The Global Economy & Market Integration PDF

THE GLOBAL ECONOMY LESSON 2.1  ECONOMIC GLOBALIZATION It refers to the increasing interdependence of world economies as a result of the growing scale of cross-border trade of commodities and services, flow of international capital and wide and rapid spread of technologies....

THE GLOBAL ECONOMY LESSON 2.1  ECONOMIC GLOBALIZATION It refers to the increasing interdependence of world economies as a result of the growing scale of cross-border trade of commodities and services, flow of international capital and wide and rapid spread of technologies. 2 TWO MAJOR DRIVING FORCES FOR ECONOMIC GLOBALIZATION The rapid growing of information in all types of productive activities Marketization Key Note: “Rapid development of science and technologies served as basis for immediate globalization of the world economies.” 3 DIMENSIONS OF ECONOMIC GLOBALIZATION The globalization of trade of goods and services The globalization of financial and capital markets The globalization of technology and communication The globalization of production 4  DIFFERENCE BETWEEN ECONOMIC GLOBALIZATION FROM INTERNATIONALIZATION TOPIC 01 TOPIC 02 Lorem ipsum dolor sit amet, consectetuer Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Maecenas porttitor congue adipiscing elit. Maecenas porttitor congue massa. Fusce posuere, magna sed pulvinar massa. Fusce posuere, magna sed pulvinar ultricies, purus lectus malesuada libero, sit ultricies, purus lectus malesuada libero, sit amet commodo magna eros quis urna. amet commodo magna eros quis urna. Lorem ipsum dolor sit amet, consectetuer Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Maecenas porttitor congue adipiscing elit. Maecenas porttitor congue massa. Fusce posuere, magna sed pulvinar massa. Fusce posuere, magna sed pulvinar ultricies, purus lectus malesuada libero, sit ultricies, purus lectus malesuada libero, sit amet commodo magna eros quis urna. amet commodo magna eros quis urna. 5  ❖ refers to a 30-year long process that began at the end of the 1960s as a form of monetary cooperation intended to INTERNATIONAL MONETARY reduce the excessive influence of the US SYSTEM (IMS) dollar on domestic exchange rates, and led, through various attempts, to the creation a Monetary Union and a ❖ -refers to a system that forms common currency. rules andstandards for facilitating international trade among the ❖ The European Financial Stability Mechanism (EFSM) is a permanent fund nations. It helps in created by the European Union (EU) to reallocatingthe capital and provide emergency assistance to member investment from one nation to states within the Union. another. EUROPEAN IONMONETARY INTEGRAT 6 International trade Focuses of Trade Policy in International is the exchange of goods, Trade services and capital across national borders. It is a Tariffs- These are taxes or duties paid for multi-million dollar activity, central to the Gross Domestic a particular class of imports or exports. Product (GDP) of many countries, and it is the only way for many people in many Trade barriers- Theses are measures that countries to acquire resources. governments or public authorities More affordable products for the introduce to make imported goods or consumer is also the result of competition. services less competitive than locally produced goods and services Safety- This ensures that imported products in the country are of high quality. 7 Trade policies Types of Trade Policies refer to the regulations and National Trade Policy- This safeguards the best interest agreement of foreign of its trade and citizen. countries. It defines standards, Bilateral Trade Policy- To regulate the trade and goals, rules, and regulations business relations between two nations, this policy is that pertain to trade relation formed. between countries. International Trade Policy- This defines the international trade policy under their charter like the International economic organizations, such as Organization for Economic Co- operation and Development (OECD), World Trade Organization (WTO) and International Monetary Fund (IMF).The best interests of both developed and developing nations are upheld by the policies. 8  WORLD TRADE ORGANIZATION (WTO) It is the only global international organization dealing with the rules an activity that requires search for a of trade between nations. partner and relation-specific investments that are governed by incomplete contracts and the extent of international outsourcing. GLOBAL ECONOMY OUTSOURCING 9 MARKET INTEGRATION LESSON 2.2 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. Example: China produces toys at a cheaper price than the US. If foreign trade increased between the two countries, toys could be sold to the US more easily, making them more available, thus reducing price 11  TYPES OF RELATED MARKETS WHERE MARKET INTEGRATION OCCURS Stock Market Integration Financial Market Integration -Two markets are perfectly - It is an open market economy integrated if investors can pass between countries facilitated by from one market to another a common currency and the without paying any extra costs elimination of technical, and if there are possibilities of regulatory and tax differences arbitration which ensures the to encourage free flow of equivalence of stock prices on capital and investment across both markets. borders. 12 GLOBAL CORPORATION A global corporation is a business that operates in two or more countries. It also goes by the name "multinational company“ 13 FOREIGN DIRECT INVESTMENT It is an investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring Yoma Strategic Holdings business assets in the other country, such as ownership or controlling interest in a foreign company and the key feature of foreign direct investment is that it is an investment made that establishes either effective control of, or at least substantial influence over, the decision making of a foreign business 14 BRICS ECONOMIES Brazil, Russia, India, China and South Africa (BRICS) is an acronym for the combined economies of Brazil, Russia, India, China and South Africa. Further, Brazil, Russia, India and China (BRIC) refer to the idea that China and India will, by 2050, become the world's dominant suppliers of manufactured goods and services, respectively, while Brazil and Russia will become similarly dominant as suppliers of raw materials. Due to lower labor and production costs in these countries now including a fifth nation, South Africa, many companies have also cited BRIC as a source of foreign expansion opportunity i.e. promising economies in which to invest 15 GENERAL AGREEMENT ON TRADE IN SERVICES (GATS) is the first multilateral agreement covering trade in services which was negotiated during the last round of multilateral trade negotiations, called the Uruguay Round, and came into force in 1995. The GATS provides a framework of rules governing services trade, establishes a mechanism for countries to make commitments to liberalize trade in services and provides a mechanism for resolving disputes between countries. 16 GENERAL AGREEMENT ON TRADE IN SERVICES (GATS) GATS has similar principle with the General Agreement on Tariffs and Trade (GATT) that deals with trade in goods. The two primary objectives of GATTS are to ensure that all signatories are treated equitably when accessing foreign markets; and second, to promote progressive liberalization of trade and services. 17 THANK YOU!