CONTEMPORARY WORLD

SUMMATIVE ESSAY

Submitted by: Santos, Bryan Jay Jr, Q.

BSCrim 21M4

Submitted to: Ma'am Jan Oriel Villaruel

Global Economy and Its Function in the Contemporary World

Over the past few decades, there have been significant changes to the way cooperating

nations organize and govern the global economy. These modifications have an impact on both

international trade in goods and services as well as international migration. Over the past

century, there have been several instances where excessive fluctuations in this international

economic system have resulted in a global economic crisis.

The term "global economy" describes the interwoven international trade and commerce

that occurs between several nations. These economic activities can have either a positive or

negative impact on the countries involved.

The global economy is comprised of characteristics such as:

- Globalization - explains the process by which the global network of trade,

communication, immigration, and transportation has integrated national and

regional economies, societies, and cultures. The global economy emerged as a

result of these developments. Domestic economies have become more cohesive

 as a result of the global economy and globalization, which has improved their

performances.

- International Trade - regarded as a result of globalization. It describes the

transfer of goods and services between nations and has aided those nations in

becoming niche markets for goods in which they enjoy a comparative advantage.

The ability of an economy to produce goods and services at a lower opportunity

cost than its trading partners is referred to in this economic theory.

- International Finance - One of the main characteristics of a global economy is

international finance because money can move between nations more quickly

than goods, services, or people can. Monetary policy and currency exchange

rates are two aspects of international finance.

- Global Investment - This is a reference to an investment strategy that is not

limited by location. Foreign direct investment is the primary means of making

global investments.

To understand the importance of the global economy, let’s look at its relation to emerging

markets.

- Economic importance at a micro and macro level: One of the main drivers of

global economic growth is the expansion of emerging markets as a result of the

world population increase. The world economy is expected to benefit from

emerging markets' growth and resiliency. Prior to moving on to the following

point, you should comprehend what microeconomics is. In terms of resource

 allocation and decision-making, it refers to the study of how households, people,

and businesses behave. To put it another way, this area of economics

investigates how individuals make decisions, the influences on those decisions,

and the effects of those decisions on the supply, demand, and price of goods on

the market. Thus, from the standpoint of microeconomics, these emerging

markets are home to some of the biggest companies with significant market

values as well as some of the wealthiest people on the planet, which has

contributed to the higher income distribution in these nations. Nevertheless, there

is still more to be done to try and eradicate poverty, as it still affects many of

these developing nations.

- Long-term world economic outlook: Based on capital productivity models and

demographic trends, financial and economic projections indicate that the GDP of

emerging market economies will likely continue to grow at a positive rate in 2019.

The economy of emerging markets is expected to grow by 7.5% in India, 6.6% in

the Philippines, 6.3% in China, 5.3% in Indonesia, 5.1% in Egypt, 4.9% in

Malaysia, 3.8% in Peru, and 3.7% in Morocco in 2019, according to a Focus

Economics forecast.

Though this is a common misconception, many people believe that the governments of

the world's largest economies control the global economy. Governments do have some

influence over a nation's economy, but these governments are primarily controlled and funded

by big banks and corporations. This indicates that big financial institutions control a significant

portion of the world economy. As per the report by World Economic News, US banks are

involved in numerous conventional government enterprises, such as electricity generation, oil

refining and distribution, and managing public facilities like train stations and airports. The
Federal Reserve Chairman Ben Bernanke received a letter from certain US Congress members,

proving this.

Transactions are the one word that best describes how the world economy operates.

International trade between the world's leading economies contributes to the sustainability of the

global economy. Trade between nations makes up the majority of these transactions. A wide

range of goods are exchanged between nations as part of international trade. It includes

everything from foods and fruits to weapons and natural oil.

Because of the influence of the global economy, events in what at times may seem to be

unrelated countries affect nearly every country in the world in some way. An excellent illustration

of this is the economic effects that the Brexit vote will have on other nations, both inside and

outside of Europe. Economics, which is predicated on the production and exchange of goods

and services, is the primary cause of these effects. Countries that choose to impose excessive

import and export restrictions may find that their economies become less stable as a result.

