Global Problem Requires Global Solution - Essay Example

GLOBAL PROBLEM REQUIRES GLOBAL SOLUTION [Name of Student] [Name of Affiliate Institution] Unilateralism prevails in the global but yet there is a dilemma in economic policy issues. The economic issue cannot be solved by a single state and hence it requires an integration of the whole globe to come up with an effective solution to tackle the dilemma. For instance globalization is making the world to one interdependent unit especially in the matter of economic policies. But this has undeniably caused a conundrum in the economic policy space. Without an effective collective economic policy the globe faces threat of sinking into a recession. This highlights how difficult it is for the world to unite despite the fact of the prevailing unilateralism. As for this reason, I agree with the statement that global problems require global solutions. Global governance is a way to address global problem. Global governance provides a link between trade and other issues involved in trade. It gives a clear analysis of how to strengthen multilateral trade and development of leadership in business (Lomborg, 2004). Global governance creates a platform for global regime and global finances to coordinate and develop better; it clearly states the relationship between World Trade Organization rules and climate change rules. Global governance is irrelevant unless all the countries participate (Lomborg, 2004). The current global challenges, impasse of global trade treaties and many more cannot be solve by the past institutions, global governance institution must be formed so that all the countries can play a key role in decision that involves solving the global problem (Cusimano, 2009). The rebalancing trade and the capital trade is a conundrum that requires collective action by the globe for it to be effective. The trend of the world trade and capital flow being use currently cannot sustain future economic global policy. For instance the new markets rely greatly on the demand of consumers from Western Europe and North America. This causes a global imbalance in deficit and the surplus and the imbalance is a significant one. The growth of consumer demand increases at a decreasing rate due to overwhelming household debts. The exchange rate is greatly influenced by the capital flow and the global trade. The global solution to this global problem needs the global countries to rebalance their economies by encouraging a rise in domestic demands. This can be aggravated by exchange rate increase to aid to channel production towards non tradable and more so to increase global imports. Improved exchange rate takes the shape of currency fluctuation in the economic circle in relation to the dollar (Cusimano, 2009). A proper example is China where the flexibility in exchange rate is used in authorities’ strategy to cater for the need to handle the capital inflows while on the other hand the financial stability and domestic macroeconomic is reserved. Exchange rate flexibility creates a need where global perceives cautionary measure not to rely on International Monetary Fund. Consequently, measures have been made to increase IMF to help member countries to fight and prevent looming crisis. However the IMF is subjected to some conditions and these results to capital imbalance (Cusimano, 2009). The other dilemma arising is how to deal and fight debt crises globally. The economic fiscal rule should dictate the long-term debt ratio, the rate of the debt ratio and the degree of the fiscal policy that will spearhead the economy in times of economic recession. However the fiscal policy is crucial is has been proved it is not sufficient. It was proved in Spain, Portugal and Ireland (Picciotto, Olonisakin & Clarke, 2007). A keen detail is needed to possibly macroeconomic imbalances. The unsustainable caused due to factors of expansion should make an effort to cushion against cyclical setback. When large imbalances occur in private sectors, the state should make collective global efforts when a huge foreign deficit is overburdening the private sector (Picciotto, Olonisakin & Clarke, 2007). The makers of the policy and the financial participant are in a conundrum as to whether countries vulnerable with fiscal policies should have a systematic restructuring debt scheme. It is a dilemma to whether such restructuring scheme should be made by euro rescue packages or whether new policies should be adopted without the rescue packages. Countries that have a potential risk of insolvency are recognized by their lack of competition from the other global competitors. This country should came up with global measures to keep abreast with other competitors by so doing their growth is stimulated and also the revenue collected by the government rises. The member’s countries of the monetary union have measures governed by the union and they have regulatory like the labor market that increases competitive advantages. The restructured tax system in these countries has increased the value added tax. The conundrum of how the central banks can be reassessed. The 2008-09 was a wake call and the consensus for financial market and the policy makers that the desirable microeconomics outcomes (Schaefer & Bolton, 2009). Central banks focus majorly on low and stable consumer inflation of price. The banks used short-term rate on interest as a weapon to fight inflation. Central banks shared banking responsibility with other countries government bodies indicating a collective action is important in global problem (Schaefer & Bolton, 2009). The short-term interest employed by the central bank was the main tool it used to fight and achieve financial stability. The tool was inefficient as the banks needed to ensure full employment and stability in price so the banks device a tool to fight multiple tragedy. The government of different country provided an oversight tool to tackle the problem collectively. They use the unconventional monetary policy (Schaefer & Bolton, 2009). Trade creation due to unilateral tariff reduction elimination of tariff by a country on its imports results to domestic fall of price in relation to the price of the world. The production domestically falls, consumption increases and this result in increase in import. The trade increases when the tariff of one particular country reduces. Barrier to international trade may not only be due to tariffs but also policies of a particular country relating to importation. In other term the import duties. This complicated barrier may slow procedures related to customs Trade creation and diversion due to