Unit 3 Activity 2

 Integration occurs when prices among different location or related goods follow similar patern over a long period of time. Groups of prices often moves proportionally to each other and when this relation is very clear among the different markets it is said the the markets are integrated. Thus market integration is an indicator that explain how much different market are related to each other.

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. Linked closely to these changes was the electric telegraph, whose lines often ran along the new railroad networks. 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. Immediately Asia was some 4,000 miles closer to Europe in transport terms, and freight costs fell. Yet the low efficiency of early steamships meant that many bulk cargoes such as rice still were carried to Europe from Asia by sail around the Cape of Good Hope. Technological change in the shape of steel hulls and steel masts made sailing ships larger and more efficient, and they continued to be active until the more efficient triple-expansion engine finally drove the sailing ships from the oceans during the last quarter of the nineteenth century.

integration of markets significant progress in worldwide market integration and the formation of a truly global economy occurred during the nineteenth century. This required significant technological advancement. From the 1830s forward, the railroad locomotive and the marine steam engine transformed global transportation. Steamships connected the world's ports, and railroads ran inland from the ports, creating a new and speedier global transportation network. Freight rates reduced, allowing things to be transported around the world to ever-further markets while remaining cheaper than the identical item produced locally. The electric telegraph, whose cables often ran alongside the new train networks, was closely linked to these advances. Most countries, including the world's largest market, installed telegraph systems.