Global Economic Changes Likely to Occur Over the Next Decade - Term Paper Example

Global Economic Changes Likely to Occur Over the Next Decade The global economic crisis that began on 2007 duet to credit crunch issue led to a liquidity crisis across the globe. This forced the US monetary bank to inject financial capital into the economic markets, but the crisis worsened in 2008. The crisis worsened economic markets across the globe; thus, many financial markets tightened their monetary policies because of the fear of suffering from the economic crisis. However, the current global economic environment is likely to contribute to a severe crisis over the next decades. This is because of the disruptive financial market chaos, which is slowing economic growth in advanced economies. Many emerging economies have made efforts of providing global resilience measures but this has set an explosion of food and gasoline price crisis. The next generation is under threat because the emerging and advanced economies are unable to adjust the current crisis. The trends in the global business cycle such as the emergence of internal growth momentum, failure to adjust to the price shock for commodities and shift in the financial shock absorbers are likely to create global economic challenges in the future. Although the federal will employ policies for reducing global economic issues, climatic changes due to globalization and increased gasoline prices are likely to create economic crisis in the future. The global economic environment is likely to experience varied changes that would take place over the next decade. First, new changes will occur because of the emergence of strong internal growth momentum in developing and emerging nations; thus providing the most trade shock-absorber across the globe. Many nations especially the emerging economies such as India, China, Malaysia and some Asian Pacific economies as well as developed economies are transforming the global business cycle dynamics. The global trade shock absorber will make the U.S downturn steeper due to the support offered in the export sector by many developing nations across the globe (Callioni, 2010). Therefore, the issue arises in case the emerging economies such as India and China sustain in the internal momentum over the decades. This may impact the emerging economies from achieving growth. This is because both financial and trade linkages continue to increase in the emerging economies as the emerging economies attempts to incorporate business activities in the global markets. Therefore, the emerging and developing nations are likely to become immune from of financial chaos in developed nations. The fiscal shock absorbers have made efforts of solving the economic challenges through employing new methods. For instance, the capital movements instead of trade have become the world’s driving force since the 19th century up to the present. The change is undeviating rather than being cyclical; thus, the link among the two is difficult to predict. The economists are unable to understand the cause for the capital movements and trade changes but the economic changes are clear. It may take some period before economists may accept the fundamental changes. However, the research indicates that the global economy is in control of the changes rather than the macroeconomics of a state through which economic theory focuses. Moreover, the primary products in the market have been changing and the price for commodities are likely to rise into higher prices for the next decades. For instance, the prices for energy sources have been one of the major problems across the globe. The price for gasoline keeps on changing; thus affecting other commodities in the market. Although the federal state has attempted to regulate the global energy crisis, still changes will take places; thus affecting the price for commodities. This will impact many developing and emerging economies from becoming developed. Even though, the current economic environment is weak, the long-term growth prospects are promising in the global economies. This is because of increased savings, improved macroeconomic management and greater diversification to better incentives for investments (The World Bank (2010). Global climate changes are likely to occur in the next decades, and this will contribute to varied economic changes in the global environment. The climatic changes are likely to occur in the next decades because of globalization. Globalization is a procedure through which international business integrate the worldviews, technology and cultural aspects in improving the economy. Globalization has contributed to new changes in transport and communication sectors that creating a new way of carrying out business activities in the global economy. The increased technological advancement is a result of globalization, and many economies are still looking for means of incorporating technology in order to perform better in the global competitive market. This is because of the increased competitive advantage; hence multinational companies are trying to achieve a competitive advantage through changing the way they perform business. Therefore, the introduction of innovative ideas and a new way of incorporating technology in order to become successful in the global market are likely to change in the long run. Additionally, the economic globalization will change over time because many economic interdependent nations across the globe have made efforts of rapidly increasing the movement of products, capital and technology. This concept takes into considerations production or manufacturing of commodities, marketing, corporations, use of technology and competitive advantage. Economic globalization