Characterizing the Global Economy

What are the challenges confronting the ‘world economy’ today? In what way can these issues be
related to the effects of the COVID-19 pandemic?
As the COVID-19 pandemic continue to spread all over different countries, several preventive
measures are imposed to restrict unnecessary movements of people to different places. In this way, it
would limit or lessen the probability of the contraction of the corona virus. But then, as months go by,
this restriction in movement has also caused a near-standstill economic activities within a country and
across the whole world. In relation to this, as stated by the International Monetary Fund, the global
economy is projected to experience a sharp contraction by 3%. Thus, it is the role of the government to
provide an urgent action plan that can provide health protection and lessen the impact of the economic
consequences that we will face.

As of this moment, several challenges confronting the world economy are faced by different
countries. These challenges include 1) loss of trade and tourism 2) bankruptcies, 3) loss of jobs, 4) tight
financial conditions and 5) mounting debt. First, there is a loss of trade and tourism since several
governments have imposed a travel ban to prevent the further spread of the virus. In relation to this,
people are also advised to stay at home. Therefore, some does not have jobs and income resulting to
tight financial conditions so that they could have something to eat for the next few months. The second
challenge, as heard in the news, several companies and businesses has filed bankruptcies after the
outbreak of the virus causing several people to lose their jobs. Lastly, to respond to this global
pandemic, some countries are borrowing money to provide necessary preventive, testing and
treatment measures for their people which results to mounting debts of a country.

How can we characterize the global economy in an era of globalization? Provide examples to illustrate
your arguments.
In this era of globalization, it allowed people, goods, and information to move easily around the
world. With the help of human innovation and technological progress, economic globalization became
possible. Trade became evident to balance the supply and demand of a country. Thus, globalization has
created a borderless economic interaction wherein the world is interacting with each other. In relation
to this, numerous multinational corporations arose. Through these corporations, different goods and
services are imported and exported to different countries around the world.

One example of the most famous and most sought out multinational company in the Philippines is
the San Miguel Corporation. It is not just famous in our country, but it is also famous worldwide. San
Miguel Corporation is the largest publicly listed food, beverage, and packaging company in the South
East Asia. Products of this company are exported to over 40 countries worldwide, having Taiwan,
Malaysia, Korea, Singapore, Japan, US, UAE, and Sudan as some of its major export markets.

Another example of how globalization affected our global economy could be observed in the
migration of people. Many Filipinos are working as an OFW in countries such as Saudi Arabia, United
States, Europe, and others. Through their remittances, our country ‘s macroscopic economy increases.
According to an article entitled “OFWs – The Strong Pillars of the Philippine Economy”, the money
transferred by Overseas Filipino Workers accounts for at least 10% of the country’s GDP.

What are prime drivers/catalysts that propels the global economy? What do you think is the most
important driver? Provide specific explanations.
According to an article written by Renée Dye and Elizabeth Stephenson, the prime drivers that
shapes our global economy are emerging market conditions, labor productivity, national-resource
management, and government. First, emerging market conditions could drive global economy because
each year the trend changes, thus, businesses should cope up to these new trends so that people would
continue to consume their products and services. Second, labor productivity is important because they
are the ones who produce the goods and services that we avail. Third, national-resource management is
important because these are the raw materials used by companies. Lastly, the national government
could also affect the global economy because they impose policies such as liberalization, deregulation
and privatization. In addition to this, as discussed in our class, multinational companies and technologies
could also drive the global economy by securing labor and capital from a variety of places, and
improving transport, communications, and production, respectively.

For me, the most important driver of global economy is the demands and preferences of the
people. It dictates the kind of businesses that should arise. As observed in the sudden rise of demand for
milktea. This demand resulted to the emergence and popularity of several milktea shops such as Macao,
Gong Cha, Infinitea and others. It also shaped the kind of resources, machines, and technologies needed
to create a milktea. Therefore, we could see how demands and preferences serve as the key catalyst
that would start up the whole process or cycle of global economy.

Sources:
Dye, R. and Stephenson, E. (2010). Five forces reshaping the global economy. Retrieved from
https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/five-
forces-reshaping-the-global-economy-mckinsey-global-survey-results on 3 September 2020.
International Monetary Fund. (2020). World economic outlook, April 2020: the great lockdown.
Retrieved from https://www.imf.org/en/Publications/WEO/Issues/2020/04/14/weo-april-2020 on 3
September 2020.
OFWs – the strong pillars of the Philippine economy. (2019). Retrieved from
https://www.xpressmoney.com/blog/industry/ofws-the-strong-pillars-of-the-philippine-economy/ on 3
September 2020.
San Miguel. (n.d.). Retrieved from https://sanmiguelbrewery.com/index.php/our-company/# on 3
Septermber 2020
The World Bank. (2020). The global economic outlook during the COVID-19 pandemic: a changed world.
Retrieved from https://www.worldbank.org/en/news/feature/2020/06/08/the-global-economic-
outlook-during-the-covid-19-pandemic-a-changed-world on 3 September 2020.