FTM482 Chapter 2

FTM482 Chapter 2 - FTM482 Chapter 2 THE WORLD ECONOMY- AN...

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FTM482 Chapter 2 THE WORLD ECONOMY- AN OVERVIEW During the past two decades, the world economic environment has become increasingly dynamic; chance has been dramatic and far-reaching. To achieve success, executives and markers must take into account the following new realities: Capital movements have replaced trade as the driving force of the world economy Production have become “uncoupled” from employment The world economy dominates the scene: individual country economies play a subordinate role. The struggle between capitalism and socialism that began in 1917 is largely over The growth of e-commerce diminishes the importance of national barriers and forces companies to reevaluate their business models. 1. The first change is the increased volume of capital movements. Global capital movements far exceed the dollar volume of global trade. 2. The second change concerns the relationship between productivity and employment. Gross Domestic Product (GDP), a measure of a nation’s economic activity is calculated by adding consumer spending (C), investment spending (I), government purchases (G), and net exports (NX): C+I+G+NX=GDP Economic growth, as measured by GDP, reflects increase in a nation’s productivity. Until the recent economic crisis, employment in manufacturing had remained steady or decline while productivity continued to grow. Now, because of the global recession, both employment and productivity are declining. 3. The third major change is the emergence of the world economy as the dominant
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This note was uploaded on 10/17/2010 for the course FTM 482 taught by Professor Moore during the Fall '10 term at N.C. State.

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FTM482 Chapter 2 - FTM482 Chapter 2 THE WORLD ECONOMY- AN...

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