International economic integration The global economy The global economy is where the economies of individual countries are linked to each other and how changes in a single economy can have ripple effects on each other Gross world products GWP is the aggregate value of all goods and services produced worldwide each year in the global economy. GlobalisationGlobalisation is the integration between different economies and the increased impact of international influences on all aspects of life and economic activity. Trade in goods and services International trade in goods and services is an important and indicator of globalisation because it is a measure of how goods and services are produced in an economy are consumer in other economies worldwide Trade in goods and services has grown rapidly in recent decades, increasing from $US 8.7 trillion (38% of global output) in 1990 to $US 40.8 trillion (70 % of global output) in 2009. The size of the gross world product is now over ten times its level in 1950,but the volume of world trade has grown to over 40 times its 1950 level The size of global trade reflects the fact that economies do not produce all the items they need, or they do not produce them as efficiently as other economies (comparative advantage). Composition of trade is the mix of what goods and services that an economy trades. Global trade is dominated by manufacturing (e.g. vehicles, clothing and electronic goods) The direction of trade flows has changed in recent decades, reflecting the changing importance of different economic regions. Between 1995 and 2009, high income economies saw their overall share of global trade fall from 82% to 70% of world merchandise exports. With Chinas economy playing an increasingly important role in the global trade, other economies have placed an increased priority on their trade relationships with China. Chinas economy has grown rapidly in recent decades, and this points towards an expanding market for exports in the future

Financial flows (portfolio) Finance is the most globalised feature of the world economy because money moves between counties more rapidly than goods and services or labour International financial flows have expanded substantially flowing financial deregulation around the world, which is the most countries occurred in the 1970s and 1980s. deregulation such as controls on foreign currency markets, flows of foreign capital, banking interest rates and overseas investment in share markets were lifted Technological change also played an important role in the expansion of international financial flows. New technological advancement and global communication networking have linked financial markets through the world and have reduced the cost of world trade. An important feature of international finance are foreign exchange markets (FOREX markets), which are networks of buyers and sellers exchanging one currency for another in order to facilitate flows of finance between countries. Foreign exchange markets have experience extraordinary growth in recent years, with average daily turnover reaching $4 trillion in 2010 Speculators are investors who buy or sell financial assets with the aim of making profits form short term price movements 95 % of foreign exchange transactions are undertaken for the main purpose of deriving short-term profits from fluctuations of currency assets and shares, rather than being directed towards trade and long-term investment. The main benefits of greater global financial flows is that it allows counties to obtain funds that are used to fund domestic investment

Investment and transnational corporations (FDI) Another indicator of globalisation is the rapid growth of investment between countries over the past two decades. One measure of globalisation of investment is the expansion of foreign direct investment (FDI), which involve long term movement of funds in order to buy over 10% of an existing company or to establish a market position overseas FDI flows are strongly influenced by the level of economic activity. the recent GFC saw FDI flows fall significantly, because of the great risk of investment in a recession period FDI flows have traditionally favoured developed nations, with greater industrial capacity and larger consumer markets; these advanced economies (USA, Japan & Europe) were the natural destination. However, in the 2010 for the first time in history, emerging economies received more FDI flows than developed economies (China, Brazil and India). Transnational corporations (TNCs) play a vital role in global investment flows. Often, they will have production facilities in counties around the world, sourcing inputs from some counties, doing most of the manufacturing in another country and doing packaging and marketing tasks in another country (from the 1990s the number of TNCS have grown from 37000 to 104000) Because of the capital and job opportunities they bring governments often encourage TNCs to set up in their country through supportive policies like subsidies or tax concessions Another significant cause of the growth of international investment is the increased level of international merges and takeovers which typically move line with changes in economic conditions Technology, transport and communication Technological development facilitate the integration of economies consider the following: Advancements in freight(transportation) technology like standardised shipping containers (containerisation), cargo tracking and more efficient logistics systems Advancement in telecommunication industry (cheaper and faster) has allowed provision of commercial services to customers worldwide Advancements in computer and communication networks have allowed money to move around the world in fractions of a second Advancements in transportation technology such as air craft and high speed rail networks allow greater labour mobility between economies as well as accessibility to tourism and travel for customers Technology influences globalisation as the driver for growth in trade and investment International division of labour, migration Labour market differ from markets for goods and services, finance and incensement, in that they are for less internationalised. While money can move rapidly around the world. Goods and services can move in days and investment can be made in weeks, people can no move jobs quite as freely The world bank estimates that there are almost 200 million people who have migrated to work in different countries in the orld, and that rising labour supply pressure and income inequality could increase this level The movement of labour between economies appears to be concentrated at the top and bottom ends of the labour market At the top end, highly skilled workers are attracted towards riches economies because of the higher pay and better opportunities available in these countries. In effect, there is a global market for the most highly skilled labour (scientists) At the bottom end of the labour market, low skilled labour is also in demand in advanced economies where it may be difficult to attract sufficient people born locally to do certain types of work (basic skilled: taxi) These trends (high & low skilled movements of labour) reflects and international division of labour whereby people move to the jobs where their skills are needed, while globalisation of the labour market is increasing but there are still significant barriers to working in other countries (migration restrictions) The international division of labour is also evident from aspect of the world economy (shifts in businesses between economies, rather than the shift of people). Just as people may move between countries in search of the best jobs opportunities, corporations shift production between economies in search of the most efficient and cost efficient labour. In a globalised business environment, many producers operate what is sometimes a global supply chain (where production facilities are in several countries). This is known as offshoring or outsourcing The international division of labour reflects the economic concept of comparative advantage (economies produce what they are good at) The regional and international business cycle International business cycle Business cycle refers to the fluctuating patterns that economies go through overtime, from above to below average growth. This is caused by changes in the level of aggregate demand and supplyTimeOutputs

Just as individual economies experience stronger and weaker periods of economic growth, so too does the global economy. The ebb and flow of world economic growth is known as the international business cycle, which refers to fluctuations in economic activity in the global economy over time Although economic growth differs greatly between countries, for most countries, economic growth is stronger when the rest of the world is growing strongly and weaker when other countries are experiencing a downturn this primarily highlights the strong relationship between the economic growth performance of the words major economies and how intergraded economies have become. Evidence: the RBA has revealed that 63% of changes in the level of output (performance) in Australia rely on interest rates, growth levels, and inflation rates (external forces) for the group of seven (G7) largest economies. The transmission of economic conditions from one country another is made more immediate by the increased integration of economies during the globalisation era (how economies are linked) Trade flows There is a boom or reception in one country, this will affect its demand for goods and services from other nations, the level of growth in an economy will have a flow on effect on economic activity on other economists Investment flows Strong economic conditions in one country will make it more likely that businesses in that country will invest in new operations in other nations, which will then add to their economic activity. in the late 2000s one of the causes of slow FDIs in flows in developing countries was weaker economic performance in the USA

