The Boom Towns and the Ghost Towns of the New Economy - Essay Example

Introduction Recently the world has been facing immense challenges in terms of economic and financial crises. Even the most stable economies have not been spared by the rising economic and financial demands. Some major organisations and corporations have collapsed sunder economic and financial pressures. Governments all over the world have not been spared either reports of deficits and increasing debts have become a common phenomenon for many countries. The common citizen in these nations ends up bearing the costs of economic deterioration in terms of high cost of living and high commodity prices. The cost of doing business in majority of countries has been on the rise (Florida, 2013, p. 54). The effect has been to increase the prices of products which eventually spill over to consumers. An increasing population in the word has seen the demand for major commodities rise. As a result, the pressure on production, coupled with increasing costs has seen economies deteriorate over the last few years. In 2007 through to 2008, the whole world was faced with an acute recession (Tamsin, 2013, p. 1). Economies were devastated and many people lost their jobs and livelihoods. The effects of the recession spilled over and full recovery is yet to be made in many economies. The cost of financing business activities also went up and banks are increasingly putting stringent requirements on borrower. The strict measures were necessitated by high defaulter rates in mortgages and loans (Wang, Lucían, & Cohen, 2013). However, the emergence of challenges in different economies has also elicited different responses to the problems. Some governments have used other countries as case studies to solve their individual problems. Policy measures made by different countries have been used as benchmarks to improve current situations and also make examples out of them (Racher Press, 2013). However, some policies may work in some countries and fail in others. Therefore, contemplation and careful consideration is necessary in deciding the best policies to approach different economic situations. The economic challenges have provided different learning platforms for countries that are in different stages of development and economic maturity. In 2013, new economies devolved as a way of tackling the persistent problem of economic crises. Countries like Spain and Greece found themselves in dire economic situations (Florida, 2013, p. 53). The new economy is based on high growth industries that have state of the art technology and high in demand. All this is in a bid to increase aggregate demand which is the ultimate solution to crippling economises. In this essay, a discussion of how weak economies can emulate new economies will be evaluated in terms of how they can learn and find solutions to their own problems. In the wake of the financial crises and economic instability, many countries found themselves in huge debt crises that have continued to affect their economies. A new approach to conducting business away from capitalism has been adopted in several counties and has eased the situation by large extents. Weak economies that are yet to recover can emulate these economies for their own benefit in a bid to get out of the crises to amore sustainable economy where debt is more manageable. In this case, there are several ways in to the new economy that countries can learn in terms of policies and strategies that are relevant in a contemporary world that is competitive and capitalistic. Innovation, growth and sustainability and shifting from manufacturing based to service based industries have been seen as potential ways of reviving collapsing economies. Taking a country like Vietnam, it has been facing wreak demand problems and growth challenges over the last few years. This has been coupled by inflationary pressures that have seen the economy deteriorate even further. Through policy measures, the country has been able to control inflationary pressures by reviewing them consistently. The problem remains in simulating demand in the economy to affect positive growth and sustainability (Global Insight, 2013). First, government owned banks and institutions should re- strategize by shifting to servicer oriented approaches. Use of effective technology is appropriate in educing costs and hence reducing the overall prices of commodities. Alleviation of crises in the banking sector has also taken centre stage by seeking to improve financing policies and strategies in a manner that will stimulate the economy both in a short term and along term basis. The European Union was also hard hit by the economic meltdown. Its recovery has been projected to take up to five years given current policy measures. Among the most rampant problems in the region include, debts, banking problems, competitive crises and structural challenges. In the last few years, the significance of the UE has been reducing with Asian economies taking over (Bloomberg Business Week, 2013). This is as a result of employment of technology that is sustainable hence bringing costs of doing business down. Majority of nations have since shifted their outsourcing activities to these Asian countries. The European Union can learn from this by reducing financing costs and costs of doing business as well. This will revive their competitiveness and their economies in the long run (Siegel, 2013, p. 34). Improvement of production and banking sectors in the European Union