The Impact Of Globalization On The Economy - Research Paper Example

Number: THE IMPACT OF GLOBALIZATION IN THE ECONOMY The present global economy has emergeda platform for every country globally, due to the role played by globalization. There has been a consistent mutual interaction between the developing and developed countries in the arena of global trade. Additionally, the technological exchange between countries has assisted towards the remarkable prosperity of the global economy. Notably, most countries on the globe have registered a significant growth in their economy. The economic growth is usually represented through the use of Gross Domestic Product (GDP). The realized economic growth has eventually led to the increase in the revenues of most countries worldwide as well as a positive progression in the income levels of the globe. In Economics, globalization refers to the process of through which businesses and world’s markets gain more connectivity leading to interdependence of the involved businesses and markets. The Economy Watch has made a considerable analysis of the Current Global Economy. A significant finding is that globalization has facilitated the expansion of domestic production and consequently featuring on the global scene. Globalization has, therefore, presented an avenue with a wide range of commodities for consumers. Customers, thus, enjoy quality products and at a considerably fair prices. Globalization has helped the realization of the world economy characterized with various features although some factors are not exclusive; they are not present in every country on the globe. To help in gaining more understanding on globalization and the world economy, it is paramount to consider the case of Japan and the US economies. There is a considerably stable status of the world economy, with some economies such as Japan and US indicating an upward progression over the recent years’ time. More specifically America has registered a healthy economic growth rated at 3.5% in 2005 and 5% in 2006’s first quarter of the year. However, the healthy economic growth was hard to be sustained following the consistent increase in oil prices globally as well as the extensive Katrina’s hurricane devastation. However, the US government adopted immediate fiscal and monetary policies which had effective responses. The adopted measures helped in regaining the economic stability of the US. The economy of Japan receives a substantial economic boost registering a phenomenal progression rates following the country’s continued trading with China. The continent of Europe has also indicated a marginal growth in the recent past. Several European Union countries have recorded unexpected growth rates economically. The establishment of the key free trade consensus including the "North American Free Trade Agreement (NAFTA)" as well as South Asian Free Trade Agreement (SAFTA) in an effort of boosting globally exercised trade. The concept of global “dollarization” of currencies has assisted economies of the world measure their respective currencies against America’s dollar. Consequently, currencies dollarization has led to reduction in the independence of the fiscal and monetary policies used in respective economies. Recently, China adopted a key monetary reform while pegging the Yuan or Renminbi to a collection of currencies. Additionally, the Indian Rupee indicates positive signs of strengthening against US dollar. There are other global currencies which have indicated stability for the past several years. Such currencies include Euro and Yen. On the other hand, Global Stock Markets indicate that they have strived to attain levels that are the economy of the US has not yet attained. Although NYSE and NASDAQ indicated an underperformance in 2002, increasing corporate revenues in the form of GDP integrated with overall political stability. In major economies, factors like political stability and GDP have helped ensure that indices of the stock do not deteriorate. Additionally, it is paramount to take into consideration that there are some sensitive issues appearing in the present global economy following the impact of globalization. Such issues call for urgent attention, and a collectively, as well as an effective approach, should be adopted; every country on the globe should be integrated. Such issues incorporate efforts meant at addressing the aggravated income inequality as witnessed in developing significant economies such as China, Brazil, India, and Uruguay. Another issue involves the strict laws governing immigration of persons, as applicable in various developed economies. The art of rationalizing domestically instituted laws of taxation; quota and tariff need to have a uniform implementation in every country. There is, therefore, the immediate call for the implementation of the round of Doha of World Trade recommendations. Another feature of the Current Global Economy is that it is a free global market characterized by limitless access of constant production as well as consumer base. The current world economy has progressed as far as from the crises of Asia and Latin American Currencies in the early 1990’s. While analyzing any economy, a constant observation is that any economic growth is usually followed by high economic inflations. Shockingly, this tendency has usually been observed in the recent past regarding the present global economy. Although economists have engaged in hot debates