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Market Integration

Market integration refers to the fusing of separate markets into a single market. Over time, technological advances in transportation and the removal of trade barriers have led to increasingly integrated global markets where price differences between countries are eliminated. Key events that promoted global market integration include the opening of the Suez Canal in the 19th century and the liberalization of capital markets in the 1970s, while events like the Smoot-Hawley Tariff Act and Great Depression introduced barriers that fragmented markets. While market integration offers benefits like prosperity, it also poses challenges around compatibility with country sovereignty and differences in institutions.

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LADYDIANE FONTANILLA
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5K views17 pages

Market Integration

Market integration refers to the fusing of separate markets into a single market. Over time, technological advances in transportation and the removal of trade barriers have led to increasingly integrated global markets where price differences between countries are eliminated. Key events that promoted global market integration include the opening of the Suez Canal in the 19th century and the liberalization of capital markets in the 1970s, while events like the Smoot-Hawley Tariff Act and Great Depression introduced barriers that fragmented markets. While market integration offers benefits like prosperity, it also poses challenges around compatibility with country sovereignty and differences in institutions.

Uploaded by

LADYDIANE FONTANILLA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
  • Market Integration: Introduces the concept of market integration as the combining of distinct markets into a unified whole.
  • Global Market Integration: Explains the global unification of markets leading to price equalization across countries.
  • History of Global Market Integration: Describes the evolution of global market integration starting from the first millennium BC to the 1970s.
  • Problems in Global Market Integration: Identifies challenges faced due to differences between countries and the impact on development.
  • Advantages of Global Market Integration: Discusses the benefits of global market integration in terms of prosperity and institutional harmony.
  • References: Lists references used, including WordPress theme information.

Market Integration

Market

Integrated
Market Market
Market

Market
Market Integration

It is the fusing
of markets into
one.
Global Market Integration

It means that the price


differences between
countries are eliminated
as all markets become
one.
Market 1 (price
would be the
same with
market 2 if they
are in a single
market )

Single
Market
Market 2
History of Global Market Integration

First Millenium BC
• long distance trade existed for centuries
• Driven buy growing population and income.
• Created a demand for new products.
1820s
• Globalization took off

• Price differences started to close –up because of :

1. Transport revolution
-steamship
-railroads
- invention of refrigeration
• 2. Opening of Suez Canal
-slashed the journey time between
Europe and Asia.
Eve of World War I
• Global economy was highly
integrated
• Unprecedented flows of capital,
goods and labor across borders
19 century Onwards
th

• Technological change helped


integrate markets because of steam
powered transport invention.
Great Depression of the 1930s
• Governments imposed tariffs which
were intended to switch the demand
for domestically produced goods.
Smoot-Hawley Tariff
• Enacted in the United States which
raised tariffs on imported goods.

• Tariffs reduced demand for foreign


goods .
• Foreign countries retaliated that
worsened the effects of Depression of
1930s.
•
• It took decades to rebuild the world
economy.
End of the 20 Century
th

• Markets are more integrated as transportation


cost have continued to fall
• Most tariffs have been scrapped altogether .
1970s
• Trend was toward a freer flow of capital across
borders

• Liberalization of capital markets , where funds


for investment can be borrowed.
Problems in Global Market Integration
• Institutional Differences • Removal of institutional
between countries variations between
countries .

• Incompatibility with • It suffocates countries’


democracy and economic development
sovereignty .
Advantages of Global Market Integration

• Harmonization of • Brings prosperity .


institutions across
countries
References :
• WordPress/Theme : Sydney by Themes

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