When every country is connected by trade and financial ties, irrevocable interdependence is created...
International trade has been part of the economy since ancient times. The means of trading improve along with technology, and along with them evolves the international trading...
In the real economy, there are diverse economic ties that manifest in trade of goods and services. One such example is the trade connections in the auto industry between Japan and the United States...
As in real economy, profound interdependence has evolved in the financial sector, as well, whether through loans (bonds) that countries took from other countries or through other means. The most conspicuous example of that interdependence is the massive amounts of U.S bonds held by the Chinese government. Because of the speed at which money markets respond to changes in the policies and in the economy, these markets have become the most prominent characteristic of the global and interconnected world we live in. The interdependence among countries and investors is palpable and tangible in those markets...
International trade began as a means to provide for a country’s needs. As capitalism spread throughout the world, the primary motive of countries changed from provision of necessities to maximizing their profits to maintain a strong, stable economy, and allow for continued development of their economies and their citizens’ well-being. The global balance was formed through international demand and supply on both economic and financial levels...
The interdependence among countries was one of the key reasons for the expansion of the crisis from the United States to the international economy in 2008. Now, as in 2008, every country is affected by the crisis. The complex links among countries and corporations require integrated moves among countries, as well as mutual consideration and genuine willingness to support faltering economies. It seems that the message, “we’re all in the same boat” has indeed sunk in. Yet, attempts to resolve the crisis through monetary or financial stimuli have failed bitterly in both the U.S. and Europe...
Along with the integration required in light of the above-described economic connections, China, the second most powerful economy in the world, recently stated that it intends to stall its investment policy in Europe and the United States. Wen Jiabao, Prime Minister of China, said in an address at the Annual Meeting of the New Champions 2011, “Governments should fulfill their responsibilities and put their own house in order...
Since the global crisis that began in 2008, the United States and the Eurozone countries have been trying to save their economies from collapse using various bailouts and emergency plans. By and large, these programs rely on monetary expansion, primarily using interest rate cuts and fiscal expansion, which means pouring government funds into the economic system and offering tax benefits to resuscitate the economic activity...
The global ties among countries is a done deal, a result of natural evolution that is still continuing. In fact, the ties are only strengthening, and the crisis in 2008 clearly exposed that single network in which the fates of all countries are interlinked...