However, there are numerous benefits of a global economy, including:

- Free trade: a fantastic way for nations to trade goods and services. Additionally, it

enables nations to focus on producing the goods in which they are comparative

advantages.

- Movement of labor: Both the workers and the recipient country benefit from

increased labor force migration. When a nation experiences a high

unemployment period, its citizens can search for employment abroad. This

contributes to the decrease of regional disparities.

 - Increased economies of scale: Most nations have seen a reduction in average

costs and customer prices as a result of the specialization of their goods

production.

- Increased investment: Due to the presence of the global economy, it has become

easier for countries to attract short-term and long-term investment. Investments

in developing countries go a long way in improving their economies.

The 2030 Agenda for Sustainable Development

We are gathering at a time when sustainable development faces enormous challenges.

Millions of people in our country are still denied a life of dignity and live in poverty. The

disparities within and between nations are growing. There are huge differences in wealth,

power, and opportunities. One major issue that persists is gender inequality. Numerous

societies' existence as well as the planet's biological support systems are in jeopardy.

17 integrated and indivisible Sustainable Development Goals and their 169

corresponding targets. World leaders have never before promised coordinated efforts and action

on such a wide range of global policy issues. We are embarking on a joint journey towards

sustainable development, committing ourselves to the joint endeavor of worldwide advancement

and "win-win" collaboration, which has the potential to yield enormous benefits for every nation

and region on Earth.

Given the scope and aspirations of the new Agenda, a reinvigorated Global Partnership

is necessary to guarantee its execution. We promise to stick to this. This Partnership will
operate with an attitude of global solidarity, with a focus on solidarity with the most vulnerable

and impoverished. In order to support the implementation of all the goals and targets, it will

enable a vigorous global engagement that mobilizes all available resources and brings together

governments, the private sector, civil society, the United Nations system, and other actors.

The means of achieving the targets for implementation under Goal 17 and each SDG are

crucial to achieving our agenda and are just as important as the other goals and targets. The

Third International Conference on Financing for Development, which took place in Addis Ababa,

Ethiopia, from July 13–16, 2015, produced an outcome document outlining specific policies and

actions that can help address the Agenda, including the SDGs, within the framework of a

revitalized global partnership for sustainable development. As a crucial component of the 2030

Agenda for Sustainable Development, we applaud the General Assembly's adoption of the

Addis Ababa Action Agenda. We understand that achieving the Sustainable Development Goals

depends on the Addis Ababa Action Agenda being fully implemented.

The primary accountability for monitoring and evaluating the progress made in executing

the Goals and targets over the next fifteen years is with our governments, both nationally and

regionally. As outlined in this Agenda and the Addis Ababa Action Agenda, we will offer

systematic follow-up and review at the different levels to support accountability to our citizens.

The primary responsibility for managing global follow-up and review will fall on the shoulders of

the High Level Political Forum, which is governed by the General Assembly and the Economic

and Social Council.

An earlier generation of international leaders convened to establish the United Nations

seventy years ago. They created this organization and its guiding principles of international

cooperation, communication, and peace out of the detritus of conflict and division. The United
Nations Charter is the ultimate expression of those principles. We are also making a very

important historical decision today. We are committed to creating a better future for everyone,

even the millions of people who have been deprived of the opportunity to live honorable, fulfilling

lives and to realize their full potential as human beings. In the same way that we might be the

last generation to have a chance to save the planet, we also might be the first to successfully

end poverty. If we achieve our goals, 2030 will be a better year for the world.

By 2030, our goal is to end poverty in all its forms everywhere. Next, is to Put an end to

hunger, ensure food security, boost nutrition, and advance sustainable agriculture. Then, Assure

everyone, regardless of age, has a healthy life and fosters wellbeing, Make sure that everyone

has access to high-quality, inclusive education, and encourage lifelong learning opportunities,

Achieve gender equality and empower women, Make sure that everyone has access to and

sustainable management of water and sanitation, Make sure everyone has access to modern,

affordable, dependable, and sustainable energy, Encourage full and productive employment,

equitable and sustainable economic growth, and decent work for all, Create a robust

infrastructure, encourage equitable and sustainable industrialization, and cultivate creativity and

to lessen inequality both within and between nations.

