The Global Economy (And the Economic Globalization)
What is the global economy? Let us discuss the “global economy definition” and other concepts related to economic globalization, globalization economy, and more.
These days, products or goods can be sold and bought all over the world. Just because people grow cotton in Alabama or wheat in Kansas, or create computers in California or cars in Michigan does not mean that they have to sell them to the people in their town, state, or country.
As we are currently in the age of lightning-speed communication and transportation, products like wheat, cotton, cars, and computers can be sold to people all over the world. In a blink of an eye, transactions are made through gadgets, apps, and internet, and goods are carried by ships, airplanes, trains, and trucks all over the globe.
By calculating payments in split-seconds and innovatively keeping track of shipments, various forms of computers and computer applications have made the worldwide buying and selling all the more easier.
Considerably, the Internet has been helping businesses by making people aware that such worldwide buying and selling can be done with ease.
The global economy definition
The scenarios described above manifest the global economy today. So let’s talk about “the global economy definition.”
The following discussion is based on the lecture by textbook author and social science professor by Jensen DG. Mañebog:
Global economy refers to the system of trade and industry around the globe that has developed as the outcome of globalization, that is, the manner in which economies have been developing to function together as seemingly one system.
The concept “global economy” also denotes global economic activities among various countries that are deemed interconnected and thus can affect other countries either positively or negatively.
Because of this global economy, countries today can plan to get their goods from anywhere in the world, not just from locations they have always acquired them.
A usual example of this is cars: America used to produce almost all the cars vended to Americans. But nowadays, most cars driven by Americans are produced by Japanese companies. Ironically, some Japanese companies have put up auto plants in America; so technically, some cars are American-made cars that are sold to Americans by Japanese companies.
Every so often, global economy is equated to the international spread of capitalism, especially in recent decades, across national borders and with slight restraints by governments.
Capitalism’s global economy has become divisive as some critics claim that its mechanism, free markets, and free trade take occupations away from productive workers in affluent nations while producing factories in the poor ones.
The advocates of global economy nonetheless contend that the free movement of capital motivates investment in poor countries and generates jobs in the process called globalization.
The Global Economy and Economic Globalization
As defined by the International Monetary Fund (IMF), economic globalization is “a historical process, the result of human innovation and technological progress.
Economic globalization refers to the increasing integration of economies around the world, particularly through the movement of goods, services, and capital across borders. The term sometimes also refers to the movement of people (labor) and knowledge (technology) across international borders” (Benczes, 2014).
Economic globalization has some interrelated dimensions:
(1) the globalization of trade of goods and services;
(2) the globalization of financial and capital markets;
(3) the globalization of technology and communication; and
(4) the globalization of production
‘Globalization Economy’, Economic Globalization, and Internalization
Although the two may be interconnected, economic globalization is distinct from internationalization. While internalization is simply about the extension of economic activities of nation states across borders, economic globalization is said to be functional integration among globally distributed activities.
This means that economic globalization (or globalization economy0 is a qualitative transformation rather than merely a quantitative change.
Tamás Szentes expounds economic globalization and globalization economy by explaining that in economic terms, “globalisation is nothing but a process making the world economy an “organic system” by extending transnational economic processes and economic relations to more and more countries and by deepening the economic interdependencies among them” (Benczes, 2014).
Notice that this definition asserts that economic activities and processes in economic globalization, such as production, can be interpreted only in a global context, that is, in an integrated world economy—that is, in a global economy.
Economic globalization also denotes the growing interdependence of world economies as a consequence of the increasing scale of cross-border trades of merchandises and services, flow of international capital, and fast and wide-ranging spread of technologies.
The global economy, globalization economy, and this economic globalization reflect the ongoing expansion and mutual integration of market frontiers, and are considered as irreversible trends for the economic development in the whole world at the turn of the millennium.
The Global Economy, Globalization Economy, and International Economic Relations
Economic globalization has significant impacts on the trade and industry of both individual countries and the global economy. Undertaken in the light of globalization, international economic relations have gained principal importance and are claimed to have led to prompt development and decline in poverty in many developing countries like India and China.
EconomyWatch.com enumerates some important aspects of globalization and international economic relations (“Globalization and International Economic Relations,” 2010):
a. Globalization ensures easier movement of goods and services across nations. This is an absolute necessity for fostering international economic relations.
b. Easier movement of people between countries has also been made possible by globalization which is conductive to international economic relations. This also helps people in one country to migrate to another for employment thereby addressing the problem of unemployment in many countries.
c. Globalization leads to free trade between countries. Since the early days of globalization numerous bilateral trade agreements have been signed between countries.
d. Globalization and globalization economy have ensured easier and faster flow of information across geographical boundaries. The success of economic relations is often dependent on information.
e. Globalization has led to reduction in cultural barriers which has proved to be conductive for economic co-operations among nations.
f. Movement of capital between countries due to globalization has also played an important role in international economic relations.
g. Globalization has given rise to several multi-national corporations who undertake economic activity across geographical borders.
h. Globalization has helped to address environmental issues which are strategic to international economic relations.
*If you want to look for other topics in The Contemporary World and other subjects, search here:
Copyright © 2014-present by MyInfoBasket.com & Prof. Jensen DG. Mañebog
From Socrates to Mill: An Analysis of Prominent Ethical Theories
=====
To post comment, briefly watch this related short video: