https://www.youtube.com/watch?

time_continue=12&v=ay1TLtdNHfU

https://www.youtube.com/watch?time_continue=165&v=3FNNpUWn7hQ

Global Economy – Definition and Meaning

The global economy is the world economy or the worldwide economy.

It is all the economies of the world which we consider together as one economic system. Put simply; it is one giant
entity. It is also the system of trade and industry across the world that has emerged due to globalization. In other words,
the way in which countries’ economies have been developing to operate collectively as one system.

The term has two meanings:

The economy of the whole planet, i.e., global GDP. GDP stands for Gross Domestic Product.

The way the world is today, with countries’ economies so intertwined and interdependent that they all seem like parts
of one whole. That ‘whole’ we call the ‘global economy.’

When we say ‘We live in a global economy,’ we are describing how intertwined countries’ economies currently are.

According to BusinessDictionary.com, the global economy is:

“Worldwide economic activity between various countries that are considered intertwined and thus can affect other
countries negatively or positively.”

Global economy - definition and examples

There is a growing movement today against globalization from both sides of the political spectrum. Many people in the
advanced economies say that the current global economy keeps their wages low.

Global economy – the economy of the world

The global economy or world economy is the economy of the world. Some people say the two terms do not have exactly
the same meaning.

We measure the global economy separately from national economies.

The world economy is simply an aggregate of all the separate countries’ measurements.

However, this is a very loose difference, i.e., many people use both terms interchangeably.

We live in a global economy

When people use that phrase what exactly do they mean? Does it mean that any economic activity today occurs across
the planet whereas before it did not? Does it mean that all economic activities occur at a significantly faster pace than
they used to?

Are we saying that our society has changed so much that one country cannot separate itself from other nations
anymore?

According to David, W. Cooney, editor of Practical Distributism, the answer to all the questions above is ‘no.’

Cooney writes:

“I submit that the global economy is really nothing more than the fact that the banking industry and some very large
companies have expanded to the point where they don’t really have any national loyalty.”

Banks, Cooney claims, hold no national allegiance because their only interest anywhere is to make a profit.
Giant multinational corporations claim to have nationalities. However, their operations are global, and their national
claims are hollow. Their national allegiance forms part of a marketing strategy in their home countries. Multinational
corporations are companies that have businesses, staff, and premises in several countries.

The term ‘marketing strategy’ refers to a business’ marketing goals and objectives, all combined into one single plan.

Multinational companies love free trade agreements, Cooney adds. They love them because they can then fire
expensive workers in their home country and replace them with cheaper workers elsewhere.

As more and more companies sell beyond their borders, the need for effective global marketing has increased
significantly. Global marketing refers to planning, producing or creating, placing, and promoting a company’s products or
services in the worldwide market.

Video – The Global Economy

This Financial Times video talks about the economies of several countries and regions. It begins by comparing the US
economy with those of the BRIC countries, i.e., Brazil, Russia, India, and China.

The meaning of ‘Global Economy’ in this video is different from the examples in the article above. In this video, the term
refers to how economies compare internationally.

GLOBAL ECONOMY

Global Economy was a concept associated with the twentieth-century evolution of financial markets and institutions,
where traditional geographic boundaries did not restrict economic transactions and consumer activities. The global
economy applied to the increasingly international transaction characteristics of banks, industries, businesses, and other
economic institutions. A global economy of financial markets was attributed to international deregulation of financial
markets; technological advances to provide for the careful monitoring of world markets; and increased institutionalization
of worldwide economic institutions. In a global economy investors and lenders viewed international loans and securities
as comparable to domestic or local transactions. Banks and other financial institutions in a global economy participated
in both foreign and domestic markets. A global economy was encouraged by advances in data-processing and
telecommunications monitoring, liberalization of worldwide capital funds, deregulation of local capital markets, and
increased international competition among markets and economic institutions.
GLOBAL ECONOMY

Global economy is the exchange of goods and services integrated into a huge single global market. It is virtually a world
without borders, inhabited by marketing individuals and/or companies who have joined the geographical world with the
intent of conducting research and development and making sales.

International trade permits countries to specialize in the resources they have. Countries benefit by producing goods and
services they can provide most cheaply and by buying the goods and services other countries can provide most cheaply.
International trade makes it possible for more goods to be produced and for more human wants to be satisfied than if
every country tries by itself to produce everything it needs.

The United States is one of the world's leading trading nations. The exports and imports of the United States thrive so
mightily that the profits of many large businesses, the jobs and incomes of many workers, and the incomes of many
farmers are dependent upon them.

