[Author’s Name]
[Institution’s Name]
Essay on The Global Economy in the 21st Century
Yesterday’s competitive market battles were fought in Western Europe, Japan and United States; tomorrow’s competitive battles will extend to Latin America, Eastern Europe, Russia, India, Asia and Africa as these emerging markets open to trade. More of the world’s people, from the richest to the poorest, will participate in the world’s wealth through global trade. The emerging global economy in which we live brings us into worldwide competition with significant advantages for both marketers and consumers. Marketers benefit from new markets opening and smaller markets growing large enough to become viable business opportunities, consumers benefit by being able to select the lowest-priced and widest range of goods produced anywhere in the world. Bound together by satellite communications and global companies, consumers in every comer of the world are demanding an ever-expanding variety of goods.
The basic facts about the global economy point to one dimension of global interdependence: The relative scale or magnitude of economic flows linking the various parts of the world. However, there is also a second dimension of interdependence: sensitivity. For example, imports of crude oil may account for relatively small fractions of total U.S. consumption, but the world market price of this marginal volume of imports determines the price of oil throughout the domestic market. The significance of this point is obvious to everyone who remembers the gas lines and multiple price increases of the 1970s; the OPEC countries never accounted for a large share of total U.S. oil consumption, it was the sensitivity of the entire market to their marginal contributions that mattered. The most telling recent example of international sensitivity is the near-collapse of the Japanese banking system.................
