This section focuses on the evolving landscape of the global economy, its structures, and dynamics.
A new economy has emerged in the last two decades, characterized as both informational and global, emphasizing the intertwining of these features.
Dependence on knowledge-based information for productivity and competitiveness is crucial for firms, regions, and nations.
Core activities of production, consumption, and circulation are organized globally, through networks linking economic agents.
Productivity and competition occur through a global interaction network.
The relationship between the knowledge information base, global reach, and the Information Technology Revolution defines this new economic system.
Capital
Managed continuously via integrated financial markets, facilitating rapid transactions globally.
New communication technologies enable prompt capital movement, linking savings and investment globally.
Corporate centers provide necessary resources for managing financial networks.
Labor Markets
Global labor markets are limited; however, professionals and scientists can work internationally.
Companies can locate operations based on labor supply across regions, while skilled labor can be sourced globally under favorable conditions.
Migration driven by poverty or conflict contributes heavily to labor markets.
Science, Technology, and Information
These areas are organized in a global flow, albeit asymmetrical in nature.
Trade Markets
Despite protectionism, markets for goods and services are increasingly globalized due to advanced communication and transportation technologies.
However, domestic markets remain significant contributors to GDP, especially in developing countries.
Management and Production
A shift in management strategies is pivotal, with production processes now incorporating global components from various locations.
This involves high-volume, flexible, customized production systems, enabling companies to adapt to changing demands.
Includes strategic alliances and networks connecting small and medium enterprises with larger corporations.
The structure of the global economy results from competition dynamics among economic agents and locales.
Four main processes determine competition:
Technological Capacity
Involves the science base for production, R&D strength, and resource availability for innovation.
Market Access
Firms benefit from access to large affluent markets (e.g., EU, US Trade Zone).
Production Costs Versus Market Prices
Assessment beyond labor costs, including land, taxes, and regulations.
Political Capacity
National and supranational institutions' ability to guide economic strategies plays a crucial role.
The notion that the economy operates entirely on a global scale is challenged:
Not all markets and strategic industries are fully integrated.
Capital flows are restricted by regulations and labor mobility is impacted by immigration controls.
Corporations often maintain strategic centers in their home nations, reflecting national influences on corporate behavior.
Government policies shape the global economy's structure.
Evidence shows that nationalism and the influence of government persist, suggesting that significant regional distinctions will remain.