In such a market, companies may source from the United States, conduct research and development in another country,
take orders in a third country, and sell wherever there exists demand, regardless of the customer's nationality.

CAUSES OF INCREASING GLOBALIZATION

In the days of Scottish economist Adam Smith (1723–1790), if a merchant wanted to trade a lot of wool for a case of port
wine, the communication of that intent would require weeks. Sending a message to someone in India took months. Such
circumstances lent themselves to fragmented and individualized markets run by family members or close friends. These
industry managers were trusted to make decisions in the best interests of the company because no rapid means of
communicating existed. The opportunity to closely coordinate the act of several foreign operations simply did not exist.

In the early twenty-first century, communication between most parts of the world is instantaneous. A manager in Berlin,
Germany, can phone or e-mail a manager in Rio de Janeiro, Brazil, to discuss the latest news regarding the orange crop.
These new capabilities allow vast amounts of business data to be transferred globally almost instantaneously at a
reasonable cost. The world truly has become a smaller place in terms of communication.

Technological advances have increased the potential for the transportation of goods and individuals globally. This reality
encourages a global market approach to business as companies attempt to reach the largest number of consumers at the
lowest possible prices.

Another factor leading to a more globalized marketplace is the historical decrease in tariff and nontariff barriers. In 1930
the United States raised tariffs under the Hawley-Smoot Tariff Act. Other countries followed suit, and international trade
slowed considerably. In 1947 several leading trading nations created the General Agreement on Tariffs and Trade to serve
as a forum for bringing down trade barriers. Between 1947 and 1994, trading countries around the world participated in
eight rounds of negotiating in an effort to reduce tariffs.

Another agreement, the North American Free Trade Agreement, was implemented by Canada, Mexico, and the United
States in 1994. This agreement reduced tariffs over a fifteen-year period, lifted many investment restrictions, allowed for
easier movement of white-collar workers, opened up government procurement over a ten-year period, and created a
mechanism for dispute resolution. As a result, retailers such as Wal-Mart and 7-Eleven have expanded operations into
Mexico and many Mexican and Canadian firms have been enjoying the benefits of participating in the world's largest
consumer market, the United States.

Multinational corporations search the globe for the lowest possible labor costs and weakest environmental safeguards. It
is not unusual for them to get help from undemocratic governments that compete in the global marketplace by refusing
to protect their citizens from environmental degradation and workplace abuse—ranging from below-survival wages to
physical attacks.
OTHER FACTORS AFFECTING THE GLOBAL ECONOMY

Closely related to the liberalization of trade, technological advantages, and the convergence of consumer preferences are
a set of competitive factors centered on the ideas of economies of scale (larger production volumes generating lower per-
unit production costs) and locational advantages.

Another factor affecting the global economy has been the shifting of production among various plants located outside of
the United States. This has occurred most significantly with the People's Republic of China. China is able to produce a wide
variety of goods and services at much lower costs than is possible in the United States.

Overall, the future for the global economy is positive. Many challenges lie ahead, but the overall opportunity is very
exciting and carries with it many unknown adventures in international trade in ways not yet known.

https://www.cigionline.org/articles/global-economy-
2019?gclid=EAIaIQobChMI6v6w1OaY5AIVl6mWCh2PzwaPEAAYASAAEgK1OPD_BwE

https://www.weforum.org/agenda/2019/01/what-to-expect-for-the-global-economy-in-2019/

GLOBAL ECONOMY 2019

The global economy started 2018 with strong, synchronized growth. But as the year progressed, momentum faded and
growth trends diverged. The US economy accelerated, thanks to fiscal stimulus enacted early in the year, while the
economies of the Eurozone, the UK, Japan and China began to weaken. These divergent trends will persist in 2019. IHS
Markit predicts global growth will edge down from 3.2% in 2018 to 3.1% in 2019, and keep decelerating over the next few
years.
One major risk in the coming year is the sharp drop-off in world trade growth, which fell from over 5% at the beginning of
2018 to nearly zero at the end. With anticipated escalation in trade conflicts, a contraction in world trade could drag down
the global economy even more. At the same time, the combined effects of rising interest rates and surging equity and
commodity market volatility mean that financial conditions worldwide are tightening. These risks point to the increasing
vulnerability of the global economy to further shocks, and the rising probability of a recession in the next couple of years.

ur top 10 economic forecasts for 2019

1. The US economy will remain above trend

Based on estimates about sustainable growth in the labour force and productivity, we assess the trend, or potential,
growth in the US economy to be around 2.0%. In 2018, US growth was well above trend at 2.9%, though the acceleration
was almost entirely due to a large dose of fiscal stimulus in the form of tax cuts and spending increases. The impact of this
stimulus will still be felt in 2019, but will diminish as the year progresses. As a result, we expect growth of 2.6% in 2019 -
less than in 2018, but still above trend.

