2.2 Market Integration Flashcards
refers to how easily two or more markets can trade with each other. It occurs when prices among different locations or related goods follow similar
patterns over a long period of time.
Market integration
___________ often move proportionally to each
other and when this relation is very clear among different markets it is said that the
markets are integrated
Groups of prices
Types of Related Markets where Market Integration Occurs
Stock Market Integration
Financial Market Integration
Types of Related Markets where Market Integration Occurs
This is a condition in which stock markets in different countries trend together and depict same expected risk-adjusted returns. Two markets are perfectly integrated if investors can pass from one market to another without paying any extra costs and if there are possibilities of arbitration which ensures the equivalence of stock prices on both markets
Stock Market Integration
Types of Related Markets where Market Integration Occurs
It is an open market economy between countries facilitated by a common currency and the elimination of technical, regulatory and tax differences to
encourage free flow of capital and investment across borders. It occurs when lending rates in several different markets begin to move in tandem with one
another. Emergence of similar patterns within the capital, stock, and financial markets with those trends coming together to exert a profound influence on the
economy of that nation is involved in the integration within a nation.
Financial Market Integration
A__________________ is a business that operates in two or more countries
It also goes by the name “multinational company”
global corporation
An approach to the study of globalization that locates the phenomenon itself in early patterns of trade and exchange is known as
historical globalization.
what is MNCs
multinational corporations
it is the one that must balance the opportunities with the challenges of operating in multiple environments in managing their internal markets in building an
advantage.
Chief financial officers (CFOs)
what is CFOs
Chief financial officers
A group’s tax bill can be reduced by the CFO like borrowing in countries
with high tax rates and lending to operations in countries with lower rates.
Financing
Global firms can offset natural currency exposures through worldwide operations instead of managing currency exposures through financial markets.
Risk Management
Getting smarter on valuing investment opportunities CFOs can add value.
Capital budgeting
It is a major driver of extended global corporate development. It is an investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets in the other country hint it was of corporate origin
Foreign Direct Investment (FDI)
what is FDI
Foreign Direct Investment
methods to establish FDIs
opening a subsidiary or
associate company in a foreign country;
acquiring a controlling interest in an existing
foreign company, or by means of a merger or joint venture with a foreign company.
These five countries were among the fastest
growing emerging markets as of 2011.
Brazil, Russia, India, China and South Africa
what is (BRICS)
Brazil, Russia, India, China and South Africa
what is the combined economies
BRICS Economies or
Brazil, Russia, India, China and South Africa (BRICS)
what is (BRIC)
Brazil, Russia, India and China
BRIC, without South Africa, was originally coined in by ________, which speculates that by
2050 these four economies will be the most dominant.
Goldman Sachs
in BRIC South Africa was added to the
list on __________ creating “BRICS”(
April 13, 2011
the first multilateral agreement covering trade in services which was negotiated during the last round of multilateral trade negotiations, called the Uruguay Round, and came into force in 1995.
The General Agreement on Trade in Services (GATS)
two primary objectives of GATTS
to ensure that all signatories are treated equitably when accessing foreign markets;
and
second, to promote progressive liberalization of trade and services.
the purposes of becoming global corporation
Expanding revenue opportunities
diversifying business risk
Period of when as both cities and countries extended their reach
beyond their own borders, a form of globalization was initiated which then followed complex patterns of interactive engagements organized through trade and industry directly influenced by the emergent and subsequently dominant technologies especially in shipping and navigation .
The entities operating within this environment were functionally and organizationally not different from contemporary organizations being possessed with head offices, foreign branch plants, corporate hierarchies, extraterritorial business law, and even bit of foreign direct investment and value-added activity
In early historical periods
In this period theCombination of invention and social organization resulting to increase in worldwide capital and wealth of nation is allowed by modern nation state system that emerged .
in the period prior to the end of World War II
American Corporations led the economic recovery and expansion happened after what period ?
After the World War II destruction
This period up to the reentry of Japanese and European corporation to the global scene is viewed as __________________
multinational corporations (MNCs)
From the end of World War II to the present is considered the period of __________
transformation of global corporation.
