The global economy of the modern world
The global economy of the modern world is being driven by a variety of issues. Most of these issues are concentrated on different aspects and sectors of the economy. However, the most significant factors that will shape the future global economy are factors that currently have a fundamental importance attached to them in the current global economy. These factors are considered to have a profound effect on the future of the global economy as they encompass the forces that drive the current global economy. The factors include technological advancements, industrial organization, and political influence. They play very strong and significant roles in driving the economy. Consequently, the cultural influence of these factors has a profound effect on national economies thereby affecting the global economy in marginal proportions. Therefore, the paper discusses the culmination of these influential forces of technology, industrial organization and political influence on the global markets currently and in the future
Technology is one of the most important factors that has defined the global economy in the 21st century. There are many areas of the economy that are greatly affected by technology. To understand the effect of technology on the global economy, one has to analyze the integration of technology with various aspects of national economies. The various aspects include health, sports, education, communication, transport, mobile technology and the internet. Technology has made life in the modern world to be easy. Day to day activities has been made easier with the advancement in technology.
The health sector has benefited greatly from technology. The provision of health care and the running of operations in healthcare organizations became easier due to the numerous technological advancements that have rocked the health sector. For instance, there have been numerous equipment’s that have been invented that are used in the diagnosis and treatment of various medical conditions that have all been as a result of technological innovations. Furthermore, research has led to the innovation of various machines that are being used for the mass production and manufacturing of medicine in pharmaceutical organizations (Dunning, 2013). The future also shows great promise for the health sector with regard to technological innovations that will shape the future of health care provision while significantly affecting the global economy.
The major economy drivers
Consequently, sports has also been one of the major economy drivers in most countries. Sports will never end as long as people keep involved and being interested in extracurricular activities. The inevitable fact is that talent in sports is high paying. Furthermore, sporting activities all over the world invite a lot of investors and companies who come in as sponsors. This also creates a significant increase in the revenues that are produced through sports related activities. Technology has allowed the invention of various technologies that are widely and broadly used in the sporting world (Glassman, 2016). These technologies have made more people get involved with the said sporting activities which have in turn increased revenue generation for the global economy. If the current trend of technological innovations with regard to the sports sector of the economy continues, the future of the global economy will be in capable hands.
Technological advancements have also revolutionized the way the education sector operates. There have been various technological advancements that have enabled the development of educational activities, especially in higher education. The innovation of various equipment has created an opportunity for the betterment of education through various means. Furthermore, technology has allowed the advancement of research being carried out that discovers important information that has a very significant impact on the global economy. Consequently, the integration of education with technology has helped various sectors of the economy to grow tremendously thus affecting the global economy as a whole.
Communication is a very important aspect of everyday life. The significance of communication in all sectors of the economy cannot be underestimated. Consequently, the advancement of technology has enabled easier and more flexible ways of different entities of the economy to communicate important information that has a very significant effect on the economy. The last decade has been characterized by increased communication across the globe. This has been due to the innovation of various communication technologies that have made instant communication to be possible. Moreover, the amount of information that can be communicated has increased tremendously. All these realizations have helped in creating the advancement of the economy to the situation where it presently is. There are high hopes for the economy to be significantly affected by an increase in size, amount, variety, and use of communication technologies around the globe.
Transport as an important sector of national economies
The ability to transport goods and people from one place to another has a profound effect on important operations that drive the current world economy. There has been the need to innovate faster, safer and reliable transport methods all over the world. The realization of these requirements will ensure that the global economy is positively affected by transportation. Furthermore, technology has aided in the creation of transport services that are effective and efficient. This has a significant impact on reducing the cost of transportation. Consequently, transportation is a vital need for the operation of most aspects of the economy. Therefore, the availability of better transport facilities will enable the gradual growth of various sectors of the economy and eventually affect the future of the global economy positively.