Transnational corporations TNCs are an increasingly important means by which global upturns and downturns are spread throughout the global economy. In 2011 for eg, Toyota temporarily reduced its manufacturing operations in Australia because of the impact of earthquakes and tsunamis in Japan and on the company Financial flows Short term financial flows also play an important role in transmitting the international business cycle. A 2009 IMF paper how linkages fuel fire, conclude that 70% of financial market volatility in advanced economies is transmitted to emerging economies and the transition takes one to two months

Financial market and confidence Consumer confidence and the animal spirit of investors are constantly influenced by conditions in other countries. This is highlighted by the strong correlation between movements in share prices of the worlds major stock exchange i.e. they lead to synchronised fluctuations Global interest rate levels Monetary policy conditions in individual economies are increasingly influenced by interest rate changes in other countries. If weak economic growth makes it necessary for the central banks to lower interest rates in the USA, this places pressure on central banks in other economies to follow suit International organisations International forums such as the Group of Twenty (G20) or Group eight (G8) can play an important role in influencing global economic activity. Discussions of global economic conditions at summit meetings means that the G20 or G8 can act as the unofficial forums coordinating global macroeconomic policy especially during periods of economic uncertainty Never the less, it is important to note that despite these linkages, the pattern and the pace of economic growth differ between countries. Even countries that are at similar stages of economic development, such as the USA and European economies, experience differing levels of economic growth. Despite the global linkages described above, many of the factors that influence the business cycle differ between economies: Interest rates Interest rates have a significant influence, through monetary policy, in the stimulation or dampening of economic activity. therefore, differences in interest rates between economies would reduce the level of influences that economies have on each other Our interest rate levels relatively high compared to other advanced economies, reflecting our better economic position Fiscal policies Government fiscal policies also have significant effect upon the level of economic growth in the short & medium term. For instance, an economy that raises taxes and another that reduces taxes will have adverse levels of economic growth Our budget is returning to fiscal consolidation (returning to balance), while other economies are struggling with record budget deficit as they desperately attempt to stimulate their economies Exchange rates Exchange rates (value of currency) differ between countries and impact on the level of trade competitiveness and confidence with economies The Australian dollar is currently experiencing upward trend of appreciation while other currencies after the GFC are struggling with a depreciating currency. This reflects Australias strong trade performance and confidence in our economy Structural factors Economies have different comparative advantage, resources and attitude towards consumption and savings. They vary in terms of reliability and resilience in their financial systems, population growth rates and age distribution and different methods of regulating labour markets, educating and training employees and regulating business. These structural factors influence the competitiveness of economies and their level of growth

Regional factors The physical location of economies and their involvement in trade relationships, trade agreements and international organisations, to a large extent will affect an economys involvement in the global market (e.g. Australia is geographically isolated)

Regional business cycle Similar to the international business cycle, regional business cycle refers to the changes in economic activity in a particular region. In the same way that countries activity can be affected by global changes, they can also be affected by regional changes. While changes in US economy will have ripple effect around the world, they can have more profound impacts in North America on the nearby Canadian and Mexican economies because of their integration through the North American Free trade Agreement In the East Asian region, economic conditions are dominated by the influence of Japan & China (2nd and 3rd largest economies). While historically, a regional business cycle in Asia has been less pronounced, it has strengthened in recent years because of increased integration between Asian economies. This has had implications for countries like Australia which is now more synchronise with conditions in East Asia that it is with the USA & European business cycle. Other regions around the world have a higher proportion of developing of low income economies and they tend to be less regionally integrated. In Sub-Sahara Africa, for example, many economies such as Uganda are dependent on high income economies for more than 80% of their exports and are therefore as likely to be influenced by conditions in the world economy as they are by neighbouring African economies While regional business cycle ted to be dominated by the largest and most global economies, it is also important to recognise the complexity of conditions at the regional level. For example, while the Greek economy is one of the smaller economies of the European Union, its sovereign debt problems in 2011 triggered a less confidence in financial that spread to neighbouring economies, contributing to regional financial instability Clearly, regional business cycles can be quite different from pattern in global economic activity, with some regionals performing more strongly than others, and fluctuating more independently from other regions

Trade, financial flows and foreign investment Trade is vital for economies in pursing economic growth. It allows economies to produce greater output that they preciously did by exporting their comparative advantages. Economies today are trading greater proportions of what they produce creating greater wealth for individual economies around the world The basis of free trade Free trade can be defined as a situation where governments impose no artificial barriers to trade that restrict the free exchange of goods and services between countries with the aim of shielding domestic producers from foreign competitors The argument for free trade is based on the economic concept of comparative advantage Comparative advantage is the economic principle that nations should specialise in the areas of production with comparative efficiency which is measured as the lowest possible opportunity cost, and trade with other nations so as to maximise both nations standards of living Example: if Australia gives up fewer computers to produce another unit of wine that does United states, then Australia has a lower opportunity cost that united states, thus is said to have a comparative advantage in wine productionAdvantages of free tradeDisadvantages of free trade

Trade allows countries to obtain goods and services that they cannot produce themselves, or in sufficient quantities to satisfy domestic demand. This would generally occur because of a lack of adequate resources. For example, a country may lack the necessary technology to produce certain manufactured goodsAn increase in short term unemployment may occur as some domestic business may find it hard to compete with imports. However, the short term rise in unemployment should correct itself in the long term, as the domestic economy redirects resources to areas of production in which it has a comparative advantage

Free trade allows countries to specialise in the production of the goods and services in which they are most efficient. This leads to a better allocation of resources and increased production within countries, and throughout the worldFree trade may encourage environmentally irresponsible production methods because producers in some nations may produce goods at a lower cost because of weaker environmental protections and environmentally damaging practices

Free trade encourages the efficient allocation of resources. Resources will be used more efficiently because countries are producing the goods in which they have a comparative advantageProduction surpluses form some countries may be dumped (sold for unrealistically low prices) on the domestic market, which may hurt efficient domestic industries

