RE AN INTERNATIONAL ECONOMY AND CURRENCY

RE AN INTERNATIONAL ECONOMY

The birth of a global marketplace has led to the emergence of that which is now termed the "multinational" company.  Such companies are capable of, and by now usually obligated to, obtain their materials in one place, produce their goods somewhere else, and sell their products in a market consisting of a third group of places, all for the sake of financial advantage.  These circumstances have simultaneously created and resulted in an extremely competitive marketplace, wherein the outsourcing referred to in the words "producing goods somewhere else" has become essential to many producers in their efforts to remain in business. 

Globalization has been additionally promoted by the fact that, in many industries, the scale of technology has today grown to the point that research and development of new products requires so great an amount of resources that it is necessary for a group of firms within an industry to join together to conduct it.  Furthermore, once so developed, it is necessary to market the resultant product in a worldwide marketplace in order to recover the enormous costs that were involved in their creation. 

Many, if not most, economists, businessmen, and political leaders, recognizing the desirability and inevitability of a worldwide marketplace, now favor a "free market"; that is, a world economy, devoid of strict regulation.  However, opposition, sometimes fierce, continues to rage, waged by organized labor, companies who have declined in the wake of imports and outsourcing by competitors, and plain simple "economic nationalists."  And as long as our economic world is divided into non-corresponding political entities, each with its own separate economic policies, trade restrictions, and currencies, such opposition will continue to attract support.  This is partly due to the fact that political divisions give rise to the existence of more advantageous conditions in some places, and correspondingly less advantageous circumstances in others--which in turn causes the "haves" to wish to bar and exclude the "have nots"; and the "have nots" to cast blame for all of their troubles upon the "haves."

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The term "global economy" was first heard with some frequency during the 1960s; and has been repeated increasingly ever since.  The concept of the multinational corporation also began to be referred to during this period.  At this time, many of these were American corporations, who built factories abroad for the purpose of taking advantage of the lower labor costs that existed in these foreign places.  This trend was further reinforced for companies of numerous nations by the fact that physical distance was no longer a major consideration in calculation of the costs of commerce, in that the cost of moving products around the world had become a lessor factor in their merchandising equations (but note that our current energy difficulties have cast a different light upon this concept). 

Subsequently, investment of American money in foreign countries became increasingly commonplace.  For example, by 1995, close to ten percent of U.S. pension funds were invested in Asian enterprise.  Lower interest rates in nation A will often be a cause for investors in that country to send their capital abroad, where the likelihood of more lucrative returns happen at the moment to be available.  Furthermore, the present state of information technology, and its accompanying capabilities, has led to a vastly shrunken and modified economic world.  It has been agreed by most economists that such foreign investment activity is an absolute benefit to the world economy in general.

Today, capital can be instantaneously shifted to anyplace on earth with the stroke of a computer key.  Companies can act and react in response to conditions and changes in the marketplace moments after they occur.  And consumers as well today become quickly aware of products, services, trends, and prices as they emerge; being thereby motivated and enabled to demand immediate gratification of their needs and desires.

As a result of all of this, that which has been referred to as "economic nationalism" has become less and less a force in worldwide commercial affairs.  On the other hand, our economic world is today experiencing an era of increasing regionalization.  Kenicki Ohmae refers to such emerging economically linked regionhs as "region states."  He describes these places as being truly "global" in orientation and outlook, welcoming foreign investment, foreign ownership, and foreign products; and maintaining as a criterion only a desire for "the best and cheapest products from anywhere in the world." (K. Ohmae, The End of the Nation State)

Commercial enterprises no longer look so much upon specific countries as places toward which to direct their marketing efforts; but, rather, to regions, which might consist of part of a nation-state, all of a nation-state, or an area consisting of all and/or parts of a number of such nation-states.

The United States has been aptly described as an early example of progress by a group of somewhat separate state economies into an integrated economy under the aegis of a federal government.  This arrangement gave rise to the eventual establishment of various federal regulatory agencies, such as the Securities Exchange Commission, Federal Communications Commission, and Federal Reserve Bank.  It is expected that the development of a single world economy would proceed along, and has in fact been following, such a track to a certain extent--as a number of semiautonomous national economies are progressing into membership in groups of more integrated regional economies.

However, opinions have varied over whether regional economies constitute "stepping stones" toward, or "stumbling blocks" along the path to, an all-inclusive world economy.  For groupings of national economies into separate regional arrangements--such as the European Union and NAFTA--could encourage individual group identities on the part of the membership of each group; and thus comprise a setback in the world's progress toward a true global economy.  Furthermore, developing countries who are not members of one or another of these regional groups would be left out altogether; and thereby encounter delay in, or even cessation of, their own economic development.  Moreover, individual regional entities could become as hostile to global free trade as any nation-state has ever been--possibly even more so.  In addition, establishment and maintenance of a regionalized economic world could lead as well to a situation wherein the world will have assumed an arrangement into several regional political entities.  (Witness, for example, the plight of the imagined future world consisting of three ever-hostile, ever-battling, political entities as portrayed in George Orwell's 1984.)  Such might turn out to be as undesirable as, or perhaps even more so than, the current nation-state condition that prevails in our political world today.

Another detrimental result of unequal economic relations among nation-states is resort by some of the less advantaged to attempts to "catch up," via overly rapid or improper depletion of their natural resources, as well as other ecological abuses.  One example is the imprudent rate of deforestation that currently takes place among some of the developing countries, in efforts to export timber faster, or create more agricultural land, than regeneration could ever keep pace with.  A second is the excessive pollution created when factories in rapidly developing economies--such as what is today taking place in China, India, and Southeast Asia in general--pay scant heed to the ecological damage attributable to their operations.  A worldwide economy, governed by worldwide regulation, would regard natural resources as existing for the benefit of the world.  Consequently, no single country would be there to recklessly deplete its particular supplies thereof in efforts to "catch up to," or "keep up with," other nations' economies.  The net result would instead be a more efficient and productive utilization of our planet's natural assets; and a consequent economic advantage to all of the world.

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