The advancement of mobile technology has created the avenue for the reliable, effective and efficient ways if accessing information. The importance of mobile technology has been made stronger due to the invention of the internet. The internet has made the world become a global village. Furthermore, the internet has created numerous business opportunities and has given rise to the age of technology where anything is possible with the use of mobile devices and the internet. Communication has been made faster, easier, reliable, secure, effective and efficient due to the invention of the internet. The invention of the internet has therefore played a vital role in the global economy by enhancing business operations and sharing of information on a global basis, which will heavily influence the future of the global economy.
The political issues of the world
The political issues of the world have a large impact on the current international economy. The impact of political issues on the global economy is first traced from the national economy. The local political issues tend to have a tremendous effect on the foreign investments being made in a particular country. There are various political concerns that have negative effects on the conduct of international businesses. Political issues, therefore, affect the fundamental aspect of the economy thereby creating a possibility of the future of the global economy not being in good hands (Baylis, Smith, and Owens, 2013). Investors grow weary of investing their hard earned money in continents like Africa, where countries are regularly faced with issues of political instability. Therefore, political issues tend to have either positive or negative effect on international law thus affecting the current and future global economy.
Political and legal differences are one of the political issues that tend to affect international business significantly. It is important to note that the political and legal environment of the domestic market is different from the international market. The complexity of political and legal differences increases with the increase in the number of countries a company conducts business in (Cohn, 2015). This type of complexity creates investment concerns that may affect business on both international and local levels. Therefore, political and legal differences have a very significant effect on business operations of international companies and international markets, which in turn affects the economy.
The most important concern for international companies are the political and legal forces that marginally define the business environment in the companies in which they plan to conduct business. The issue of political and legal forces also creates the possibility of dramatic, frequent and unpredictable regime changes. This situation may create inevitable occurrences that may have a negative impact on business operations through the destruction or seizure of private property, nationalization of foreign companies, frequently striking workforce and the disruption of normal business operations (Mander, 2014). It very crucial that a company analyzes the legal and political forces in a country they plan to operate their business activities. The concern is due to the different legal forces that may drive international investment policies that do not positively impact or encourage international business operations (Gilpin, 2016). Furthermore, the political forces of a given country may create an avenue for the growth or decline of business opportunities thereby immensely affecting the prospects of international business. This will correspondingly affect the current global economy and aid or ruin growth prospects for the future economy.
Another significant political issue that has a profound effect on the economy are the restrictions placed on trade and investments. Most foreign governments impose different trade and investment restrictions. These restrictions may negatively affect the trade and investment relationships between different countries which impacts negatively on prospects of international investments and international trade. Furthermore, different foreign governments may impose trade barriers which have immense implications on the balance of trade in the global economy. Trade barriers may include export and import policies that are relatively reflected in import and export licensing, tariffs and other import charges, quotas, and customs practices (Kelsey, 2015). Other significant trade barriers include testing, standards, labeling, various types of certification, lack of copyright protection (May, 2013), and restrictions on licensing, technology transfer and franchising. Furthermore, trade and investment restrictions can take the form of restrictions on direct investments which may hurt international business relations between different countries operating in different international markets that are very influential to the global economy.
Another important political aspect that affects global economy are the restraining forces. Restraining forces refer to the external and internal forces that tend to impact the government’s position on foreign investments and international business. External retraining factors include government controls and policies which restrain the social, cross-border and political opposition against foreign businesses. The international aspect of the restraining factors includes factors that are considered internal to certain business organizations. These restraining factors tend to impact adversely on the prospects of international business and investment opportunities. Correspondingly, this will negatively affect trading in international markets and international business relations which will eventually affect the growth of the economy.
However, government’s regulations and policies may also favor internationalization. Most governments conduct operations aimed at influencing investments towards foreign countries while also inviting foreign investments and creating opportunities for international business operations to flourish. This can be achieved by governments offering financial support and incentives for foreign investments through the implementation of certain policies and regulations (Gopinath, Helpman. and Rogoff, 2014). Furthermore, some countries in the world attach a lot of importance to foreign investments and development of import operations. When a country applies policies and regulations that take this road, they create a sense of support for international businesses thus creating an appealing, political and legal environment that nurtures and makes possible the flourishing of international business operations. With this kind of political and legal support for international business in most countries, the future of the global economy seems to be good.
