What is Global Economy and How Important is it

If you ever wondered how prices, currencies, and even standards of living can be so fickle? It’s most probably because of what’s happening in the economy on a global scale.

From trade to politics, the global economy has interconnected multiple countries and cultures. Which in turn holds sway over the economic performances of each one.

In fact, most industries in a myriad of countries have emerged thanks to the impact of the global economy. Today you can see industries such as business outsourcing and raw material resources.

So the next time you wonder why stocks fluctuate, and prices of goods change from season to season, you should take a look at how the global economy is doing.

What Is the Global Economy

In simplest of terms, Global Economy is the interconnected economic activities between multiple countries, if not all. The Global Economy is one of the products of globalization that began hundreds of years ago. A change in the economic performance of a country can sway the global economy.

Thanks to the developing relations of trade and politics of these countries have created the world economic stage. But even then, global economic performance has positive and negative effects for each country. This is where it becomes clear how important the global economy is.

The Importance of the Global Economy

Many countries reach out to other countries for different things. Sometimes even to the point of dependence, on raw materials, agriculture, human resource, and even banking, and finance (take Switzerland, for example). If a country that heavily supports a certain product or trade, everything else cascades.

Global Economy is important in a way that it determines how macro and micro economies of countries can be affected and also vice versa. It also helps them excel or fail in a way.

Also, movements in many micro and macro economies across the world can pave way for changes in the world economy. Such a perfect example was the emerging market for business process outsourcing, an in-demand service from the early 2000s.

Many US and European companies have outsourced their call centers and IT services. Mostly to companies and human resources in Asian countries, where labor costs are lower. As a result, there are more jobs in nations where they are needed, which can boost the national economy and raise living standards.

Global Economy allows us to enjoy many different things we do today, from the food we eat to the latest gadget and technology. However, the performance of each of the components of the world economic landscape affects all others. So it is important to pay attention to how other countries are performing, but more importantly how that affects our own backyard.