Setting foot in the twenty-first century, men consider the entire world as a family.
Among many vital aspects, economy has allured the attention of all. Globalisation has opened a new horizon in the field of economy.
A detailed analysis has been made on the trends towards global economy.
Meaning of Globalisation:
The term ‘Globalisation’ has been derived from the word ‘Globe’. If this term will be extended, it will mean that instead of the thinking of a country’s problem by itself, the entire world will think about it. In economic field, it conveys two meanings.
First, to remove the hindrances like government permit, licence, export, import, forcing capital etc. in case of liberlaisation.
Secondly, permission to be granted for the investment of foreign capital in financial corporation or industries run by government which will be privatised. This process of economic globalisation will encourage agriculture, trade, commerce etc. and will help in the economic development of a country.
Background of Global Economy:
When the cold war was in full swing, on 12 March, 1947, the ‘Truman Doctrine’ of America gave financial assistance to Germany and Greece in order to check the entry of Soviet Russia’s Communism in Europe. This process went one step ahead on 5 June, 1947 through ‘Marshall Plan’ of the U.S.A.
This plan came forward to help the European countries and the allies of Soviet Russia. Against these two economic measures, the Soviet Russia adopted ‘Molotov Plan’. With the gradual march of time, this policy of economic liberalisation was adopted by many countries of Europe.
The Principle of ‘Perestroika’ initiated by President Gorbachev of U.S.S.R. created a milestone in the field of economic liberalisation. Gradually, the ‘Multi-national Companies’ of various capitalist countries invested their capital in other developing countries thereby creating market for them.
As a result, capital, different products, technology etc. flew from one country to another. This was known as ‘Economic Liberlisation’. The ‘World Bank’ and ‘World Trade Organisation’ also activated this process and different countries of the world adopted this process.
Different aspects of Global Economy:
Global Economy has several aspects. At first, many countries of the world have been connected with this global economy by following its trends. Secondly, the economic growth of a country influences the economy of another country. Thirdly, it is encouraging many countries to invest capital at other countries. Fourthly, the WTO has been created to regulate the global economy. At last, it is meant to connect the countries of the world.
Development of Global Economy:
The development of global economy passed through several stages. In 1944 in the ‘Brettonwoods Conference’, the representatives of 44 countries decided to form ‘International Bank for Reconstruction and Development (IBRD) and ‘International Monetary Fund’ (IMF). This plan was also materialised.
In 1948 when ‘General Agreement on Tariff and Trade’ (GATT) was made. In 1956 ‘International Finance Corporation’ (IFC) was formed. In 1960 the ‘International Development Association’ (IDA) was formed. In 1995 GATT was given a new name as ‘World Trade Organisation’ (WTO) which galvanised the global economy.
When P.V. Narasimha Rao was the Prime Minister of India, the then Finance Minister, Manmohan Singh had encouraged this process. After him, Yashobant Sinha, the then Finance Minister encouraged it. Now P. Chidambaram, the Present Finance Minister is also encouraging it.
Measures of Global Economy:
The Multi-national Companies have established their organisation in different countries. They have launched their products in these countries. They have also established industries in different countries and employed the local people in these factories. Some people are also sailing the products of these companies and earning profit for them.
These companies are producing electronic goods, vehicles, packet milks, cosmetics, fast food, cold drinks etc. and monopolising in different countries. These activities of different multi-national companies have made the world a ‘Global Village’.
Country and Global Economy:
Now global economy is regulating the activities of a country. This has forced the country to lose control over the economic activities of individuals. The economic liberalisation has given impetus to global economy. Without the intervention of the government in individual activity, the interest and ability of an individual are increasing.
On the other, the IMF and World Bank are giving loans to different countries and regulating their activities. These countries are also dancing to the tune of the World Bank. Thus, global economy is decreasing the influence of a country and increasing the influence of an individual.