2. Europe’s expansion will slow even more

Eurozone growth peaked in the second half of 2017, and has declined steadily since then. IHS Markit predicts a further
decline to 1.5% in 2019. Political uncertainty, including Brexit, challenges to Emmanuel Macron's government, and the
winding down of Angela Merkel’s chancellorship, are contributing to a decline in business sentiment. Economic factors
such as the tightening of credit conditions and heightened trade tensions are also driving the deceleration in growth.

3. Japan’s recovery will remain weak, and its economy will grow less than 1% in 2019

Japan’s economy is expected to expand by 0.8% in 2018, with this rate increasing only slightly in 2019 to 0.9%. The
slowdown in China’s economy and the fallout from trade tensions between the US and China are drags on growth.
Monetary policy will continue to be ultra-accommodative next year. The cyclical decline in Japan’s growth is occurring in
an environment of very weak long-term growth. Adverse demographics - specifically a declining labour force - are not
being offset by strong enough productivity growth. The “third arrow” of Abenomics, which was supposed to implement
significant structural reforms and boost productivity, has been slow to materialize.

4. China’s economy will keep decelerating

The quarterly rate of Chinese growth has been steadily edging down since the beginning of 2017, hitting its lowest level
in 10 years in the third quarter of 2018. On an annual basis, the pace of expansion has slowed from 6.9% in 2017 to 6.6%
in 2018, and will fall further to 6.3% in 2019. In response to recent economic shocks - including the impact of US tariffs,
which has so far been limited - policy-makers have unleashed a series of monetary and fiscal measures to help support
growth and stabilize financial markets.

However, these measures are likely to remain modest. Credit growth will continue to be constrained by the massive debt
overhang and the government’s commitment to deleveraging, at least in the medium to long term. On the other hand,
the government’s stimulus efforts may well become more aggressive if trade tensions with the US (re)escalate and growth
is seriously damaged.

5. Emerging market growth will decelerate to 4.6% in 2019

Some economies, including Brazil, India and Russia, experienced a mild pickup in growth in 2018, while others, such as
Argentina, South Africa and Turkey, came under intense financial pressure and suffered recessions or near-recessions.
Going forward, emerging markets face a number of headwinds, including slowing growth in advanced economies and in
the pace of world trade; the strong US dollar; tightening financial conditions; and rising political uncertainty in countries
such as Brazil and Mexico. A few countries will be able to buck these trends, especially dynamic economies with low levels
of debt, notably in Asia.
6. Commodities markets could be in for another rollercoaster ride in 2019

Demand growth next year still looks strong enough to provide commodity markets with support, making the kind of price
collapse seen during 2015 unlikely. However, volatility in commodity markets will continue in 2019, particularly in oil
markets. We predict oil prices will rise a bit in the near term and average around $70.0 per barrel over the coming year,
compared with an average $71.0 in 2018. That said, the risks to prices of oil and other commodities are predominantly on
the downside, given slowing demand growth and rising supply. Despite volatility, we predict that by the end of 2019,
prices will be little different from their current readings.

7. Global inflation rates will remain close to 3.0%

Most of the rise in consumer price inflation between 2015 and 2018 - from 2.0% to 3.0% - was due to a transition in the
developed world from deflationary, or near deflationary, conditions to inflation rates that are close to central banks’
targets of 2.0%. Over the near term, we expect global inflation and developed economy inflation to remain close to 3.0%
and 2.0%, respectively.

While there will be upward pressures in many economies as output gaps close and unemployment rates fall - in some
cases to multi-decade lows - there are downward pressures as well. Outside the US, growth is weakening. Moreover,
relative to 2018, commodity prices will be relatively flat on average in 2019. Finally, with the trade war in a “temporary
truce”, the upward push from tariff increases will be on hold.

8. The Fed will raise rates, and a few other central banks may follow

With the world’s key economies at different points in the business cycle, it is not surprising that central banks are moving
at different speeds and in different directions. However, given weaker growth and muted inflationary pressures, the pace
of removing accommodation is likely to be even more modest than previously expected.

The US Federal Reserve is likely to raise rates three times in 2019. Other central banks, including the Bank of England
(depending on the Brexit process), the Bank of Canada, and a few emerging market central banks - such as those in Brazil,
India and Russia - may also raise rates.

