Market Integration

Market Integration
According to the Cambridge Business

English Dictionary
Market Integration is
a situation in which separate
markets for the
same product become one single
market
Free Trade
Free Trade wherein international trade

(the importation and exportation) left to
its natural
course without tariffs and non-tariff trade
barriers such as quotas, embargoes,
sanctions or other restrictions.
3 Sectors of FREE TRADE
•Tariffs
•Embargo
•Economic Sanctions
TARIFFS
taxes or duties to be paid on a

particular class of imports or exports
EMBARGO
- a government-instituted prevention
of exports to a certain country.
Official ban on
trade or other commercial activity.
Economic Sanctions
-commercial and financial

penalties applied by one or more
countries
against a targeted country, group, or
individual
WORLD’S MAJOR FREE TRADE AREAS
1. North American Free Trade Agreement

(NAFTA)
2. Association of Southeast Asian Nations Free
Trade Area (AFTA)
3. Southern Common Market (MERCOSUR)
4. Common Market of Eastern and Southern
Africa (COMESA)
Here are not Free Trade Areas yet Union and
Partnership Agreements
5. European Union
6. Trans-Pacific Partnership
7. Transatlantic Trade and Investment
Partnership – not yet ratified
North American Free Trade Agreement (NAFTA)
•Free trade between the three member nations, Canada,
the US and Mexico
•Effective on January 1, 1994 -Although tariffs weren’t fully

abolished until 2008
•by 2014 total trilateral merchandise trade exceeded

US$1.12 trillion Gains in Canada are reportedly even
higher, with 4.7 million new jobs added since 1993.
•Canada is also the largest exporter of goods to

the U
Brief History of Global Market Integration in the 20 the
Century
The international economic integration achieved
during the nineteenth century was largely unraveled
in the twentieth by two world war and the Great
Depression.
World War 1 brought the liberal economic order of

the late 19th century to an abrupt end; 1914 clearly
marked a dramatic and discontinuous break in the
past.
Brief History of Global Market Integration in the 20the
Century
The end of war did not imply an end to protection.

Different tariff acts and restrictions are made.
Post war economic reintegration was supported by

several factors, both technological and political.
Association of Southeast Asian Nations Free Trade Area
(AFTA)
•The original members were Brunei, Indonesia, Malaysia,

Philippines, Singapore and Thailand. Four countries have
subsequently joined: Vietnam, Laos, Myanmar andCambodia
• The AFTA was signed in January 1992 in Singapore It has also

entered into agreements with a number of other nations, including
China, eliminating tariffs on around 90% of imported
goods.
• The AFTA nations had a combined GDP of

US$2.3 trillion in 2012, and they're home to
600 million people.
Southern Common Market (MERCOSUR)
•a Latin American single market, its full members are Argentina,

Brazil, Paraguay and Uruguay. Venezuela is a full member but has
been suspended since December 1, 2016. Meanwhile, Bolivia
obtained its full membership on July 7, 2015.
•Established by the Treaty of Asunción in 1991 and Protocol of

Ouro Preto in 1994
•The four have a combined gross domestic product (GDP) of

roughly $2.9 trillion
•Latin America’s second-largest trade group, the Pacific Alliance,

which comprises Chile, Colombia, Mexico, and Peru, has a
combined GDP of about $1.8 trillion
Common Market of Eastern and Southern Africa
(COMESA)
•The member States of COMESA are: Burundi, the
Comoros, the Democratic Republic of Congo, Djibouti,
Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar,
Malawi, Mauritius, Rwanda, Sudan, Swaziland,
Seychelles, Uganda, Zambia and Zimbabwe
• Formed in December 1994
•an annual export bill in excess of $80 billion, the

organization is a significant market place
WORLD BANK
multinational financial institution

established at the end of World War II
(1944) to help provide long-term capital for
the reconstruction and development of
member countries.
- it provides much of the planning
and financing for economic
development projects
involving billions of dollars
Purpose for the setting up of the
Bank
-To promote private foreign investment by means of guarantees or participation in
loans and
other investments made by private investors
- To promote the long-range balanced growth of international trade and the

maintenance of
equilibrium in balance of payments
- To conduct its operations with due regard to the effect of international

investment on
business conditions in the territories of members
- To assist in bringing about a smooth transition from a wartime to a peacetime

economy
-It provides funds to borrowers by borrowing funds in the world
capital markets, from the proceeds of loan repayments as well
as retained earnings.
- At its funding, the bank’s major objective was to serve as an

international financing facility to function in reconstruction and
development.
- Lends money to a government for the purpose of developing

that country’s economic infrastructure such as roads and power
generating facilities
- Also, funds are lent only to members of the IMF, usually when
private capital is unavailable at reasonable terms .
International Bank for Reconstruction and
Development (IBRD
-Lends money to a government for the purpose
of developing that country’s economic
infrastructure such as roads and power
generating facilities
- Also, funds are lent only to members of the
IMF, usually when private capital is unavailable
at reasonable terms.
- Generally, bank loans are made to cover only
import needs in foreign convertible
currencies and must be repaid in those
currencies at long-term rates.
International Development
Association (IDA)
IDA’s funds come from subscriptions from

its developed members and from the earnings
of the IBRD.
- Credit terms usually are extended to 40 to 50
years with no interest.
- Repayment begins after a ten-year grace period
and can be paid in the local currency, as long
as it is convertible.
International Finance
Corporation
The IFC was established in 1956. There are 133
countries that are members of the IFC and it is
legally and financially separate from the IBRD
- Main responsibilities are:
(i) To provide risk capital in the form of equity
and long-term loans for productive private
enterprises in association with private investors
and management;
(ii) To encourage the development of local
capital markets by carrying out standby and
underwriting arrangements; and
(iii) To stimulate the international flow of
capital by providing financial and technical
assistance to privately controlled finance
companies. Loans are made to private firms in
the developing member countries and are
usually for a period of seven to twelve years

Market Integration

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Market Integration

According to the Cambridge Business

Free Trade wherein international trade

taxes or duties to be paid on a

-commercial and financial

1. North American Free Trade Agreement

•Effective on January 1, 1994 -Although tariffs weren’t fully

•by 2014 total trilateral merchandise trade exceeded

•Canada is also the largest exporter of goods to

World War 1 brought the liberal economic order of

The end of war did not imply an end to protection.

Post war economic reintegration was supported by

•The original members were Brunei, Indonesia, Malaysia,

• The AFTA was signed in January 1992 in Singapore It has also

• The AFTA nations had a combined GDP of

•a Latin American single market, its full members are Argentina,

•Established by the Treaty of Asunción in 1991 and Protocol of

•The four have a combined gross domestic product (GDP) of

•Latin America’s second-largest trade group, the Pacific Alliance,

• Formed in December 1994

•an annual export bill in excess of $80 billion, the

multinational financial institution

- To promote the long-range balanced growth of international trade and the

- To conduct its operations with due regard to the effect of international

- To assist in bringing about a smooth transition from a wartime to a peacetime

- At its funding, the bank’s major objective was to serve as an

- Lends money to a government for the purpose of developing

IDA’s funds come from subscriptions from

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