Moreover, government policies and regulations attract companies due to various aspects of business. For instance on the aspect of sustainability of business operations due to environmental sustainability. Some companies tend to set up business in advanced countries that have sustainable environmental laws. On another instance, governments may implement policies and regulations that tend to limit the scope of business in the home country. In these instances, local companies are forced to look for more appropriate political and legal environment that aids the growth of business operations.
A critical role of the political environment
The political environment also plays a critical role in defining the suitability of investing in a certain nation. The political environment is inclusive of the government system, nature of the constitution, environment encompassing business and economic policies, policies of political parties and the political characteristics of a certain country. All these aspects are vital in evaluating the eventual suitability of nation regarding foreign investment activities and international business operations. If the aspects encompassing the political environment seem to be culminating into a negative business environment, then the business prospects of such a nation will diminish tremendously and thus lowering potential for the smooth conduct of international business operations. This, in turn, lowers the ability of growth of foreign investment opportunities which negatively impacts international business and the corresponding negative effect on the future of the global economy. The most important policies that determine the nature of the political environment include fiscal policy, industrial policy, foreign trade policy and policies towards technology and foreign capital.
In essence, there are many aspects of political issues that tend to affect international business operations, opportunities and relations negatively (Forsgren and Johanson, 2014). It is adamant that the political environment is not under the absolute control of the governments of different nations. This absolute control creates the possibility of the government being the main driver of political policies and regulations that have a profound effect on the ability of a given nation to conduct business in a harmonious manner with other foreign countries. It is prudent to state, therefore, that a government that is large enough to give you anything is also large enough to take away everything from you.
Moreover, the political environment of any particular nation is prone to be affected by various factors of the external environment. The factors that make up the external environment have so much impact on the suitability of a nation in matters concerning international business activities. These factors include the technological environment, political and legal environments, socio-cultural environment and the economic environment. The culmination of the forces of these factors of the external environment of every nation in the world come together to create a profound effect on the current and future growth prospects of the economy.
Industrial organization and the technological developments
Industrial organization refers to the technological developments in areas which include product mix, production, and in-firm related operations. These developments aid organizations in expanding their stretch of industrial operations. The various industrial processes that occur in the world have been made faster, effective and efficient due to technological advancements. Technology has created a sense of organization on the conduct of industrial processes and firm operations. The invention and innovation of various technological equipment has enabled the adaptation of new technologies in making the industrial process less costly, more efficient and effective while the firm operations have been optimized in a great manner (Benn, Dunphy, and Griffiths, 2014). For instance, a process that involved 20 steps for production or manufacturing has been optimized and reduces to almost half the steps required thus making the process become faster while producing the same or even higher quality of products. Furthermore, the introduction of these technologies has enabled most of these operations to become automatic thereby reducing operation costs while maximizing output for these industrial organizations.
Moreover, there are technological advancements that have assisted in increasing individual employee output in major international firms. These technologies have therefore assisted in increasing the performance of employees while reducing their operation time (Dorn and Hanson, 2015). This leads to the overall increase in performance of individual employees and thus the organization, increase in effectiveness, efficiency and the reduction of the cost of operations in major firms across the world. The industrial organization due to technological advancements has significantly helped in the creation of improvement opportunities for organizational processes and operation in most organizations operating in international business markets. This has also created an avenue for the growth of international business operations which have a long term effect on the eventual growth of the international economy.
The development of the international economy is being influenced by a variety of issues. However, the key issues that have a significant effect on the economy include technology, political issues, and industrial organization. The technology aspect has defined the modern international market profoundly. Technology and the internet have integrated to lead to an age of information where business opportunities are created by the day. Consequently, technology is regarded to be one of the fundamentals that form the framework on which most aspects national economies built on. Other key issues including political issues and industry organization have a marginal and long-term effect on the prospects for the growth of the global economy.
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