Market Integration

Intended learning outcomes:

a.) Explain the role of international financial institutions in the creation of a

global economy.

b.) Narrate a short history of global market integration in the 20th century.

c.) Infer the attributes of global corporations.

Marketing Integration

Marketing Integration is a situation in which the prices of related goods

and services of the same product become one single market. It has a
number of social and economic benefits. Marketing integration occurs
when prices among different locations or relations goods follow a similar
pattern over a long period of time.
 After the Second World War, almost all countries around the world
faced the great challenge of bringing their feet back on the ground. As a
substitute to the unsuccessful League of Nations, the United Nations (UN) was
establish on October 24, 1945. Primarily, it was tasked to promote international
cooperation and to restore international order.

Earlier in 1944, the first government-sponsored international financial

institutions were established- the World Bank (WB) and the International
Monetary Fund (IMF).
Two types of International Financial Institutions:
a.) Intergovernmental
b.) Private

The WB is an intergovernmental institution. Its aim is to end extreme poverty and

promote shared prosperity in a sustainable way.

5 Organizations that belong to WB Group

- International Bank for Reconstruction and Development
- International Development Association
- International Financial Corporation
- Multilateral Investment Guarantee Agency and;
- International Center for Settlement & Investment Disputes
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In the 1960’s, regional developmental banks were established: the Asian

Development Bank (ADB) in 1960 and the African Development Bank
(AfDB) in 1964. These two are intergovernmental financial institutions that were
created to spur social progress and economic growth in order to address and
reduce poverty. As financial institutions, ADB and AfDB are anchored on the goal
of fostering sustainable development in their respective countries.
Private International Financial Institution

There are also private international financial institutions such as Citigroup

and Merrill Lynch. Citigroup is an American multinational investment banking
and financial corporation. It is the fourth largest bank in the US. On the other
hand Merrill Lynch is the wealth management division of the Banks of the
America. Both institutions provide investments around the world. Investments
can be in the form of foreign direct investments, stocks, or financial loans.
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Both intergovernmental & private financial institutions help facilitate the

functionality of global economy by lending money to their members of the state
and global corporations. For example, the World Bank helps in project lending,
establishes structural reforms, provides support & technical assistance, and
helps design modern and durable social safety nets for the benefit of both
developed & developing nations. It also provides international capital like foreign
direct investments, short term capital and long term capital investments.

Clearly, these global institutions are active agents in fostering social and
economic development by providing various forms of help to improve the
national and the global economies.
 GLOBAL MARKET INTEGRATION

It was the result of the establishment of a global economy that involved

the homogenization of trade and commerce. Prior to the trends in
globalization of the 20th century, international trade and exchange of goods and
services were already practiced.

Harvey (1990) sees that the cities and countries were able to extend
their reach beyond borders and patterns of trade & technology because of
developments in shipping and navigation.
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Colonialism & Imperialism rose as the new ways of putting order to

economic interrelationships among countries. Equity, corporate ownership,
management subsidiaries, and central headquarters which supply and distribute
goods and services were established through colonialism.
Iwan (2012) identifies the differences among international, multinational, transnational, and global
companies:

• International Companies are importers and exporters with no investments outside their home
countries.

• Multinational Companies (MNC’s) have investments in other countries, but do not have a
coordinated product offering in each country. They are more focused on adapting their products and
services to each individual local market.

• Global companies have investments and are present in many countries. They typically market their
products and services to each individual local market.

• Transnational Companies (TNC’s) are more complex organizations that have investments in foreign
operations, have a central corporate facility but give decision making, research and development and
marketing powers to each individual foreign market.
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On the whole, international financial institutions play an important role in

the social and economic development programs of developing and transitional
nations. They are instrumental in the functionality of the global economy which is
reliant on global corporations.
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