Global Economy

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Last updated: April 21, 2019

The word ‘Global Economy’ is defined as the ‘world-wide exploitation of resources and the world-wide production and marketing of goods and services’. This is broken down into each individual countries economy. A countries economy is ‘the amount of money within the country and how it is linked together by such things as business’. However what makes the global economy such an uneven platform is the breakdown of the worlds economies and the types of countries. The Brant report is the basic way of showing how the world in reality is split into two areas the north and south regions.The north is predominantly first world country. A first world country is one, which comprises mainly of more economically developed countries (MEDC’s), where capitalism prevails.

Examples of first world countries are Western European, North American or Australian. Australia is the exception of the north /south divide because the line drops just east of Indonesia. Also in the northern precinct of the economy are second world countries. These consist of socialist groups where government and economic control is paramount.Less economically developed countries (LEDC’s) and some more economically developed countries are found in this category.

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Communist country collapses have also enabled countries such as those in the break up of the Soviet Union in 1990 to move towards capitalism and the first world. Today the second world is a decreasing feature with only such countries as China, North Korea, Vietnam and Cuba remaining part of the second world. Another example of a second world country is one, which has been colonised in the past by a great empire such as the ‘British Empire’. This great empire spread all over the globe from Australia to India.Initially the colonisers began to set up trading posts but this eventually led to the total control of the whole territory. Colonies would provide agricultural produce, which would otherwise be unattainable in our climate. In return Britain brought their goods that had been manufactured across the empire.

As the empire started to break down each colony was left as an LEDC which many still are struggling to become more economically developed, thus once again making the global economy even more unbalanced as the rich are very rich and the poor are a long way behind.In the southern area stated in the ‘Brant report’ it is basically the opposite containing les economically developed countries (LEDC’s) and least less economically developed countries (LLEDC’s). This area is generally referred to as the third world and many of the countries have only recently achieved political independence from colonial powers. Here is where the global economy begins to fault as third world countries are starting to be drawn into the system. Many of the LEDC’s are in debt and are unable to pay it back in conjunction to the interest rates.

During the world recession LEDC’s were able to large sums of money from the World Bank and other financial developments to start building their own economy. When these interest rates rose again in the 1980’s they were unable to repay their debts. If as stated in the economic diagram (above) the first world countries and the world bank drop debts towards the LEDC’s and LLEDC’s then the unstable south would be able to work its way towards improving their economies. This would then in turn make the balance of the worlds economy more even and the north and south regions becoming closer together.This is because as an LEDC’s economy improves its stability it will create new markets for the multinational companies to build factories, thus providing jobs and a positive income to countries finances. An increasing loop will appear as the countries start to emerge form debt. Countries, which have already started the long process and are slowly emerging from debt and towards economic stability, are known as RIC’s (recently developed countries) or NIC’s (newly industrialised countries).

A good example of these two types of development is found in the ‘Young Tigers of Asia’.This group of countries includes Hong Kong, Singapore, South Korea, Taiwan, Malaysia and Thailand. As the agricultural workforce declined a new secondary industry developed to replace it. All of these countries have become dominant in the manufacturing of electronic goods for the first world and MEDC’s. The new industries have bought jobs and increased wealth within the country and amongst the families who work in the factories. Trade blocks can also develop between countries or continents so as to provide the best resources, food and investment between the contingents.

An example of a trading block is the European free trade association (efta). Within this trading block there is free movement of manufactured goods as well as raw materials and food products. Any country not in the trade union that wants to bring goods into the area is usually heavily taxed so as to discourage foreign goods. This would therefore help preserve a nations culture and enable the people to invest in their own nation. An OPEC (oil and petroleum exporting country) is a good country to have in a trading block.This is because these countries are producing oil and petrol for the sale to other countries across the globe. As there are relatively few of these OPEC’s then they too can charge high rates for their goods, especially to those outside of the trading block because they are desperate for oil in MEDC’s, as they cannot produce it themselves.

Also MEDC’s are more likely to be able to pay the prices so as to keep industries operating and people happy. Therefore it could be stated that as long as there is oil extracted and refined in OPEC’s and bought by the MEDC’s the global economy is relatively stable as everything runs smoothly.In conclusion I can say that yes the global economy is an uneven platform. This is mainly due to the north/south divide as stated in the Brant report. However I believe that it is caused mainly by the history of a countries development over the last few centuries.

If for example the country was initially self sufficient, developing their own resources and becoming economically strong they have developed into the strongest and most wealthy countries in the global economy today.Whereas if a country was colonised or taken in as part of a communist regime they have bee held back in development by having a different political power to their own. Then as these have broken down the countries are left with nothing and start to build up debts. Therefore making these countries the poorest in the world, as they effectively have nothing to offer the first world countries anymore.

This fact is what makes global economy so uneven because the poorest countries are in a cycle of debt whilst the richest countries are growing larger and richer widening an already large gap between the two.

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