Evaluate the effects of globalisation on the Global Economy
Globalisation has had antipodal effects on the Global economy, -such as increasing gross world product (GWP) by 19 times since the 1950s-. Such integration has been fostered through international organisations, such as the World Trade Organisation (WTO), World Bank (WB), who had significantly aided the process of globalisation through providing low-interest funds to developing economies. However, globalisation has also had negative effects throughout the global economy such as increasing income inequality when comparing developed and developing economies – such as America and Vietnam.
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. Globalisation is the direct catalyst for the Gross World Product. Which is the Aggregate value of goods and services produced worldwide, it is measure by the IMF by compiling countries GDPs at Purchasing Power Parity (PPP). This has allowed for the creation of the International business cycle, which is: fluctuation in the level of economic activity in the global economy over time.
The effect of this on the Global Economy is mainly felt through trade and investment flows. Which means when there is a boom or recession in one country it will affect the demand for goods and services for other countries. Also strong economic activity in one economy means that it can invest in others. This has mixed effects on the Global Economy as it can either benefit or impair it. When there is a boom in an economy it allows them to demand more goods and/or invest in other countries, which in turn will raise the GWP, as there is increased trade/investment flows throughout multiple economies- that is China demand more resources from Australia in 2011. However it also has the opposite effect when an economy experiences a downswing in their regional business...