The paper 'Impacts of Global Recession on Globalization Internationalization and Neo-liberalism' is a wonderful example of a Macro and Microeconomics Case Study. Economic recession is defined as a period associated with economic decline especially in the stock market, an increase in unemployment levels, and a decline related to the housing market. In general terms, the recession is associated with a decline in Gross Domestic Product of a country in a span of two more successive quarters. However, the recession is less severe when compared to a global depression. Globalization Economic globalization is an increase in the interdependence of the national economies which has resulted in increased levels of trade amongst such nations.
The economic integration is caused by technological advancement which allows quicker communication within the globe. Moreover, integration is caused by improved transportation systems and reduction of cost coupled with the transfer of products (Hirst & Thompson 2000). Impact of Global Recession in processes of Economic Globalization The current recession period has had a share of devastating effects both on the world economy as well as globalization. By the year 2007, globalization has had unprecedented growth.
However, the economic recession that commenced in the United States has stalled the process of globalizing worldwide, raising queries about the functionality of the entire process. In the early period of recession, analysts believed that globalization had taken a retreat and that the troubled period was over, basing on the trend during the period. Based on this fact, world governments began to develop doing away with stiff regulations such as banking and the auto-industry in a country like the United States, United Kingdom as well as Ireland (Sobotka, Skirbekk & Philipov 2011). In regard to the fact that the priority related to the early crisis was based on the government’ s national interests over international interests, it proves that the economic crisis resulted in a decline in globalization.
In the present times, many countries have taken extra protectionist measures to curtail their spending within the national borders. For instance, the United States recommended it, citizens, to buy American products by enacting a law that aimed at stimulating the economy. However, the essence of the law was changed with the argument that such a law would exist in the absence of international agreements to check such discrimination (Prasad, Rogoff, Wei & Kose, 2005). According to researchers, the current economic crisis continues to affect the engines of rapid globalization.
This includes private property, multinational firms, global logistic chain as well as the open market. In the year 2008 and 2009, there was a sharp rise in levels of public participation within the private sector. According to the data surveyed from the biggest banks in the United States and the European Union, most of these banks received public funds injections.
Other sectors such as insurance and automobile received state aid. However, despite that economic integration within the last quarter-century occurred due to the active participation of multinational firms, these firms were the first to be affected by the crisis (Scholte, 2005). The firms were therefore put into the task of identifying specific governments that could offer assistance. According to the study, national response to the economic crises can highly cause both financial and economic fragmentation. In the past, world governments had requested banks to continue with their operations of lending domestically and thus streamlining credit within the foreign markets.
For instance, Dutch government requested ING bank to have an expansion of domestic credit with the aim of reducing overall balance (Hirst & Thompson 2000). This kind of measure puts emerging markets as well as developing countries into a vulnerable position of financial protectionism. This is because such a market depends highly on external credit. Furthermore, G20 countries committed not to increase tariffs in the years 2008. However, such measures were not taken into account by countries like China, India and Argentina who raised the tariffs.
In the view of these risks, researchers assert that global governance together with the global economic picture is bound to emerge from the entire crisis reshaped. The study further shows that depending on policies adopted by world governments, globalization will be stronger or ‘ frail’ after the current recession crisis (Prasad, Rogoff, Wei & Kose, 2005).
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