Understanding the World Economy

Understanding the World Economy

Understanding the World Economy

Understanding the World Economy

Synopsis

This edition has been updated to take account of current developments in this area of economics. Building on the first edition, the overall structure is retained whilst new topic boxes and up-to-date examples add to its accessibility.

Excerpt

The world economy never stops changing. Almost as soon as one event has passed, another surprises you. In the time it took to write the first edition of this text, fundamental restructuring was taking place in the former Soviet Union and Eastern Europe, Mexico was emerging from a damaging financial crisis and the ‘miracle’ economies of East Asia seemed to be showing the way forward on the path to economic development.

In the course of this revision, Russia’s progress of transition has been upset, East Asia’s development was rudely interrupted, Europe gained a common currency and - just at the time of going to press - the World Trade Centre in New York was reduced to rubble with the loss of thousands of lives.

While this text offers no expertise or commentary in the discipline of international political relations it is none the less worth making the point here that the terrorist attack on the World Trade Centre is symbolic of the aggression some feel towards the world economic order. Rightly or wrongly, many have expressed the opinion that the conduct of international trade is weighted against the interests of poorer nations. As a result there has been mounting criticism of the ‘forces of globalisation’ (an imprecise but highly evocative term) that has grown increasingly intense. We have witnessed numerous demonstrations on the streets outside the meeting places of world leaders. We have now seen the awful lengths that some suicidal extremists will pursue in order to strike a blow against the global order.

There are many injustices in the world. The existing unequal distribution of global incomes is one of the more urgent causes for concern and is a major theme of this text. It must be strongly emphasised at the outset, however, that all the evidence to date shows that, in general, world trade is not harmful to the interests of the poorest of the poor. Look further in the pages that follow to seek justification for this claim. Global capitalism is not played out as a zero-sum game in a world of fixed resources where for one party to grow richer it means another party must grow poorer.

This does not imply that in some specific instances exploitation does not take place. Sadly, economic power can be abused just as efficiently and ruthlessly as political and military might. How such power may be controlled is the central investigation of this study and it would be premature to

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