Global Economy

Business, Legal & Accounting Glossary

Definition: Global Economy




Full Definition of Global Economy


Global economy is the ability of businesses to market their services and products all over the world. The global economy has supported the growth of many companies to transform themselves into multinational firms. An example of a global economy is the incidence of developed countries like the United States outsourcing their routine operations to developing nations like India and the Philippines.

The many advantages of the global economy include economies of scale. The rapidly disappearing economic borders between countries enable companies with an international footprint to obtain raw materials, technology and workforce at the cheapest possible rate. A prime example of this is the outsourcing of the manufacture of computers and toys to China by American companies. Increased trade between countries also lowers the incidence of war between nations. Many countries with a historical wartime past have buried their differences for the mutual benefits of trade. South Korea and Japan are one of many examples.

There are a few disadvantages to the global economy. Many multinational companies have been accused of using their economic clout to pressurize developing countries’ governments to do tasks that benefit the company itself rather than the country where the company has invested. Companies have also been accused of violating environmental laws in order to maximize profits.

Globalization

Globalization is the propensity of businesses and investment funds to move from their home country markets to other markets around the world. Globalization strengthens the economic and political link between different nations. It also helps to promote cultural exchange between countries around the world. According to free-market-oriented economists, globalization helps the less industrialized nations to ‘catch up’ with their technologically advanced counterparts.

International Monetary Fund (IMF)

The International Monetary Fund is an international organization engaged in promoting international trade. It also helps to stabilize the global money market. The IMF assists in the formation of a comprehensive system of payments for conducting current transactions.


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Definition Sources


Definitions for Global Economy are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 29th March, 2020 | 13 Views.