Australia_in_the_Global_Economy - Nature of globalisation...

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Nature of globalisation and the global economy The Global Economy Economies of individual countries are increasingly linked to each other and changes in an economy can have ripple effects on another. Gross World Product (GWP) The combined value of all goods and services produced worldwide each year in the global economy . IMF report estimates a GWP of US$40 714 billion. Globalisation Globalisation: the increased integration between countries and economies and the increased impact of international influences on all aspects of life and economic activity. Indicators of globalisation: international trade flows international finance growth in international investment & technology movement of labour / workers between countries Trade: International trade refers to all economic transactions which take place between individuals, business firms and governments in different countries. Trade economically is beneficial - enables countries to specialise. Globalisation has led to fast growth, and has favoured countries with high incomes TNC’s (eg. Microsoft) have a significant influence and have developed global production processes (different stages of production are carried out in different nations) Trade has increased world trade flows due to trade liberalisation and major trade agreements (eg. WTO, NAFTA, APEC & EU) Trade in goods and services has grown from $US8.5 trillion (39.3% global output) in 1990 to $US17.3 (50%) in 2003 GDP now 7 times its level in 1950 Volume of world trade is 25 times level in 1950 Investment and Technology: Investment is any current expenditure where the benefits will be obtained in the future and usually involves the purchase of capital goods. Two types of global investment: Foreign Direct Investment (FDI) : involves movement of funds directly being invested in economic activity or in the purchase of companies. FDIs create capital and are long term investment. - $US 209 bill. in 1990 to $US 1.5 trill. in 2000 – but 2003 $US 560 bill. as economy slow downed - 2003 high income received 73.5% of worlds net FDI inflows while developing sub Sahara Africa received 1.8% Portfolio investment : overseas corporations purchasing shares, debentures or other securities in existing domestic companies. This is often speculation. the short term of funds for loans are the purchase of small share holdings Technology: Has played a significant role in the expansion of trade and investment between countries. It creates more efficient production processes as well as new products and services. It has reduced the distance between countries. Businesses that have a leading role in new technology often move directly into overseas markets to sell products to local buyers (eg. IBM) Finance: Globalisation of finance major impact in terms of linking economies around the world
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Foreign direct investment (FDI), portfolio and other short terms capital flows have grown Growths were due to the deregulation of
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This note was uploaded on 01/17/2012 for the course BUSINESS BU2005 taught by Professor Smith during the Three '10 term at Bond College.

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Australia_in_the_Global_Economy - Nature of globalisation...

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