can create positive or negative changes depending the way global economies interact in the global market. According to the research report from the Great Britain (2006), the economic globalization has changed the world economy and the changes will accelerate over the decades. The author argues that the globalised economy will become relevant as economies increasingly adopt policies, which underpins efficient markets. Thus, the technology will impact the domestic savings and knowledge constraints on economic growth. The global economy is likely to take a new shape over the decades in many economies. The communication technology and developing mobility will create a significant interconnected world, which is characterized by growing interdependence. This will create a new way of cooperation that will surpass countries and cultural boarders. This will likely to contribute to a global community with new transformations. Parry and Intergovernmental Panel on Climate Change (2007) report that the current economic and political crisis are the key challenges in the global economy. This is because of the nature of international trade and poor policy implementation from the concerning bodies such as the political leaders. These leaders are likely to create high risks in the next decade unless the federal government finds solutions to the issues. For instance, many developing and emerging nations are unable to achieve effective, economic development because of poor political leadership and poor implementation of policies. Multinational companies are likely to experience a shift in the global market. Many business industries have made efforts in order to become transitional. However, the most successful multinational companies have higher budget in order to meet their stated goals effectively. Many companies operating globally distribute their commodities through global labor division, which has associated consequences in the business world. These consequences range from environmental consequences, human right issues to nuclear proliferation. Multinational companies are not beyond the national government control, but in most cases, they separate themselves from non-government entities. This may lead to self-perception, which may impact efficient organizational performance. The climatic changes are likely to occur because of globalization; thus contributing to environmental degradation, emission of greenhouse gas and economic crisis. These issues would not be solved by a nation unless all the stakeholders across the globe coordinate to solve the issue. Many issues have been raised over the growing concern about the global climatic change. The climatic changes are likely to contribute to adverse effects over the next decades because of the industrialization process and increased use of technology. The developing nations are likely to undergo severe effects of global consequences because of the need to increase production rates. For instance, the issue of greenhouse gas from industries will create planetary climate changes in an environment. The negative externalities linked with domestic and regional pollutants may create environmental consequences; thus impacting effective, economic development. It is essential for the every nation to reduce its emission for the common good of all nations. The actions of every global industry will contribute to sustainable development of nations. It is significant for the developing, emerging and advanced nations to develop rational market actions that would sustain the success of Cisco in order to avert the changes that are likely to occur in the next decades. First, organizations should develop innovative ideas as one of their top priorities for managing global economic issues. Innovation has become the central ideas for effective competitiveness in the global markets. Ianchovichina and Walmsley (2011) argue that innovation is the mechanism through which organizations produce brand commodities that are desirable in the changing markets. Thus, the performance hurdles for success increases tremendously as the companies continue to focus on innovation. Companies across the globe should commit themselves to innovative ideas effective for enabling them achieve a competitive advantage in the global competitive market. However, managing the complex nature and risks involved in the innovation process has become one of the major problems in the global economies. Additionally, organizations should develop an innovation capability model for acting like a funnel seeking, allocating and developing possible innovations that can be relocated into the mainstream. Innovation capability is the key mechanism for effective organizational performance; thus, it is crucial for organizations to leverage their knowledge base. This is because innovation capability is all about synthesizing two operating paradigms of transforming knowledge and creating new products that are desirable in the global market. For instance, Cisco organization is among the leading entities in the global market. The company offers effective networking and Internet service solutions in order to improve the business market. Cisco Company harness technology and utilize the innovation capability model. It has become one of the fastest growing and profitable industries in the technology industry. This is because the company places innovation capability at the core of their business activities; thus creating organizational change. Secondly, creation of federated trust network in order to overcome the waves of change. The federal government should avoid over- regulating or under-regulating policies with an aim of reducing financial crisis across the globe. However, the federal government should