Main Challenges Facing the Contemporary World Economy

The world economy is a dynamic, multifarious and complex entity. The contemporary economy can be distinguished from past economies simply because technology permits a greater degree of interdependence than has previously been possible. An integral facet of the 21st century economy is what Harvey (1989) identifies as ‘Time-Space Compression’, the phenomenon described by Larsson (2003, pg.89) as “The process of world shrinkage”. This “shrinkage” allows faster capital exchanges and a rapid movement of commodities. Such close spatial relations create a degree of economic dependence, as global interrelations have the potential to become far more entrenched than before. Although Graham (1998) regards space as having been ‘conquered’ by technology, this argument can be contested, as significant spatial inequality remains across local, national and international scales. Brandt (1980) accurately maps the ‘North-South Divide’ (Fig.1), observing large economic disparities between what he deems the ‘Global North’ and the ‘Global South’. Another unequal facet of the economic system is its governance, with many developed nations adopting neoliberal policies, whilst certain underdeveloped nations have less developed social rights and economic infrastructures. Hudelson (1999) argues that a movement away from classical liberalism and economic liberalism in conjunction with the adoption of neoliberal policy characterises the contemporary world economy. Viewing the global economy through Hudelson’s lens, one can observe the extent to which it is characterised by the policies that govern it. This essay will critically examine the extent to which economic inequality, interdependence and excessive deregulation are the main challenges facing the contemp...

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