Economics - Nature of the Global Economy & Globalisation

NATUREOF THEGLOBAL ECONOMYANDGLOBALISATION
TH E GLOBAL ECONOMY
 Trade inGoods and Services had grown rapidly increasing from 38%ofGWP in 1990 to 63% ofGWP in
2007.
 GWP is now9 times the level in 1950 howeverthe volume ofworld trade has grown 33 times it’s 1950 level  During times of economic downturns,the growth of globaltrade has contracted fasterthanworld economic output highlightingthe greater volatility oftrade compared toGWP.
 Important developmentthat has contributed to these flows is the increased influenceof
Transnational Corporations.
 Transnational Corporations: global companies that dominate global product and factor markets. TNCs haveproduction facilities in atleasttwo countries and are owned by residents of atleasttwo countries.  Trade has also lifted in response to majortrade agreements: o World TradeOrganisation (WTO): is anorganisation of153 member countries that implements and advances globaltrade agreements and resolves trade disputes between nations. Established in 1995 o NorthAmerican Free TradeAgreement(NAFTA) o Associationof South EastNations (ASEAN) o EuropeanUnion (EU)
GROSS WORLD PRODUCT
 GrossWorldProduct(GWP):the sum oftotal output of goods and services by all economics in the worldover a period oftime.
 In the industrialisedworld the value ofwhat many countries buy and sellfrom overseas is greaterthan half ofthe country’s economic output
GLOBALISATION
 Globalisation:the process ofincreased integration between different countries and economies and the increased impactofinternational influences on all aspects oflife and economic activity.
 Involves layers ofinfluences in all directions
 Majorindicators ofintegrationbetween economics include: o Internationaltrade flows o Internationalfinancialflows o International investmentflows and transfers oftechnology o The movement ofworkers between countriesEconomics SummaryNotes 2010 JamieKennedy ‐ 9 ‐
D:\Documents\School\SchoolWork\Economics\Economics