The Global Economy( Naujas)

8/3/2019 The Global Economy( Naujas)

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The Global Economy

Agn Vaiiulyt, BN10B


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What is The Global Economy?

A global economy is characterized as a worldeconomy with an unified market for all goodsproduced across the world. It gives domesticproducers an opportunity to expand and raisecapacity according to global demands likewise italso provides an opportunity to domesticconsumers to choose from a vast array of imported

goods. The concept of a global economy cannot beunderstood in isolation. For this globalization needsto be defined first.


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Globalisation may be defined as the integration ofproduction and consumption in all markets acrossthe world.

Impact of Globalisation: The emergence ofTrans National Companies or Multi NationalCompanies has been due to the direct impact ofglobalization. Globalisation has boosted

productivity and capacity of these companies toastronomical highs because of the stiff competitionat the international level.


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Global Economic Indicators

It is economic variables or parameters that maydetermine global economic behavior over a periodof time reflecting the movement of the globaleconomy as a whole.

These are Global Economic indicators: Real GDP growth rate

Real GDP per capita

Exports-Imports

Balance of Payments (BOP)

Inflation Rates Unemployment

People below poverty line (generally standardized as havingless than $1 a day)

External Debt, if any, as a percentage of GDP


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Real GDP growth rate: shows the increase in

value of all final goods and services producedwithin a nation in a given year, taking into accountinflation.

GDP per capita: An approximation of the value of

goods produced per person in the country, equal tothe country's GDP divided by the total number ofpeople in the country.

Exports-Imports: Export - shipping the goods and

services out of the port of a country. Import -bringing in the goods and services into the port of acountry.


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Balance of Payments (BOP): an accountingrecord of all monetary transactions between a

country and the rest of the world. Thesetransactions include payments for the country'sexports and imports of goods, services, andfinancial capital, as well as financial transfers. TheBOP summarizes international transactions for aspecific period, usually a year, and is prepared in asingle currency, typically the domestic currency forthe country concerned. Sources of funds for anation, such as exports or the receipts of loans and

investments, are recorded as positive or surplusitems. Uses of funds, such as for imports or toinvest in foreign countries, are recorded asnegative or deficit items.


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World Unemployment rates 2009


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People below poverty line: is the minimum levelof income deemed necessary to achieve an

adequate standard of living in a given country.Percentage population living on less than $1.25

per day 2009


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External Debt: part of the total debt in a countrythat is owed to creditors outside the country. Thedebtors can be the government, corporations or

private households. The debt includes money owedto private commercial banks, other governments, orinternational financial institutions.


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Global Economy Advantages &Disadvantages

Advantages:

1.Raise of world productivity and incomes;

2. Improvement of the standards of living at aglobal level;

3.The industrial sector attain cheap labour,capital and technology.

4.Promotion of peace and cooperation.5.Wide customer base (pro for small

companies).

6.Outsourcing.


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Disadvantages:1.Wide divide between have-nots and have-lots

in less developed economy countries.

2.Different wage standards.3.Loss of domestic jobs.

4.Differences in the legal environment.

5.The difficulty of competition.


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Summation:

It is a widely accepted view that globalization would

not only benefit all countries across the world butwould also work towards the betterment of theeconomy as a whole. Although The global economyhas become hotly controversial. Critics allege that its

props, free markets and free trade, take jobs awayfrom well-paid workers in the wealthy nations whilecreating sweatshops in the poor ones. Its supportersinsist that the free movement of capital stimulatesinvestment in poor nations and creates jobs in them.Nonetheless, a global economy may be beneficial forthe world at large. This may result in the economiesof the world fighting issues such as global warming,climate change and environmental degradation

collectively and effectively.

The Global Economy( Naujas)

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