The Global Economy Essay Example for Free

The Global Economy Essay The world economy is mostly described by globalization. Globalization is the growth and development of economies all over the world. This is integration and interactions of world’s greatest economies and the development of the emerging market economies. Globalization is not new, since it has existed for thousands of years in terms of the oldest long distance trade across Asia and Europe. Many large corporations have invested in businesses in other counties (multinational businesses) implying that the current characteristics of globalization existed even before the First World War. The recent technological developments (especially ICT-information and communication technology) and economic policies are the major stimulation factors that contributed to increased globalization (Maddison 2001). Current policies aimed at bringing about disinflation have significantly opened up countries’ economies both locally and globally. This is because after the Second World War, most nations were motivated to start developing their economies since they had lost most of the resources in the war. The most effective policy was the adoption of free market systems which significantly improved the rate and volumes of productivity in their regions of origin and opened up numerous international markets as many barriers to free trade and commerce had been reduced. Economic Growth The world economy is the concern of every nation, because every country has some dependence of others. For such a reason most countries comply with economic policies aimed at improving world economy hoping to improve their own. The world market opened up with the opening of free market in the individual states that had split from the former Soviet Union plus other nations of the Eastern Europe (Maddison 2001). The Eastern Europe was very critical player for increased globalization in the 1990s. Most of the nations in the region joined the world trade organization and played a significant role as a supply foundation in to the western countries. China’s role in the cold war was a swift one and by the time the cold war was culminating, it had established itself in Asia as the economic stronghold serving as a market and supplier to Japan and other developed nations in the region (Maddison 2001). Inflation Structural changes in the global financial market have influenced the international, market environment in terms of prices of consumer products. Development and innovative technology plus anti-inflation policies adopted by many nations also played a significant role in the disinflation development. The inflation rates in the Group of eight G-8 countries (United States, Germany, Japan, Italy, Canada, Britain, Russia and France) countries declined by about 3-4%, these countries are the greatest economies in the World (Maddison 2001). In 1990s the world experienced a change in disinflation rates reflected by a notable increase in the supply of products to the world market as a result of the rapid industrialization in the emerging market economies. Poverty Reduction The developing nations have improved considerably and have found a place in the world economy as critical players. These countries have actually increased the value of global economy as they are rapidly developing in terms of industrialization and are being termed as emerging market economies as well. Example of emerging economies are china an India, which have invested in Multinational firms that accommodate information technology and have a greater influence on the world economy, which is also supported by worldwide economic connection Information technology has played a role in facilitating economic growth in most of the countries but it has also come with some negative features which are a threat to economic growth (Maddison 2001). Globalization Condemnation It is argued that the international corporations like international monetary fund, World Bank and world trade organization have become undemocratic assuming power of decision making about economic policies. Environmental preservation is no longer a priority; detrimental labor practices like child labor and prisoner service have become the order of the day As much as the Globalization Phenomenon has been praised for the improved economies of the world, On the other hand, it has been criticized for economic problems and financial crises in other nations could easily be transferred to other countries as a result of these interactions. This was evident with the Asian currency crisis of 1997 that affected the major economies of the Asian region; the Russian financial crisis that saw countries of former Soviet Union suffer an economic depression and the disintegration of the long-term capital management in 1998 (Maddison 2001). Many countries have now undertaken a process of finding a solution to such occurrences in future and the most notable research is that conducted by the Japanese central bank. Globalization has been blamed for unfair trade by the emerging economies who introduce fake products to the international market especially the Chinese companies. It has also been argued that Globalization has brought about in equality in economies and environmental deprivation. Globalization includes interaction of communities, a concept that has been found to have a negative influence on the environment, culture as well as on political administration of some countries discriminately (Maddison 2001). Economic development has been found to be uneven around the world. Opponents of globalization argue that the creation of free markets only benefits the multi-national companies that are already established from the western nations at the expense of the local companies and people in the developing countries. The so called free and far trade is not fair after all; nations compete for international ventures where they offer low environmental standards as well as poor working conditions and low wages. The free and fair trade arrangements usually snatch power from local governance of host nations to the multi-national corporations. As these businesses are seen to control the economy and hence make up financial policies, economic changes and other corporate manipulations (Maddison 2001). Conclusion Globalization has greatly affected business around the globe and many businesses have benefited from it while others have suffered a down fall. Third world companies have been brought to the international market while inflation in several countries has been transferred to other as a result of free market. Major phenomena that stimulated economic development were agriculture and capitalist economy, but the recent and significant of them was the industrialization which has intensely revolutionized economy. In order to understand the effects of globalization, both those who are for plus those against have to come to a consensus of the effects that have been brought about by globalization. All these interactions proof that globalization is a complex subject for discussion. References Maddison A. (2001). The World Economy: A Millennial Perspective. Organization for Economic Co-operation and Development Centre