Market Integration
Integration – is a state of affairs or a process involving attempts to combine separate
national economies into larger economic regions.
Two Types of Market Integration
1. Negative Integration – reduces non-tariff and tariff barriers to trade as a main tool
for integrating markets.
2. Positive Integration – on the other hand, adjusts domestic policies and institutions
through the creation of supranational arrangements.
Five Forms of Integration
1. Preferential Agreement – involves lower trade barriers between those countries,
which have signed the agreement.
2. Free Trade Area (FTA) – reduces barriers to trade among member countries to zero,
but each member country has autonomy in deciding on the external rate of tariff for
its trade with non-member countries.
3. Customs Union – represents a higher stage of economic integration. In this form,
countries agree to abolish tariff and non-tariff barriers to trade in goods flowing
between them.
4. Common Market – allows for free movement of labor and capital within the
member-countries.
5. Economic Union – is the highest form of economic integration. In addition to the
conditions of a common market, member-countries also agree to integrate
monetary, fiscal, and other policies.
INTERNATIONAL FINANCIAL INSTITUTIONS
Three Major International/Financial Economic Institutions:
1. World Trade Organization – is the only global international organization dealing with
the rules of trade between nations. The goal of this organization is to ensure that
that trade flows as smoothly, predictably, and freely as possible.
2. International Monetary Fund – exerts control on international exchange rates as
well as act as reserve base for member-countries to borrow from.
3. World Bank – was created primarily to offer economic assistance to the poor
countries of the world. It provides long term loans on easy terms for specific need.
Five major functions of the World Bank:
a. Provides loan services to member Governments
b. Provides development loans on soft terms to poor member nations
c. Provides support to private or joint sector projects
d. Provides insurance guarantees to foreign investors
e. Setting investment-related disputes among member nations through
conciliation or arbitration.
GLOBAL CORPORATIONS
Global corporations are integral part of economic growth. They account for a significant
share of the world’s industrial investment, production, employment, and trade.
Types of Global Corporations:
1. International Companies – are importers and exporters, typically without
investment outside of their home/country.
2. Multinational Companies – have investment in other countries, but do not have
coordinated product offerings in each country.
3. Global Companies – have invested in and are present in many countries.
4. Transnational Companies – are more complex organizations, which have invested in
foreign operations.
The Power of Global Corporations:
1. Economic Control – on world trade, financial markets, technology, patents,
intellectual property rights, and the media
2. Political Influence – on national governments and regional governance structures
(e.g., the EU) and national and international economic and social policies
3. Social and cultural influence – on people’s attitude, values, and lifestyle choices
4. Environmental Impact – on the natural environment
MULTINATIONAL CORPORATIONS
They are known to be independent from government, and also known to produce and
deliver goods and services to numerous countries.
The roles of multinational companies: Golden Straitjacket
- To get the herd’s money, you have to make yourself attractive to it.
1. Acts as modernizers of the world economy. - That means fulfilling a long list of economic requirements
2. Promote efficiency and growth of the world economy.
3. Promote regional agreements and alliances. 1. Making the private sector the primary engine of its economic growth
4. Increase money circulation in the economy. 2. Maintaining a low rate of inflation and price stability
3. Shrinking the size of its state bureaucracy
Challenges of Multinational Companies: 4. Maintaining as close to a balanced budget possible, if not a surplus
5. Eliminating and lowering tariffs on imported goods
1. Public Relations 6. Removing restrictions on foreign investment
2. Ethics 7. Getting rid of quotas and domestic monopolies
3. Organizational Structure 8. Increasing exports
4. Leadership 9. Privatizing state-owned industries and utilities
5. 10. Deregulating capital markets
6. 11. Making its currency convertible
7. CHAPTER 4: THE GLOBAL INTERSTATE SYSTEM 12. Opening its industries, stock and bond markets to direct foreign ownership and
investment
THE GLOBAL INTERSTATE SYSTEM 13. Deregulating its economy to promote as much domestic competition as possible
14. Eliminating government corruption
Many facets of the lives we have right now are an offshoot of globalization. 15. Subsidies and kickbacks as much as possible
Example – System of Education (Kto12 Program) 16. Opening its banking and telecommunications systems to private ownership and
- Resistance – Many Filipinos go against it. We are afraid and against change, but we competition
want it or not change is bound to happen and it will definitely happen. (“The only 17. Allowing its citizens to choose from array of competing pension options and foreign-
thing in the world that is not changing, constant, is change.”) run pension and mutual funds

The Global Interstate System – global interstate system ECONOMIC AND POLITICAL INTEGRATION (Integration Processes)

