The Question
The global financial crisis has caused a structural breakdown in all the parts of the economy. The primary influence has been on the behaviors of the consumers, and the consumers are comparatively more risk averse. This situation might support the recession and its negative influences on the economy.
The Relevant Facts and Circumstances
The most recent global crisis has caused important losses for the consumers including their houses because they could not afford to pay the mortgage loans back to the banks. The crisis started in the sub-mortgage markets have widened to the other financial sectors and the real sectors. Consequently, the American economy could not produce enough return for the investors. The following result of this situation has been the less number of jobs generated in the American economy. Also, the number of high-skill requiring jobs has fallen.
As can be seen in the paragraph above, the influences of an economic crisis move to the other parts of the economy gradually and create a cycle hard to break. Consequently, the income generating economic mechanism stops working healthily. As a result of this, the consumers cannot produce enough income for surviving or continuing their economic status in the economy. This negative macroeconomic condition creates a negative impact on the consumer behaviors. They lose their trust in the economy and the economic activities. As a response to the negative influences of the crisis, the consumers reshape their decisions and behaviors relevant to the consuming, investing, and saving. Considering that the financial institutions increase their risk premium aftermath, it becomes relatively more difficult for the people to find suitable funding to support their entrepreneurship attempts (World Bank 1).
The last studies indicate that the consumers are willing to regain their losses during the crisis by spending effort in building new businesses; however, the American economy cannot recover fully from the crisis. The reason behind this is the weak international demand, and stimulating the domestic income cannot support the stimulation.
The crisis started in 2008 has reshaped the whole economy including the individuals and the macroeconomic conditions. After 2008, we faced a structural break in the economy. The happenings at the macroeconomic level and the happenings at the microeconomic level have had an interaction, and this interaction still supports the recession in the American economy. Therefore, the recovery depends on creating a recovery program aims at leading this interaction in a way that might create solutions simultaneously at the microeconomic level and the macroeconomic level. Simply saying, the American economy needs a program to promote new investments and provide the necessary conditions at the macroeconomic level (Shah 1).
How to Transform the Crisis into Opportunities
The most recent global crisis has influenced many of the national economies unevenly, and it seems to be difficult for the countries to recover from the crisis’ negative influences alone. The national economies are connected with each other strongly, and any negativity in one of the national economies has the potential to spread to the other economies. Considering the strong interaction between the national economies and the spread of the crisis throughout the world is easier compared to the past, the issue seems to be difficult to solve. The reason behind this is that regulating the regulations between countries is quite difficult (World Bank 1).
Although the interaction between the countries fosters the global financial crisis, it might be the field for creating opportunities for the national economies. Taking the fact of the international companies are using the advantages provided by the different countries for developing their businesses into consideration, it might be possible to create a new world economy to create opportunities.
The theories in the field of international economics explain the benefits from the free international trade. However, the practical world indicates us that the developed countries have gained more from the international trade than the developing and the less developed countries have done in the past. The new challenges in the world economy, after the global financial crisis, has shown us that the old story of the leading developed countries in the international trade arena will not be true shortly because the developed countries could not create enough export volume to stimulate their economies.
The developed countries have certain advantages such as the ability to produce high-technology and the ability to have high-quality workers. However, they need markets to expand the range of their exports. The advantages did not create the desired results for the developed economies. At the same time, the less developed countries are suffering from many economic, social, and political conflicts. The people living in the less developed countries are more into the lifestyles the developed countries’ citizens have. Consequently, a transformation of the world economy might affect the world economy relatively better by matching the needs of the developed countries, and the less developed countries (World Bank 1).
The consumption behaviors in the less developed countries can easily be changed by providing new opportunities for the people in these countries. The developed countries might develop an aid program to develop these countries. If this can be achieved, then it might be possible and easy to change the consumer behaviors in the less developed countries, and that might provide new export regions for the developed countries (Shah 1).
At the microeconomic level, the integration through the aid programs implemented by the developed countries to help the less developed countries might provide new international business opportunities for the individuals. Especially, considering that each country has a labor force specialized in a specific industry, it might be possible to create new companies with the relatively higher level of labor productivity. Connecting cultures might open new areas for the entrepreneurs.
The Risks
Transforming the world economy and the international businesses might be a solution at the macroeconomic and microeconomic levels. However, there are many risk factors. The most important risk factor is the political risk. As known, some countries are compatible with the other nations because of the enmity between them in the past, and some states are competing with each other with hostile attitudes. Overcoming these political problems seems to be difficult to solve. However, the world politics is getting reshaped in the last ten years. Even though it seems catastrophic these days due to the continuing wars in the Middle East countries and the immigration to the European countries, the world politics is changing. Especially, the immigration from the less developed countries to the developed countries has opened a new facet of the global economy. While some people are suffering somewhere in the world, it is not possible to draw up the global economy or the national economies separately (OECD 1).
Identifying the Opportunities
The countries and the individuals need to learn more about the other cultures they never touched before. Especially, considering that the immigration between countries will create relatively more complex societies in the developed countries, the developed countries’ citizens need to learn how to work together with the other people to increase the productivity and to produce new business ideas.
It has been long years that the fashion professionals learned how to use other cultures’ colors in their artifacts, and they could manage to improve the fashion in the world. The new fashion in the business world should be exploring the useful interactions between the cultures. For instance, the people in the developed countries suffer from the obesity problem while many African people have never had this problem. Therefore, creating a new diet which is a mixture of the different countries’ diet habits, one might produce a healthy eating way for all the people.
Conclusion
As the conclusion, the most recent global financial crisis, and the conflicts and the wars in the Middle East have caused a structural break in the world economy. That might be considered as a structural failure, or it might be bearing new opportunities for all the countries including the developed and the less developed ones, and for all the people all around the world. Although many nationalist people or the people who firmly believe in the national borders are against a transformation of the world economy which is based on the national economies, the world economy is changing.
Works Cited
OECD Immigration, "Is Migration Good For The Economy?", 2016. Web. 24 Feb. 2016.
Shah, Anup. "Global Financial Crisis and Global Issues." Globalissues.org, 2016. Web. 24 Feb. 2016.
World Bank. "Global Development Horizons - A Changing World Economy," 2016. Web. 24 Feb. 2016.