The European Central Bank will not hike rates until early 2020. Similarly, we do not believe the Bank of Japan will end its
negative interest rate policy until 2021. The People’s Bank of China is the one major central bank moving in the opposite
direction; worried about growth, it is providing modest stimulus.

9. The US dollar will hold at current elevated levels for much of 2019

Continued above-trend US growth and more rate hikes by the Fed are the primary reasons for this anticipated strength.
Given the recent relative calm in forex markets, especially relative to emerging market currencies, another big
appreciation of the US dollar seems unlikely.

Nevertheless, the potential for volatility remains very high. Political uncertainty in Europe could be very negative for the
euro and sterling; we expect that the euro/dollar rate will end 2019 at around $1.10, compared with $1.14 at the end of
2018. At the same time, we predict that the renminbi/dollar rate will hold fairly steady just below the psychological level
of 7.0 - the result of the Chinese government’s desire for financial stability.

10. The risks of policy shocks have risen, but probably not enough to trigger a recession in 2019

Policy mistakes remain the biggest threats to global growth in 2019 and beyond. The simmering trade conflicts are
dangerous, not because they have done damage so far - they haven’t - but because they could easily escalate and get out
of control. In addition, rising budget deficits in the US, high debt levels in the US, Europe and Japan, and potential missteps
by key central banks all pose threats to the global economy.

The good news is that the probability of such policy mistakes seriously hurting global growth in 2019 is still relatively low.
However, IHS Markit believes that the risks of damage from policy mistakes will rise in 2020 and beyond, as growth slows
further.
Economic globalization involves a wide variety of processes, opportunities, and problems related to the spread of
economic activities among countries around the world.

Economic globalization refers to the mobility of people, capital, technology, goods and services internationally. It is also
about how integrated countries are in the global economy. It refers to how interdependent different countries and regions
have become across the world.

In the eighteen hundreds in the world economy generally, people and capital crossed borders with ease, but not goods.
In this century, people do not cross borders easily, but technologies, capital and goods do.

Over the past two to three decades, under the framework of General Agreement on Tariffs and Trade (GATT) and World
Trade Organization, economic globalization has been expanding at a much faster pace. Countries have rapidly been cutting
down trade barriers and opening up their current accounts and capital accounts.

Economic Globalization Car IndustryWhen you buy a Toyota car, its parts have probably been produced in several different
countries. Toyota is one of hundreds of companies with globalized operations.

This rapid increase in pace has occurred mainly with advanced economies integrating with emerging ones. They have done
this by means of foreign direct investment and some cross-border immigration. They have also reduced trade barriers.

In some regions of the world, such as the European Union, a large area almost the size of a continent has opened up to
the free movement of capital, labor, goods and services. The North American Free Trade Agreement (NAFTA) opened up
the free movement of goods and services, but not labor.

Cuba and North Korea are among the most autarkic (self-sufficient) and isolated nations on the planet. The two countries
are the last bastions of the Soviet economic model.

Economic globalization linked to greater wealth and inequality

While becoming more integrated into the global economy tends to bring increased wealth to a nation, globalization is
commonly linked to greater inequality.

According to the United Nations:

“Economic globalization refers to the increasing interdependence of world economies as a result of the growing scale of
cross-border trade of commodities and services, flow of international capital and wide and rapid spread of technologies.
It reflects the continuing expansion and mutual integration of market frontiers, and is an irreversible trend for the
economic development in the whole world at the turn of the millennium.”

Economic development, apart from GDP growth, also includes improvements in literacy, life expectancy, and people’s
well-being.

Does globalization cause wealth inequalityThe big debate: ‘Does globalization bring inequality, or is it just coincidence?’
(Data Source: The Atlantic)

Advances in science and technology

The United Nations says the fast globalization of the world’s economies over recent decades is mainly due to the rapid
development of science and technologies. They have created an environment in which the market economic system can
spread across frontiers.

For example, the Internet and electronic communications today mean that businesses can employ workers from virtually
anywhere in the world, and can trade in several countries at the same time without having to physically open up branches
there
Thanks to scientific and technological progress, transportation and communication costs today are just a fraction of what
they used to be. Compared to 1930, current shipping costs are today about 50% cheaper, airfreight costs are now just 1/6
of what they were 85 years ago, while communication costs are just 1% of what they were.

With what it used to cost to buy a computer in 1960 (in today’s dollars), you could buy 125 of them by 1990, and four
times that number by 1998. All these advances in science, technology and communications have helped drive economic
globalization.

The Internet and electronic communications have allowed advanced economies to outsource many of their jobs offshore.
In the US, Canada, and EU, millions of jobs have been transferred abroad. Call center positions, especially, have gone
overseas. These jobs have gone mainly to India, the Caribbean, and other English-speaking emerging economies.

