Globalisation & The Global Economy Essay

1176 words - 5 pages

•Globalisation the process of increased integration between different economies and the increased impact of intnl influences on economic activity and all areas of life•Global economy the situation where the economies of the world are increasing linked to each other, and changes in one economy have ripple effects on other economiesI) INDICATORS OF GLOBALISATION•Economic integration can be seen inoIntnl trade flows- growing at 2 times the rate of GWP with the impact of TNC's and global agreements. Also subject to great fluctuations 'oIntnl finance and investment- no single measure of finance. Has increased due to financial deregulation, tech changes and globalisation. Investment has grown for things such as mergers and takeovers but also for purchasing shares in, or setting up a company. Investment (FDI) unequal with 62% of inflows and 83% outflows from the triadoIntnl tech- tech has expanded trade and investment by boosting exports of software and computer equipment and via the internetoInternationalisation of the labour mkt- least globalised pin-pointer because it involves personal upheaval as people move and due to differences in culture, incompatible qualifications, immigration restrictions etc. However, high income economies attract the most highly skilled and lowly skilled employmentII) CHANGES IN TRADE FLOWS•Trade flows in the world economy have changed in terms of size, composition and directions.•In terms of compositionoManufactures have a high importance making up 78% of trade in 2001oGlobal services also have an increasing importance•In terms of directionoThere has been a slight shift from high income countries, which now hold 75% of trade, to the Asia Pacific which has doubled its input to 9%•In terms of sizeoTrade growth has been driven by regional and bilateral trade agreements which are reducing barriers to trade•The impacts of shifts in trade have an implication on resource allocation in terms of changing dd and also if imports take a high proportion of the market then resources will be diverted awayIII) CHANGES IN GLOBAL FINANCIAL MKTS•Forex markets- markets in which foreign currencies are bought and sold•Exchange rate- the value of one nations' currency in terms of another•Forex markets are a major feature because they facilitate trade and investment, but also due to the actions of speculators (95% of transactions)•Since most exchange rates now are floating, changes in currency values affect the domestic economy•The IMF maintains the stability of the global financial system and can provide funding but structural adjustment policies must be in placeIV) THE INTNL BUSINESS CYCLE•Intnl business cycle the ebb and flow of world economic growth, measured by changes in GWP and the synchronisation of the business cycles of individual economies during the globalisation era•Factors which strengthen the cycleoTrade flowsoInvestment flowsoTNC'soFinancial...

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