CHAPTER 3: Market integration -​ currencies were pegged to gold.

INTRODUCTION 2. Fixed exchange rates

-​ The economy as a major social -​ central banks maintained currency
institution values.
-​ The economic system shape lives. 3. IMF oversight
-​ Three sectors of production -​ monitored exchange rates and
(primary, secondary, and tertiary ) financial stability
Primary- mining construction of raw 4. Elimination of currency restrictions
materials -​ allowed free trade
Secondary - manufacturing 5. USD as global currency
Tertiary - services, (ex. banking, retailing) -​ become the dominant currency in
THE ROLE OF FINANCIAL AND trade.
ECONOMIC INSTITUTION Tariffs - means tax
-​ financial and economic institutions III. THE BRETTON WOODS SYSTEM
facilitate trade and global growth. background and purpose
* Economic revolutions and their impact ●​ was establish in 1944 as a
* Multinational corporations shaping the response the severe economic
world economy turmoil caused by world war 1, the
* Financial institution that regulate markets great depression of the 1930's,
and word war 2.
GLOBALIZATION AND MARKET ●​ before bretton woods, countries
INTEGRATION often engaged in protectionist
- Global connects economies worldwide a policies, such as high tariffs(tax)
"when the American economy sneezes and competitive devaluation, which
the rest of the world catches a cold” further deepened economic crises.
Example of financial crisis affecting the ●​ thus, world leaders convened at
world. the Bretton Woods Conference in
1. 1990s Russian economic crisis July 1944 in Bretton Woods, New
-​ Affected global trade Hampshire, USA.
2. 1997 asian financial crisis ●​ the primary goal was to restructure
-​ led to currency devaluation in Asia the global economy by reducing
3. 2001 Argentina financial crisis barriers to trade and ensuring the
-​ had a smaller global impact free flow of money among nations
(Ritzer, 2015).
The bretton woods system ( BWS ) GATT - General Agreement on Tariffs and
●​ established after WWII to prevent Trade
economic instability WTO - World Trade Organization
●​ Goals
- reduced trade barriers & stabilized GATT AND WTO
global markets -Establish to promote by reducing the
- ensure financial cooperation among barriers and ensuring fair competition.
nations -The results of WTS
●​ Created key financial institution GATT: THE EARLY FRAMEWORK FOR
-​ International monetary fund (IMF) TRADE LIBERALIZATION
-​ World Bank 1. Establishment and purpose
Bretton woods system -​ GATT was established in 1947 as
( key elements ) a response to the growing need for
1. Gold standard international trade regulations.
 -​ It was initially a forum for permanent, independent
multinational trade negotiations, organization with a broader
ensuring that trade policies among mandala
nations remained transparent and ●​ The WTO was included services,
fair. intellectual property, and dispute
-​ 23 member countries participated me mechaniema, making more
in GATT's early negotiations, powerful and structured than GATT
agreeing to reduce tariffs and
eliminate trade barriers. IV. THE GENERAL AGREEMENT ON
TARIFFS AND TRADE (GATT) AND THE
2. Trade Negotiations through 'Rounds' WORLD TRADE ORGANIZATION (WTO)
-​ GATT functioned through rounds of Key functions of WTO:
negotiations, where countries
discussed and modified trade ●​ Regulates trade in goods and
agreements to facilitate global services.
trade The WTO free and fair trade by
-​ Each round aimed to reduce tariffs informing agreement( means all
and other barriers on International about monitoring the trade policy)
goods. between its 164 member states as
-​ Over time, GATT evolved to cover of 2024. 166- 2025
more Industries and services, but ●​ Addresses non-tariff trade barriers.