A greater tendency for specialisation leads to economies of scale, which will lower average costs of production and increase efficiency and productivity even furtherIt may be more difficult to establish new businesses and new industries if they are not protected from larger foreign competitors

International competitiveness will improve as domestic businesses face greater competitive pressures from foreign producers, and governments will encourage domestic industrial efficiency

Free trade encourages innovation and the spread of new technology and production processes throughout the world

Free trade leads to higher living standards as a result of lower prices, increased production of goods and services and increased consumer choice as countries have access to goods that a lack of natural resources may otherwise prevent. The opening up of global markets leads to higher rates of economic growth and increased real income

Role of international organisations World Trade Organisation (WTO) The World trade organisation is one of the most powerful global economic institution The role of the WTO is to implement and advance global trade agreements and to resolve trade disputes between economic Prior to the WTO the General Agreement on Tariffs and Trade (GATT) was responsible for developing trade agreements (1997) The Uruguay Round led to the WTO agreement. For the first time, the scope of the trade agreement went beyond trade in goods to include trade in services (such as insurance and banking) and intellectual property (such as patent, copyright, trademarks, etc.) The WTOs membership is growing with 155 countries in 2010 and 29 further countries applying to join. If the Doha Round is successful in its ambitions of deregulations, the World Bank estimates that the resulting increase in global trade would increase global economic activity by $520 billion by 2015 and lifting over 140 million people out of poverty in the developing world. However, the Doha Rounds ambition to lift millions of people out of poverty is under jeopardy after difficulty negotiations with member nations in implement these goals ( the developed would not free up its agricultural market to the developing world) (2008) The WTO intends to broaden its agenda to include issues such as economic development, exchange rates, and climate change and foods security. International Monetary Fund (IMF) The international Monetary Fund is one of the most important institutions in the global economy. It has 186 members, covering almost all nations The role of the IMF is to maintain international financial stability In situations where a financial crisis occurs in an economy, region or even across the world the world, the IMF plays a critical role in minimising the crisis In response to the GFC, the IMF injected $250 billion into the global economy, to promote liquidity in the global financial system, and provided specific support for countries hard-hit by the crisis to stimulate their economy The IMFs policies are to support the free trade of goods and services and the free movement of financial and capital throughout world markets. The IMF often require countries to change their economic policies and open up their market before they receive financial assistance (structural adjustment policies) The impact of the IMFs policies approach is increased by the fact that many international banks and other private leaders require that country to adopt IMFs support policies before they are willing to lend to those nations The IMFs structural adjustment policies have played an important role in the process of globalisation, effectively ensuring that most economies have adopted similar economic strategies in recent years

Part of the IMFs structural adjustment policies is that it asks developing economies embrace the global economy by advising them to: Cut the size of government Privatise government owned industries Deregulate market policies that inhibit business practice Open Market to foreign competition The IMF advices economies to: Embrace globalisation Export led growth Embrace deregulation and privatisation Embrace budget balancing

World Bank The World Banks role in the global economy is primarily concerned with helping poorer countries with their economic development The official title of its main organisation is the international Bank for reconstruction and development The focus of the main organisation (IBRD) is to: Fund investment in infrastructure Reduce poverty Help countries to adjust their economies to the demand of globalisation Other Organisations within the World bank that provide specific assistance to lower income countries: The international Development Association provides soft loans (i.e. loans at little or no interest to developing countries The International Financial Corporation has the role of attracting private sector investment to the Banks project The Multilateral Insurance Guarantee Agency provides risk insurance to private investors The World Bank is funded by contributions from member countries and from its own borrowing in global financial markets The World Banks major aim (as set out in the millennium Development Goals) has been to reduce the proportion of people living on less than $1 a day to half the 1990 level by 2015 (from 29 precent to 14.5 precent of all people in low-and-middle income economies In response to the GFC in 2008, the World Bank has provided over US$280 in assistance to developing countries. Furthermore, immediately after the GFC the World Bank tripled lending from $13.5 billion to 35 billion to assist lower income economies. The World Bank in recent years has been its support of the Heavily Indebted Poor Countries Initiative (where the World bank relieves countries that are in debt because it has borrowed)

United Nations The United Nations was established in 1945 aid has grown to cover 192 member states. Its agenda is broader than any other organisations, covering the global economy, international security, the environment, poverty and development, international law and global health issues The UN has historically played an important role in supporting greater linkage between economies and promoting globalisation

Organisation for Economic Co-operation and Development (OECD) The organisation for Economic Co-operation and Developments an international economic organisation of 31 countries committed to democracy and to the market economy The primary goal of the OECD is to promote policies to achieve the highest sustainable economic growth and employment and a rising standard of living in member countries, while maintaining fiscal stability, and thus contributing to the development of the world economy Influence of government economic forums (G20 G8) Group of Eight Nations (G8/G7) The group of eight (G8) largest industrialised nations include the US, UK, France, German, Canada, Japan Italy and Russia along with the European Union (it was previously now as G7 because Russia was not included) The G8/G7 has effectively operated as the economic council of the worlds wealthiest nations, meeting annually to discuss conditions in the global economy Because of the G8s status as the forum for the worlds most powerful economies, its agenda has often included general political issues and current priorities such as climate change, global poverty and security Group of Twenty Nations (G20) The G20 emerged as the leading council of nations responsible for the management of the global economy The meeting achieved agreement on measures to improve coordination of fiscal stimulus being implemented by governments around he world, as well as on a plan for improved supervision of the global financial system and international financial institutions The Toronto summit in 2010 focussed on balancing the need for a long term place to reduce fiscal deficits while continuing to support global economic recovery

Trading blocs, monetary unions and free trade agreementsAs trade has grown and economies have become more integrated countries have in recent years moved to form agreements and trading alliances to ensure that they are in the best position to gain from growing trade opportunities and also to avoid being excluded from emerging trading blocs

