hi dear ones,
The global economy has equipped the economy with the power to market goods and services across different countries in the globe. Before the global economy came into existence, the entire economy was ruled by the United States. But with the stings of global economy the power of the United States has shrunk to about 25%. This is still more. The monopoly of United State would continue to lose its vigor as more and more industrialized states come to the fore.
Advantages of Global Economy
The global economy can reap the benefits of increasing economies of scale. With the opening up of the economy the industrial sector has benefited with the attainment of cheap labor, capital and technology. Small companies also witness rapid growth owing to a wider customer base. Many opine that the global economy has promoted international peace and cooperation.
Disadvantages of Global Economy
The global economy has encouraged transportation on a wider scale for the free flow of goods and services across nations. This has, in turn, led to the emission of greenhouse gases. The global economy has also resulted in the loss of domestic jobs. The labor intensive industries of the developed countries find it profitable to shift to third world countries where wage rates are low. This leads to the displacement of labor in the developed countries. Further, it is difficult to formulate regulations and legislations that are undifferentiated across the globe.
The components of global economic growth with globalization which have led to its success are:
- Free trade of goods and services across the world
- Expansion of industries outside the boundaries of its own country
- Creation of Export Processing and Special Economic Zones
- Jointly fighting towards the threat of environmental degradation
India and the Global Economy
India, an emerging economy, has witnessed unprecedented levels of economic expansion, along with countries such as China, Russia, Mexico and Brazil. India, being a cost effective and labor intensive economy, has benefited immensely from outsourcing of work from developed countries, and a strong manufacturing and export oriented industrial framework. As the economic pace is picking up, global commodity prices have staged a comeback from their lows and global trade has also seen reasonably healthy growth over the last two years.
India’s progress in global integration has been modest and its level of integration remains low with only modest future prospects because macroeconomic policies, notably a large fiscal deficit, and comparatively high trade restrictions block and discourage foreign investors, transportation and communications infrastructures are weak and inefficient, and the large labor pool is on the whole qualitatively inadequate and inflexible. Moreover, India remains vulnerable to a combination of external and internal shocks, specifically to unexpected oil price increases and domestic production stagnation, to foreign interest rate fluctuations and macroeconomic instability triggered by the combination of a large deficit, to high domestic consumption, to low investment and export growth, and real exchange rate appreciation.
WE CAN HOPE FOR BETTER ONLY !