Market Integration L2 SOCSCI PDF

MARKET INTEGRATION A situation in which separate markets for the same product become one single market. In simpler manner, it is indicator that explains how much different markets are related to each other Economy - social institution that has...

MARKET INTEGRATION A situation in which separate markets for the same product become one single market. In simpler manner, it is indicator that explains how much different markets are related to each other Economy - social institution that has one of the biggest impacts on society - composed of people. - It is the social institution that organizes all production, consumption, and trade of goods in society. - keep prices stable depends on whether markets are integrated with each other. The Economic System - Vary from one society to another. - more complicated or at least more sophisticated than the way things used to be for much of human history. ❖ Primary Sector - extracts raw materials from natural environments ( farmers, fisherfolks, miners ) ❖ Secondary Sector - gains raw materials and transforms them into manufactured goods. ❖ Tertiary Sector - involves services rather than goods International Financial Institutions 1. The Bretton Woods System - established the rules for commercial and financial relations among its members. - first example of a fully negotiated monetary order intended to govern monetary relations among independent states. - fear of recurrence of lack of cooperation among nations, political instability, and economic turmoil. ✓ Reduction of barriers to trade and free flow of money among nations became the focus to restructure the world economy and ensure global financial stability Five Key Elements: 1. Is the expression of currency in terms of gold or gold value to establish a par value. 2. The official monetary authority in each country (a central bank) would have to 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 establishment of an overseer for these exchange rates thus the international monetary fund was founded. 4. Eliminating restrictions on the currencies of member states in the international trade. 5. The US dollar became the global currency. 2. The General Agreement on Tariffs and Trade ( GATT ) - answer to the # 4 key elements of BWS - This is one of the systems born out of Bretton Woods is the General Agreement on Tariffs and Trade. - Established in 1947 - It focused on trade goods through multinational trade agreements conducted in many “rounds” of negotiation. ✓ However, it was out of the Uruguay Round (1986-1993) that an agreement was reached to create the World Trade Organization ( WTO ). - It was established in 1995 ; Its headquarters is located at Geneva, Switzerland - It is an independent multilateral organization that became responsible for trade in services, non-tariff- related barriers to trade, and other broader areas of trade liberalization. However, there are significant criticism to WTO. trade barriers created by developed countries cannot be countered enough by them.  The decision-making processes were heavily influenced by larger trading powers, in so-called Green Room, while excluding smaller powers in meetings. International Non-Government Organizations (INGOs) are not involved, leading to the staging of regular protests and demonstrations against the WTO. 3. The International Monetary Fund ( IMF ) and The World Bank ( WB ) - were founded after the World War II mainly because of peace advocacy. - help the economic stability of the world. - both basically banks, but instead of being started by individuals like regular banks, they started by organizations. - designed to complement each other. IMF - help countries which were in trouble at that time and who could not obtain money by any means - served as a lender or a last resort for countries which needed financial assistance WB - more long-term approach which revolved around the eradication of poverty and it funded specific goals and it funded specific projects that helped them reached their goals. ✓ Unfortunately, the reputation of these institutions has been dwindling, mainly due to practices such as lending the corrupt governments or even dictators and imposing ineffective austerity measures to get their money back. 4. OECD, OPEC, and the EU Organization for Economic Cooperation and Development ( OECD ) - emanates from the member countries’ resources and economic power Organization of Petroleum Exporting Countries ( OPEC ) - formed because member countries wanted to increase the price of oil, which in the past had relatively low price and had failed in keeping up with inflation. European Union ( EU ) - Most members in the Eurozone adopted the euro as basic currency. 5. North American Free Trade Agreement ( NAFTA ) - A trade pact between the United States, Mexico, and Canada which helps in developing and expanding world trade by broadening international cooperation. - aims to increase corporation for improving working conditions in North America by reducing barriers to trade as it expands the markets of the three countries ✓ Positive - It lowered prices by removing tariffs, opened up new opportunities for small and medium sized business to establish a name for itself, quadrupled trade between the three countries, and created five million US jobs. ✓ Negative - excessive pollution, loss of more than 682,000 manufacturing jobs, exploitation of workers in Mexico, and moving Mexican farmers out of business. History of Global Market Integration 1. Agricultural Revolution and Industrial Revolution ✓ Agricultural Revolution - It was the first big economic change ✓ Industrial Revolution - It was the second major economic revolution in 1800s.  