THE GLOBAL ECONOMY
The study of Economics has traditionally focused on how individual economies operate. While international trade has always been a feature of economies, economists have traditionally developed economic theories with the assumption that economies, by and large, operate separately from each other and that the structure and performance of economies is mainly the result of local developments and influences.
This way of looking at Economics has now passed its use-by date. Most economists now talk about the global economy – where the economies of individual countries are linked to each other and changes in a single economy can have ripple effects on others. The aggregate value of all goods and services produced worldwide each year in the global economy is known as gross world product (GWP). In the industrialized world, for example, the value of what many countries buy and sell from overseas is greater than half of the country’s economic output. When conditions in the global economy change, these changes can have an impact on the economies of far-flung countries almost immediately. In many respects there is nothing new in the fact that major economic developments can have impacts across the world. For example, the Great Depression of the 1930s had a global impact, with many countries experiencing a severe economic downturn. On the other hand, economies are more closely integrated now than at any previous time. The linkages between economies are stronger and more far-reaching than ever before. There are few aspects of life that have not been affected by the waves of global influences washing across the world. This is especially the case in a small economy such as Australia, which has embraced the global economy and pursued policies to integrate its economy with those of its region and around the world. A FUN FACT VIDEO ON THE GLOBAL ECONOMY. |
KEY TERMS
Gross world products refers to the sum of total output of goods and services by all economies in the world over a period of time. Globalisation refers to the integration between different countries and economies and the increased impact of international influences on all aspects of life and economic activity. |
"The Global Economy" by Financial Times ( https://www.youtube.com/watch?v=3FNNpUWn7hQ)