Module 3 Market Integration.pptx

Market Integration Marke t Integrat Marke Marke t ed t Market Marke t  Market Integration It is the fusing of markets into one. Global Market Integration It m...

Market Integration Marke t Integrat Marke Marke t ed t Market Marke t  Market Integration It is the fusing of markets into one. Global Market Integration It means that the price differences between countries are eliminated as all markets become  Market 1 (price would be the same Singl with market 2 if they are in a single market ) e Mark Market 2 et  History of Global Market Integration First Millenium BC long distance trade existed for centuries Driven buy growing population and income. Created a demand for new products.  1820s Globalization took off Price differences started to close –up because of : 1. Transport revolution -steamship -railroads - invention of refrigeration  2. Opening of Suez Canal -slashed the journey time between Europe and Asia.  Eve of World War I Global economy was highly integrated Unprecedented flows of capital, goods and labor across borders  19 century Onwards th Technological change helped integrate markets because of steam powered transport invention.  Great Depression of the 1930s Governments imposed tariffs which were intended to switch the demand for domestically produced goods.  Smoot-Hawley Tariff Enacted in the United States which raised tariffs on imported goods. Tariffs reduced demand for foreign goods.  Foreign countries retaliated that worsened the effects of Depression of 1930s. It took decades to rebuild the world economy.  End of the 20 Century th Markets are more integrated as transportation cost have continued to fall Most tariffs have been scrapped altogether.  1970s Trend was toward a freer flow of capital across borders Liberalization of capital markets , where funds for investment can be borrowed.  Problems in Global Market Integration Institutional Removal of Differences institutional between countries variations between countries. Incompatibility with democracy and It suffocates sovereignty. countries’ economic development  Advantages of Global Market Integration Harmonization of Brings prosperity. institutions across countries  References : WordPress/Theme : Sydney by Themes