Introduction to Market Integration

Study Notes

The study of economics involves the analysis of how people produce, consume, and trade goods and services.
Economic systems vary widely around the world, but typically involve three economic sectors: primary, secondary, and tertiary.
Market integration refers to the increasing interconnectedness of national economies through globalization.
International financial institutions play a critical role in facilitating global trade and investment.

The globalization of economies creates a system where the financial health of one nation can impact others.
The Bretton-Woods system, established in 1944, aimed to address worldwide economic instability following World War II.

The system was created after two world wars and the Great Depression, demonstrating a desire for international cooperation.
Its main goals were to reduce trade barriers, promote free flow of currency, and restructure the global economy.

The value of currencies was linked to gold, ensuring a fixed exchange rate.
Countries agreed to exchange currencies at fixed rates with a limited margin for fluctuation.
The International Monetary Fund (IMF) was established to oversee global exchange rates.
Nations agreed to eliminate currency restrictions on international trade.
The US dollar became the dominant global currency.

The WTO was founded in 1993, replacing the General Agreement on Tariffs and Trade (GATT) established in 1947.
The WTO aims to remove barriers to international trade, based on the principle of neoliberalism.

The organization has been criticized for failing to effectively address trade barriers in agriculture, particularly for developing countries.
Decision-making processes within the WTO have been accused of being dominated by larger trading powers, excluding smaller nations.
The lack of significant involvement by international non-governmental organizations has led to protests against the WTO.

The IMF and World Bank were created after World War II to promote global economic stability and peace.
The IMF's main focus was to support countries facing financial difficulties by providing loans and advice.
The World Bank's primary goal was to fund projects aimed at reducing poverty, particularly in developing nations.
Both organizations have faced criticism for lending to corrupt governments and for imposing austerity measures that may not be effective.

The OECD comprises the world's wealthiest nations and is responsible for promoting economic development.
OPEC was founded in 1960 and consists of oil-exporting countries who aim to coordinate oil production and prices.
The EU represents a union of 28 European nations with a shared political and economic framework.

NAFTA was implemented in 1994 between the US, Canada, and Mexico with the aim of fostering economic cooperation and reducing trade barriers.
The agreement aimed to improve working conditions and promote fair trade by removing tariffs on goods traded between these three North American nations.

Manufacturing jobs have shifted from developed to less developed nations, resulting in job losses and economic hardship.
Mexican farmers have faced increased competition, forcing many to abandon their land and contributing to food poverty for a significant portion of the Mexican population.

NAFTA has led to increased trade and lower prices due to the elimination of tariffs, but it has also resulted in environmental pollution, job losses, worker exploitation, and harm to Mexican farmers.