The Global Economy

Setting the Stage: Origins of the Global Economy

• Since 1970s world economy hit by turbulent forces
• Unemployment in western countries
• Traditional industries (iron and steel) have declined
• LDCs bearing huge financial debts which threaten drive for development
• Trading tensions have emerged between industrial countries and the newly industrializing countries

Causes of These Conditions?

• Some argue that continuing OPEC escalation of oil prices through limited production is root cause
• Had some effect but too simple an answer
• More profound changes in world economic structure were underway before this
• Increasingly growing consensus that world economy has become more volatile, complex and tightly connected
• Countries affected by what is happening abroad and at larger geographical scale