GEC 8 (The contemporary World)

MODULE 2 MARKET INTEGRATION, THE GLOBAL INTERSTATE SYSTEM, AND

GLOBAL GOVERNANCE

Objectives:
At the end of the lesson the students are expected to:
1. View market integration as merging and integrating globally, and thus, improve the growth
of global economy.
2. Understand that we evolve with other countries in almost all aspects and is inevitable
reality.
3. Better understanding of the role, effects and impact of interstate system(other system
besides the government).
4. Be critical thinkers about global governing.

Lesson 1:
I. Introduction to the study of market integration.
II. Contribution of the interstate system
III. The crucial role of global governance.

I. MARKET INTEGRATION

Market Integration can be viewed as the merging, integrating and understanding of the contribution of
the different financial and economic institutions and sectors that would facilitate the growth of the
global economy.

Three sectors of production:

1. Primary sector or the raw material sector – farmers , miners

2. Secondary sector or intermediate sector – from raw materials to finished products, product
produced by farmers, miners are refined, finalized into usable goods. (example. From oil to refined gas,
from logs to finished tables and beds)

3. Tertiary Level – manpower , services , labor management

Economic systems

1. Capitalism – free trade, free economy where there is economic freedom, competition, profit
motives

2. Communism – there is central control/central government, the government provides all the
needs of the people and thus owns every thing

3. Socialism – combination of socialism and capitalism system where the major and minor business
and trade are controlled both by government and the people.
Financial Institution and economic organization that made countries even closer together in trade
relation

1. The Bretton System- established from the remnants of WW I and II in trade, the Focus were the:

a. Reduction of barriers to trade

b. Free flow of money and exchange due to the start of restructure or economy.

Bretton System 5 key elements:

1. Expression of currency in terms of gold (with equivalent rate/value in dollars)

2. Establishment of official monetary authority in each country(ex. Phils-we have the central
bank)to agree with other countries currency = official exchange rate equivalent

3. Establishment of the IMF – International Monetary Fund(acts overseer)

4. Eliminating restrictions or control on the currencies of other member countries

5. Making the US dollar as the global currency

2. The General Agreement on Tariffs (GATT)

- The GATT was established in 1947

- A forum for the meeting of representatives from 23 member countries

- It focus on trade goods through multinational trade agreements conducted in many ‘rounds’ of
negotiation and from the agreement the world trade organization WTO was created

3. World Trade Agreement(WTO)

- Is an independent multilateral organization that became responsible for trade and services, non-
tariff-related barriers to trade(trade liberalization)

- Located in Geneva, Switzerland with 152 members states as of 2008

- Is a neoliberalism organization(by eliminating barriers or reducing restrictions so all nations will

benefit.

Critism on WTO

- Trade barriers imposed by developed countries cannot be countered by WTO(esp in agriculture)

4. The International Monetary Fund (IMF)

- Founded after the world war II, the establishment was mainly because of peace advocacy after
the war and aimed to help the economic stability of the world

5. The World Bank

- IMF and WB ere both founded after the war with the same mission were WB main goal also is to
extend loan to the third world in particular and had a longer term payment approach.

6. North American Free Trade Agreement(NAFTA)

- Trade pack between US, Mexico and Canada created on January 1, 1994 when Mexico joined
the two other nations

- Helps in developing and expanding world trade and increase cooperation for improving working
conditions in North America by reducing barriers to trade as it expands the markets of three countries.

II The Global Interstate System

The state is viewed as:

- The institution that creates welfare and sets economic policies for the country

- A political unit that has a authority over its own affairs and in the global world recognizes its
borders

The treaty of Westphalia of 1648- a treaty signed by countries recognizing the idea of state sovereignty,
government control and state policies.

In the globalization of politics today – the treaty faces the challenges because it was not as simple as
recognizing borders or sovereignty today.

The state/country is not the soul actors in the global system but also includes:

- Multinational corporation

- Global civil society(ex. Red cross)

- International and regional bond bodies(IMF,WB)

- Non-state(private capital group-banks group of people like AI-Qaeda, ISIS, Terrorist

organization)

III The Global Governance:

an effective global authority and a potential global way for the improvement of human life and the
development of more truly global structures and methods of dealing with various sort of issues and
problems.

The emerge of global governance is due to factors like:

- Declining of power of nation-state because of emergence of some other from of global

governance (the power is just confined within its border, limited)

- Flow of digital conformation – when strong countries interfere with the internet
- Mass migration of people and their country(illegally) uncontrol flow, flow of criminal elements
and their products(drugs, sex trafficking, laundered money,)

Effects of Globalization to Governments

I. Traditional challenges

a. External intervention – invasion by other countries ( ex. Saddam Hussein ruler of Iraq took over
the oil fields of Kuwait but dislodged by an international coalition headed by the US .

b. Internal political intervention – coup that deposes present political leaders to restore stability

Others: regional challenges ( fighting for state autonomy, human right issues, territorial deputes )

II. Challenges from national/Identity movements-

- Global movements or Organization like Ai-Qaeda, ISIS(fundamentalist version of Islam whose

movement is global)