Right now there are lots of great things that happened in our world. There are lots of new inventions, business, tourist spot and market around the world. These changes helped us all to develop to a greater world full of modern things.
How did these things happen?
There's one great factor how did our world managed to progress a lot that is the Global Economy
So what is Global Economy?
Global Economy refers to the interconnected worldwide economic activities that takes place between multiple countries. In another words it is the exchange of goods and services integrated into huge global market. There are several impacts that can happen in the countries that are involved. It can be positive or negative.
There are some characteristics that can help us to understand what is Global Economy
Globalization - a process in which several national economies and societies have become integrated through global network of trade, communication, immigration, and transportation. And this leads to the development of global economy. Because global economy and globalization, domestic economies have become corrective leading to an improvement in their performances.
International Trade - this characteristic can be called or considered the impact of globalization. Because it refers to the exchange of goods and services from different countries . Due to trade it help some countries that have specialized product to let it show to the global market.
International Finance - this characteristic is one of the primary features of global economy. Since money can be transferred with faster rate than goods and services. This characteristic is consist of topics light currency exchange rate and monetary policy.
Global investment - this is one refers to the investment of different countries to another . A great factor why some countries managed to developed through the help of richer countries. This investments opens up the path to create more jobs and opportunities at different countries.
So that is global economy it is like a bridge that connects different countries with one another. So true it countries can manage to trade goods and services with each other. But the question is why do countries trade?
So one of the great reason is that every single one of us has their own differences. We are all unique, and that uniqueness makes our world interesting. The difference that we have is the key for everybody to learn to value and trust one another. That is why there is a trade of goods and services.
So there are really lots of reason and here are some examples
Differences in Technology - every country has managed to produce different kinds of technology that makes them unique to everyone. The advancement in technology leads for others to make partner deals and attract more investors and this business man invest to their countries. And when that happened the path of goods and services will open. An example the development of new mobile phones, since it can be a new trend the company will trade goods with their partner countries and they will also invest to create more factories at a certain country because of low rate of payment and more source of raw products.
Differences in Demand - every country as their own differences when it comes to demand and supply. Most of the time the demand is greater than supplied and that is what we called shortage. Once the supply is greater than the demand we called it surplus. If this circumstances happen other countries tend to trade their excess supply to the other countries and bought goods that lacks in their country. With this kind relationship both of them can be benefited, they have managed to use their excess supply and satisfy the demands. But there are some cases where some countries abuse the price, once they find out that the country badly demands a certain material they tend to increase the price and gain more profit from them.
Resource Endowments - there are lots of countries that have abundant supply of raw materials. In contrast some countries really lacked on it. This is where to trade happens, factories needs material to produce their own products, the materials that they need will be supplied and provided by the countries who have abundant of raw materials. Some countries sometimes abused it, they tend to buy more raw materials, the greatly demand a great fly leading to the destruction of the natural resources of raw materials.
Existence of government policies - in the country where there are lots of policies about certain products there can be a great charge tax for goods and services. That's why most of the business man or companies tend to trade their products or services to different countries with less taxes or charges. So they can earn more from their goods rather than paying great taxes with less profit.
So they are just an example on why do countries trade goods and services. Is a part of the global economy. When tackling global economy there are really lots of concepts that we need to learn and this are just some of it.
no man is an island we need each other to grow and adapt in this world that is full of changes. We are now in the world where nothing is forever that's why we need each other. Accepting one another without discrimination and injustices will lead and good relationship for the better future.
Mr. Moon Light 23