contemporary world and the global economy

THE GLOBAL ECONOMY

1. THE GLOBAL ECONOMY

2. INTRODUCTION The global economic system beginning in 1896, had reached its peak in 1914. There are various changes and improvements that characterize economic globalization before and at present. Structures of transportation, communication, and capital are comparable then and now. In terms of transportation, railroads and steamships are the significant inventions that hastened development in the past. Today, airplanes have been transporting humans and objects all over the world in a relatively shorter period of time.

3. When it comes to communication, the Internet today made the world open to everyone. The access to different social media and websites allows one to have access to overwhelming information of other people, organizations, and countries.

4. SURPLUSES AND DEFICITS A good place to get a quick snapshot of global trade (Mann and Pluck,2007: 1159-66), as well as net economic flows in and out of a nation-state, is by looking at nation’s trade surpluses and deficits.

5. Economic Chains and Networks Trade in goods and services is clearly central to the global economy. Much of that trade takes place in interconnected circuits of one kind or another. Gary Gereffi (2005:160-83) has outlined several of the most important economic chains and networks involved in global trade: Supply chains . These are general label for value-adding activities in the production process. A supply chain begins with raw materials and follows the value-adding process through a variety of inputs and outputs and ultimately to a finished product.

6. International production networks. These involve the networks of producers involved in the process of producing a finished product. Multinational corporations (MNC’s) are seen as playing a central role, as being the “flagships”, in these networks. Global commodity chains. Gereffi and Korzeniewicz (1994) bring together the idea of value-adding and the global organization of industries. They also accord a central place to the growing importance of the sellers of global products. This includes buyer-driven chains such as Wal-Mart which play an increasing role in determining what industries produce and how much they produce. Since such as companies do not manufactured their own products, they are buyers of products that are then sold under their brand names.

7. Global value chains . Gereffi argues that global value chains are emerging as the overarching label for all work in this area and for all such chains. He describes it as: These highlight the relative value of those economic activities that are required to bring a good of service from conception to, through the different phases of production (involving a combination of physical transformation and the input of various producer services), delivery to final consumers, and final disposal after use. (Gereffi,2012)

8. Global Value Chain: China and the US To give specificity to the idea of global value chains, look at the several specific examples of such chains, all of which involves trade between China (Brandt and Rawski 2008) and the US, although many other countries in the world are involved in these or similar chain.

9. RACE TO THE BOTTOM AND UPGRADING A dominant idea in thinking about less developed economies from a global perspective is the so called “race to the bottom”. It is often the case that one nation is willing to go further than the others in order to attract the interest of Multinational Corporations (MNCs).

10. Waste Paper Zhang Yin-one of the richest women in world ( estimitated to be worth $1.5 billion and her family has worthd billions more). - the source of her wealth is her business. -Nine dragons paper (72% of which is controlled by the Zhang Family. Los Angeles-based America chung nam (largest exporter to china)

11. Waste Paper -Take mountains of waste paper from the united states, ship it to china, recycle it into corrugated boxes. The boxes are used to ship goods to various places around the world-including the US. -Nine dragons paper is already one of the world's largest producers of paper. Surpassing such well-known giants as weyerhaeuse . It is difficult to compete with nine dragons paper because the works with less paper, its factory burns comparatively inexpensive coal, and it uses the latest technologies while competitors like weyerhaeuse are saddled with less efficient technologybthat is three or four decades old.

12. Consumers increasing numbers of people throughout the world are spending more and more time as consumers. it was very different as most people spent most of their time as producers. Not only do more people spend more time consuming but they are increasingly more likely to define themselves by what they consume than by their roles as producers and works

13. Consumer object and services much of consumption revolves around shopping for and purchasing objects of all kinds, ut in recent years, increasing amount of consumption relate to various services(legal, accounting, educational among othets ) there are global services such as those offered by accounting firms as well as package delivery of particular importance in terms of object and services is the issue of brand and branding (holt 2004) brands are of great importance both within nation as well as globally. Much money and effort is invested in creating brand names that are recognized and trusted throughout the world.

