GE3 Module 2 Market Integration and Global Interstate System Tagbilaran City College PDF

Course Code GE3 Instructor Lozein Sang-an, LPT Course Title The Contemporary Email [email protected] World Course Credits 3 Contact 09092021355...

Course Code GE3 Instructor Lozein Sang-an, LPT Course Title The Contemporary Email [email protected] World Course Credits 3 Contact 09092021355 Number Course General Education Consultation 8:00 AM – 11:00 AM Classification Hours Pre-Requisite(s) Consultation TCC Faculty Office/Room Venue Learning Module 2: Market Integration and Global Interstate System Duration of Delivery: September 9 - 11, 2024 Due Date of Delivery: September 11, 2024 Objectives: By the end of the lesson, the students shall be able to: a. Identify the attributes of global corporations. b. Recognize the institutions that govern international relations. c. Determine the four elements of a state. d. Distinguish the positive and negative effects of globalization. e. Differentiate internationalism from globalism. MARKET INTEGRATION Market integration refers to how easily two or more markets can trade with each other. It occurs when prices among different locations or related goods follow similar patterns over a long period of time. Groups of prices often move proportionally to each other and when this relation is very clear among different markets it is said that the markets are integrated. The term is further used in identifying related phenomenon of market of goods and services experiencing similar patterns of increase or decrease in prices of products. It may also refer to the movement of prices of related goods and services sold in a defined geographical location in similar patterns. When government implement certain strategy to control the direction of economy then integration is intentional while shifting in supply and demand that has a spillover effect on several markets is another factor of market integration. One way of helping integration of market by reducing barriers to trade and increasing fluidity between markets is through foreign trade. The Contemporary World | 1  Market integration exists when there are exerted effects that prompt similar changes or shifts in other markets that focus on related goods on events occurring within two or more markets. Types of Related Markets where Market Integration Occurs Stock Market Integration - This is a condition in which stock markets in different countries trend together and depict same expected risk adjusted returns. Two markets are perfectly integrated if investors can pass from one market to another without paying any extra costs and if there are possibilities of arbitration which ensures the equivalence of stock prices on both markets. Financial Market Integration - It is an open market economy between countries facilitated by a common currency and the elimination of technical, regulatory and tax differences to encourage free flow of capital and investment across borders. It occurs when lending rates in several different markets begin to move in tandem with one another. Emergence of similar patterns within the capital, stock, and financial markets with those trends coming together to exert a profound influence on the economy of that nation is involved in the integration within a nation. GLOBAL CORPORATIONS A global company is generally referred to as a multinational corporation (MNC). An MNC is a company that operates in two or more countries, leveraging the global environment to approach varying markets in attaining revenue generation. These international operations are pursued as a result of the strategic potential provided by technological developments, making new markets a more convenient and profitable pursuit both in sourcing production and pursuing growth. International operations are therefore a direct result of either achieving higher levels of revenue or a lower cost structure within the operations or value-chain. MNC operations often attain economies of scale, through mass producing in external markets at substantially cheaper costs, or economies of scope, through horizontal expansion into new geographic markets. If successful, these both result in positive effects on the income statement (either larger revenues or stronger margins), but contain the innate risk in developing these new opportunities. Opportunities As gross domestic product (GDP) growth migrates from mature economies, such as the US and EU member states, to developing economies, such as China and India, it becomes highly relevant to capture growth in higher growth markets. is a particularly strong visual representation of the advantages a global corporation stands to capture, where the darker green areas represent where the highest GDP growth potential resides. High growth in the external environment is a strong opportunity for most incumbents in the market. Challenges 1. Public Relations: Public image and branding are critical components of most businesses. Building this public relations potential in a new geographic region is an enormous The Contemporary World | 2  challenge, both in effectively localizing the message and in the capital expenditures necessary to create momentum. 2. Ethics: Arguably the most substantial of the challenges faced by MNCs, ethics have historically played a dramatic role in the success or failure of global players. For example, Nike had its brand image hugely damaged through utilizing ‘sweat shops’ and low wage workers in developing countries. Maintaining the highest ethical standards while operating in developing countries is an important consideration for all MNCs. 3. Organizational Structure: International expansion requires enormous capital investments in many cases, along with the development of a specific strategic business unit (SBU) in order to manage these accounts and operations. Finding a way to capture value despite this fixed organizational investment is an important initiative for global corporations. 4. Leadership: The final factor worth noting is attaining effective leaders with the appropriate knowledge base to approach a given geographic market. There are differences in strategies and approaches in every geographic location worldwide, and attracting talented managers with high intercultural competence is a critical step in developing an efficient global strategy. Countries around the world are exercising different forms of government. Political scholars may have different observations on a certain country based on their interest. One perhaps focused on history of the government; on exportation and importation of goods; on or local politics. GLOBAL INSTERSTATE SYSTEM STATE- are independent political communities of which possess a government and asserts sovereignty in relation to a particular segment of human population (Hedley Bull) INTERSTATE – a system of unequally powerful and competing states in which no single state is capable of imposing control on all others. 