TCWD111 – Lessons 2-3

➢ refers to the international exchange of goods and services; free

movement of goods, capital, services, technology and information

PROTECTIONISM
✓ comes in the form of tariffs and quota
✓ giving preferential treatment to domestic producers
TRADE LIBERALIZATION
✓ free trade
Purpose
--- play a significant role in supporting the private sector in
developing countries by encouraging entrepreneurial initiatives
that help developing countries achieve sustainable growth;

Role/Mission
--- - created in the aftermath of WWII to promote international
monetary stability countries achieve sustainable growth;
1. IMF or International Monetary Fund
2. Multicultural Development Bank (MDBs) which
includes:
a. World Bank Group
b. African Development Bank
c. Asian Development Bank
d. Inter-American Development Bank
e. European Bank for Reconstruction and Development
International Companies
--- are importers and exporters; they have no investment outside
of their home country

Multinational Companies
--- has locations or facilities in multiple countries, but each
location functions in its own way, essentially as its own entity
Global Companies
--- also has locations in multiple countries, but they’ve
figured out to create one company culture with one set of
processes that facilitate a more efficient and effective single
global organization

Transnational Companies
--- a commercial enterprise that operates substantial facilities;
does business in more than one country and does not consider
any particular country its natural home
--- a situation in which separate markets for the
same product become one single market
(Cambridge Business English Dictionary )

Example :
*when an import tax in one of the market is removed
--- occurs when prices among different locations or
related goods follow similar patterns over a long
period of time;

--- group 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
 Horizontal Integration
❖ is a type of integration, by combining the
market agencies to form a union to reduce
their effective member and the extent of
actual competition in market

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 ❖ Partnership: collaborating with
another company to tackle the market
together (with a common product,
promotion, sales strategy, etc.)

13
 ❖ Merger: when two different
companies in the same market become
one; a combination of entities whose
products or services directly compete in
the same market

16
❖Acquisition: when a
company buys another
within the same market

18
Conglomerate Integration/Merger
❖a combination of agencies or
activities not directly related to
each other may operate under a
unified management
22
 Vertical
Integration
It occurs when a firm
performs more than one
activity in the sequence of
the marketing process.
➢ Forward integration
•if a firm assumes another function of
marketing which is closer to the consumption
function
➢ Backward integration
•this involves ownership or a combination
of sources of supply
PREFERENTIAL TRADING
AGREEMENT

➢ trade agreements between countries

in which they lower tariffs for who
have signed the agreement, but not
for the rest of the world
CHINA-BANGLADESH

BANGLADESH-BHUTAN
FREE TRADE
AGREEMENT
➢ reduces barriers to trade among
member countries to zero, but each
member country still has autonomy in
deciding for external rate of tariff for
its trade with non-member countries
❖ North American Free Trade Agreement (NAFTA)
--- was implemented in order to promote trade between the U.S.,
Canada, and Mexico

❖ The ASEAN Free Trade Area (AFTA)

--- is a trade bloc agreement by the Association of Southeast Asian
Nations supporting local manufacturing in all ASEAN countries
CUSTOMS UNION

➢ an agreement to remove trade barriers

among members and impose uniform
trade restrictions against non-members

36
➢ an economic Customs Union founded in 1948
between Belgium, Netherlands and Luxembourg
COMMON MARKETS

➢ allows for the movement of labor

and capital within the member
countries

➢ Custom Unions + integration of

factor markets (capital and labor)
Example:
❖ EUROPEAN COMMON MARKET is the example
of common market which aims to provide the free
movement of goods, capital, services and labor within
the EUROPEAN UNION

➢ it refers to an agreement between countries that allows

product, services and workers to move freely across
borders
❖The Southern Common Market (MERCOSUR)
--- el Mercado Común del Sur (the Common Market of the South)
is a regional integration process, initially established by Argentina,
Brazil, Paraguay and Uruguay, and subsequently joined by
Venezuela and Bolivia

❖The Common Market for Eastern and Southern

Africa (COMESA)
--- is a free trade area that encompasses 19 countries stretching
from Libya to Zimbabwe
ECONOMIC UNION
➢ an agreement that seeks to coordinate economic and social
policies to facilitate the free flow of capital, labour, and goods
and services from country to country;
➢ a form of regional cooperation agreement, when fully
implemented, entails creation of a unified central bank; the
use of a single currency; and common policies on agriculture,
social services and welfare
 FEATURES OF AN ECONOMIC UNION
➢ Goods, services, and production factors (capital and labour) flow
freely among member countries;
➢ All members adopt a uniform set of policies when trading with non-
members;
➢ Members establish the general institutions and economic policies for
trade unions;
➢ Economic unions integrate monetary and fiscal policy. Member
countries coordinate and harmonize government policy, taxation, and
spending.
 EUROPEAN UNION
➢ the world’s largest trading bloc;
➢ one of the largest exporters in the world;
➢ it imports goods and services from more than 100 countries, making
them the world’s largest import market
 EURASIAN ECONOMIC UNION
➢ a political and economic union of countries in central and northern
Eurasia;
➢ the agreement on establishing a union signed in 2014 by Russia,
Belarus, and Kazakhstan;
 REFERENCES
 https://www.tfafacility.org/united-nations-conference-trade-and-development-unctad
 https://www.routledge.com/United-Nations-Centre-on-Transnational-Corporations-Corporate-Conduct-
and/Hamdani-
Ruffing/p/book/9781138896536#:~:text=The%20United%20Nations%20Centre%20on,multiplied%20and%20deepe
ned%20with%20globalization.
 https://atom.archives.unesco.org/go-59
 https://www.encyclopedia.com/social-sciences/encyclopedias-almanacs-transcripts-and-maps/transnational-
corporations#:~:text=A%20transnational%20corporation%20(TNC)%20is,xii
 https://courses.lumenlearning.com/boundless-management/chapter/the-global-
corporation/#:~:text=of%20each%20unit.-
,Global%20Corporations,markets%20in%20attaining%20revenue%20generation.
 https://www.unescwa.org/association-southeast-asian-nations-free-trade-are
 https://www.studocu.com/ph/document/polytechnic-university-of-the-philippines/the-contemporary-world
 https://slideplayer.com/slide/5930801/
 https://abhipedia.abhimanu.com/Article/IAS/NDI5MAEEQQVVEEQQVV/Stages-of-Economic-Integration-and-
trends-in-globalization--Economic-Affairs-IAS
 https://www.consuunt.com/horizontal-integration/