have seen corporate profits rise again though at a slow rate, though it may take some time to make full recovery, countries should continue with policy measures that will reduce inflationary rates and improve on both internal and external demand (Klöckner & Co, 2013, p. 19). Looking at a country like china, its economic growth has remained high though subdued by the financial crises. The country has continued to employ stimulus programs over the last few years in a bid to maintain the economic growth trends and prevent sliding in this perspective. Other nations could emulate strategies applied by the Chinese authorities in their portfolios as well (Stratfor Geopolitical Diary, 2013, p. 2). Industrial growth in the country remains a key driver of the economy and its continuing growth ensures sustainability and growth in the overall economy (Global Insight, 2013). Greece is one of the countries that was most affected by the financial and economic crises. The situation in the country has been so dire that it has affected most industries and sectors in the country negatively (Global Insight, 2013). Contraction of the economy in Greece has seen reduction of activities in major sectors in the country. The country still remains vulnerable to economic pressures and is also. Investment in the service industry especially in the tourism sector could offer some reprieve for ailing economy. The country has been affected by reduced demand and shrinking profitability in major organisations. This has also been associated with reduced unemployment as lying down of workers continues. The way out for Greece has been cited as debt relief to channel available finances towards growth of industries to return to growth and sustainability. The situation has even threatened an exit of Greece from the Eurozone. Change in strategies and policies in Greece will ease the debt and financial crises in the long run. The country can adapt strategies that have worked for other countries in the Eurozone (Ellis, 2013, p. 23). Significant structural reforms have also been suggested as ways of improving the situation in Greece. A country like the United Arab Emanates has quite a stable economy. The country was able to survive economic pressures in 2013 despite a slowed economic growth. The country is highly reliant on production of oil which reduced in 2013. However, through growth of non oil industries, the country was able to record growth. Industries such as transports, tourism and construction have enabled the country to supplement on its oil based industries. As a result, the UAE has been able to maintain a steady economic growth and low levels of inflation (Global Insight, 2013). The economic status in the United States cannot be regarded as a weak one. The country remains one of the strongest economies in the planet. However, the country is highly indebted to china it outsources most of its commodities ion terms of manufacturing there. China maintains a currency policy that ensures its debt portfolio with other countries is maintained. As a result, the country can always have financing sources to facilitate production and development of the general economy. In terms of the new economy, countries facing severe problems could use such an approach in order to improve the foreign monetary policy abilities (Amadeo, 2013). Other counties could learn from this by maintaining steady foreign currency strategies to help in managing balance of payment and cross border exchanges. Conclusion The new economy has provided numerous avenues that ailing economies can utilise in order to return to sustainability and growth, the most affected countries can use a combination of strategies and policy measures that have worked in other countries. However different nations face different challenges. Even countries that have positive growth prospects still face challenges in their individual portfolios. Shifting of industrial orientation and improving on financial capabilities is crucial in achieving economic sanity in affected countries. In the long run structural reforms and financial policies will also play significant role tin managing the crippling economies. The success of these strategies will rely on relevance and applicably in different scenarios that are unique to different countries. References Amadeo, K, 2013, What Is the US Debt to China, Bloomberg Business Week, 2013, Sorry, Europe,theCrisis Isn't Over', Bloomberg. Ellis, J, 2013, 'Companies-and-industries', Businessweek, 22-23. Florida, R, 2013, 'The BoomTowns and theGhost Towns of the New Economy', The Atlantic, pp. 53-58. Global insight, 2013, Country Intelligence: Report, Australia, Global Insight. Global Insight, 2013, Country Intelligence: Report, China, Global Insight. Global Insight, 2013, Country Intelligence: Report, Greece. Global Insight. Global Insight, 2013, Country Intelligence: Report, United Arabs Emirates, Global Insight. Global Insight, 2013, Country Intelligence: Report, Vietnam, Global Insight. Klöckner & Co, 2013, EU economic recovery may take 5 years. M etal Bul letin, vol.1, no. 9304, pp. 19. Racher Press, 2013, Mass Market Retailing, Racher Press, Inc, New York. SIEGEL, J, 2013, What Keeps Me Awake Now. NVESTING, 34. Stratfor Geopolitical Diary, 2013, China's Options for Economic Recovery. Strat for Geopolitical Diary, pp. 2. Tamsin, M, 2013, Worse than Greece? ECONOMIC recovery, vol. 125, no. 51, pp. 1. Wang, C., Lucían, B., & Cohen, A 2013, 'Leaders Explore the World's Economic Future. BizEd. pp. 51. Read More