MARKET

INTEGRATION
Prepared by:
MARLON F. ADLIT
WORLD ECONOMY IN 2020
1. Which
three
countries
have the
highest
share in
the global
economy?
Why do
you think
so?
2. How about
our
country?
2
https://www.visualcapitalist.com/the-88-trillion-world-economy-in-one-chart/
1. Explain the role of international
financial institutions in the creation
of a global economy,
2. Narrate a short history of global
market integration in the twentieth
century,
3. Identify the attributes of global
corporations

OBJECTIVES
3
ROLE OF INTERNATIONAL FINANCIAL
INSTITUTIONS IN THE CREATION OF A
GLOBAL ECONOMY
1. WTO - The World Trade Organization (WTO) is the only global international organization dealing
with the rules of trade between nations. At its heart are the WTO agreements, negotiated and
signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to
ensure that trade flows as smoothly, predictably and freely as possible.
2. World Bank - The World Bank Group is one of the world’s largest sources of funding and
knowledge for developing countries. Its five institutions share a commitment to reducing poverty,
increasing shared prosperity, and promoting sustainable development. The World Bank Group
works in every major area of development. Provide a wide array of financial products and technical
assistance, and we help countries share and apply innovative knowledge and solutions to the
challenges they face.
3. IMF - The International Monetary Fund (IMF) is an international organization that promotes global
economic growth and financial stability, encourages international trade, and reduces poverty.
Quotas of member countries are a key determinant of the voting power in IMF decisions.
4
*Based on 1st year projections
ROLE OF INTERNATIONAL FINANCIAL
INSTITUTIONS IN THE CREATION OF A
GLOBAL ECONOMY
One dimension of this crisis of legitimacy is the crisis of the multilateral
system of global economic governance owing to the US’ no longer
wanting to act as a primus inter pares, or first among equals, in the WTO,
World Bank, and the IMF, and its wishing to unilaterally pursue its
interests through these mechanisms, thus seriously impairing their
credibility, legitimacy, and functioning as global institutions. Another
dimension of this crisis of legitimacy is the crisis of Lockean democracy,
that model of democratic rule that the US has promoted as the system of
self-rule both in the North and in the South (Bello, 2008:134)
5
20TH CENTURY GLOBAL ECONOMY
1. 1911-1918 - The assassination of Archduke Ferdinand in the Balkans
sparked the century’s first World War. In its aftermath, President
Woodrow Wilson advocated a new-world order centered on the League
of Nations.
2. 1930s - The US stock market crashed in 1929. Inappropriate policy
responses led to the Great Depression. International trade came to a halt
in the mid-1930s deepening and lengthening the Great Depression.
3. 1939-1945 - The cost of WWI to Britain resulted in the abandonment of
the gold standard, a system of exchange rates backed by gold.The post
WWI era was marked by a resurgence of economic prosperity,
particularly in the United States. However, Germany saddled with
reparations, payments to Allied powers (France in particular) for damages
caused during the war faced devastating hardship. 6
20TH CENTURY GLOBAL ECONOMY
4. The post World War II era is marked by two major geopolitical events, the
Cold War and the period of decolonization. Some political scientists viewed
the world as being divided into three groups of nations. The first-world
consisted of the western democratic industrial nations. The second-world was
made up of the communist nations and the third-world, a term still in use
today refers to the developing nations. The Cold War was an ideological battle
between the first and second worlds. Each believed the other wished to
spread its influence and dominate the world. The actual hostilities that took
place were in the third world. The Korean War, Vietnam War, and numerous
other conflicts were at their core battles between the first and second worlds
for the allegiance of third-world nations. The end of the Cold War occurred in
the beginning of the 1990s with the fall of the Soviet Union. 7
THE RISE OF GLOBAL CORPORATION
Global corporations are inseparable to the phenomenon
of globalization.
International companies are importers and exporters,
typically without investment outside of their home country.
Multinational companies have investment in other
countries, but do not have coordinated product offerings in
each country. They are more focused on adapting their
products and services to each individual local market. 8
THE RISE OF GLOBAL CORPORATION
Global companies have invested in and are present
in many countries. They typically market their products
and services to each individual local market.
Transnational companies are more complex
organizations which have invested in foreign operations,
have a central corporate facility but give decision making,
research and development, and marketing powers to each
individual foreign market. 9
THE RISE OF GLOBAL CORPORATION
TNC – Transnational Corporation: An enterprise that
engages in activities which add value (manufacturing,
extracting, services, marketing) in more than one country.
Foreign Direct Investment (FDI) is construed to be one
of the major elements of the global economic development.
These types of corporations are called under the
generic name of GLOBAL CORPORATIONS.
10
PRESENT DAY GLOBAL CORPORATIONS
The advent and impact of digitalization and
instantaneous global communications.
The structural transformation of global commerce
from producer driven community to chains to buyer
driven.
The increasing role performed through the global
system by financial elements and the emergence of global
financial firm. 11
PRESENT DAY GLOBAL CORPORATIONS
The advent and impact of digitalization and
instantaneous global communications.
The structural transformation of global commerce
from producer driven community to chains to buyer
driven.
The increasing role performed through the global
system by financial elements and the emergence of global
financial firm. 12
BRAZIL, INDIA, AND CHINA (BRICS)
Have become the most dynamic sector of global corporate growth.
Represented in part by their significant FDI over the past three decades.
The importance of global corporations in Brazil, India, and China to
the current and projected global economy is singular. With forty percent of
the world population, BRICS economies represent a primary force in both
global production and consumption.
The BRICS were unaffected by the US and European Markets in 2007.
The BRICS economies is the new face of the global corporate reality as their
strong domestic markets and their ability to gain capital from within their
host countries.
13
GLOBAL PRODUCTION
Represent an increasingly vast network of relationships in
which global production chains are assembled through
1.contract manufacturing,
2.services outsourcing,
3.contract farming,
4.franchising,
5.licensing, and
6.management contracts.
14
STRUCTURE AND OPERATION OF GLOBAL
CORPORATIONS
The relevance of the changing regulatory environment to the
structure and operation of global corporations;
1. Lessened regulation by governments.
2. The requirement of the so called corporate social
responsibility.
3. Check and balances provided by NGOs.
4. Need for regulation of the global financial market.

