WEEK 3 my MARKET INTEGRATION LECTURE.pptx

lecture

1. MARKET INTEGRATION

2. LEARNING OUTCOMES Identify and explain the types of market integration, including preferential trade agreements, common markets, and economic unions, and understand their implications on global trade and economic cooperation. 2. Analyze and evaluate the benefits and challenges of market integration for businesses, considering factors such as market access, economies of scale, competition, and regulatory harmonization. 3. Examine case studies of successful market integration initiatives, such as the European Single Market and the ASEAN Economic Community, to understand practical applications and outcomes of market integration on business strategies and economic development. 4. Relate the concept of market integration to the field of Business Administration by recognizing its impact on organizational strategies, market expansion, and competitiveness. Understand how market integration influences business decisions, market dynamics, and global opportunities for BSBA students.

3. Market integration is a crucial concept in the global business environment, shaping the interconnectedness of markets, trade relations, and economic cooperation among nations.

4. 1. What is Market Integration? Market integration refers to the process of creating a UNIFIED MARKETPLACE where goods, services, and capital can FLOW FREELY between Countries or Regions.

5. 1. What is Market Integration? It is a Central aspect of Economic Globalization , which refers to the increasing interconnectedness of economies, and societies around the world.

6. 1. What is Market Integration? MARKET INTEGRATION can take MANY FORMS including the REDUCTION OF TRADE BARRIERS such as; 1. Tariffs (taxes), 2. Adoption of a COMMON CURRENCY (like E.U.) 3. The HARMONIZATION of REGULATORY STANDARDS . 4. Development of Infrastructure to facilitate transportation and communication.

7. 1. What is Market Integration? When these measures are implemented, they can help to INCREASE the efficiency of the market by allowing for Greater Specialization Economies of scale and Increased competition

8. I. What is Market Integration? One of the main benefits of Market Integration is that it allows firms to access a larger pool of customers and suppliers. Simply saying, having a LARGER MARKET to sell your GOODS or SERVICES that you are offering.

9. I. What is Market Integration? Which can increase your profits and lead to higher levels of economic growth. But, at the same time, MARKET INTEGRATION can create winners and losers, with some industries and regions benefiting more than others.

10. I. What is Market Integration? Ex: Firms in industries that CAN COMPETE internationally may thrive or prosper in a MORE integrated market. Meaning, if you have a BIGGER CAPITAL , you have a BETTER chance to COMPETE or TRADE internationally, you have a BIGGER MARKET.

11. I. What is Market Integration? Ex: While Firms in industries that are not globally competitive , may SUFFER. Maybe because they are NOT BIG ENOUGH to EXPAND their market INTERNATIONALLY .

12. I. What is Market Integration? Overall, Market Integration is an important aspect of ECONOMIC GLOBALIZATION. As it can help to increase Economic efficiency and promote growth.

13. I. What is Market Integration? However, it is important to ENSURE that BENEFITS of integration are SHARED FAIRLY and that MEASURES a re TAKEN to ADDRESS the NEGATIVE IMPACTS that can arise or occur for certain INDUSTRIES or REGIONS

14. II. Types/Stages of Market Integration PREFERENTIAL TRADE AGREEMENTs/AREAS Preferential Trade Agreements/Areas ( PTAs ) is a TRADING BLOC that gives PREFERENTIAL ACCESS to CERTAIN PRODUCTS from certain COUNTRIES - Usually carried out by reducing, but not eliminating tariffs/taxes.

15. II. Types/Stages of Market Integration PREFERENTIAL TRADE AGREEMENTs/AREAS Ex: European Union and the African, Caribbean, and the Pacific (ACP) group states.

16. II. Types/Stages of Market Integration 2. FREE TRADE AGREEMENTs/AREAS is an agreement made between countries, where countries agreed to TRADE FREELY AMONG THEMSELVES but are able to trade with other countries OUTSIDE of the Free Trade Area in whatever way they wish.

17. II. Types/Stages of Market Integration Ex: North American Free Trade Area/Agreement (NAFTA) was established in 1994 by USA, Mexico, and Canada.

18. II. Types/Stages of Market Integration FREE TRADE AGREEMENTs/AREAS Country D Import Tariffs Free Trade Country A Country B Country C Free Trade Area Complete Embargo

19. II. Types/Stages of Market Integration 3. Customs Union Is an agreement made between countries, where the countries agreed to trade freely among themselves, and they also agree to adopt common external barriers against any country attempting to import into the Customs Union.

20. II. Types/Stages of Market Integration 3. Customs Union All common markets and economics and monetary unions are also Customs Union; thus, European Union has a customs union.

21. II. Types/Stages of Market Integration Customs Union 3. Customs Union Country A Country B Country C Free Trade Area

22. II. Types/Stages of Market Integration 4. Common Markets Is a Customs Union with common policies on product regulation, and free movement of goods, services, capital, and labor, The European Union is a Common Market

23. II. Types/Stages of Market Integration 3. Common Markets Ex: Labor (International Football Players) Once the EU as a common market, International were able to travel freely within the Common Market and gain employment. Before that, Labor was not “common” (need for work permits, etc ,)

24. II. Types/Stages of Market Integration 5. Economic and Monetary Union is a Common market with a common currency and a Central Bank. Ex.: Eurozone, which includes the member countries of European Union that have adopted euro € as their currency and have the European Central Bank (ECB) as their central bank.

25. II. Types/Stages of Market Integration 5. Economic and Monetary Union Advantages: No exchange rate fluctuation More stable currency Business confidence tends to improve Promote internal growth and trade Transaction cost between member countries is eliminated

26. II. Types/Stages of Market Integration 5. Economic and Monetary Union Disdvantages : Loss control of their own Central Bank Loss control of their interest rates because of external Central Bank Difficulty of managing Inflation rate, unemployment rate, rate of economic growth Dependent on Strong member countries for bailouts

27. II. Types/Stages of Market Integration 6. Complete Economic Integration The FINAL STAGE of Economic Integration at which point the Individual countries involved WOULD HAVE NO CONTROL of ECONOMIC POLICY, FULL MONETARY UNION, and COMPLETE HARMONIZATION OF FISCAL POLICY. The Eurozone is moving towards this end.