There are two major types of trade agreements existing in the global economy Preferential free trade agreements (which are regional or bilateral agreements) Multilateral agreements (which are open to all nations) A trading bloc occurs when a number of countries join together in a formal preferential trading agreement to the exclusion of other countries, such as European Union (EU) and the North American free trade Agreement (NAFTA) Monetary union is where two or more countries share a common currency (EURO) Free trade agreements (or preferential trade agreements) are formal agreements between countries designed to break down barriers to trade between those nations. When the agreement is between two countries it is said to be bilateral and when the agreement is between two countries it is said to be bilateral and when the agreement is between three or more economies it is said to be multilateral or regional. While these agreements are generally described as free trade agreements because in effect they give more favourable access to goods and services from one nation or a group of nations compared to another. Sometimes they can make it harder for nations outside the preferential trade agreement to trade at all. In contrast, global free trade agreements, conducted through the World Trade Organisation (WTO), are designed to break down all trade restrictions and free up world trade Regional trade agreements have multiplied in recent decades, with the number of agreements in force jumping from 27 agreements in 1990 to 278 in 2010. In fact, only one WTO member (magnolia) is not a party to a regional or bilateral trade agreements in recent years had led to what some economist have describe as the emergence of regionalisation, not globalisation Evidence: around two0thirds of European trade occurs within the European Union, demonstrating both its vast size and its tendency to be a more closed trade bloc due to protectionist policies Trade AgreementsTrade Agreements

Global agreementsBilateral AgreementsMultilateral or Regional agreements

WTO CERTA SAFTA TAFTA AUSFTA CHAFTA EU NAFTA APEC AFTA AANZFTA

Advantages and disadvantages of multilateral (EU, APEC, NAFTA, ASEAN) and bilateral agreements Asia-Pacific Economic Cooperation (APEC) forum Asian-pacific Economic Cooperation (APEC) forum was formed in response to the formation of trading blocs around the world (EU, NAFTA) Its member include: Australia, Brunel, Canada, Chile, Hong Kong , Indonesia, Japan Malaysia, Mexico, New Zealand, Pap New Gunnie, Peru ,The Philippines, Russia, Singapore, South Korea, Taiwan, Thailand, USA and Vietnam The APEC forum is intended to be a free trade group that supports the WTO and addresses all impediments to the objective of free and open trade and investment in the region. It is intended to be non-discriminatory group (not a secluded trading bloc like EU), in that it will trade with countries outside of the grouping on the same basis of members of the forum if they are prepared to give equal access to their market However, the APEC meetings has not succeeded in its origin ambition to create a regional area of free trade, instead the APEC meetings have increasingly served simply as an opportunity for leaders to meet and address whatever issues were the priorities if the day (i.e. financial crisis, climate change and terrorism) APEC forums has 40% of the worlds population, 54% of world GDP and 48% of world trade The European Union The European Union (EU) is the most important trade bloc in the world economy. Its member span across the European continent, with membership growing to 27 nations in 2007, giving it a pollution of around 500 million people. Currently three additional countries The EU is a single market for European goods and services was established in 1992, and this has helped drive strong trade growth within the EU. However, the EU has tended to raise tariff barriers against non-member countries, resulting in accusations that the EU is a closed trading bloc The increase in protection has had major implications for non-European countries (some large international traders, such as USA and some relatively small as Australia) In particular, the high rates of protection applied to agricultural product in the EU (almost 40 precent of EUs budget of $A220 billion is spent on agriculture) and the huge oversupply of agricultural commodities that this generated, has prompted a retaliation from the USA with similar protection policies. This has left smaller agricultural trading countries around the world , including Australia suffering in this ongoing conflict North American free Trade Agreement (NAFTA) NAFTA was established in 1994 and is composed of United States, Canada and Mexico NAFTA is a free trade agreement in which agricultural protection is being completely eliminated and other tariffs are being phased out over a period of 5 15 years NAFTA has resulted in substantial increase in trade among its members. Access to the United States market has resulted in significant increases in exports for the two other members, while the US has benefited from shifting the production facilities to Mexico where wage costs are substantially lower Free Trade Area of the Americans (FTAA) is a potential trading bloc between America

Bilateral trade agreements A bilateral trade agreement occurs between two economies A good example of this is the Closer Economic Relations Trade Agreement (CERTA) (between Australia and New Zealand) CERTA has gradually been extended in recent years, such as with the harmonisation of business regulations, and tax laws between the two economies. This agreement has led to an 8% annual increase in trade between Australia and New Zealand Bilateral trade agreements have experienced a resurgence in recent years

This resurgence is due to: Show progress of the WTO to create multilateral negotiations United States using its economic power to negotiate bilateral agreements more favourable for itself However, economist are divided over the extent to which bilateral agreements claim OF delivering large increase in trade is not always true. In fact, the cost of implementing these agreements are underestimated and the benefits exaggerated

Association of South East Asian Nations (ASEAN) The ASEAN group covers emerging economies in South East Asia but doesnt include any f the large economies. ASEAN has acted as a counter-weight to the APEC forum, which tends to be dominated by large advanced economies such as US, Japan and China. ASEAN is now the most important force for trade negotiations within the Asia Pacific region. The ASEAN Free Trade Area (AFTA) comprises of Indonesia, Thailand, Malaysia, Singapore, The Philippines, Vietnam, Brunei, Burma, Cambodia and Laos The ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) agreement came into effect in 2010, with ASEAN nations committing to lowering and eliminating tariffs on 96% of Australian exports to the region. This is the largest preferential trade agreement that Australia has concluded representing 20% of Australias trade in goods and services and covering economies with a GDP of over $US 1 trillion

ProtectionProtection can be defined as any type of government action that has the effect of giving domestic producers an artificial advantage over foreign competitors. The main protectionist measure include tariffs, import quotas and subsidies Reasons for Protection Despite the economic argument in favour of free trade, historically most countries have tend to impose at least some form of protection to assist local producers in the face of foreign competition. A number of arguments have been put forward to justify why countries impose protectionist barriers to trade, including the need to assist infant industries, protecting industries from overseas firms dumping goods, reducing unemployment and argument of self-sufficiency in certain times (war) Infant industries (major reason) During establishment phase new industries generally face many difficulties and risks. They usually start out on a small scale (have not achieved economies of scale yet), with costs that are relatively higher than those of the more established firms competing in the international arena. It is argued that these infant industries may need protection in the short run to enable them to expand their scale and reduce their cost of production so that they can compete with the rest of t the world For this argument to be valid, the protection should be temporary, otherwise there would be no real incentive for the industry to reach a level of efficiency that would enable it to compete with protection and a good chance of achieve a comparative advantage in the long run Prevention of dumping Dumping occurs when foreign firms attempts to sell their goods in another countrys market at un realistic prices The practice of dumping may occur for two reasons: To dispose of large production surplus To establish a market position in another country These low prices are usually only of a temporary nature but can harm domestic producers, local firms that could normally compete with such foreign producers may be forced out of business, causing a loss in countrys productive capacity and higher unemployment The only gain from dumping is that it results in lower prices for consumers in the short term, but this does not last, as foreign producers will put up their prices one the local competition is eliminated. Under such circumstances, it is generally in the economys best interest to impost restrictions on such imports However in recent years the WTO has questioned whether countries might be abusing their entitlement to prevent dumping and falsely accusing efficient low-cost foreign producers (economies with comparative advantage) of dumping as an excuse to give domestic producers on artificial advantage