of the role of inflation in an economy, inflation is not conducive for an economy that is intended to perform excellently. There is, thus, the need of adopting short run and long run measurers of addressing inflation. One of the million dollar questions regarding the current global economy is the span of time that economies such as China and India need in sustaining the surge of inflation. The other question concerns the far the developing countries will achieve the ultimate significance of globalization with an equitable share. The Great Financial Crisis (2011). While approaching the topic of the role of globalization in the current economy in another perspective, some economists think that there remains underlying problems that are not yet addressed regarding economic recession of the year 2011. The global economy of the year 2000 and 2007 was estimated at an average of 3.2 per cent economic growth rate. The economy experienced a slight dip between the year 2001 and 2002 with the great intervention of the “Dot Com Crash.” The global economy has progressively grown over that period (2001 and 2002). In actual sense, the economic periods of the year 2004 and 2007 acted as the boom period. Amazingly, the Emerging Markets had a history of posting between seven and ten percent economic growth rates. Such Emerging Markets included the China giants, Russia, Brazil, and India. Stock and property market booms had caused constant growth in Europe and North America. The constant and extensive investment caused the economic development brought to many areas of Africa as well as in the Middle East. Japan was then under the recovery of the deflationary phenomenon in the Lost Years. According to the Global Economic Outlook 2012, the then economic conditions of the above mentioned countries played a key role in an effort of establishing a better economic atmosphere. Such established economic atmosphere was intended to accommodate the economies of the under-developed nations. In numerous aspects, less developed and developing economies rely on the economies that are already developed. This has led to the establishment of dependence economies in the world. Such dependent companies cannot run their economies independently; they have to rely on the economies of the developed nations. Global economic outlook 2012 projects a growth rate of 3.5 percent. The global economic growth rate is expected to hit an average of three percent annually; this would fall somehow below the mean of the past two decades. Economic recovery is accelerated and is expected to exceed the offset as a gradual slowdown of the emerging economies towards their maturity. The forecast net global outcome will be a slow global economic growth. However, the most striking risk facing the world economy tends to shift from the slower economic growth to a net slowdown of the average revenue per capita. A probable cause of low output per capita is the reduced exportation of commodities. This output per capita is essential in determining the attainable speed of better standards of living as well as how they can be supported over time. Another greatest global challenge regarding the slow economic growth concerns the effort of raising economic productivity while avoid the incidence of rendering working population jobless. The global per capita growth rate has registered a progression of about 2.5 percent. This statistic covers the inception of the century; the per capita progression is, however, predicted to drop anywhere between the year 2017 and 2025. This observation presents a contrast from the statistic of the last half century. This implies that a slowdown is in the accompaniment of a relatively slower growth rate of the population. According to the article by Scotia Economics, Global Forecast Update the generally synchronized performance of the stock market reflects greatest confidence that seek to enhance developments. Taking the case of Europe, perhaps the economic recession is not worse anticipated. Partly, the source of confidence is that the strength of Germany’s foremost productions has facilitated the drastic reduction in inter-regional trade. Globalization is, therefore, a significant drive of the economy. It provides free and large market with varying commodities, while bringing together consumers from all over the world. There are, however, a few challenges that accompany globalization’s role in the economy; such as having developing and the under-developed economies being over-dependent on the developed economies. Work Cited: “Current Global Economy.” Economy Watch. June 2010. Accessed 9 Mar. 2012. http://www.economywatch.com/world_economy/world-economic-indicators/global-economy/current-global-economy.html “Global Forecast Update”. Global Economic Research. March 2012. Accessed 9 Mar. 2012. http://www.gbm.scotiabank.com/English/bns_econ/forecast.pdf “Global Economic Outlook 2012.” THE CONFERENCE BOARD: Trusted Insights for Business Worldwide. Accessed 9 Mar. 2012. http://www.conference-board.org/data/globaloutlook.cfm “Great Financial Crisis? What Great Financial Crisis?” Economy Watch. June 2010. Accessed 9 Mar. 2012. http://www.economywatch.com/world_economy/ Prassad, Bhaskar. “Global Economy 2012: Eurozone, China and Oil Price Present Major Concerns.” INTERNATIONAL BUSINESS TIMES. 24 Jan. 2012. Accessed 9 Mar. 2012. http://www.ibtimes.com/articles/286417/20120124/global-economy-2012-eurozone-china-oil-price.htm Read More