HOWEVER, every economic revolution comes with economic casualties. The workers in factories worked in dangerous conditions for low wages. More productivity came greater wealth, but also greater economic inequality. Because of it, in the late 19th century, labor unions began to form that sought to improve wages and working conditions. 2. Capitalism and Socialism ✓ Capitalism - natural resources and means of production are privately owned. - It emphasizes profit maximization and competition as the main drivers of efficiency. - The idea that if one leaves a capitalist economy alone, consumers will regulate things themselves by selecting goods and services that provide the best value. This is what Adam Smith called as the “invisible hands”. - In practice, an economy does not work well if it is left completely on autopilot. It would lead to market failure such as monopoly. ✓ Socialism - Government plays an even larger role in socialism - The means of production are under collective ownership – property is owned by the government and allocated to all citizens, not only those with the money to afford it. - To Karl Marx, socialism is a steppingstone to communism 3. The Information Revolution - Computers and other technologies are beginning to replace many jobs because of automation or outsourcing jobs offshore. - Development of technologies in the second half of 20th century. Multinational Corporations The international trade agreements often benefit private industries the most. Companies can produce their goods and services across many different countries. It is also referred as Global Corporations It is a company that operates in its home country, as well as in other countries around the world. Characteristics of a Multinational Corporations Very high assets and turnover Network branches Control Continued growth Sophisticated technology Right skills Forceful marketing and advertising Good quality of products Reasons for being a Multinational Corporations Access to lower production costs Proximity to target international markets Avoidance of tariffs  GLOBAL INTERSTATE SYSTEM State ( Political Concept ) - a political unit that has authority over its own affairs. In other words, its borders are recognized by other countries. - distinctive political community with its own set of rules and practices - refer to the Philippine government, the Philippine Territory, and its internal and external sovereignty. Treaty of Westphalia of 1648 - established the notion of the nation-state and the idea of sovereignty Scholars - suggest a decrease in the power of the state and that other “actors” are becoming powerful Elements ; Permanent Population / People - who live in a place Territory - land and water that is controlled by a government Government - regulates relations among its own people and with other states. Sovereignty - right to govern itself. Nation ( Cultural Aspect ) - people rather than any kind of formal territorial boundaries - collective identity grounded on a notion of shared history and culture. - refer to our shared collective notion of democracy, our history, and our collective identity. Nation-state - territory bounded sovereign institution that governs individuals sharing a collective history, identity, and culture. Relevance of the State Amid Globalization “Retain at least some power in the pace of globalization” (Gilpin, 2001) Beland (2008) argued that “the role of the state is enduring - and even increasing in advanced industrial societies.” - He saw greater demands being placed on the state because of four major sources of collective insecurity: 1. Terrorism 2. Economic Globalization 3. Threats to National Identity 4. Spread of Global Disease Institutions that Govern International Relations Peace Treaties and Military Alliances: the UN and NATO Non-Governmental Organizations ( NGOs ) Global Economic Associations: the WTO and NAFTA ❖ United Nations Organization ( UNO ) - coined by former US President Franklin D. Roosevelt in 1942. - Founded on October 24, 1945 with 50 representatives - located in New York City, New York, USA - Secretary-general is Antonio Guterres - “ Maintain international peace and security ” General Functions: 1. Military Issues 2. Economic Issues 3. Human Protection 4. Environmental Issues Other Programs: United Nations Children’s Emergency Fund ( UNICEF ) - help children around the world The Sustainable Development Goals - improvement of all aspects of life. United Nations Environment Programme ( UNEP ) - environmental issues  Intergovernmental Panel on Climate Change ( IPCC ) - mitigate climate change International Court of Justice ( ICJ ) - located in Netherlands ; ( ICC ) ( ITLOS ) Other Mechanisms include: 1. Office of the UN High Commissioner for Human Rights ( OHCHR ) 2. UN Development Group’s Human Rights Mainstreaming Mechanism ( UNDG-HRM ) 3. The Special Advisers on the Preventions of Genocide and the Responsibility to Protect. International Bill of Human Rights which consist of three legal documents: 1. The Universal Declaration of Human Rights 2. The International Covenant on Civil and Political Rights 3. The International Covenant on Economic, Social and Cultural Rights. Security Council ( UN ) - UN created the Security Council - group of countries decides what to do when two or more countries are waging war or are on the verge of fighting. - There are 15 countries who are members of the UN Security Council - USA, Britain, Russia, China, France Permanent - Ivory Coast, Equatorial Guinea, Kuwait, Peru, Poland, South Africa, Indonesia, Belgium, Germany, Dominican