Protection of domestic employment One of the most popular arguments in favour of protection is that it saves local jobs. If local producers are protected from competition with cheaper foreign imports, the demand for local goods will be greater and this will create more domestic employment However, economists argue that protection will tend to distort the allocation of resources in an economy away from areas of more efficient production towards areas of less efficient production (survival of the fittest) In the long run, this is likely lead to higher levels of unemployment and lower growth rates. On the other hand, by phasing out protection it is hoped that better and more lasting jobs will be created other sectors within the economy that are internationally competitive Furthermore, if a country protects its industries, it is possible that other countries will retaliate and adopt similar protectionist polices. The net result could be that country would maintain employment in less efficient protected industries but lose employment in more efficient export industries. Also, the increased cost of foreign imposters worldwide results in higher prices for everyone as firms aim to main profitability Defence and self-sufficiency Major superpowers generally want to retain their own defence/weapons industries so that they are able to produce their own defence equipment in periods of war regardless whether it is cheaper to be produced overseas Similar to defence, economies need to be self-sufficient in food supplies (e.g. Japan) Other arguments Economies need to protect their country from foreign goods that could harm their environment Methods of protection and effects of protectionist policies on the domestic and global economy Methods of protection Tariffs A tariff is a government imposed tax on imports. It has the effect of raising the price of the imported goods, intending to making the domestic producers more competitive The diagram to the right reveals the following The curve SS and DD represents domestic supply and demand OP is the price of imported goods in there was no tariffs applied (i.e. in a situation of free trade). At this price demand 0Q1, domestic producers supply 0Q, and the quality imported would be QQ1 If a tariff of PP1 is imposed, all of which is passed on to consumers, demand will contract to 0Q3, domestic supply will expand to 0Q2, and imposts will fall to Q2Q3 Following the imposition of the tariff the government will raise revenue of ABCD Economic effect of tariffs Domestic producers supply a greater quantity of the good. Therefore the tariff stimulates domestic production and employment More domestic resources are attracted to the protected industry. This leads to a reallocation of resources towards less efficient producers (i.e. those who are unable to compete on a n equal footing with foreign producers + Consumers pay a higher price and receiver fewer goods, this redistribution of income away from consumers to local producers The tariff raise revenue for the government, but that is not the primary objective. In fact, the more successful the tariff as a protectionist device (the import it restricts) the less revenue it will raise A retaliation effect can be experienced. In response to tariffs on imports, other countries may impose tariffs on the goods that are exported to them. In that case any increased production and employment gains got the import-competing industries would be offset by losses in the nations export industries. Quotas An import quota controls the volume of goods that is allowed to be imported over a given period of time The diagram to the right reveals: The curve SS and DD represent domestic supply and demand 0P is the price at which the imported goods would sell if there was no quota imposed. At this price consumers demand 0Q1, domestic producers supply 0Q1 and the quantity imported would be QQ1 If the government imposed a quota restring imports to Q2Q3, this would have the effect of raising the price of imported good to 0P1. This price would allow domestic expand to 0Q2 Countries sometimes use a system of tariff quotas. Under this protectionist method, good s imported up to the quota pay the standard tariff rate, whereas goods imported above the quota pay a higher rate Economic effect of a quota Domestic producers supply a greater quantity of the good. Therefore, the quota stimulates domestic production and employment in the protected industry More resources in that economy will be attracted to the protected industry , leading to a reallocation of resources from other sectors of the economy (where production and employment will fall) Consumers pay a higher price and receive fewer goods. This redistribution away from consumers to domestic producers in the protected industry, and results in lower overall levels of economic growth Unlike tariffs, quotas do not directly generate revenue for the government. However, governments can sometimes raise small amount of revenue from quotas by administering the quota through selling import licence allowing firms to import a limited number of goods As with tariffs, the imposition of a quota on imports can invite retaliation from the country whose exports may be reduces because of the quota this can result in lower exports for the country that initiated the import quota Subsidies Subsidies are cash payments from the government to businesses to encourage production of goods or services and influence the allocation of resources in an economy to allow them to compete with overseas competition The diagram to the right reveals: The curve SS, S1S1 and DD represent domestic demand and supply Because of the subsidies domestic producers are able to reduce their price resulting in a rightward shit of domestic supply curve from SS to S1S1, resulting in a lower market price Businesses will be able to sell a higher quantity od their product on bother domestic and global markets The quantity produced increases from Q to Q1 The size of the subsidy in per unit terms is the vertical distance between S and S1 Economic effects of a subsidy Domestic producers supply a greater quantity of the good. Therefore, the tariff stimulates domestic production and employment in the protected industry More resources in that economy is attracted to the protected industry, leading to reallocation of resources from other sectors of the economy (where production will fall) Consumers pay a lower price and receive more goods, because the subsidy shifts the supply curve from the sector to the right, However , consumers still pay indirectly through higher taxes Subsidies impose direct costs on government budget because they involve payments from the government to the producers of goods and services. This means that governments have fewer resources to allocate to other priorities such as healthcare and education (reallocation of income) While economist are opposed to protectionist policies, they often prefer a subsidy to tariff because subsidies tend to be abolished more quickly (since they impose costs on the budget, rather than generating revenue) Local content rules Local content rules specify that goods must contain a minimum percentage of locally made parts. In return for guaranteeing that a contain percentage of a good will be locally made, the imported component may not attract a tariff.(e.g. Australian television is protected by local content restrictions to maintain Australian culture) Export incentives Export incentive programs give domestic producers assistance such as grants, loans or technical advice (such as marketing or legal information), and encourage businesses to penetrate global markets or expand their market share

