The global economy is the world economy. It reflects the total amount of economic activity which can be measured by GWP (Gross World Product) and PPP (purchasing Power Parity).
PPP aims to get a more accurate method to compare the value of different currencies. This is done by focusing on the quantity of goods and services that can be purchased by one unit of the currency. For a global economy to exist there should be a rising share of economic activity in the world between people living in different countries. This process is known as globalization.
Globalization refers to the increasing integration between countries. This occurs when national boundaries are reduced or removed and world wide changes are taking place to things such as; trade, investment, finance, labour and technology. Globalization means that people in different countries are becoming increasingly linked by common technologies (for example: Internet, fax, etc.) and through goods and services sold on a global basis rather than national.
The size of the world economy can be measured with GWP (Gross World Product).
The result of GWP is reached by adding together the outputs of the world economies. In simpler terms you add all the contributing countries GDP (Gross Domestic Product) together.
The total world GDP is hard to measure accurately because each country has different methods of measurements and units of measure. The figures may vary because inflation rates vary from country to country, differences in exchange rates, variations in statistical methods for calculating asset values, government policies relating to taxation can vary from country to country and inaccuracies in collecting data all contribute to the varying statistics of total GWP.
The Essay on Country’s economy
These are goods that cannot be provided by the private sector but are very essential to the development of a country’s economy. They are usually very expensive undertakings with fewer returns or take a long time for the investors to recoup their money back. This makes them to be less attractive to the private sector investors who are mainly driven by the profit motive and would thus be unwilling ...
In the table on the previous page, we can see a clear domination by a few economies. In 5 nations which make up 45.3% of the world’s population, over half the world’s products are produced by them. Australia is ranked 16th in the globes major producing nations which is a great figure considering the mere 20 million population, compared to competing countries.
The table shows which countries export goods and services compared to the total output of every contributing country. The USA, China and Germany have been clearly the biggest exporters of the world’s goods and services. Australia’s economy is ranked 25th largest in the world even though it is less populated than many other countries in the world. For example India has a population of 1080 million and is in position 29.
Economic globalization can be identified when trends appear in areas such as; trade, investment, technology, finance, labour and business cycles. These trends involve:
* When there is an increase in trading of goods and services beyond national boundaries this is known as a global market.
* The increase in movements of capital, labour and technology between nations which is also known as global flows of factors of production.
* The related increase in interdependency between national economies.
* The growth of the size and number of transnational corporations which have business operations in many nations.
* Consumer trends becoming worldwide. E.g.: coke, fast foods, jeans, etc.
* Need for more inter-government consultations and agreements to facilitate the increase in economic contacts and to deal with the unavoidable increase in disputes.
* Increasing environmental damage which does not stop at national boundaries. E.g.: air pollution and water pollution which can flow into neighbouring countries even though they didn’t cause the problem.
The drivers of globalization are the factors or reasons to why globalization moves along. The three main drivers are:
The Coursework on Foreign Trade Britain British World
Page TOC o "1-3" h z u Introduction PAGEREF Toc 1837247 h 21. Economic development as a factor of external trade PAGEREF Toc 1837248 h 31. 1. Agriculture PAGEREF Toc 1837249 h 31.2. Manufacturing PAGEREF Toc 1837250 h 51. 3. The service sector PAGEREF Toc 1837251 h 61.4. Transportation PAGEREF Toc 1837252 h 82. Foreign trade PAGEREF Toc 1837253 h 122. 1.The foreign trade turnover, exports, imports ...
– Improved levels of technology, communications and transport.
– Increased customization of products and services.
– Rapid increase in global trading environment through trade agreements (e.g. NAFTA, TAFTA, AUSFT, APEC, etc.) and micro economic reforms.
These forces are driving globalization of economic activity and are very strong and generally supported by the government’s f high, medium and low income countries. However the era of globalization has not led to a more even distribution of income. The gaps between the rich and the poor countries are increasing and this is a negative impact of globalization.
The growth in global markets can be seen through the growth in the trade of goods and services between nations. The market could be consumer goods and services, capital goods or intermediate goods and services. The world’s goods and services trade has risen from 12% in 1964 to 24% in 2004 as a percentage of global GDP. Another measure of the growth in global markets is the extent to which a nation depends on imports and exports compared to their value of production (GDP).
This is known as trade dependency.
There are 43 nations which have a very high trade dependency in that the value of goods exports and imports totaled at least 80% of the value of goods produced in their economy. These economies import then re-export the products of other nations as well as exporting their own produce and importing for their own use. The interesting thing to note is that these very high trade dependency economies are scattered around the world which suggests that there is a high level of trade flows in the world.
In the table we see that in 2004 trade dependency statistics are higher than the previous statistics (in most cases).
This indicates a trend in globalization.
Also in the table, Australia is shown to have a moderate-low trade dependency despite the clear increase in figures. This table also shows that Australian is the 20th lowest country out of 146. Reasons for this could be the geographic position and trade policies which limit our trade.
The Term Paper on Economic Growth Trade Production Income
... that "Gross World Product" has grown. This implies huge growth in 'intra-industry trade' i.e. trade between same industry, different countries. Growth of trade has been helped ... manufacturing output. - Most cases double digit annual percentage increase in exports. Economies in Transition These economies are formerly socialist economies that ...
Globalization affects world trade and financial flows in many different ways. An increase in world spending, output and growth will lead to an increase in demand for a country’s exports of goods and services, raising its GDP growth potential. A decrease in world spending, output and growth will usually lead to a decrease in the demand for a country’s exports of goods and services and reduce its GDP growth potential.
If exports are increasing faster than imports, the balance of payments on current account should improve and move into a surplus. If domestic growth exceeds the world rate of growth, with imports increasing faster than exports, a county’s balance of payments on current account may decrease and cause a deficit.
An increase in commodity prices and an increasing exchange rate is usually caused by higher world growth for those countries experiencing a rise in export income. On the other hand lower world growth will most likely lead to a decrease in commodity prices and depreciating exchange rates for those countries experiencing a decline in export income.
Changes in financial flows can also impact on national economies. For example, a rise in foreign investor confidence may lead to increasing capital flows into a country or region, helping to raise the domestic rate of growth by providing foreign exchange and capital. This may impact the nation by leading to a stronger exchange rate and rising asset prices such as shares, real estate and bonds. If a fall in foreign exchange the opposite outcome occurs.
In conclusion, globalization can benefit or disadvantage a country and its people. However in most cases globalization helps people around the world integrate with one another and in some cases introduce countries to new products or services. For Globalization to work successfully each nation involved should have less protective barriers or no barriers at all. As globalization has progressed, living conditions have improved significantly in almost all countries. However, the strongest gains have been made by the advanced countries and only some of the developing countries.
The Term Paper on Direct Investment Countries Growth Developed
"The transnational corporate system in the late 1990 s" by Robinson Rojas (1997) Transnational direct investment in less developed societies in the 1990 s is consolidating further the historical regional spheres of influence by the former colonial powers. By and large, Latin America, Africa, Asia and Eastern Europe are becoming more than ever "spheres of control of production and trade" by the ...
