Global Market Integration Overview

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Questions and Answers

What is meant by global market integration?

The fusing of markets into one, eliminating price differences between countries. (correct)

The creation of multiple currencies to manage trade.

The restriction of trade to increase local production.

The separation of markets into distinct entities.

Which development had a significant impact on market integration during the 1820s?

The legalization of currency exchange.

The rise of digital marketplaces.

The establishment of new trade routes in the Americas.

The invention of the steamship and railroads. (correct)

What was a major consequence of the Smoot-Hawley Tariff enacted in the 1930s?

Encouragement of global free trade practices.

Strengthening of the U.S. economy through lowered tariffs.

Increased demand for imported goods.

Reduction in foreign goods demand as countries imposed retaliatory tariffs. (correct)

What major infrastructure project helped decrease journey times between Europe and Asia?

The opening of the Suez Canal. Signup and view all the answers

What trend characterized the end of the 20th century regarding global markets?

Most tariffs were eliminated and transportation costs decreased. Signup and view all the answers

Which factor helped to integrate markets after the 19th century?

Advancements in steam-powered transportation. Signup and view all the answers

What is one problem identified with global market integration?

It fosters dependence on foreign markets. Signup and view all the answers

What historical event boosted market integration significantly before World War I?

Unprecedented flows of capital, goods, and labor across borders. Signup and view all the answers

What event significantly reduced journey times between Europe and Asia?

The opening of the Suez Canal Signup and view all the answers

Which development contributed to the closing of price differences between countries?

The transport revolution Signup and view all the answers

What was a consequence of the Great Depression on global market integration?

Imposition of tariffs Signup and view all the answers

How did technological changes in the 19th century contribute to market integration?

By facilitating faster transportation Signup and view all the answers

What was a significant trend regarding market integration in the late 20th century?

Reduction in transportation costs Signup and view all the answers

What institutional differences pose a challenge to global market integration?

Institutional variations between countries Signup and view all the answers

What impact did the Smoot-Hawley Tariff have on international trade during the 1930s?

Retaliation from foreign countries Signup and view all the answers

What characterized market conditions on the eve of World War I?

Highly integrated global economy Signup and view all the answers

Which technological advancement did NOT contribute to market integration?

The internet Signup and view all the answers

What was a common outcome of market integration in the 19th century?

Widespread availability of new products Signup and view all the answers

Study Notes

Market Integration

The fusing of markets into one.
Global Market Integration means that the price differences between countries are eliminated as all markets become one.
In a single global market, the price of a good would be the same in Market 1 and Market 2.
History of Global Market Integration
Long-distance trade existed for centuries in the first millennium BC.
Driven by a growing population and income, a demand for new products emerged.
Globalization took off in the 1820s.
Price differences started to close up due to the transport revolution, the opening of the Suez Canal, and technological change.
The transport revolution included the invention of the steamship, railroads and refrigeration.
The opening of the Suez Canal slashed the journey time between Europe and Asia.
The global economy was highly integrated on the eve of World War I.
Unprecedented flows of capital, goods, and labor occurred across borders.
The Great Depression of the 1930s saw governments impose tariffs to shift demand for domestically produced goods.
The Smoot-Hawley Tariff raised tariffs on imported goods in the United States.
Tariffs reduced demand for foreign goods, leading to retaliation from foreign countries. This worsened the effects of the Depression.
It took decades to rebuild the world economy after the Great Depression.
By the end of the 20th century, markets were more integrated due to falling transportation costs and the scrapping of many tariffs.
The 1970s saw a trend towards a freer flow of capital across borders, leading to liberalization of capital markets.

Problems in Global Market Integration

Removal of institutional differences between countries can cause incompatibility with democracy and sovereignty.
It can suffocate local markets.

Market Integration

The fusing of markets into one
Price differences between countries are eliminated as all markets become one

Global Market Integration

Market integration can be understood by considering two markets. If both are part of a single market, the price of goods in each market would be the same.

History of Global Market Integration

Long distance trade existed for centuries in the first millennium BCE.
Driven by growing population and income, a demand for new products emerged.
Globalization took off in the 1820s.
The 1820s saw the closing of price differences between countries due to factors such as the transport revolution and the opening of the Suez Canal.
Steam ships, railroads and refrigeration were key innovations that fueled the transport revolution.
The Suez Canal slashed the journey time between Europe and Asia, furthering global market integration.
The eve of World War I saw a highly integrated global economy with unprecedented flows of capital, goods, and labor across borders.
The 19th century saw technological change helping integrate markets through the invention of steam powered transport.
The Great Depression of the 1930s saw governments impose tariffs to switch demand towards domestically produced goods.
The Smoot-Hawley Tariff, enacted in the United States, raised tariffs on imported goods, significantly reducing the demand for foreign goods.
Foreign countries retaliated with their own tariffs, worsening the effects of the 1930s Depression.
It took decades to rebuild the world economy following the Great Depression.
By the end of the 20th century, markets were more integrated as transportation costs continued to fall and most tariffs were scrapped.
The 1970s witnessed a trend towards a freer flow of capital across borders, fueled by the liberalization of capital markets which allowed for the borrowing of funds for investment.

Problems in Global Market Integration

Institutional differences between countries are a major obstacle to global market integration.
Global market integration can stifle democracy and sovereignty.
The removal of institutional variations between countries may not be compatible with democratic principles and national sovereignty.

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Description

Explore the essential concepts of global market integration and its historical development. This quiz covers key milestones such as the transport revolution and the impact of globalization starting in the 1820s. Understand how these changes shaped the prices and availability of goods across different markets.