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Thursday, 13 September 2018

Emerging Economics and Globalization

This term "emerging market" as revealed by the economist was coined 26 years ago by the international financial corporation ,the private sector arm of the world bank. It is on record,that before the steam engine and the power loom gave Britain its industrial lead,today's emerging economics dominated world output. Now emerging economics are on the rebound enjoying their best performance for decades after they were submerged by the technological advanced countries for so long.

According to estimates by the economist in 2005,the combined output of emerging(or develop) economies rose above half of the global total. This is seen as part of the biggest shift in economic strength since the emergence of the united states more than a century ago. It is envisaged that should this pace of production be maintained,in 20 years time, emerging economies would account for two- thirds of global outputs.Is this likely?

These emerging economies like China ,Brazil,Russia and India have continued to accumulate surpluses in their current account balances ,and have built up weighty foreign exchange reserves. Thanks to globalization aided by trade liberalization which has opened up the national and regional boundaries of the world to movement of goods and services.

The shift in economic power towards emerging economies is a product of the following;
(1) In the open world,it is easier to catch up by adopting advanced country's technology than it is to be an economic leader that has to invent new technologies in order to keep pace with growth;

(2) The out sourcing business continues to soar as major multinational enterprises continue to search for low cost zones to undertake certain aspects of their production.

(3) Globalization is causing the biggest shift in relative prices(of labour, capital,commodities and goods) for a long time now. China which is the leading economy now ,has the least pay package in the world in dollar terms.

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