Overall Economic effect of protectionism on global economy Global protectionist policies have the overall effect of reducing trade between nations (Global protectionist policies cost global economies between US$180 billion and US$20 billion in exports yearly according to the WTO) Overall, protectionist policies reduce living standards and reduce global economic growth by shielding inefficient producers ( the international institution for international economics estimates that protectionism reduces GWP by US$400 billion yearly) Protectionist policies make it more difficult for individual economies to specialise in production in which they are most efficient. Businesses are less likely to achieve economies of scale and therefore lower profits and lower dividend. With less completive pressure, prices of goods and series in individual economies are higher The negative economic impact of the protectionist policies of trading bloc tends to be greatest for developing economies, which are excluded from accessing advanced economies markets

Globalization and economic developmentThe most distributing feature of the global economy is the significant difference in the standard of the living between countries and stark inequality of incomeWhile there is a large gap between rich and poor countries, it is also true that in overall terms, living standards are improving in most countries rich and poor. This evidence by the following facts: Between 1981 and 2005, those living extreme poverty in developing countries, living on less than $us 1.25 per day, fell from 52% to 25%. if we exclude china from these calculations, however, extreme poverty rates fell much less significantly over the same periods Life expectancy in developing countries rose from 56 to 67 years between 1920 and 2009. Child mortality for those under five declined from 1 to 10 children in 1990 to 1 to 5 in 2009 The primary education completion rate in developing countries increased form 78% in 1991 to *7% by 2009, while the adult literacy rate in developing countries reached 80%While these figure show progress they also demonstrate how wide the gap are for many people in the developing world, compared to the one billion people in developed countries who enjoy what is described as a high level of human development Difference between economic growth and economic development Economic growth occurs when there is a measure of welfare in a nation that includes indicators of health, education and environmental quality as well as material living standards Economic development is a broad measure of welfare in a nation that includes indicators of health, education and environmental quality as well as material living standards Distribution of income and wealth Income High income economies receive around two-thirds of the worlds income as measured in raw GNI figures or over half o the worlds income using PPP-adjusted GNI figures While the richest nations are far better off than poorer countries, the gap appears to be falling, though very slowly. Technological change has shifted production process away from low-skilled labour towards higher skilled labour. This benefits people with higher levels of education by increases unemployment for less skilled workers (division of labour) Wealth Another dimension to global inequality is the unequal distribution of global wealth According to United Nations University, global wealth is concentrated among households in North America (34% of global wealth), Europe (30 %) and rich Asia-Pacific countries like japan and Australia (24%). The remaining countries share only a little over 10 % of worlds economic wealth. There is a higher disparity in wealth than income

Income and quality of life indicators Economic growth Gross National Income The most popular method of comparing living standards between economies is income, because it is a measure of the ability of a nations citizens to satisfy their material wants GNI is the sum of value added by all resident producers in an economy plus receipts of primary income for foreign sources One of the limitations in making such comparisons between the size of economies Is the exchange rate used to make the comparisons.(for example, if the price of a good or service in developing countries is low relative to the price in the United States, them measuring GNI in terms of US dollar will underestimate the true income of the developing countries, is how far your dollar goes) For this reason, economists usually make an adjustment using what is known as Purchasing Power Parity (PPP). This theory states that exchange rates should adjust to equalise the price of identical goods and services in different economies throughout the world Given that the high-income economies have just over one billion people out of a world population of almost seven billion, a high level of inequality clearly exists in the low-income economies receive an economic output that is only a fraction of the output of the high-income economies People who live in the developing world (one in six people in the world) enjoy income levels that, even after adjusting for purchasing power parity, are six times as great as those in low and middle income countries. While the richest nations are far better off than poorer countries, the gap appears to be falling, though very slowly. Almost all nations have experienced some economic growth in recent decades, enjoying higher income as a result of an income increase as in their Gross Domestic Product (GDP). For the rich nations, wealth is needed to create more wealth Another dimension to global inequality is the unequal distribution of global wealth. Wealth is an important safety net for people when they do not have income and can be used to start a businesses and generate income (wealth creates more wealth) Evidence: according to 2008 research by economist at the United Nations University Global Wealth is concentrated among household in North America (34%), Europe (30%) and rich Asia-Pacific countries like Japan and Australia (24%), with the remaining countries across Latin America, Africa, Asia (China & India). Sharing only a little over 10% of the worlds economic wealth. Hence wealth is distributed even more unevenly than income global Economic growth refers to an increase in an economys income and production GNI and economic growth and income cannot measure living standards accurately Economic developmentEconomic development also takes into account other quality of life indicators such as health standards, education levels, and domestic work that is not given a financial value, the level of damage to the level of damage to the environment and inequalities income distribution Human development index (HDI) The main alternative measure to GNI is the HDI, devised by the Uniter\d Nations Development Program (UNDP) to measure economic development HDI takes into account: Life expectancy at birth (health and nutrition standards in a country) Levels of education attainment (education levels = future development potential) Gross Nation Income per capita (income of domestic producers + foreign sources by PPP) The HDI (Admeasured of economic development in an economy from 0 to 1) Comparing HDI and GDP statistics reveal the difference between economic growth and development across the globe, Highlighting the Importance of a broader measure of welfare Economic development relies on economic growth but not the other way around Developing economies, emerging economies, advanced economies Categories of development in the global economy Advanced economies (industrialised/developed) These are countries that have high levels of economic development Have close ties with each other (i.e. OECD) Have liberal-democratic political/economic institutions The IMF identifies 34 advanced economies, that make up half of the high income economies in the world (the other hand have very small nations) and comprises most of the members of OECD High income economies have Gross National Income per capita levels above $US 12 246 and arte mostly found in North America and Western Europe, with a smaller number in the Asia-Pacific region Emerging economies These are economies that are in the process of industrialisation or modernisation and are experiencing sustainably high levels of economic growth This classification includes a range of economies that are nether high income, nor share the traditional characteristics of developing economies They include the economies that used to be known as newly industrialised economies (i.e. Malaysia and the Philippines) They include economies that used to be known as transition economies which were making the transition from social economies (i.e. China & Hungary) They include developing economies with improved prospect (i.e. India & Indonesia) Developing economies These are countries generally suffering from low income levels Suffer from weak human resources Have experienced industrialisation to a limited extent Have large number of people living in absolute poverty (less than $US1.25 per day) Developing countries are often divided into the two groups, low income and middle income While there are significant differences between developing countries some common characteristics include High levels of income inequality within their economies Dependence on agricultural production for income, employment and trade opportunities Reliance on foreign aid and development assistance as a major source of income Reliance on foreign aid and development assistance as a major source of income low levels of labour productivity, industrialisation, technology innovation and infrastructural development Weak political and economies institutions, and a high prevalence of corruption Least developed countries The United Nations conference on Trade and Development has also identified 48 countries that it this sub-group These countries suffer from the lowest GNI per capita level in the world (less than $US905 per year) They suffer from weak human assists (based on economic structure) 33/48 LDCs are located in Sub-Sahara Africa (Africanisation of poverty)Types of EconomyIncome levelsEconomic GrowthStructure of economyExamples

