Maybe you’ve wondered why news corporations in the United States report so widely on other nations when supposedly the story is all about the American economy. This all has to do with the topic of global economies, a recent topic of major contention amongst economists, world leaders, and citizens of every nation. So what exactly is a global economy? Let’s dive into its definition, roots, and effects on modern life.
It all begins with a history rooted in the British industrial revolution of the 18th century. Modern Western society was transformed from primarily agrarian to industrial, thus coining the term industrialization. The creation of major manufacturing, which allowed goods to be mass-produced in a shorter time with less labor, allowed prices to drop and provided more access to products from all classes. This spread globally as foreign nations became invested and reliant on manufactured goods.
As industrialization spread across the world, and what’s known as a global economy started. A global economy is defined as the global spread of capitalism, also known as the free market. Countries may operate in the free market with little government interference and restriction which appeals to many businesses. International relationships, trade, and labor migration were all enabled through this process.
So why is the practice of global economies hotly debated? There are two major opinions. One side argues that globalization opens up new opportunities for countries to provide employment and investment opportunities to poor nations in the form of factories and natural resource sourcing. In return, first-world countries are able to capitalize on cheaper labor and resources by offering products at a less expensive price, thus growing their profits. The opposition argues that these practices further isolate third-world countries that now rely solely on unfair wages and detrimental working conditions. This provides the basis for the concept of the wage gap which implies the wealthy continue to become richer and big businesses continue to grow while the backbone of their companies become poorer and have no other sources of income to turn to for survival.
ABCO Group works with American companies to help improve their operations in today’s competitive global economy. How has globalization affected your business’s performance, either negatively or positively?