(9) Global Economy and Integration

Global Market Integration

Global Market Integration

Refers to the increasing uniformity of prices, or simply the elimination of price differences, since all markets become one.

1. Horizontal integration

2. Vertical integration

   • Forward Integration

   • Backward Integration

3. Conglomeration

There are three main types of market integration:

Horizontal integration

involves firms gaining control of similar firms in other locations

Vertical integration

involves a firm performing multiple stages of production

Forward Integration

takes activities close to the consumption function

Backward Integration

a combination of sources of supply

Conglomeration

involves combining unrelated activities under single ownership

Global Economy

A concept that refers to the individual national economies, clustered as one.

highly integrated, interdependent, and interconnected place

The global economy is considered a_________, _________ and _________ where trade, finances, resources, capital, etc. are exchanged and transacted.

Global Economy

_____________ is a condition and a place where there is an international, borderless, exchange of goods and services, information, and data.

Capitalism

An economic and political system in which a country’s trade and industry are controlled by private owners for profit.

private or corporate ownership

Capitalism are characterized by_________ or ________ of capital goods, investments that are determined by private decisions, and prices, production, and distribution of goods that are determined mainly by competition in a free market.

• Inherent Exploitation

• Alienation and Commodification

• Economic Inequality

Criticism of Capitalism:

Private property promotes efficiency by giving the owner of resources an incentive to maximize the value of their property. So the more valuable the resource is, the more trading power it provides the owner

Why Private Property Matters for Capitalism?

capitalist system

In a ___________, the person who owns the property is entitled to any value associated with that property.

Neoliberalism

An ideology and political and economic policy model that emphasizes the value of free market capitalism while seeking to transfer control of economic factors from the government to the private sector

Neoliberalism

Also incorporating the policies of privatization, deregulation, globalization, and free trade, it is commonly—though perhaps incorrectly—associated with laissez-faire economics.

• Monopoly and Monopsony Power

• Financial Instability

• Inequality

Criticism of Neoliberalism:

Laissez-Faire

An economic theory from the 18th century that opposed any government intervention in business affairs.

economic theory ; 18th century

Laissez-Faire is an ________ from the ________ that opposed any government intervention in business affairs.

leave alone

Laissez-Faire is a French term that translates to "________", is that the less the government is involved in the economy, the better off business will be, and by extension, society as a whole.

Laissez-Faire

A French term that translates to "leave alone", is that the less the government is involved in the economy, the better off business will be, and by extension, society as a whole.

free-market capitalism

Laissez-faire economics is a key part of _______.

Laissez-faire capitalism

________________, also referred to as free market capitalism or market capitalism, is an economic system that allows businesses to operate with minimal government intervention.

• Economic Freedom

• Private Property and Contracts

• Non-Interference

• Free Market

Key characteristics of Laissez-faire capitalism:

It does not inherently protect the weakest in society. While laissez-faire advocates argue that if individuals serve their interests first, societal benefits will follow.

One of the chief criticisms of laissez-faire is that capitalism as a system has moral ambiguities built into it:

The idea of letting an economic system run without regulation or correction in effect dismisses or further victimizes those most in need of assistance, they say

Detractors feel laissez-faire leads to poverty and economic imbalances.