GLOBAL ECONOMY

Search and answer the following:

1.What are the factors that facilitate economic globalization?

Factors that facilitate economic globalization

International trade: An increasing share of spending on goods and services is devoted to imports and
an increasing share of what countries produce is sold as exports. International trade is important to a
country's economy. In today's ever-changing commercial environment, countries are more
interdependent than ever on their partners for exporting and importing, thereby keeping the home
country's economy afloat and healthy.

Capital market flows: Many countries, particularly in the developed world, have increased their
diversification of their portfolios to include foreign financial assets such as international bonds,
equities, or mutual funds, and borrowers have increased their reliance on foreign sources of funding.

Migration: When migrants who have gained education and know-how overseas return home to start
new businesses, they can help emerging economies. However, migration can harm the economy by
causing "brain drain," or the loss of skilled workers who are necessary for economic growth.

Diffusion of technology: Telecommunications, information technology, and computing innovations

have reduced communication costs and encouraged the cross-border flow of ideas, including technical
expertise as well as more fundamental ideals like democracy and free markets.

2.What is modern world system?

A modern world-system is a social system constituted of limitations, organizations, groupings of

individuals, rules and regulations, and unity among various groups. It is made up of world-empires and
world-economies and socialistic systems. The modern world-systems are the foundation of current
political, economic, and social institutions. A world system has classes that describe diverse
economic, political, and social classes. To avoid disputes among the many groups in the state, state
leaders and managers have the obligation of uniting them.

3.What is global economic integration?

Economic integration is an agreement among countries in a geographic region to reduce and
ultimately remove, tariff and non-tariff barriers to the free flow of goods for services and factors of
production among each other. The more integrated economies become the fewer trade barriers exist
and the more politically coordinated they are. Countries can agree to different levels of economic
integration.

4.What is the role of financial institutions in the creation of a global economy?

International financial institutions (IFIs) play an important role in developing nations' private sector
development by encouraging entrepreneurial initiatives that help developing countries achieve long-
term growth. IFIs achieve these objectives through loans, credits and grants to national governments.
Such funding is typically related to specific projects that promote economic and social sustainability.
IFIs also offer their borrowers technical and advisory assistance and perform substantial research on
development issues.

5.The effects of globalization on governments

Globalization effects the government in a negative and positive ways. Globalization help the nation to
make money and earn more interest in order to create important things that makes people’s lives
easier. It also causes for non-local products to be ignored, local investors lose their money and
English language are becoming norm

With the impact of globalization, local government units in different areas of the world can
communicate with each other thanks to advancements in transportation and communication
technology, and these new structures can be adopted by their own bodies. Thus, local units can define
their own economic position in economic terms. Local governments engage with one another
through the global network they generate, and this interaction process results in substantial structural
and functional changes.

6.The institutions that govern international relations

United Nations (UN) – The United Nations was designed to be an organization where countries could
come to discuss their issues without resorting to war and violence, which had plagued our world for
several years in the past.

Non-Government Organization (NGO) – NGOs are some group of organizations that founded by
citizens which include clubs and associations which provide services to its members and others. A
non-profit group that functions independently of any government. Sometimes called civil societies –
organized on community, national and international levels to serve a social or political goal such as
humanitarian causes or the environment.

Global Economic Associations – Is a professional association, which promotes a pluralistic

approach to economics. Its key principles include worldwide membership and governance, and
inclusiveness towards the variety of theoretical perspectives and applications of economics. And also,
the goal of Global Economic Association is to promote personal contacts and mutual understanding
among economists in different parts of the world through the organization of scientific meetings
through common risk research programs and by means of publication of an international character
and problems of current importance.