AdvancedHigh income levels, with GNI per capita above $US 12,276Slower growth in recent decadesLarge service industries and advanced manufacturingUnited StatesGermanyKorea

DevelopingLow income levels, with around half of population in absolute povertyModerate growth rates, but population growth also highHeavily reliant on agriculture and foreign aidBangladesh ZimbabweEthiopia

EmergingIncome levels vary but what these economies have in common is fast growth in income levelsStrongest growth rates in the world (5 10 per cent) and favourable prospectsIndustrialising , usually with substantial manufacturing sectorsCopyright 2013 | Majd Abdulwali

China BrazilIndonesia

Reasons for differences between nations (cause of global inequality) Global factors: Global trade system Wealthy countries protect their domestic agricultural sector because it is not competitive with agricultural producers in many developing nations. Developing countries that export commodes are severely affected by continued high levels of local protectionism in the agricultural sector (OECD nations provide $US253 billion in agricultural protection) Expanding regional trading blocs like EU and NAFTA exclude poorer nations from gaining access to lucrative (highly profitable) global consumer markets WTO negotiations that focus on improving development in poorer nations seem to always tell short on providing any actual benefits to developing countries because of the resilience of high income nations The benefits of free trade agreements are often not accessible to developing nations because of the substantial cost in implementing international agreements and lodging against other countries protectionist measures. A one percent increase in administrative costs would result in a decrease in GDP by $US 75 billion

Global financial architecture Historically, long term International flows heavily favoured developed countries. That has changed in recent years, with developed economies now accounting for only hand of global FDA inflow. However, FDI flows now mainly benefit a handful of emerging economies includes China, Brazil, India and Russia. In 2010 the Worlds 48 least developed economies, by contrast received only 2 precent of global FDI inflows Short term financial inflows s favour the more prosperous emerging economies, which offer better financial return for currency and stock market spectators. However, these regions have also experienced greater economic volatility (i.e. East Asia Crisis) The major criticism of the IMF is that the structural adjustment policies it advocates serve the interest of rich countries, and may not be appropriate to the conditions of many developing countries Many developing countries have massive foreign debt burdens. As a result, many developing countries spend more on debt servicing that public healthcare, education and infrastructure which could promote growth and development. The existence of debt can also precent potential investors Global aid and assistance The total level of developing aid provided by high-income economies was $US133 billion or 0.31% of GDP in 2011. This is less than half the level of which high income economies have been committed for four decides (0.7 % of GDP) Critics of aid policies argue that a significant portion of official development assistance is Phantom aid (which is temporary aid that does not improve the lives of poor). Additionally, another proportion of aid is tied aid (which is conditional aid that must be spent on overpriced or unnecessary goods and services that are produced by the donor country (America assisting Africa with its own crops) The distribution of aid by high-income countries often reflects strat4gic and military considerations rather than the needs of the poorest nations (America assisting Iraq & Afghanistan after war rather the LDCs) Global technology flows Recent World Bank research found that around half of the difference in living standards between US and developing economies can be linked to the slow adoption of new technologies in poorer nations. Differences in access to new communications technologies is called the digital divide New technologies are also largely geared to the needs of high-income countries because they choose the priority areas of scientific research (e.g. labour saving devices) and have little benefit to poorer nations Developing nations also find it difficult to gain access to new technologies intellectual property rights restricts the benefits of technological transfer to poorer countries because they cannot py developed country prices for those technologies Domestic Factors: Natural resources Economies that have an abundant and reliable supply of cheap natural resources clearly have a better opportunity for economic development than those that do not, even if some have been spectacularly unsuccessful in using these opportunities But an abundance of natural resources can also hamper a countrys economic development if it leads to an overvalue exchange rate, narrow export base and becoming over reliant on a small number of industries to drive economic growth Labour Supply and quality Labour is an output to the production process for many sectors of the economy and is thus an important factor influencing development levels. Whereas high income countries tend to have highly educated & skilled labour resources, low income nations are characterised by high population growth, poor education n levels and low health standards, which reduce the quality of the labour supply Access to capital and technology Difficult in gaining access to capital for investment and development in another major structural weakness of developing nations that contributes to their lower living standards low income levels provide little opportunity for savings that can be used for investment. Poorly developed financial systems make it difficult for businesses to gain easy access to loans for investment purposes Entrepreneurial culture The value of individual responsibility, enterprise, wealth creation and a strong work ethic can assist the industrialisation process, and the transition towards sustainable economic development

Institutional factors: Political and economic institutions Political instability, corruption and a lack of law enforcement by governments tend to undermine the confidence of investors who will be reluctant to take risks if their business interests are threatened by an inadequate structure for resolving legal disputes, corruption or other institutional problems (i.e. Syrian war) Economic policies If all major decisions are left to market forces, a country may achieve a high level of economic growth, but it may not improve education, health care and quality of life. On the other hand, excessive government control over economic decision making can constrain entrepreneurship and innovation, reducing economic growth. Courtiers with the highest levels of human development, such as investment in human development Government response to globalisation Policies relating to trade, financial flows, investment flows, transnational corporations and the countrys participation in regional and global economic organisations will influence on economys ability to take advantage of the benefits of integration, such as economic restructuring, efficient, access to foreign capital and technology and access to overseas goods markets

