who-we-are
World Trade Organization. (2021). “Who we are”. Word Trade
Organization Website. Retrieved from
https://www.wto.org/english/thewto_e/whatis_e/who_we_are_e.htm