discriminatory tariff reduction has an impact, for instance when a country eliminates trade barrier with its partners and maintain with its third party countries lead to partner to find alternative and this leads to trade creation. Energy and environmental security is a dilemma in the economic policy. Discussion has been done on how to come up with a long-term economic, environmental security, damages arising from the supplies of energy and other environmental constrains. Even with the global efforts, no answer or effort has been arrived at. Global warning is an effect that requires a global solution by the entire nation to impact the menace (Hoffmann, 2011) Conflict and poverty need a collective effort. Fight against global poverty has become a global solution. Dealing with poverty and conflict needs a long-term local effort. Global help is effective I dealing with conflict (Chossudovsky & Marshall, 2010). The new era of globalization is rising steadily. Although globalization is highly welcomed, it brings about global imbalances. In the interconnected globe, the super power United States dominated the foreign capital. Upcoming powers like China increase the foreign magnitude. The rise of Brazil, Russia, China and India (BRIC) and later on by countries like Mexico and South Africa and many other country bring a global economy by joining together hence collectively they solve the problem of the global solution. The BRIC group is rising very fast that has changed the international trade (Chossudovsky & Marshall, 2010). It has greatly influenced the capital flows and the flow of natural resources. This countries growth has witness a global power shift that make the other super power to realize that global rules need to be shared to realize a common solution to global problem. Global impact and global corporation is a problem that need too a global solution. Private firms has become major dominant players in global economic. Multinational cooperation revolves all over the world and sometimes they are better than the government one, this play a big part in preventing risk of globalization (Chossudovsky & Marshall, 2010). Building companies that thrives in low economies. Many Low Countries e.g. India, Haiti, Bangladeshi and more has a high return prospect but the global problem has been low due to lack of investment flow. The economies are in unbalance state coupled by high entry barrier, low expectation and dismal reputation. Provision of employment opportunity is vital to economic stability and economic development. An unfavorable environment for business scares away investors (Savona, Kirton, & Oldani, 2011). The traditional way the government used to compensate poor business was not effective. The emergency of the World Bank came in handy to solve this global problem. Due to high need for capital, the capital meant for public has to be combined with capital for private; this resulted to partnership of both public and private. The partnership can lead to high investments. Integration of countries can lead to bigger investment. World Bank has indicated that countries can move up the ladder of doing business if they integrate (Savona, Kirton, & Oldani, 2011). There are other positive consequences of regional integration they include growth effect; increase the effect of investment etc. Labor division and tax legislation is another issue that requires global approach. The developing countries have typically labor and tax legislation that they inherited during the colonial era (Lomborg, 2004). As a result, it has lead to complexity that has made it a bottleneck for the small and medium enterprise to comply with the labor law and the legislation inherited fro the colonial power. A good example is India, which has several labor laws that are in operation today (Picciotto, Olonisakin & Clarke, 2007). Even with simplified global law solution and a tax system that is more transparent, the developing countries still lacks behind. Pillar of labor law like value added tax and income tax has ensured a formal global economy for enterprise, as they are able to receive incentives. Liberalization of the labor law reforms ensures that the labor right is protected (Lomborg, 2004).  In other hand people with no education and training are trapped in the informal economy despite the much effort by the government and the global governance to raise education levels. This increases the number of unskilled labor whereas the private sectors in the countries are looking for those skilled individual (Bhargava, 2006). The government of the countries has also gone further by formulation of credible curricula and certification that is recognized in the global market. This plays an important role because the skill acquired can be recognized globally (Obstfeld, Cho & Mason, 2012). The aim is to equip the worker with the formal skills so that they can seek employment globally. The certification advantage is that, it integrates the labor market and increases the labor mobility. Global governance policy also plays a hand in spreading the formal employment and overcoming the informal employment. It also plays a crucial role in empowering of women who are underrepresented in the formal employment (Fowler & Fanso, 2009)). This means more women are in the informal employment and hence face problems such as wage discrimination and other problem that discriminates against women. The global demand for food is becoming a thorn in the flesh. It is a global problem and a global solution to find a manner sustainable to counter it is necessary. Due to number of problem the world faces an uphill task to compact this menace (Metz, 2010). The problems include ever raising standard of living, land usage is shifting from agricultural use to industrial use and urban settlements, people opt for nonfood crops as biofuel is more profitable, desertification, lack of capital to invest in agriculture and the mother of all is global warming which make the poor countries unable to produce food (Metz, 2010). This left questions of how the international organization together with the local government work together to alleviate the problem. The international bodies like the World Bank, United Nations, FAO (food and agricultural organization) and many more have joined hand in helping with the problem. In conclusion global problem needs a global solution to enhance a collective and effective way to solve a problem. A country cannot rely on itself to solve a problem, some problem need integration with other countries so that an amicable solution can be achieved. 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