The economic systems that exist in the world today are much more complex than in ancient times, when humans survived
by hunting and subsistence farming.

Globalization of the automotive industry

Today, the automotive industry has companies producing vehicle parts and then assembling them in several countries.
Most current parts production, assembly and vehicle sales take place in integrated regions.

These car production regions include MERCOSUR in Latin America, ASEAN in Asia, and NAFTA in North America. The also
include the European Union and CIS for the former Soviet Bloc countries.

Within those regions, certain countries stand out – in China, Brazil, Mexico, Russia and India, car production and assembly
have increased dramatically over the past 20 years.

The city of Detroit in the United States is still synonymous with auto manufacturing. America’s ‘Big Three,’ i.e., Ford,
General Motors and Chrysler, are still based there. However, the expansion in those three companies’ operations have
occurred outside the city, and mainly abroad.

Patrice Hill wrote in the Washington Times in August 2013:

“The ‘Big Three’ long ago moved some of the biggest chunks of their production, jobs and plants to places as near as Ohio
and Ontario and as far away as China, Brazil and Russia. Without the plentiful factory jobs and incomes that once made
Detroit a wealthy and teeming metropolis, the city steadily deteriorated into a hollow shell of vacant buildings and weed-
covered lots. Last month, it became the largest American city ever to declare bankruptcy.”

Does globalization bring more inequality?

As the world has become more economically globalized, so has the income and wealth inequality within countries. Some
people believe globalization is the cause – this has so far been difficult to prove.

They argue that if companies have access to the whole world market, and most of those companies are located in a few
countries – the US, EU and Japan – they will suck money out of the whole world in much greater quantities than if they
sold just within their own markets.

The counter-argument is that globalization brings well-paid jobs (compared to local pay rates) to emerging economies. A
Ford factory worker in Mexico earns more and has better workplace conditions than he would as a farm laborer.

When looking at inequality between nations, however, globalization has coincided with more equality between the
advanced and emerging economies. The rich countries today represent a smaller percentage of global GDP compared to
twenty or thirty years ago.

Wealth inequality is not only a problem within emerging and low-income nations – it is also increasing in the advanced
economies.
Janet Yellen, who heads the Federal Reserve System of the United States (America’s central bank), said in a speech at the
Conference on Economic Opportunity and Inequality at the Federal Reserve Bank of Boston in October 2013 that wealth
inequality in the US has widened since 1990.

Ms. Yellen added that there are still opportunities in the country to bridge the wealth and income gap.

Video – Economic Globalization

A video explanation of what economic globalization is:

https://www.youtube.com/watch?time_continue=15&v=YmincgD3uzE

Actors of Globalization

Much of the current literature on the history of globalization in the late nineteenth and early twentieth century has
focused mainly on questions of political integration, empire, and the global economy. Given this bias in the literature, this
research group focuses instead on processes of cultural exchange and interaction, and in particular on the role of historical
actors in this larger process. This includes individual actors, but also groups and social milieus; the emphasis is not so much
on individual biographies, but rather on actors as a heuristic device that will allow us to link the macro and the micro level
and thus to acknowledge the regional, temporal, and social specificity of the globalization process. In addition, the focus
on non-Western actors will help us elucidate the positionality of global integration, and the fact that the “world” looked
very different depending on from where one looked. As a result, the research group wants to contribute to the history of
globalization in a way that does justice to its complexity.

Some of the overarching questions that will be addressed include:

What were the specific logics that guided global interaction? What was the role of transfers and translation? What
strategies of appropriation and adaptation came into play? How were social processes encoded as belonging to the “East”
and “West”?

In what ways was cultural interaction linked to the emergence of a global consciousness? How did the example of distant
countries influence reform efforts in different societies? What were the boundaries of transnational spaces? Can the
emergence of regional connections, public spheres, and identities be understood as reactions to, and effects of, global
processes? Where did regional connections emerge that mediated between the local/national and the global? In what
ways did these forms of regionalism relate to earlier phases of regional interaction, and what role did continuity with
existing regional structures play?

Did the increasing quantity of exchange and interaction lead to cultural homogenization, or did they sharpen, and produce,
forms of difference? What were the logics of difference that shaped global interconnection from the late 19th century
onwards?

Can a map of cultural interconnections that portrays the different regional dynamics be reconstructed? What junctures,
what hierarchies, what asymmetries structured interactions on a global level?

The research group is funded by the German Research Foundation (DFG).

https://www.youtube.com/watch?v=UwVA3EhOoCA