MARKET INTEGRATION

ROMERSON C. ORRO, LPT

Economy and Economic Systems

 Economy is composed of people. it is a social institution that organizes all production, consumption, and
trade of goods in the society.
 Economic system is an organized way in which a state or nation allocates its resources and apportions goods
and services.
TYPES OF ECONOMIC SYSTEM

CAPITALISM
 Capitalism is an economic system. In it the government plays a secondary role. People and companies make
most of the decisions, and own most of the property. ... The means of production are largely or entirely
privately owned (by individuals or companies) and operated for profit. 
 An economic and political system in which a country's trade and industry are controlled by private owners
for profit, rather than by the state.
TYPES OF ECONOMIC SYSTEM

CAPITALISM
Still, here are some of the most fervently capitalist countries in the world today:
 The United States of America
 Canada
 Chile
 Germany
 The United Kingdom
 Japan
 South Korea
 Bangladesh
TYPES OF ECONOMIC SYSTEM

Socialism
 Socialism a political and economic theory of social organization that advocates that the means of production,
distribution, and exchange should be owned or regulated by the community as a whole. Socialism is an
economic system where the ways of making money (factories, offices, etc.) are owned by a society as a
whole, meaning the value made belongs to everyone in that society, instead of a group of private owners.
People who agree with this type of system are called socialists.
TYPES OF ECONOMIC SYSTEM

SOCIALISM

Below, you will see some of the most socialistic nations in the world today:
 China
 Denmark
 Finland
 Netherlands
 Canada
 Sweden
 Norway
 Ireland
TYPES OF ECONOMIC SYSTEM

MIXED ECONOMY
 Mixed economy means is privately owned businesses and government both play important roles. ... For
example, to protect the public and to preserve private enterprise, to help control and regulate the means of
production. Besides that inmixed economy, the government decides on resource allocation of scarce
commodities
 FRANCE
 UK
 RUSSIA
Three Sectors of Production

 PRIMARY SECTOR- Extracts raw materials from natural environments

 SECONDARY SECTOR- Gains the raw materials and transforms them into manufactured goods.
 TERTIARY SECTOR- involves services rather than goods. 
International Financial Institutions

An international financial institution is a financial institution that has been established by more than one country, and hence are
subjects of international law
In many parts of the world, international financial institutions (IFIs) play a majorrole in the social and economic development
programs of nations with developing or transitional economies. This role includes advising on development projects, funding
them and assisting in their implementation 
The International Financial Institutions (IFIs) include the World Bank, the regional development banks, and the International
Monetary Fund (IMF). They are the largest source of development financein the world, typically lending between US$30-$40
billion to low and middle-income countries each year.
The following are the financial institutions and economic organizations that made countries even closer together
 The Bretton Woods system
 The General Agreement on Tariffs and trade (GATT) and the World Trade Organization (WTO)
 The International Monetary Fund (IMF) and the World Bank 
 The Organisation for Economic Co-operation and Development (OECD) The Organization of the Petroleum Exporting
Countries (opec) and the Europian Union (EU)
 The North American Free Trade Agreement (nafta)
History of Global Market Integration

Industrial Revolution
 Before the rise of modern economy, people only produced for their family. Nowadays, economy demands
the different sectors to work together in order to produce, distribute, and exchange products and services.
Agricultural Revolution 
 second economic revolution is the Industrial Revolution of 1800s 
 rise of industry came new economic tools (steam engines), manufacturing and mass production.
 first big economic change was the agricultural revolution (Pomeranz, 2000) 
 farming helped societies build surpluses that led to major development like permanent settlements, trade
networks and population growth.
History of Global Market Integration

However economic revolutions come with economic casualties: 

 Workers in the factories-mainly poor women and children- worked in dangerous conditions. 
 19th century industrialists were known as robber barons- more productivity came greater wealth but also
greater economic inequality. 
 Labor unions sought to improve wages and working conditions through collective action, strikes and
negotiations.
SECONDARY LABOR MARKET

 provide fewer benefits and include lower-skilled jobs and lower-level service sector jobs 
What do jobs in a post-industrial society look like ?
 Agricultural jobs, which once were a massive part of the philippines labor force, have fallen justically over the last
century. In other countries such as the US, manufacturing jobs, which were the lifeblood of the economy for much
of the 20th century have declined in the last 30 years. The US economy began with their many workers serving in
either the primary or secondary economic sectors. But today, much of their economy is centered on the tertiary
sector or the service industry. 
What is next for capitalism and socialism ?
 No one knows what the next economic revolution is going to look like. Nowadays, a key part of both are economic
and political landscape is corporation. 
Corporations are defined as 
 legal entities and have liabilities that are separate from its members.
 includes job that benefits to workers 
 these are white-collar professions
GLOBAL CORPORATIONS

 Multinational or transnational corporations (MNCs OR TNCs) 

 these are companies that extend beyond the borders of one country. 
 There seem to be a lot of negative effects of globalization from transnational corporations. Trade does
promote the self- interested agendas of corporations and give them autonomy. The global corporation also
influence politics and allow workers to be exploited.
GLOBAL CORPORATIONS

Diffusion
 -cultural practices and expressions passed between nations, spreading from group to group.
 Technology has exponentially increased the spread of diffusion
Opportunities
 high growth in the external environment
 as GDP growth migrates from mature economies becomes highly relevant to capture growth in higher growth markets.
Positive Effects
 Better allocation of resources 
 Lower prices for products
 More employment worldwide
 Higher product output
Challenges 
 public relations
 ethics
 organizational structure
 leadership
 TYPES OF INTEGRATION

Horizontal integration
 Here, businesses in the same industry and which operate at
the same stage of the production process are combined.
 TYPES OF INTEGRATION

Forward vertical integration

 This involves acquiring a
business further up in the
supply chain – e.g. a
vehicle manufacturer buys
a car parts distributor
 TYPES OF INTEGRATION

Backward vertical integration

 This involves acquiring a business operating earlier in the
supply chain – e.g. a retailer buys a wholesaler, a brewer
buys a hop farm
TYPES OF INTEGRATION

Conglomerate integration
 This involves the combination of firms that
are involved in unrelated business activities