offer guidance on effective measures that the global economies should undertake in order to manage financial assets. Callioni (2010) argues that increasing the significant of knowledge, value that is not captured in the accounting standard process and soft intangibles are essential. Therefore, he encourages the federal government to implement effective measures and profitable management practices in order to regulate the economic issues. Organizations should avoid impeding financial setbacks that may hinder emerging and developing economies from achieving their goals. Hence, the federal government should regulate their policies in a manner that can enable the emerging economies to achieve effective business performance in the global market. Dealing with the global challenges is one of the difficult issues; thus, globalization requires effective global governance. Van, Ang and Sudarsanam, (2008) argue that effective corporate governance is essential because it encourages leaders to minimize organization risks. This is through employing consensus driven approach and encouraging collaboration between industries and government bodies. The emerging economies should join with the advanced economies and play a leadership role in learning the way they should operate in the global market. They should work together towards problem solving in order to enable them to manage the global economic changes. The developing nations should mitigate the threats that may weaken the development prospects. Moreover, developing effective global economic policies in order to create a stable economy is crucial. The global economies can corporate; hence create new ways for creating unwavering and sustainable global economy. They can seek and develop effective ideas through international debates vital for managing global crisis. Hope (2002) asserts that the only ways through which global economies can create a stable and sustainable economy is by setting effective global polices. For instance, the environmental policies such as pollution laws and preserving the natural resources should be taken into considerations. The policy should ensure that industries manufacturing commodities should not exhaust natural resources and should adhere to environmental laws of preventing climatic changes. Capacity building is another effective adaptation measure for sustaining the success of Cisco. The organizational leaders can adapt an assessment and action plan method in order to determine the factors that may hinder them from achieving sustainability in an organization. This will enable them to promote capacity building in a global economy on the way the business industries should incorporate technology effectively in the production of commodities. Capacity building will enable the local and international industries to achieve successfully business performance and utilize resources effectively without compromising with the future needs. Developing adaptation measures for responding to climatic change through capacity building is vital. This is an effective measure for integrating the global development forces that are sustainable. Thus, response for climatic change requires effective coordination and integration of socio-economic development policies and environmental conservation programs. This is through capacity building in the society; thus mainstreaming of climatic risk management into developmental policies. In conclusion, the climatic changes, which results due to globalization and increased gasoline prices, are likely to create economic crisis in the future. These will create varied changes in the global economy because gasoline prices will create price changes for manufactured commodities. The climatic changes are likely to occur because of globalization; thus contributing to environmental degradation, emission of greenhouse gas and economic crisis. The economic globalization will create adverse impacts over the next decades because of increased technological development. The global economy is likely to take a new shape over the decades in many economies. Thus, Multinational companies are likely to experience a shift in the global market. However, developing, emerging and advanced nations should develop rational market actions that would sustain the success of Cisco. These include innovation capability, capacity building and creation of federated trust network in order to overcome the waves of change. Moreover, developing effective corporate governance and global economic policies is significant. References Callioni, P. (2010). Waves of change: Managing global trends in the financial services industry. Hawkhurst, Cranbook, Kent: Global Professional Pub. Doyran, M. A. (2011). Financial crisis management and the pursuit of power: American pre- eminence and the credit crunch. Burlington, VT: Ashgate. Great Britain. (2006). Active diplomacy for a changing world: The UK's international priorities. London: Stationery Office. Hope, K. R. (2002). From crisis to renewal: Development policy and management in Africa. Leiden: Brill. Ianchovichina, E., & Walmsley, T. L. (2011). Dynamic modeling and applications in global economic analysis. Washington, DC: Cambridge University Press. Parry, M. L., & Intergovernmental Panel on Climate Change. (2007). Climate change 2007: Impacts, adaptation and vulnerability: contribution of Working Group II to the fourth assessment report of the Intergovernmental Panel on Climate Change. Cambridge, U.K: Cambridge University Press. The World Bank. (2010). Global economic prospects: And the developing countries. Washington, D.C. Van, F. R. A. I., Ang, J. S., & Sudarsanam, P. S. (2008). Corporate governance and corporate finance: A European perspective. London: Routledge. Read More