5

YEAR

2011

VOLUME

FOUR

Science of Resource Informed Decisions

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Decision support

Management and leadership consulting  Cost benefit analysis   

performance  metric

      Subject:  

   Economics

The term Globalization is sometimes used to refer specifically to economic globalization: the integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology.

The term Global Economy refers to an integrated world economy with unrestricted and free movement of goods, services and labor trans-nationally. It projects the picture of an increasingly inter-connected world with free movement of capital across countries, also. The concept of a global economy cannot be understood in isolation. For this, globalization needs to be defined first.  Globalization may be defined as the integration of production and consumption in all markets across the world. It is a widely accepted view that globalization would not only benefit all countries across the world but would also work towards the betterment of the economy as a whole.

Country specific economic and political decisions are being taken on a global scale in today’s world with global considerations becoming more important than narrow provincial ideals.

A Global Economy also leads to a shifting of jobs from the developed countries to the Third World Countries as wage rates are much lower here. This allows companies of the advanced nation to grow exponentially. For example, we might find computer chips produced in China be exported to USA for designing which may be subsequently used in Japanese computers supplied across the world. This process is called “outsourcing” and leads to exploitation of workers in Third World economies where income inequalities already exist.

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Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of the entire economy. This includes a national, regional, or global economy. With microeconomics, macroeconomics is one of the two most general fields in economics.

Macroeconomists study aggregated indicators such as GDP, unemployment rates, and price indices to understand how the whole economy functions. Macroeconomists develop models that explain the relationship between such factors as national income, output, consumption, unemployment, inflation, savings, investment, international trade and international finance. In contrast, microeconomics is primarily focused on the actions of individual agents, such as firms and consumers, and how their behavior determines prices and quantities in specific markets.

Macroeconomic models and their forecasts are used by both governments and large corporations to assist in the development and evaluation of economic policy and business strategy.