WEEK 9 NOTES (MIDTERM)

MARKET INTEGRATION
DEFINITION:
 INTEGRATION SHOWS THE RELATIONSHIP OF THE FIRM IN A
MARKET.
 THE EXTENT OF INTEGRATION INFLUENCES THE CONDUCT OF
THE FIRMS AND CONSEQUENTLY THEIR MARKETING
EFFICIENCY.
 THE BEHAVIOUR OF A HIGHLY INTEGRATED MARKET IS
DIFFERENT FROM THAT OF A DISINTEGRATED MARKET.
 MARKETS DIFFER IN THE EXTENT OF INTEGRATION AND
THEREFORE THERE IS A VARIATION IN THEIR DEGREE OF
EFFICIENCY.
 OCCURS WHEN PRICES AMONG DIFFERENT LOCATIONS OR
RELATED GOODS FOLLOW SIMILAR PATTERNS OVER A LONG
PERIOD OF TIME. GROUPS OF GOODS OFTEN MOVE
PROPORTIONALLY TO EACH OTHER AND WHEN THIS RELATION
IS VERY CLEAR AMONG DIFFERENT MARKETS IT IS SAID THAT
THE MARKETS ARE INTEGRATED.
ECONOMIC SECTOR:
A SECTOR IS AN AREA OF THE ECONOMY IN WHICH BUSINESSES
SHARE THE SAME OR A RELATED PRODUCT OR SERVICE. IT CAN
ALSO BE THOUGHT OF AS AN INDUSTRY OR MARKET THAT SHARES
COMMON OPERATING CHARACTERISTICS. DIVIDING AN ECONOMY
INTO DIFFERENT SECTORS ALLOWS FOR MORE IN-DEPTH ANALYSIS
OF THE ECONOMY AS A WHOLE.

3 SECTORS OF ECONOMIC SYSTEMS

A. PRIMARY SECTORS
• EXTRACTS RAW MATERIALS FROM NATURAL ENVIRONMENTS
 • EXAMPLE: MINERS /FARMERS
B. SECONDARY SECTOR
• GAINS THE RAW MATERIALS AND TRANSFORMS THEM INTO
MANUFACTURED GOODS
• THEY REFINE THE PETROLEUM INTO GASOLINE
C. TERTIARY SECTOR
• INVOLVES SERVICES RATHER THAN GOODS
• OFFERS SERVICES BY DOING THINGS RATHER THAN MAKING
THINGS

INTERNATIONAL FINANCIAL INSTITUTIONS

 WORLD ECONOMIES HAVE BEEN BROUGHT CLOSER TOGETHER
BY GLOBALIZATION.
 THE STRENGTH OF A MORE POWERFUL ECONOMY BRINGS
GREATER EFFECT ON OTHER COUNTRIES.

ECONOMIC ORGANIZATIONS

THE BRETTON WOOD SYSTEM

• THE BRETTON WOODS SYSTEM IS A SET OF UNIFIED RULES
AND POLICIES THAT PROVIDED THE FRAMEWORK NECESSARY
TO CREATE FIXED INTERNATIONAL CURRENCY EXCHANGE
RATES. ESSENTIALLY, THE AGREEMENT CALLED FOR THE
NEWLY CREATED IMF TO DETERMINE THE FIXED RATE OF
EXCHANGE FOR CURRENCIES AROUND THE WORLD.
5 KEY ELEMENTS
1. EXPRESSION OF CURRENCY IN TERMS OF GOLD OR GOLD
VALUE TO ESTABLISH A PAR VALUE. EX: EXCHANGE RATE
2. .THE OFFICIAL MONETARY AUTHORITY IN EACH COUNTRY
3. . ESTABLISHMENT OF AN OVERSEER FOR THESE EXCHANGE
RATES ( IMF)
 4. ELIMINATING RESTRICTIONS ON THE CURRENCIES OF MEMBER
STATES IN THE INTERNATIONAL TRADE
5. US DOLLAR BECAME THE GLOBAL CURRENCY
GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT)
 GENERAL AGREEMENT ON TARIFFS AND TRADE WAS
ESTABLISHED IN 1947
 A MEETING OF 23 MEMBER COUNTRIES
 FOCUSED ON TRADE GOODS

WORLD TRADE ORGANIZATION(WTO)

 LOCATED IN GENEVA, SWITZERLAND WITH 152 MEMBER STATES
 INDEPENDENT MULTILATERAL ORGANIZATION
 FOCUSES FOR TRADE IN SERVICES, NON-TARIFF- RELATED
BARRIERS TO TRADE
 MEXICO, EGYPT , INDONESIA

INTERNATIONAL MONETARY FUND(IMF)
 HELP COUNTRIES WHICH WERE IN TROUBLE AND WHO COULD
NOT OBTAIN BY ANY MEANS.
 SERVED AS A LENDER FOR COUNTRIES WHO NEEDED
FINANCIAL ASSISTANCE
 YEMEN LOANED 93 MILLION DOLLARS ON APRIL 5,2012