Chap 2.a Structures of Globalization

Contemporary World
Chapter 2. Structures of Globalization

MARKET INTEGRATION
> a situation in which separate markets for the
same product become one single market
> equalizing prices of goods and capital
> ex. ASEAN Free Trade and the European Union’s
Single European Market
- they reduce tariff barriers and promote
trade among member countries
Contemporary World
ECONOMY
May think in terms of:
A. number of unemployed
B. GDP
C. stock market – a collective trading network
involving shares
Securities and Exchange Commission (SEC)

- a national government regulatory agency charged
with supervision over the corporate sector
Market participants – investors, borrowers, stockholders

Contemporary World
Types of Economic Systems

1. Capitalism – trade is controlled by private owners
2. Socialism – production, distribution….is by the state
3. Market economy – supply & demand direct the production of
goods
4. Command economy – a central government sets permitted levels
of production
5. Traditional economy – relies on customs and time-honored beliefs
6. Mixed economic system – combines aspects of capitalism and
socialism
Contemporary World
In any production, economy is split into 3 sectors:

a. Primary sector – raw materials from natural environment
b. Secondary sector – gains raw materials and transform them into
finished products
c. Tertiary sector – involves services rather than goods
DIFFERENT FINANCIAL & ECONOMIC INSTITUTIONS

A. International financial Institutions
1. Bretton Woods System
> established to restructure the world economy
> 5 Key elements:
1.1 expression of currency in terms of gold value
1.2 official monetary authority in each country would agree
to exchange its currency for those other countries
Contemporary World
1.3 IMF as the overseer for the exchange rates

1.4 eliminating restrictions on the currencies of members
1.5 US dollar the as global currency
2. The General Agreement on Tariff and Trade, the world Trade

Organization
GATT >born out of the Bretton Woods
> a forum for the 23 member nations
> trade of goods thru multinational trade agreements
WTO > created out of the many ‘rounds’ of negotiations

> 152 members nations
> an independent multilateral organization that became
Contemporary World
3. International monetary Fund and World Bank

IMF > an organization of 189 members
> mission:
- promote global economic growth and
financial stability
- encourage international trade
- reduce poverty around the world
> What does it do?
a. offer policy advice
b. financial assistance
c. capacity development
Contemporary World
WB > an international development organization

> has 189 members
> its role is to reduce poverty by lending
money to poorer governments
> has a long term approach
> goal: eradication of poverty
4. Asian Development Bank

> an international development finance institution
> function: to help developing countries reduce poverty
and improve quality of life
> owned and financed by 68 member countries
Contemporary World
B. World’s Major Free Trade Areas

1. The North American Free Trade Agreement
> enacted 1994
> a free trade zone for Mexico, Canada and US
> goal: eliminate all tariff and non-tariff barriers
2. Association of South East Asian Nations

> 1st regional grouping
> aim: promote economic growth, regional peace and
stability
> more of a political and economic union
> has 10 members
Contemporary World
3. European Union
> founded in 1992 with 28 member countries
> for sustainable development, promote equality and
social justice
> both political and economic alliance
> an attempt to integrate European economies and
prevent future conflicts
> has 7 official EU institutions grouped into: executive,
legislative and financial functions
Contemporary World
EXECUTIVE
1. European Council 2. European Commission
- 27 members - 27 commissioners
- sets policy agenda - propose and implement
legislation
LEGISLATIVE
1. European parliament 2. Council of Ministers
- 705 members - 27 ministers
- approve or reject legislation - approve or reject legislation
JUDICIAL
1. Court of Justice of the EU 2. European Court of Auditors
- 2 courts with judges - 27 members
- interprets EU laws and - audits budget
settles disputes
FINANCIAL
-European Central bank
Contemporary World
4. Asia-Pacific Economic Cooperation

> a forum of 21 member countries
> Founded 1989
> purpose: promote sustainable economic growth, trade and
investment and prosperity in the region
> make up 60% of global GDP
5. The Organization for Economic Cooperation and Development

> a forum of 37 democratic governments
> high influence comes from countries’ resources and
economic power

Chap 2.a Structures of Globalization

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Chap 2.a Structures of Globalization

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Contemporary World

Chapter 2. Structures of Globalization

Securities and Exchange Commission (SEC)

Market participants – investors, borrowers, stockholders

Types of Economic Systems

In any production, economy is split into 3 sectors:

DIFFERENT FINANCIAL & ECONOMIC INSTITUTIONS

1.3 IMF as the overseer for the exchange rates

2. The General Agreement on Tariff and Trade, the world Trade

WTO > created out of the many ‘rounds’ of negotiations

3. International monetary Fund and World Bank

WB > an international development organization

4. Asian Development Bank

B. World’s Major Free Trade Areas

2. Association of South East Asian Nations

4. Asia-Pacific Economic Cooperation

5. The Organization for Economic Cooperation and Development

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