√ Understanding the Global Economy and its Impact (Complete Discussion)
Understanding Global Economy and Its Impact (Complete Discussion) – Generally understanding of the global economy known as a revolutionary system that allows any entrepreneur to invest money anywhere in the world. The global economy is now known as economic globalization. There is also a short definition of the global economy or economic globalization as a way of life global and open economy, without recognizing territorial or territorial boundaries between countries each other. Side of trade investment activities and moving towards liberalization of world trade and investment as a whole.
Understanding Global Economy and Its Impact (Complete Discussion)
Currently, the global economy or economic globalization is closely related to free trade. This free trade is now known as free trade. Free trade or free trade seeks to create a wider trading area and eliminate obstacles to the smooth flow of international trade.
Understanding Global Economy
So understanding of the global economy is a process of economic and trade activities in many countries in the world which is becoming a unified and increasingly integrated market force without barriers or territorial boundaries country. The existence of economic globalization means the need to eliminate all boundaries and obstacles to the flow of goods, services and capital.
The Embodiment of the Global Economy
In the process of activity, below are several manifestations of the global economy, including:
-
Globalization of production
The globalization of production carried out by several countries aims to lower production costs. -
Globalization of financing
Global companies in this case have access to obtain loans or carry out investment activities (both in portfolio and direct form) in all countries in the world. -
Globalization of labor
Globalization is characterized by the presence of foreign workers. Global companies in this condition will be able to utilize workers from all over the world according to their level. -
Globalization of information networks
There is also a form of globalization of information networks that can be seen in the people of a country where they can easily and quickly get information from various countries in the world with advances in technology. -
Globalization of Trade
In the field of trade, globalization is manifested in the form of uniformity and reduction of tariffs as well as the elimination of non-tariff barriers. So that trade activities and competition become tighter, faster and fairer.
Positive and Negative Impacts of Economic Globalization
From the manifestation of each global economy, of course there will be impacts that will occur in the form of positive impacts and also negative impacts. The following are the positive and negative impacts of the global economy, including:
Positive Impact of the Global Economy
Increased global production
This increase in global production can be through specialization and trade. There are also factors of world production that can be used more efficiently. In this way, world output will increase and society will benefit in kind increased income, which in turn can result in increased spending and savings.
Increased prosperity of the country
The global economy, through freer trade activities, allows the people of various countries to import more goods from abroad. This means consumers have more choices of goods. And also consumers can enjoy goods at lower and better prices.
Expansion of the domestic product market.
With the existence of a global economy, freer foreign trade allows each country to gain a much wider market than the domestic market.
Obtain more capital
Capital that can be obtained from foreign investment is mainly enjoyed by developing countries due to a lack of capital and educated personnel and experienced experts.
Providing additional funds for development in the economic sector.
Development in various other sectors is not only developed by foreign companies, but mainly investment from domestic private companies.
Negative Impact of the Global Economy
Inhibiting growth in the industrial sector.
The existence of a global economy means that developing countries can no longer use high tariffs to protect newly developing industries (infant industry). Thus, fairly free foreign trade creates obstacles for developing countries in advancing the industrial sector.
The balance of payments is poor.
The global economy increases imported goods. On the other hand, if a country is unable to compete, then exports will not develop. This condition could worsen the balance of payments.
The financial sector is increasingly unstable.
Increasingly large portfolio investment (capital) flows are one of the effects of globalization. Investment in this case mainly includes the participation of funds from abroad into the stock market.
Worsens long-term economic growth prospects.
If the things stated above apply in a country, then in the short term its economic growth will become unstable.
Maybe that's where our discussion ends Complete understanding of the global economy and its impacts, Hopefully the article above is useful and can broaden our insight. That is all and thank you.
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