The Global Economy

The rising 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.” cite book|last=Haag|first=Stephen|title=Management Information Systems|date=2000|id=ISBN 0-7600-1091-9 ] Prior to Globalization, the United States dominated the global economy. In past decades, however, the U.S. share of the global economy has shrunk to approximately 20%. This trend is expected to continue as the economies of many newly industrialized countries continue to grow at a faster rate, this is called the balancing of the equilibrium.

Advantages

There are numerous advantages 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.” 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).

It is obvious how global economy also helps in promoting international cooperation and peace for the nations involved in the international trade by increasing mutual-dependence. For instance, India and Pakistan are often in dispute over land territory such as Kashmir. It can be argued that it would be less likely that these two countries will enter into combat due to the severe negative effects on their economies. However it can alternatively be argued that countries that are shut out of global trade are more likely to resort to armed combat for the same reasons that are mentioned above, therefore the subject needs a proper study to draw any conclusions on globalization’s effect on world peace.

Disadvantages

The subjection of human rights and human wellbeing to the needs of global capital are some theories against a global economy.

These companies may also gain power greater than that of any country, as many pharmaceutical companies have been accused of using their power to influence governments, so too could these super companies but to a much greater extent.

More disadvantages to having a shared global economy is the transportation of resources and the impact it has on the environment.

Theories

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. cite journal|last=Chan|first=Anita|title=A "Race To The Bottom": Globalisation and China's labour standards|journal=China Perspectives|volume=46|pages=41–49|date=2003-03-01|url=http://rspas.anu.edu.au/~anita/pdf/AChancp461.pdf|format=PDF|accessdate=2006-09-16] cite paper|author=Rich, Schucking & Zuniga, Bosshard, Sohn & Durbin, Norlen, van Voorst|title=A 'Race To The Bottom': Creating Risk, Generating Debt and Guaranteeing Environmental Destruction, A Compilation of Export Credit & Investment Insurance, Agency Case Studies|date=1999-03|url=http://www.environmentaldefense.org/documents/480_ecareport.pdf|format=PDF|accessdate=2006-09-16 ] 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).cite news |last=Engardio |first=Pete |coauthors=Geri Smith, Ram Charan, Michael Arndt, Stanley Reed |title=Emerging Giants |publisher=Business Week |pages=40-49 |date=2006-07-31 |url=http://www.businessweek.com] 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.cite news |last=Petruno |first=Tom |title=2006 takes a soft bounce |publisher=The Baltimore Sun |pages=1 |date=2006-12-26 |url=http://www.baltimoresun.com/business/investing/bal-bz.petruno26dec26,0,3755461.story?track=rss]

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 18th century AD),

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

References

ee also

* World economy
* Globalization
* Globalization and Health

External links

* [http://www.homemade-atlas.org/ Maps of the global economy]
* [http://www.soc.duke.edu/~ggere/web/Global_Economy_chapter_Handbook_2005.pdf "The global economy: organization, governance, and development", by Gary Gereffi]
* [http://www.dollarsandsense.org/archives/2000/0300collect.html "The ABCs of the Global Economy"] from Dollars & Sense Magazine
* [http://unieco.info/ The United economic encyclopedia]
* [http://www.globaleconomics.com "Global Economic Research"]