Theories of Global Stratification

The two main theories that emerged from the structural-functional and conflict

theories—modernization theory and dependency theory—are best suited to explain global

inequality, even though the three main sociological paradigms all contribute to the explanation of

global stratification. According to modernization theory, industrialization and advancements in

technology are the means by which nations move forward through their evolutionary stages.

Modernization theory is perceived by dependency theory as being Eurocentric and

condescending. Dependency theory holds that core nations' exploitation of labor and resources

in peripheral and semi-peripheral countries sets up a cycle of dependence that leads to global

inequality.

Modernization Theory

The structural-functional perspective informs modernization theory, which views

inequality as a result of national industrial and cultural disparities. It contends that because of

their incapacity or unwillingness to adopt new technologies, low-income countries were

excluded from the industrial gains that followed the Industrial Revolution as well as the

Columbian Exchange, which resulted in a transfer of goods and technologies between Europe

and the "New World" starting in the late 15th century. Modernization theory states that

low-income nations are impacted by their lack of industrialization and can raise their status in

the world economy by doing the following (Armer and Katsillis 2010):

Critics draw attention to this theory's innately ethnocentric bias. It is assumed that every

nation has access to the same resources and can travel down the same route. Furthermore, it

makes the assumption that becoming as "developed" as possible is the aim of every nation.

This theory does not allow for the idea that industrialization and technology are not the ideal

ends in and of themselves.

Naturally, this assumption has some foundation. According to data, core nations typically

have longer life spans, less extreme poverty, and lower rates of maternal and child mortality. It's

also true that millions of people in the world's poorest nations perish from a lack of access to

sanitary facilities and clean drinking water—a privilege that most of us take for granted.

However, the problem is more intricate than the figures would imply. Modernization is putting

local customs, history, equality among cultures, and communities at jeopardy as it advances into
peripheral nations. Therefore, the difficulty lies in allowing modernization's benefits while still

being mindful of the cultural heritage that already exists.

Dependency Theory

Dependency theory aligns with the conflict perspective by emphasizing the ways in

which rich nations have wronged poor nations. It was developed partly in opposition to

modernization theory's Western-centric viewpoint. According to this, the main cause of global

inequality is the exploitation of semi-peripheral and peripheral nations (also known as

middle-class and low-income nations) by core nations, or high-income nations, which feeds a

cycle of dependency (Hendricks 2010). Peripheral countries will never achieve stable and

consistent economic growth in a self-determined sense as long as they rely on core countries

for economic stimulus and access to a larger portion of the global economy.

At first look, it appears that this theory ignores countries like China that were once

low-income but are now regarded as middle-income and are headed toward becoming

high-income countries and significant players in the global economy. However, some

proponents of dependency theory contend that it is best for core countries to guarantee the

long-term value of their semi-peripheral and peripheral partners. According to that theory,

sociologists have discovered that entities that hold a dominant position in the equation are more

likely to outsource a sizable portion of a company's work; in other words, companies want to see

their partner countries in a healthy enough state to provide work, but not in a state that poses a

threat (Caniels and Roeleveld 2009).

REFERENCES
How does the global economy work? | Edology. (n.d.). Edology.

https://www.edology.com/blog/accounting-finance/how-does-global-economy-work/

Transforming our world: the 2030 Agenda for Sustainable Development | Department of

Economic and Social Affairs. (n.d.). https://sdgs.un.org/2030agenda

Lumen Learning. (n.d.). Theoretical Perspectives on Global Stratification | Introduction to

Sociology.

https://courses.lumenlearning.com/wm-introductiontosociology/chapter/theoretical-perspectives-

on-global-stratification-2/