ECONOMIC INTERDEPENDENCE Economic Integration

- It is a more informal, societal-driven process that removes trade and investment
- It is a relationship between countries in which each country is dependent on barriers.
another for necessary goods or services.
- It is occurring due to specialization of countries, as they are dependent on others in Political Integration
the purchase of products, which are not manufactured nationwide. - It is a more top-down, state-driven process of institutional creation at the regional
level.
THE ELECTRONIC HERD AND STRAITJACKET
REGIONAL AND ECONOMIC PARTNERSHIPS/INSTITUTIONS
Electronic Herd
- It is a global lending group. Association of Southeast Asian Nations (ASEAN)
- It is powerful because it has a lot of money that it is willing to lend to others. - Established on August 8, 1967 in Bangkok, Thailand
 - Indonesia, Malaysia, Philippines, Singapore and Thailand
- Brunei Darussalam (1984), Vietnam (1995), Laos and Myanmar (1997), Cambodia
(1999)

European Union (EU

- 1951
- Belgium, Germany, France, Italy, Luxembourg, and Netherlands
- Now, 28 members

Asia-Pacific Economic Cooperation (APEC)

- It was first broached by former prime minister of Australia, Bob Hawke.
- It is the only international intergovernmental grouping in the world committed to
reducing barriers to trade and investment without requiring its members to enter
into legally binding obligations.

ASIAN REGIONALISM

ASIA-PACIFIC AND SOUTH ASIA AND THE WORLD

This topic deals on the relationship between process and place, between globalization and
Asia-Pacific and South Asia, how globalization influence Asia or how Asia influence other
countries

Some of the world’s most economically developed Japan, South Korea, Singapore,
Taiwan
Highly impoverished countries Cambodia, Laos, Nepal
Largest and most populous states China, India
Smallest states Maldives, Bhutan

The Region’s Strength

Asia-Pacific & South Asia: Northeast Asia, SEA, Pacific Islands, South Asia
Diversity: most progressive: Japan, South Korea, Singapore, Taiwan
Most poor: Cambodia, Laos, Nepal
Most populated: China, India
World’s smallest: Maldives, Bhutan
As a region:
1/3 of the world’s land mass
2/3 of the world’s population
35% of the world’s GDP (28% Europe, 23% North America)
Over 1/3 of world’s export 4. Promote Sustainable Development
Prevalence of poverty, HIV/AIDS, gender inequality and other social econ problemsu 5. Uphold International Law

AN EXTERNALIST VIEW OF GLOBALIZATION Governance Gaps – flaws in the global governance that are evident in the business and human rights
The Asian regions as being influenced by social relations from other countries. situation the world faces at present.

Regionalism and Regionalization Five Gaps in Global Governance

Region – a group of countries in the same geographically specified area. (Southeast Asia) 1. Knowledge Gaps
Regionalization – is the “societal integration and the often undirected process of social and 2. Normative Gaps
economic interaction.” (Grouping) 3. Policy Gaps
Regionalism – is “the formal process of intergovernmental collaboration between two or 4. Institutional Gaps
more states (ASEAN)…” 5. Compliance Gaps

EXTERNALIST VIEW
An externalist view refers to the colonial rule and dominance of Western countries to Asian WORLD OF REGIONS
countries. It also describes the different experiences of these countries like war financial Chapter 6 – Global Divides: The North and the South
crisis, cultural homogenization, and the destruction of their cultural diversity, and many
The North-South Divide
other experiences of Asian countries as they connect to the world.
- Also known as the “Rich-Poor Divide”
Global Governance – It is the sum of laws, norms, policies and institutions that define, constitute and - It is an imaginary line separating more economically developed countries (MEDC), and less
mediate relations among citizens, society, markets and the state in the international arena. There is a economically developed countries(LEDC)>
need in global governance when the state can no longer resolve the crises and problems internally NORTH
without the mediation of international actors. - “Rich side”
- More economically developed countries (MEDC)
UNITED NATIONS - Canada, USA, Greenland, Russia
- International organization founded in 1945 - At some point, was imperialists
- Made up of 193 member states MEDC
- Stable economy
Main Organs of UN - Better standard of living and quality of life
1. General Assembly How did the north gain the advantage?
2. Security Council - Technological advancement in weaponry
3. Economic and Social Council - Advancement of medicine
4. Trusteeship Council SOUTH
5. International Court of Justice - “Poor side”
6. UN Secretariat - Developing countries
- Considered inferior to that of the North
Roles of United Nations - Somalia, Vietnam, Haiti, and India
1. Maintain International Peace and Security LEDC
2. Protect Human Rights - Unstable government
3. Deliver Humanitarian Aid - Poor economy
Why is the South at such a disadvantage?
 - Colonization; colony
NORTH
¼ of the world population
4/5 of world’s income
Ave. life expectancy: more 70 years
Most people have enough to eat
Most people is educated
Over 90% of the world’s manufacturing
industry
About 96% of the world’s spending on
research and development
SOUTH
¾ of the world’s people
1/5 of world’s income
Ave. life expectancy: 50 years
1/5 or more suffer from hunger and
malnutrition
½ of people have little chance of any
education
Less than 10% of the world’s
manufacturing industry
4% of the world’s research and
development