Republic. - The UN is being criticized as being weak and is unable to stop wars. - This gave rise to the institution that plays a big role in foreign affairs – NATO. North Atlantic Treaty Organization ( NATO ) - defensive treaty or military alliance. - Founded on April 4, 1949 in Washington, D.C., USA - Its headquarters is located at Brussels, Belgium. - The current Secretary General is Jen Stoltenberg - This treaty and international organization is based on the idea of collective security. - defend each other from the possibility of communist Soviet Union taking control of their Nation. - The countries in this organization basically agreed to combine their militaries and announce to the world that if a country messes with one of its members, the other countries will come to their defense. Non-Government Organization ( NGOs ) - not tied to any country which allows them to operate freely throughout the world. - They provide emergency relief such as food, water, and medical supplies for those homes have been destroyed by disaster or war. - NGOs are neutral during wars. Example: - Red Cross - organization that help those who are wounded during wars. - Doctors without Borders - provides free emergency healthcare in disaster areas. - Oxfam - fights famine and diseases. - Amnesty international - speaks out human rights and political prisoners. - Save the Children Fund - helps kids gets health care and education Globalization and Globalism Globalization - increase or decline in the degree of globalism. - Thickness Globalism - network of connections that transcends distances - Thin Informationalism - computer, science and modern telecommunication, that replaces industrialism - It is defined as the exchange of information and knowledge  Media - McLuhan and Flore (2006) argued that the New Media Age, the importance lies in the medium, the way in which the message is transmitted, not necessarily in the content presented through the medium - Guy De Bord (1994), French Social theorist, emphasize in his media spectacle the sophistication and ubiquity of spectacular visual in televisions. Internet - work of the contemporary world according to Ritzer (2015). - Internet has prompted a flat world basis, anyone can be included in it, at least theoretically GLOBAL GOVERNANCE Government - Creates warfare and sets economic policies for a country. - political unit that has authority over its own affairs. - group of people who control and make decisions for a country. History of Global Governance Since the second world war, organizations and unions have been created to maximize global governance and interference to prevent unbalance between states. Not only should one country have a say towards world issues, but decisions should rather be taken together and internationally which is the main characterization of global governance. Emergence of Global Governance The declining power of nation-states. - If states themselves were “highly contingent and in flux”, it would open the possibility of the emergence of some form of global governance to fill the void Vast flows of all sorts of things that run into and often right through the borders of nation-states. - This could involve the flow of digital information of all sorts through the Internet. Mass migration of people and their entry, often illegally, into various nation-states. - The flow of criminal elements, as well as their products is a strong factor in the call for global governance Horrendous events within nation-states that the states themselves either foment and carry out, or unable to control. Global problems that single nation-state cannot hope to tackle on their own. - Such as the global financial crises and panic that sweep the world periodically, which nations are often unable to deal with their own. Global Government VS Global Governance Global Governance - movement among political cooperation among transnational actors - aimed at negotiating responses to problems that affect more than one nation. - came around mostly from a bunch of academics who were looking at the world's agenda Global Government - We don't have an authority with hierarchical powers.  Global Governance in the 21st Century Global Issues: Environmental Issues Health Policies Illicit Activities Human Rights Refugees, Migration and Population Weapons Proliferation Effects of Globalization to Governments Traditional Challenges - There are two forms of Traditional Challenges: External Intervention and Internal Challenges External Intervention Internal Challenges - invasion by other countries - political challenges happened within the country Challenges from National / Identity Movements - nation has cultural identity that people attached to, while a state is a defined entity due to its specific boundaries. Global Economics - It demands the states to conform to the rules of free-market capitalism. - Government austerity comes from developments of organizations that cooperate across countries such as WTO and regional agreements. Neoliberal Economics - Neoliberal Capitalism, started in the 1980s. - focuses on free trade and dismantling trade barriers - requires a state to cooperate in the global market through the free flow of capital, the privatization of services, and fiscal austerity or constraint - seen as threat, in general Global Social Movements - movements of people that are spontaneous or that emerge through enormous grassroots organization. - transnational movements which means they can occur across countries and across borders. Therefore, states have less control of them. - There are two types: Activist Movements and Regressive or Reactionary Movements