its framework remained limited to (Such as import restrictions,
trade in goods. government subsidies, and product
regulations)
THE TRANSITION FROM GATT TO WTO ●​ Ensures fair competition in
1. The Uruguay Round (1986-1993) and international markets.
WTO Creation ( WTO promotes the Free markets
●​ The Uruguay Round was one of principle - ensuring that countries
the largest and most ambitious do not engage in unfair trade
negoñation rounds under GATT practices, ex. dumping or
●​ It addressed broader issues, excessive subsidies)
including:
-​ Trade in services -​ if disagree about fair
ex. banking, insurance, competition/dispute resolution
telecommunications ( legal arbitration)
-​ Non-tariff trade barriers
ex. import quotas, subsidies, Criticisms of WTO:
regulatory policies ●​ Trade barriers favor developed
-​ Intellectual property rights and nations
dispute settlement mechanisms. -​ Has criticize allowing developed
●​ The Uruguay Round resulted in the nations or poor or wealthy to
decision to establish the World maintain agricultural subsidies,
Trade Organization (WTO) in 1995 which negatively affect developing
to replace GATT countries.
2. Differences Between GATT and WTO ●​ Unequal decision-making
●​ GATT was a temporary agreement power: because dominant ang
focused primarily on trade in wealthy nations in decision
goods, while the WTO became a making.
 -​ meeting: closed door discussion/ -​ manufacturing jobs moved from
green room meeting the US and Canada to Mexico to
●​ Lack of NGOs involvement reduce costs
-​ This exclusion has lead to -​ Producer prices in Mexico
widespread protest such as the dropped, forcing 2M farmers to
1999 anti-WTO demonstration in leave their farms
seattle -​ Consumer food prices rose,
leading 20M Mexicans ( 25% of
Organization for Economic population ) into “food poverty”
Cooperation and Development (OECD ) Effects of United States
-​ most encompassing club of the -​ NAFTA contributed $127 billion per
richest countries in the world with year U.S GDP through trade
35 member states as of 2016, with growth.
Latvia as it's latest member. -​ 791,000 US jobs were outsourced
-​ This emanates from the member to Mexico in 2010
countries resources and economic Effects on Canada
power -​ 76% of Canadians exports go to
Organization of Petroleum Exporting the US
Countries ( OPEC ) -​ 25% of Canadian jobs depend on
-​ 1960, Saudi Arabia, Iraq, Kuwait, US trade
Iran and Venezuela Overall Positive Effect
-​ wanted to increased the price of oil 1.​ lowered prices by removing tariffs
-​ UAE, Algeria, Libya, Qatar, 2.​ opened new business
Negeria, Indonesia, are also opportunities
included as member for small and medium-size
European Union ( EU ) companies
-​ 28 member state 3.​ quadrupled trade between the US,
-​ Most members in the Eurozone Canada, and Mexico
adopted the euro as their basic 4.​ Created 5M US jobs
currency, except Western Europe Overall Negative Effects
like Great Britain, Sweden and 1.​ 682,000 manufacturing jobs lost in
Denmark. the US
North American Free Trade Agreement 2.​ Excessive Pollution due to the
( NAFTA ) industrial growth
-​ a trade pact between the United 3.​ worker exploitation in Mexico
State, Mexico and Canada created 4.​ Mexican farmers pushed out of
on January 1, 1994 business due to lower producer
-​ 1st created in 1989 with Canada prices
and the United States as trading
partners HISTORY OF GLOBAL MARKET
-​ aims to cooperation for improving INTEGRATION
working conditions in North
America by reducing barriers to 1. Early Economy (Pre-Modern Era)
trade as it's expands the market of •Before modern economies, people
the 3 countries produced
Effect on Mexico goods primarily for their families.
•Econonmic production was limited to
subsistence farming and small-scale
exchanges. • Led to minimum wage laws, regulated
•The shift towards integrated economies working hours, and safety protections.
required different sectors to work together
produce, distribute, and exchange goods. CAPITALISM AND SOCIALISM

2. Agricutural Revolution (-12,000 years 1. The Rise of Capitalism and Socialism

ago) •These two economic models emerged
•Key Development: Domestication of duringthe Industrial Revolution when
plants economiccapital became crucial for
and animals (Pomeranz, 2000). production.
