Introduction
The concept of the global economy is not easy to understand because it requires a certain portion of knowledge in the spheres of politics and economics at the same time.1 Different authors and researchers introduce their approaches to how people should define the global economy and comprehends the peculiar features of its evolution and other interesting theories demonstrating different approaches in regards to this concept.2 One of the first thoughts that come to mind is that the global economy is something that touches upon the whole world simultaneously. It is a kind of economic relations that is based on a number of political factors and relations. Therefore, it is a variety of trades (the possibility to exchange different goods or services to benefit financially) that can happen between different countries.
The current essay is an attempt to understand the main essence of the global economy and its evolution and clear up if it is bad, good, or both. The global economy should be explained in terms of trade, goods/service production and distribution, and political relations that take place globally because its evolution touches upon the countries in different ways and leads to the evident success or a total failure on the world economic and political arenas. To find the answer to the question of what the global economy actually is and if its evolution is of positive, negative, or both nature, it is very important to consider the existing primary sources like the raw works by such political economists like Adam Smith or David Ricardo, the recent reports or stats of the World Bank, and the available textbooks and lecture notes that offer different perspectives on the idea of how to understand the global economy and its role in trade relations between the countries. It is not enough just to present a dry, still definite answer to the chosen question. It is more important to explain how its evolution took place and what aspects have been touched during different epochs.
Primary Sources
The global economy is the type of economy that touches upon the whole world and defines the trade relations between different countries. It is hard to define when this term has been coined. This term started making sense as soon as different regions began to offer their services and goods and share their achievements with other countries. It was recognized that some countries had a more gold reserve,3 Some countries were able to develop international trade relations with their neighbors, and some countries were free to use import services and goods just because of their inabilities to develop their ideas.
Trade relations between people from different countries turn out to be the main essence of the global economy with a number of benefits and challenges for each country involved in this type of relation.4 Still, trade relations began far in the 17th century when people got to know about the possibility to divide labor and benefit from the opportunities. Adam Smith admitted that “the greatest improvements in the productive powers of Labour, and the greater part of the skill, dexterity, and judgment with which it is anywhere directed or applied, seem to have been the effects of the division of labor.”5
These are the graphs taken from the World Bank database. Both of them contain information about the existing variety of services offered globally. Graph One is the comparison between the United States and the United Kingdom in regards to the global level.6 It proves that the level of the global economy is lower than the same records of particular countries. The chosen countries remain the giants in the global economic arena and promote the development of international trade relations on a high level.
The records of the other two regions (Poland and the Dominican Republic) mentioned in Graph Two introduce them as weak and unable to compete properly on the world level.7 Though the defined countries demonstrated considerable progress during the last ten years, their achievements in the world cannot be defined as successful.
Therefore, it is wrong to judge the success or failure of a country by several specific factors only. This is what the global economy teaches people: all aspects, issues, and every part of the economic development of a country should be considered first and then compared in regards to the proportion and the raw materials.
Secondary Sources
The information taken from primary sources helps to understand that the global economy is not about the relations of several countries or the role of one country only. The global economy is a combination of a variety of factors and possibilities. The global economy has to be a combination of three main concepts: production, trade, and money supply.8 Money is a crucial aspect of any kind of trade relations in terms of both production and distribution. Therefore, this kind of combination may be rather beneficial. First, the global economy may improve the income in developing countries or the countries that are less developed. Foreign investments can be an interesting proposition for such a country like Bangladesh to introduce its agricultural services to the countries that have poor access to the same services.9
Still, it is not the only idea on how to comprehend the essence of the global economy and its worth. With time, the demands and requirements have been changed dramatically. People were in need of understanding their options and made the conclusions fast. In fact, the global economy has been developed in several stages: the preindustrial period that lasted from 1400 until the beginning of the 1800s, the industrial period that took place between the beginning of the 1800s till 1945 (the end of World War II), the period of the Cold War between 1945 and 1989, and the period called the Post-Cold-War that began in the 1990s, and it lasts today.10 All these periods of the global economy evolution have been coined and explained by O’Brien and Williams in mutual projects at the beginning of the 2010s. It proved that the authors got a chance to compare and investigate all stages properly and come to the same conclusions about the worth of each period in regards to the development of international trade relations.
Regarding the available primary and secondary sources, it is possible to investigate the evolution of the global economy and understand its nature, whether it is good, bad, or both. There are two main factors that may influence the global economy and its further development: the improvement of global trade conditions and the demographic change that can promote the competitiveness of the nations.11
Trade relations, as well as the global economy, have long roots. One of the first stages mentioned by many researchers is the pre-industrial period that lasted from the 1400s until the beginning of the 1800s. Investigating the historical aspect of the global economy, it is possible to observe a number of contradictions. For example, Oatley says that the global economy began in the middle of the 19th century only;12 O’Brien and Williams define the pre-industrialized period and underline its importance as the global economy forged period.13In fact, it was the period when the global economy was discovered. The Europeans learned to explore, share, and exchange services with the representatives of America, Asia, and Africa. It was the period of global expansion when Russian merchants offered their goods to such countries as Britain, Turkey, China, etc. By the way, during a long period of time, China remained to be the most powerful trade body in the world. The peculiar feature of the relations offered was the choice of the products appropriate for the elite.14 China was ruled by one strong political authority, and it was hard to diversify the services. As soon as one direction was chosen, it was supported for a considerable period of time.
