The Contemporary World Unit 3 Activity 2: Reflection Paper Writing and Publishing

 Trace the history of Global Market                          Integration.


Market Integration

Market integration occurs when prices among different locations or related goods follow similar patterns over a long period of time. Groups of goods often move proportionally to each other and when this relation is very clear among different markets it is said that the markets are integrated. Thus, market integration is an indicator that explains how much different markets are related to each other. 


The History of Global Market Integration

The nineteenth century saw substantial advances in international market integration, and the creation of a truly world economy. Technological advance was critical in this. The railroad locomotive and the marine steam engine revolutionized world transport from the 1830s onwards. Steamships connected the world's ports to each other, and from the ports the railroads ran inland, creating a new and faster world transport network. Freight rates fell, and goods could be carried across the world to ever more distant markets and still be cheaper in those faraway places than the same item produced locally. 

Telegraph systems were established in most countries, including the major market of British India, until 1854. Beginning with the first transatlantic cable, which was laid by steamship in 1866, these existing domestic telegraph systems were linked together by marine cables. The resulting international information network was crucial in communicating details of prices and price movements, reducing the cost of making deals and transactions. An infrastructural change of major significance came in 1869 with the opening of the Suez Canal, which linked the Mediterranean Sea by way of Egypt to the Red Sea: now ships sailing from Europe to Asia could take the new shortcut rather than sail all the way around Africa.


INTEGRATION OF GRAIN MARKETS AT THE TURN OF THE CENTURY

Within Asia major effects of market integration were seen. Where a market area is fully integrated, prices of a particular commodity will equalize across that area. Fluctuations in prices across the region will synchronize, demonstrating that they are subject to the same influences. Transport costs are crucial, and a commodity will only move from one location to another if the cost of production in the place of origin plus the cost of transport is less than the prevailing price for that commodity in the destination.

When did global economic integration started?

Global economic integration took another major leap forward during the period between the end of the Napoleonic Wars in 1815 and the beginning of World War I. International trade again expanded significantly as did cross-border flows of financial capital and labor.





Resources: https://en.m.wikipedia.org/wiki/Market_integration 

https://www.encyclopedia.com/history/news-wires-white-papers-and-books/market-integration

https://www.federalreserve.gov/newsevents/speech/bernanke20060825a.htm



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