15
GLOBAL CORPORATIONS

1. After World War II, global corporations were viewed as

16
GLOBAL CORPORATIONS
Global corporations are viewed as agents of a system that on balance
was resulting from;
1. greater global wealth inequality,
2. income inequality,
3. lack of effective worker protection, environmental degradation,
4. producing natural cultures of corruption through corporate collusion,
5. and in some instances, threatened national sovereignty.
6. Global corporations are now very powerful that they can create a
financial crisis if they want to.
17
GLOBAL CORPORATIONS
Basic features thought to be brought about by global
corporations
1. Global inequality.
2. The systematic stability and viability of the global
financial system.
3. It has positive and negative contributions to the
contemporary world.
18
GUIDE QUESTIONS FOR DISCUSSION
1. How does the international financial institutions strengthened
the global economy?
2. What were the events in the 20th century that lead to the
emergence of global corporations?
3. How do you distinguish the global corporation from the early
time to the present day?
4. What were the positive/ negative attributes of global
corporations?
5. Consider the Philippines businesses, where do we position in
terms of global corporation? 19
ASSESSMENT
Research one Filipino company considered to be a
global corporation and write a short essay (200 words)
answering the questions below.
1. Did the international financial institution supports the
said global corporation?
2. If it is a global corporation, where does it engage in
enterprise? Include the countries, product and annual
profit. 20
ASSIGNMENT
The Global Interstate System
• Chapter 7 of textbook: “Governments and Citizens in
a Globally Interconnected World of States” by Hans
Schattle
• Mazower, Mark. 2006. “An International Civilization?
Empire, Internationalism and the Crisis of the Mid-
Twentieth Century.” International Affairs 82(3): 553–
566. 21
THANK
YOU!