If there were some contradictions in terms of the first period of time, the period between the beginning of the 1880s and 1945 was recognized as the most powerful part of the global economic evolution. It was the time when long-distance trade became possible; it was the time when technological innovations improve trade relations between many countries; it was the period when new possibilities were used and even required by the governments.15
It was the time when the governments settled a mutual gold-backed currency system. France used to have a bigger gold reserve in comparison with other European countries; it was easy for this country to follow this requirement.16 With time, the countries started offering their gold standards (Britain was the first country to offer the gold standard; then, Germany followed that example). At the beginning of the 19th century, Britain took the leading position in international trade and had a considerable amount of economic power. It was not convenient for other countries like Germany to follow the standards dictated by Britain and Russia. It was necessary to gain more power from the political and economic points of view. The global economy turned out to be a good and explainable reason for why some countries joined the war and put the desire to gain political and economic world recognition as one of the main goals to be achieved.
When Germany failed to take the leading position in the economic world and lost the Second World War, the global problems did not disappear. On the other hand, American economists were not able to solve the existing economic problems and could not stabilize the global economy after the First World War and the Second World War. Still, after the Japanese and German failures in the wars, the USA could gain the required fame and a stable global economic position promoting the development of the World Trade Organization (WTO), the World Bank.17 In addition to the global economic institutions, there were a number of local institutions by means of which the governments could control the economic relations and predetermine the possibilities of the countries.18 For example, the Group of 77 is one of the brightest examples of how the developing nations could be grouped and promote their mutual economic and trade interests. The peculiar feature of this period of evolution is the attention the politics paid to the sphere of the global economy and the necessity to eliminate trade barriers within a short period of time.
Finally, as soon as the Cold War was not as evident as it was in the middle of the 1980s, the global economy was considerably improved because the countries did not pay attention to their potentials and the necessity to take the leading positions but focused on the external factors like the identification of the rival firms and their emergency, the revolution of information technologies, and the promotion of the international organizations.19 The terms of trade were defined to follow the difference between import and export. The politicians started paying more attention to their possible impact on the development of economic relations with different countries. People turned out to be more interested in the idea of developing international trade relations and getting more benefits. The current global economy is a chance to demonstrate the national potential and the countries’ abilities to import and export services and goods and improve the local economies by means of the mutual global economy standards.
Conclusion
In general, the evolution of the global economy is the way of how this concept was coined and evaluated by society. People could demonstrate different attitudes and opinions about the role of the global economy. Besides, the countries that are in the global economic relation could achieve different goals. The majority of them are beneficial for particular countries. The role of the global economy is to help the countries achieve high results in their trade relations and set the goals, and choose the methods to achieve the goals in an appropriate and effective way. The chosen primary and secondary sources help to clear up the worth of the global economy and understand that the global economy is not only the trade relations between the countries around the whole world. It is a combination of different specific factors that help the country to become a powerful economic and political body.
Bibliography
Kwasnicki, Witold. “Logistic Growth of the Global Economy and Competitiveness of Nations.” Technological Forecasting & Social Change 80 (2013): 50-76.
O’Brien, Robert, and Marc Williams. Global Political Economy: Evolution and Dynamics. New York: Palgrave MacMillan, 2013.
Oatley, Thomas. International Political Economy. New York: Routledge, 2013.
Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. London: Strahan, 1776.
Spilsbury, Richard. Global Economy. London: Raintree, 2013.
Taillard, Michael. 101 Things Everyone Needs to Know about the Global Economy: The Guide to Understanding International Finance, World Markets, and How They Can Affect Your Financial Future. Avon: Adams Media, 2013.
The World Bank. Services, etc., Value Added. Web.
The World Bank. Services, etc., Value Added. Web.
World Trade Organization. Doha WTO Ministerial 2001: Ministerial Declaration. Web.
Footnotes
- Thomas Oatley, International Political Economy (New York: Routledge, 2013), ix.
- Robert O’Brien and Marc Williams, Global Political Economy: Evolution and Dynamics ( New York: Palgrave MacMillan, 2013), 7.
- David Ricardo, The Works and Correspondence of David Ricardo, ed. Piero Sraffa and MH Dobb (Indianapolis, IN: Liberty Fund, 2004), 14.
- Michael Taillard, 101 Things Everyone Needs to Know about the Global Economy: The Guide to Understanding International Finance, World Markets, and How They Can Affect Your Financial Future (Avon: Adams Media, 2013), 11.
- Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (London: Strahan, 1776), 5.
- The World Bank, Graph from Services, etc., Value Added, Web.
- The World Bank, Graph from Services, etc., Value Added, Web.
- Richard Spilsbury, Global Economy (London: Raintree, 2013), 10.
- Ibid., 24.
- Robert O’Brien and Marc Williams, Global Political Economy: Evolution and Dynamics ( New York: Palgrave MacMillan, 2013), 44-102.
- Witold Kwasnicki, “Logistic Growth of the Global Economy and Competitiveness of Nations,” Technological Forecasting & Social Change 80 (2013): 50.
- Thomas Oatley, International Political Economy (New York: Routledge, 2013), 15.
- Robert O’Brien and Marc Williams, Global Political Economy: Evolution and Dynamics ( New York: Palgrave MacMillan, 2013), 44.
- Ibid., 46
- Thomas Oatley, International Political Economy (New York: Routledge, 2013), 15.
- Lecture Notes.
- Ibid., 19.
- Lecture Notes.
- Robert O’Brien and Marc Williams, Global Political Economy: Evolution and Dynamics ( New York: Palgrave MacMillan, 2013), 96.