14. Consumer object and services In her best selling book No Logo: taking aim at the brand bullies, Naomi Klein details the importance of the brand in the contemporary world and the degree to which brands are both globalized ( logos are ritually an international language) and having a global impact (Klein 2000).

15. Consumption sites •American and western style consumption sites °shopping malls, fast-food restaurants, clothing chains. Discounters such as Wal-Mart. Disney like theme parks. Las Vegas-style casino hotels

16. Consumption Process Increasing numbers of people know what is expected of them as consumers; they generally know what to do in the consumption process. This includes knowing how to work their way through a shopping malls, use a credit card, or make a purchase online. where these processes are known, there is a remarkable similarity throughout the world in the process of consuming in a supermarket and shopping mall, or fast food restaurant.

17. Increasing Competition for Commodities One of the most striking developments of late has been the increasing global competition for commodities. Demand for commodities like oil and natural gas, precious metals like gold, silver, among others, as well as even the more mundane products such as rice, wheat, corn, to name a few, has been fueled by massive development in emerging markets, especially China. Massive industrialization in China place large and increasing demand for all sorts of commodities to power the same. Also, demand for commodities goes well beyond that of specific industries needing specific commodities for their production processes.

18. For example, specific products like airplanes to transport people anywhere in the world, trucks to deliver consumable things, to cars that are used both as consumables and as technologies to be used for personal use or even for tourism purposes, are results of increased industrialization. All of these planes, trucks and cars require gasoline and need to be produced in facilities that consume huge amount of energy, leading to demand for a wide range of commodities. Again, global commodities ranging from oil to base metals to grains are moving higher as billions of people in China and around the world get wealthier and are consuming more as they produce for others and increasingly for themselves.

19. Second is Consumption While aspect of globalization that relate to consumption have been mentioned above, this section focuses more directly on consumption itself in a global context ( sassatelli 2008) Consumption is highly complex, involving mainly consumer objects, consumers, the consumption process, and consumption sites . Before we get to those topics it is important to note that there has been a tendecy to closely associate consumption, as well as the globalization of consumption, with america and americanization .

20. This is largely traceable to the affluence of the US after the close of WWII and the economic difficulties encountered by most other societies in the world during this period. Thus, the US developed an unprecedented and unmatch consumer society for several decades after the end of the war, and at the same time, began exporting it and its various elements to much of the rest of the world.

21. Scrap Metal An important example of global value chain involves scrap metal. This seems like a rather prosaic commodity, but it is more important than many think its fate tells us a great deal about globalization. For one thing, about two-thirds of the steel made in US comes from recycled steel rather than iron ore and coke (“virgin steel”). For another, this is a big business, especially since prices for scrap metals (e.g., steel and copper) have increased dramatically as a result of skyrocketing global demand for such commodities. Scrap metal is interesting in this regard because, by definition, its origins go back to other chains involved in the use of raw materials and the production of finished products.

22. INCREASING COMPETITION One of the most striking developments in recent years have been the increasing global competition for various commodities. The best known and obvious example is oil, but much the same big has happened in the market of natural gas, copper, lithium (especially for batteries for electric cars) nickel, silver, gold, as well as even more mundane commodities such as rice, wheat, corn, and soybean. The increasing demand for these commodities, and many others, is no longer fueled mainly by the needs of the countries we traditionally of as highly developed but now, by massive development in other parts of the world, especially India and China.

23. OUTSOURCING The transfer of activities once performed by an entity to a business or businesses in exchange for money. It is a complex phenomenon that is not restricted to the economy, not only a macro-level phenomenon, and not simply global in character. Dealing with the first issue, while outsourcing in the economic realm is of greatest importance and the issue of concern here, it also occurs in many other constitution such as health care and military. In terms of health care, one example is the work of radiologist, which is increasingly being outsourced. This is made possible because the material with which radiologist deal (x-rays, result of MRI's) is now usually digitized and therefore sent easily and quickly via Internet to radiologist anywhere in the world.