The paper 'The World Economy at the Start of the 21st Century' is a wonderful example of a macro and Microeconomics Case Study. The international economy has grown tremendously due to global factors. The international economy can be recognized from the domestic economy in terms of the strategies and the way business is conducted. The developments in the 19th century have led to the development of the international economy. The impact of the international economy is that it helps to develop various economies as they can access the international factors of production (Torsten & Guido 2000).
In this effect, this report will discuss the features of the international economy as well as the factors in the 19th century that led to the development of the international economy. Features of the international economy The international economy can be distinguished from the domestic economy regarding the features that are exhibited in the international economy. The first feature of an international economy is more options for production. In the international economy, there are many options of production that can be employed by various economies (Torsten & Guido 2000).
For instance, despite the production processes which are used the same capabilities of production can be used somewhere else by other economies. In addition, the factors of production in the international economy are readily available and can be accessed by many economies. For instance, there is the outsourcing of labor with relevant skills and this means that the production process can be altered with the aim of suiting the current needs by outsourcing the required services. Further, the international economy is characterized by the intensification of international trade and the flow of capital.
After World War 11, there has been increased integration of the economy. This can be observed by the trade trends in the global economy. For instance, the industrialized economies managed to lower their average tariffs from 40% in the year 2946 to 5% in the year 1990s. This means that there was an integration of economic activities between the developed and developing economies with the aim of stabilizing the global economies (Charles 2010). As a result of international economic integration, there has been an increase in an industry trade.
In addition, the developing economies like the economies from the East and Southern Asian countries have entered into the global economy successfully. Furthermore, the international economy is characterized by three main actors. These main actors in the international economy include multinational enterprises, global institutions, and regional arrangements. From the resent research which was conducted, it was determined that there are about 60,000 parent firms that operate in the global economy. These parent firms have about 500,000 affiliates global and this means that international trade is characterized by multinational corporations (Guillaume et al 2008).
There are also international organizations in the international markets and they include the International Monetary Fund which was formed in the year 1945 and World Bank which has more than 182 member states. There is also WTO which has the responsibility of managing the way business operations are conducted internationally. Regional arrangements like the European Union and North American Free Trade Agreement (NAFTA) also form part of the global economy. In addition, the international economy is characterized by the changes which are available to create new markets.
The current international economy provides a variety of opportunities which are available for smart minds that can be able to identify the opportunities and formulate strategies that can help to exploit the existing opportunities (Barry & Donald 2008). It has been realized that it is not a lack of money that presents individuals from realizing their ideas but the ability to identify the opportunity and utilize the available resources so that they can exploit the opportunities. In this effect, the international economy is characterized by a variety of opportunities that can be taken up by the entrepreneurs to exploit and they require little investment.
This makes the international economy different from the local economy which might have limited opportunities.
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