Effects of globalization (impact of globalisation) Economic growth and development Developing economies have greater opportunities to grow by producing goods for global consumer market, and can also benefit from greater access to new technologies and foreign investment On the other hand, some regions have not gained as much as might be expected from globalisation and greater economic integration has cause disruptive structural change in some regions Overall, there is no clear evidence that globalisation has produced an acceleration of economic growth. As the world economy has become more integrated over recent decades, world growth slowed from 3.3% per year (1990s) to 2.8% (1990s) and to 2.7% (2001-2011) However, globalisation does nevertheless appear to be contributing to a convergence in living standards in the global economy. In recent decades, the fastest growing economies have been emerging economies such as China and India, while the slowest growing economies have been the advance economies. Since 1990, emerging and developing economies have been catching up to advance economies The East-Asia and Pacific region has been the fastest growing region in the world (8.7% per year, on average, between 1991 and 2011). In particular, strong growth in China during this period (10.4%) demonstrates the role of industrialisation and globalisation in economic growth Economies in South Asia have also experienced successful growth over this period (6.1%), in particular India after becoming more integrated in the global economy (6.5%) as well as Bangladesh (5.4%) Latin American economies (3.4%) such as Brazil and Argentina experience stronger growth than in 1980s (1.4%) due to greater integration with regional economies as well as rising commodity prices High income economies grew by just 2.1% on average in the 1991-2011 period, slower than the 3.3 % recorded during the 1980s The implications of these trends are mixed. On one hand, the remarkable growth experienced by emerging and developing economies that have embraced international trade, foreign investment and the participation of translation corporations may indicate that globalisation facilitates higher rates of economic growth. For example, sustainable economic growth in China and India is liked to policies in both countries that have encouraged increase trade and foreign investments On the other hand, the most globally integrated economies, advanced economies, experienced comparatively weak growth over the past two decades and were most impacted by the global recession of the late 2000s. In particular, economies with highly globalised financial markets, such as United States and Europe, suffered the worst effect of global recession and were again the centre of economic instability in 2012. Global forces have also contributed negatively to other growth outcomes in recent years, such as through foreign indebtedness (Africa) and exchange rate volatility (Latin America & East Asia crisis). Therefore, while certain features of globalisation clearly facilitate economic growth, other features may destabilise or constrain economic growth If globalisation lifts economic growth rates in individual economies it also raises income levels, and provides more resources for education and health care, and for programs to clean up the natural environment However economic growth has negative consequences for development if, while contributing to growth in individual countries, it also caused income inequality to increase and accelerate climate change and environmental damage. In analysing the trends of recent decades, it is clear that the impacts of globalisation are dominated by the rising economic power of China, since China has the worlds largest population. The rise of China is a major structural change in the global economy that is occurring in parallel to the process of globalisation. There is no question that globalisation has also contributed to the extraordinarily speed of Chinas economic development. Trade has been central to Chinas rapid industrialisation since Chinas growth has been led by export-oriented manufacturing industries. Chinas growth is also in turn accelerating the process of globalisation, by deepening trade and financial links among economies The speed and scale of Chinas economic expansion dwarf any other emerging economy and so in examining the impact globalisation is important to examine particularly the role of China Trends in the Human Development Index (which is a measure of material living standards, education and health outcomes), shows that over long periods of time (1980-2011) almost all countries have experience major improvements in economic development

The role of financial markets Global financial markets can have positive impacts on economies. Countries would be unable to conduct international transactions without foreign exchange market. Businesses would find It more difficult to access loans or a attract investors if they were confided so domestic financial market. Efficient international financial markets should encourage greater transparency of the action of businesses and governments and should foster economic development However, global financial markets have also produced negative results during the globalisation era. Financial markets shift massive volumes of money around the world every day. If investors sentiment turns against a particular economy, it can result in a collapse in exchange rates, a shock to the economy and a recession accompany by rising unemployment. This was seen in Mexico in 1995, in East Asia in 1997 (East Asia crisis), in Russia in 198, in Brazil in 1999, and in Argentina in 2002 With its origin in the United States housing market, the global financial crisis of 2008 saw a collapse in worldwide investor confidence and the seizure of the global financial system. Central banks subsequently flooded financial markets with liquidity, governments guaranteed banking deposits to improve confidence and many governments provided bail-out to prevent troubled banks and financial institutions from collapsing. While these emergency measures helped avoid global economic depression, the world economy sill contracted by 2% Income inequality Globalisation Also has impacted on income inequalities within countries because as trade and financial flows grow, it changes the structure of economies Increased openness to trade provides more export opportunities, which raises the income of agricultural workers in developing countries. Lower tariff or imports improve standards of living for the poor by reducing the price of goods Increase financial flows provide greater employment opportunities and fuel economic growth, but FDI flows also tend to be concentrated in high skilled and high technology sector favouring those who are already better off According to IMF, one fifth of the increase in income inequality seen in countries is because of globalisation Trade, investment and transnational corporations Globalisation has resulted in substantial increases in the size of trade flows and foreign investment. Because of the key role played by transitional corporations (TNCs) in both trade and investment flows, TNCs are increasingly dominating business activity around the world An important feature of trade growth during the globalisation era is how goods are produced in different stages in different economies, this is known as vertical specification (global supply chain) The globalisation of financial markets has seen an increased reliance on foreign sources of finance for investment. Foreign direct investment is now playing a greater role in creating more economic activity for every region around the world The Growth of short term financial flows has created great volatility, it in many economies Merge activities continues to concentrate the number of the companies, as TNCs prepare for a world where many global industries will feature just a handful of global companies Environmental sustainability Low income countries that are desperate to attract foreign investment and earn higher export revenue may engage in economic behaviour that harms the environment (disposal of production waste) Additionally, the growth in global trade itself is increasing consumption of non-reliable fuels for transport by air, road, rail and sea vehicles On the other hand, globalisation also affects the best opportunity to protect the worlds environment from harm by forcing individual nations to face up to their global responsibility for environmental preservation. It makes it possible for the cost of preservation to be shared, and to increase scrutiny of the environmental practices of transitional corporations. Globalisation has also facilitated the transfer of environmental friendly technology. Overtime, globalisation may create international institutions with the power to enforce orders on individual countries to stop environmental damage

The international business cycle The closer linkage between economies hold benefits and risks fro countries in the global economy. The benefit of integration is that it allows countries to achieve faster rates of economic growth by specialising in certain types of production and by engaging in trade. Countries that have a higher level of trade also experience faster economic growth. In particular, during ties when world economic growth in higher, individual economies are likely to benefit from the upturn in growth However, closer economic integration also makes economies more exposed to downturns in the international business cycle and to developments in their regions. One of the reasons for the strength of global economic growth in the mid-2000s was the simultaneous upswings in the US and China which propelled the global economy to its fastest growth rate in 30 years. Equally, the closer the links between economies resulted in the downturn in the US economy in the late 200s spreading quickly to other developed and developing economies Nevertheless, as the extent of trade and financial integration continues to increase , there is a likely to be greater synchronisation of the international business cycle, intensifying both the downturns and upturns in the global economyCopyright 2013 | Majd Abdulwali

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