Example Of Global Economy Case Study

At the dawn of the millennium, the world economy was promising for the majority of the economies in the world. However, between 2001 and 2002 the economy of the United States of American declined rapidly due to increased trade deficit, stock inflation, and terrorism. Such triggered a similar trend in Europe, Latin America, and Japan. Nevertheless, after some time, these economic regions began the process of recovery with the European areas at a reduced rate than the USA. Uruguay, Paraguay, and Brazil appealed to the IMF and USA to assist them while African remained with the highest debt and experiences economic challenges due to low populations, political instability, and other aspects that it has no control.
The USA economy affects the major economic blocks. In this respect, if there is a recession in the USA, the effects trickle down to the Euros zone, Japan, Latin American, Africa and some part of Asia. The primary cause of such is the commonality in the international markets and economic activities. Inflation tends to be cumulative in nature and spread across the world since the majority of the trade zones have a mutual relationship with each other. The Asian regions have been experiencing an influx of manufacturing firms due to the cheap labor. That reduces the unemployment rates in the countries.
The relationship between countries determines how they interact. In the event of economic challenges, they face similar fates. However, developing countries still lag behind due to the over-dependence on international aid. Also, external forces render the African countries vulnerable economically. These two aspects coupled with small populations, internal political instability and ethnic warfare hinders a steady economic growth. Therefore, there is a need to reduce international debt and aid, so as to trigger a quick economic growth. The developed countries and the IMF have to increase their efforts to salvage the third world.