Information about Global Economy

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The rise of technology has allowed our environment to be characterized as a global one. “The global economy" gave business the ability to market products and services all over the globe. It has also allowed them to develop partnerships and alliances throughout the world, which has become essential for success in today’s business.”^[1] Prior to Globalization, the United States dominated the global economy. In recent years, however, the U.S. share of the global economy has shrunk to approximately 25%. This trend is expected to continue as the economies of many newly industrialized countries continue to grow at a faster rate.

Advantages

There are numerous advantages in the shift to a global economy including the possibility to increase benefits from economies of scale. The breaking down of global barriers allows companies to benefit from the largest and cheapest workforces, raw materials, and technology. For example, “many North American publishers actually write and produce much of their software in countries such as India.”^[1] Other advantages that companies benefit from include: the opportunity for smaller companies to quickly expand globally, having more choices when recruiting a workforce and the opportunity to target a larger customer base (which translates to greater earning potential).

Many have argued a global economy also helps in promoting international cooperation and peace (source?). If countries are dependent upon one another's economic success then armed conflict would be less likely. For instance, India and Pakistan are often in dispute over land territory such as Kashmir. It is argued that it would be less likely that these two countries will enter into combat due to the severe negative effects on their economies.

Disadvantages

• The subjugation of human rights, human welfare/wellbeing, to the needs of global capital.

The Global Economy

This increase in globalization has created many new opportunities, such as niche markets, and requires everyone to keep up with globalization in order to stay competitive. As David Shane points out in his article entitled "Youth must learn skills to succeed in Global Economy", “Technology and trade separate the economy into two camps -- those with the skills to participate in the global economy and those who lack them.” Shane indicates that advances in technology are giving developing countries the ability to compete directly with developed countries in terms of education and skills. With the ever increasing Global Economy and widespread use of the internet, people and businesses are realizing that they are often competing with people around the world for contracts and business deals.

The global economy has created an environment in which many large corporations are becoming transnational firms. Critics of this trend say it has caused a worldwide ‘race-to-the-bottom’ where companies are so focused on staying competitive that they often outsource production to developing countries with the lowest labor, environmental and economic standards.^[2][3] While these business practices allow companies to save money, leading to larger returns for investors and more affordable products for their clients, at the same time balancing the world economy, some believe they also serve as a motivation for governments in developing nations to keep their legislation lax when it comes to labor and environmental laws. These transnational corporations often lobby governments in order to gain access into these developing countries. Still, many developed countries have protectionist policies that do not enable developing countries to export their goods into developed markets. While some believe these activities should be curtailed with increased government legislation, proponents of economic liberty argue that the governments themselves are the reason for most of the economic problems attributed to globalization.

Trade barriers more often hamper economic development in the Global South, as compared to the North. New technologies like the internet may speed up the reduction of trade barriers. Critics of the expanding global economy argue the reduction of trade barriers will create harder competition for the previously protected companies in developing countries, while its advocates point to the new possibilities in global markets for emerging market companies such as Haier (China) and the Tata Group (India).^[4] In 2006 the global economy continued to expand so that most individual, corporate and government borrowers are making good on their obligations, which in turn has kept financial markets in clover.^[5]

Historical Origins

Although a global economy is generally associated with the late 20th century and early 21st century, it may be argued that a global system of exchange existed before that.

Some possible dates for its origins are:

- The Phoenician trade system along the Mediterranean Sea (12th to 8th century BC),

- The Roman to Han trade system along the Silk Road (1st to 2nd century AD),

- The Arabian global trade system across the Old World (7th to 13th century AD),

- The Global maritime navigations across the Earth (15th to 17th century AD),

- The New Imperialism (19th century) and Neo-Colonialism (20th Century)

Notes and references

See also

• World economy
• Globalization

External links

• "The global economy: organization, governance, and development", by Gary Gereffi
• "The ABCs of the Global Economy" from Dollars & Sense Magazine
• The United economic encyclopedia