Pros and Cons of the Global Economy
Global economy refers to various economic activities among different countries with visible either negative or positive effects. The notion of a world economy is related to everyday life based on the interconnected nature of the various world nations. Trade interrelations are a significant indicator of the global economy. The United States of America is an example of a country that clearly explains the world economy aspect. The investing power of American companies in various nations is similar to the global economy. Therefore, analyzing the world economy originates from the decision to review a financial center. Currency values of dominant countries are also an indicator of how the global economy works. The American dollar is a regulating currency in many developed and under-developed countries. Global economy features entail various factors of production, world market rates and financial sectors. The dependence of China, India and Africa’s development on America explains the effects of the global economy. The mutual relationship existing between these countries illustrates industrial revolution in reference to global change. This paper will analyze the United States of America economy in relation to the global economy perspective. A significant discussion platform will also review the effects of the world economy. The argument will be based on both the positive and negative impacts of the global economy in relation to the American economy.
The existing global economy demands progressive strategies based on successful developments in the international business sector. Multinational companies or organizations employ proportional advantages to expanding and develop organizations within various territorial boundaries. The decision to implement these strategies is to establish competitive industries for effective productivity and absolute profitability. Multinational companies differentiate between capabilities of operating areas or industries. As such, many American companies engage in economic partnership unions for maximum benefits and improve operating strengths. The agreement favors each member in terms of international business operation. Thus, the exchange rate is of significant discussion in relation to the characteristics of the global economy. Flexibility of the exchange rates is no longer considered as a factor of influence on the global economy. The changes in the world economy reshape flexibility of the exchange rates to merge the current world demands (Varoufakis, 2013). The international monetary structure is a regulatory organ that defines the standards of the global economy. So, America is a leading nation influencing the changes in the world economy, impacting other countries of the world both positively and negatively. The international monetary policy covers both pure gold standards and trade rate of pure floats. The consequence of the invention of the structure has established a single international currency. Globalization is a factor of consideration while discussing the American economy. Different views emerge relating to the benefits and limitations of the global economy. Principal side effects constitute the globalization impact in relation to employment rates, service provision, and product manufacture.
Advantages of the Global Economy
A global economy is significant in the elimination of local control within various nations of the world. As such, production companies are stretched to desirable limits for effective service provision and production of quality products. Job creation is a noteworthy approach entitled in the global economy. Citizen migration is facilitated for the different population of country members. Job employments are, therefore, enhanced to accumulate the large populations in the established industries (Alpert, 2013). Increased importation per capital is a significant advantage of a practicing global economy. Therefore, economic development is enhanced through direct capital investment generating increased national income. The inset of a global economy is an indicator of increased innovation and intervention.
The automobile industry is an example of increased innovation shared among various countries of the world through the world economy policy. America is a leading nation that has advanced in the automobile industry establishing multination car companies throughout the world. Furthermore, advanced communication networks are significant developments of global economies. The creation of international communication networks enhances mutual understanding between various companies of the world. As such, communication has improved international trade in the global market. Revenues generated from the advanced communication channels provide economic stabilities for various countries. Moreover, effective transport network is another advantage of the global economy to the world trade. Increased airlines are a significant development generated by the global economy aspect (Alpert, 2013). As a result, airport expansions facilitate effective transportation of goods and services within various nations. America is a key contributor to the aviation developments with the realization of large cargo planes. Warehouse handling services have influenced international trade of perishable goods to create the insurance policing industry. Insurance agencies generate country foreign exchanges through the taxation program. The development of the banking sector is significant discussion pointing to the development of loan institutions. The United States of America dominates the finance industry through creation of monetary institutions such as the International Monetary Fund (IMF) and the World Bank.
Disadvantages of the Global Economy
Undeveloped countries’ overdependence on donations and aid is a disadvantage of the globalized economy. Developing countries tend to rely on the progressive nations for infrastructure developments. The reliance influences the developed countries to suppress a development affecting a country economic growth rate. The suppression also entails conditional agreement based on different interest. As such, a country may lack independence on the free will trade engagements. Furthermore, economic depression is also a disadvantage of a global economy. Developing countries are depressed by industrialized nations due to the overall control effect. International companies eliminate local industrialization that is a major setback to economic transformation. The multinational company policy undermines local industrial developments due to stiff competitions. A local company employs minimal technology as a factor of production while the international organizations use high-tech investment as a basic policy. As such, the local companies are disadvantaged due to the limited resources. The comparison between the two companies is a marginalized revenue income for both the firm and the nation (Gottfried, 2013).
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The operation structures of American brands are of significant discussion in terms of disadvantages of global economies. American brands such as Starbucks explore Third World markets for resources and finished commodities. As such, the local brands and enterprises in poor countries become bankrupt under the economic might of the rich countries. The onset of international branding is an elimination of local brands leading to a preference list of the international products (Gottfried, 2013). Global economy undermines facility development for the local industries and economies. An example of such an instance is the development of international schools within undeveloped nations. The international schools erode local cultures instilling a civilized American lifestyle. As such, the international education system undermines local curriculum and lifestyles.
Implication and Effects of the Global Economy
The world economy has significant effects on a given nation or country depending on the stability element. Rapid financial and industrial development increases economic sustainability through employment opportunity creation. A significant example of such developments is the American economy which provides employment for a large population through the diversified industries. Developing countries attract foreign investors due to the favorable international trade policies. As such, many developing countries easily obtain loans for industrial and infrastructural development. However, overreliance on such funds undermines independence and development of the developing countries. The long term effect is migration of the skilled population to the developed countries. This effect is the onset of overcrowding or population explosion in the developed countries (Spilsbury, 2012). Resultant effect of population outburst is unemployment and forced deportation. Such policies strain relations between countries orchestrating animosity leading to wars or negatively impacting the country’s economy. Global economy has a positive effect on the immediate population of the involved countries.
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A peaceful relation between countries attracts access to foreign lending policies. The friendly donations are effective for road constructions, health care developments and improvements in the educational sectors. The resultant effect of the foreign aid is an improved living standard. A development of free trade policies also influences access to international markets for both raw materials and manufactured commodities (Spilsbury, 2013). Rapid growth of companies influences interdependence between underdeveloped nations and developed countries. Homegrown industries access international markets in exchange for raw materials and technological advice. A global economy also enhances disparity incomes among Third World countries and developed nations. An example is the provision of better education systems by the American government to Third World government. Improved health is also a positive effect of the global economy due to disease eradication.
Conclusion
In conclusion, the global economy is a centralized structure targeting development among various countries of the world. The features of the world economy entail common interests among participant countries. The effects of the global economy may be negative or positive influencing the immediate population. Determinant factors of the world economy include foreign exchange rates, currency use, and economic stabilities. Global economy influences a country growth and development through trade. International policies affect the functionality of a world economy based on member state interest. America is a defining nation that has developed over the years due to the global economy aspect.