•Impact: •Capitalism focuses on private ownership
•Farming allowed societies to create food of
surpluses. esources and means of production.
• Led to permanent settlements and •Socialism promotes collective ownership
population growth. anddistribution of resources.
• Enabled the enmergence of trade
networks. Capitalism
Key Principles:
3. Industrial Revolution (1800s) ●​ Profit maximization and
Key Innovations: competition
• Introduction of steam engines and drive efficiency.
manufacturing. ●​ Businesses must outperform
• Growth of mass production and factories. competitors
• Impact: to succeed.
• Shift from home-based work to wage ●​ The "invisible hand" (Adam Smith,
labor. 1770s) regulates markets as
• Specialization of labor increased consumers choose the best
productivity. products.
• Higher standards of living and wider
access to goods. Capitalism
Challenges: Market Failures & Government
• Poor working conditions for women and Intervention:
children. ●​ Monopolies can form, reducing
• Low wages and economic inequality. competition and harming consumers.
• Industrialists became "robber barons", ●​ Governments regulate industries,
accumulating set minimum wages, and provide
vast wealth while many workers remained social services (e.g., public
in poverty. schools, postal services).
●​ Most countries mix capitalism with
4. Rise of Labor Unions (Late 19th government intervention to prevent
Century) economic inefficiencies.
●​ Reason: Poor working conditions
and Socialism
economic inequality. •Key Principles:
Inspired by: Marxist principles. ●​ Means of production are
Achievements: collectively owned (usually by the
• Formation of labor unions to demand government).
better wages and working conditions.
 ●​ Prioritizes collective welfare over unions now in public sector jobs
individual profit. (e.g., teachers)
●​ Rejects capitalism's private
propertyy and laissez-faire policies. 2. Changes in the Labor Force
●​ Agricultural jobs in the Philippines
Socialism have declined over the last
Marxist Influence & Communist Goals: century.
●​ Karl Marx saw socialism as a ●​ Manufacturing jobs in countries like
stepping stone to communism, the United States have also
where all members of society are decreased in the last 30 years.
equal. ●​ The U.S. economy has transitioned
●​ However, socialist states like from primary (agriculture) and
Cuba, North Korea, China, and the secondary (manufacturing) sectors
USSR retained strong government to the tertiary (service) sector.
control.
●​ Instead of worker equality, power 3. The Rise of the Service Industry
shifted to political elites. ●​ Service jobs include administrative
assistants, nurses, teachers, and
Economic Performance: Capitalism vs. lawyers.
Socialism ●​ Jobs are categorized into two labor
●​ Capitalist countries had markets:
significantly higher economic -​ Primary labor market: High-paying
output than socialist states. jobs with job security, health
●​ Before the fall of the Soviet Union, insurance, and retirement benefits
capitalist countries had an average (e.g., doctors, accountants,
output of $13,500 per person, engineers).
nearly three times higher than in -​ Secondary labor market:
socialist countries. Lower-paying jobs with fewer
Inequality Comparison: benefits, unpredictable schedules,
●​ Capitalist economies had a 10:1 and less job security (e.g., retail
income ratio between the top 5% workers, fast-food employees).
and the bottom 5%.
●​ Socialist economies had a 5:1 4. The Future of Capitalism & Socialism
ratio, reducing equality but limiting ●​ The next economic revolution is
overall economic growth uncertain, but corporations play a
key role.
The Information Revolution ●​ Corporations operate as legal
1. Shift from Manufacturing to Service entities, separate from individual
& ldea-based Economy owners, and have global reach.
●​ The Information Revolution has ●​ Globalization will influence the
reduced human labor in future of the Philippine economy
manufacturing and shifted the and other economies worldwide.
economy toward service work and
idea production.
●​ Automation and outsourcing have
replaced many traditional jobs.
●​ Decline of labor unions, especially
in the private sector, with most