Understanding the Global Economy: A Historical Perspective

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INSIDE GLOBAL ECONOMY Introduction The term ‘Global Economy’ refers to worldwide economic activities that affect countries positively or negatively through trade and economic growth. The term came into picture after Globalization took place. The term Globalization signifies “the rapidly increasing interdependence, integration & interaction among people to share the economic activities taking place in various locations around the world”. Now looking back to the history, around the 16th century economies like Europe started expanding and development of mercantilism took place which further led to economic Liberalism. Mercantilism aims to increase nation wealth and power which a government achieves by promoting export outlets and protecting domestic market whereas Liberalism can be defined as “the economic approach that emphasizes, Markets are the best path towards improvement in the quality of life”. During the declination of Arab – Muslim empire and defeat of Constantinople by Ottoman Turks, Europeans started to expand the scope of their political, military and financial …show more content…

The devastation of Europe financially and physically led the United States that had resources to drive the recovery of the world economy. At this moment some allied officials came up with a broad set of arrangements which would guide the operation of world economy from the end of World War II. This broad set came to be known as the “Bretton Woods System” coined from the name of town where it was created. The system was based on liberal economic principles which intended to promote a reopening of commercial and financial channels. The System mainly focused on economic recovery of world so that once recovery takes place the responsibility could be shared more equally. But the initial burden was on United States and as it pushed slowly towards more opening trading system and supported most financial

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