4 ESSENTIAL ELEMENTS OF A STATE People State is a community of persons. It is a human political institution. Without a population there can be no State. Population can be more or less but it has to be there. Territory Territory is the second essential element of the State. State is a territorial unit. Definite territory is its essential component. A State cannot exist in the air or at sea. It is essentially a territorial State. The size of the territory of a State can be big or small; nevertheless, it has to be a definite, well-marked portion of territory. Sovereignty Sovereignty is the most exclusive element of State. State alone possess sovereignty. Without sovereignty no state can exit. State has the exclusive title The Contemporary World | 3  and prerogative to exercise supreme power over all its people and territory. In fact, Sovereignty is the basis on which the State regulates all aspects of the life of the people living in its territory. Government Government is the organization or machinery or agency or magistracy of the State which makes, implements, enforces and adjudicates the laws of the state. Government is the third essential element of the State. The state exercises its sovereign power through its government. EFFECTS OF GLOBALIZATION POSITIVE Based from the study done by Mohammad Abo Gazleh, the following are the positive effects brought about by Globalization. 1. In communication, subscribers and users of the Internet are remarkably increasing 2. In Education, New communication and technologies enabled the students and researchers, both young and old, to access ideas and information from the best libraries around the globe. 3. In different fore issues, almost everyone is made aware of the rights of women and children, health, environment, discrimination and inequalities through increased media coverage 4. In Culture, clear and deeper understanding of the different communities with their practices and religions is greater than before which leads to a possible demonstration of sympathy and compassion with one another in time of calamities and tragedies. 5. In resources, since developed countries need natural and human resources while developing countries need capital, technology, and brain power there is a growing interdependence among these countries. 6. In investment, developed countries flow investment to developing countries which pushes up the reserve of foreign exchange. 7. In competition, every global corporation as well as domestic corporation will improve the quality of their product and services to compete globally, resulting a survival of the fittest situation. NEGATIVE 1. In culture, globalization is a challenge to culture and language. The scientific and economic superiority of developed countries imposing certain languages particularly in English. 2. In developing countries, although they contributed a lot in the system, they do not yield benefits from such contribution. Global corporations have the tendency to cause damage The Contemporary World | 4  to the environment of these countries in addition to dangerously marketing expired products and illegal goods. 3. In religion, exchange of information on different opinions about various religions are made easier by globalization, however the religious values lose. Their influence on peoples behaviors due to the promotion of pure secular system values. Corruption of values find a way into the minds of individuals. 4. In Morals, immoral acts are not only globalized but also becoming a disease. Many people are wasting a lot of time on the internet for unnecessary purposes. With the use of Internet, young people can have direct access to immoral materials. Due to lack of parental guidance, a lot of criminalities have emerged in the present times. GENERALIST INTER-STATE ORGANIZATION Composed of different nation with its member states having the same aims and purpose. These include: The United Nations (UN) is an international organization that describes itself as a "global association of governments facilitating co-operation in international law, international security, economic development, and social equity"; It is the most prominent international institution. Many of the legal institutions follow the same organizational structure as the UN. The Organisation of Islamic Cooperation (OIC) is an international organization consisting of 57 member states. The organisation attempts to be the collective voice of the Muslim world (Ummah) and attempts to safeguard the interests and ensure the progress and well-being of Muslims. Other generalist inter-state organizations include: African Union, Association of Southeast Asian Nations, Arab League, BRICS, Commonwealth of Independent States, Commonwealth of Nations, Community for Democracy and Rights of Nations, Council of Europe, Economic Community of West African States, Eurasian Economic Union, European Union, Group of Seven, G20, Organisation Internationale de la Francophonie, Organization of American States, Pacific Islands Forum, & South Asian Association for Regional Cooperation. Economic institutions Asian Infrastructure Investment Bank, Asian Development Bank, African Development Bank, Eurasian Development Bank, European Bank for Reconstruction and Development, Bank of International Settlements, Black Sea Trade and Development Bank, InterAmerican Development Bank, International Bank for Reconstruction and Development, International Monetary Fund, Islamic Development Bank, New Development Bank, Organization of the Black Sea Economic Cooperation, World Bank, & World Trade Organization. The Contemporary World | 5 Internationalism vs Globalism INTERNATIONALISM GLOBALISM When Different nations decided to It is an ideology based on the belief cooperate with one another in that people, goods and information political, economic, and cultural ought to be able to across national aspects for the promotion of the borders unfettered. common good. Globalism seeks to describe and The word “internationalism” comes explain nothing more than a world from Latin and means “between” or which is characterized by networks “among” nations. In this framework of connections that span multi- people do not relate directly to each continental distances. other as individuals but usually interact with each other as citizens of It attempts to understand all the different nations and in formal interconnections of the modern settings by means of national world — and to highlight patterns representatives. Crossing a national that underlie (and explain) them. boundary usually means getting inspected, being subject to different laws, using a different language, and using different money. References: Albrow, Martin and Elizabeth King (Eds) Globalization Knowledge and Society. London, Sage, 1992. Aldama, Prince Kennex R. 2018. The Contemporary World, Manila Rex Book Store. Ariola, Mariano M. The Contemporary World: Unlimited Books Library Services & Publishing Inc., 2018 The Contemporary World | 6