Download Global Economics and Finance Issues

Tina Covey and Bradley Doss
GS3050-Midterm assignment
February 6, 2013
Readings Midterm Assignment
The most critical issues affecting global economics and finance in the 21st century.
The Top 5 Concepts/Issues
1-Terrorism and Corruption
2-Economic Freedoms and Overregulation
3-Talent Migration, Illegal Immigration
4-Globalization in terms of Isolationism vs. Homogenism
5-Sustainable Development
The Importance of Our Top 5 Concepts/Issues
Partners tell why your chosen 5 concepts/issues are the most important, why you ranked them in
your chosen rank order
Terrorism and Corruption- Because politics of these directly impact everything else on this list
in determining where investments and trade will go, where foreign aid will be needed or
effective, where people will migrate to and from, etc. As terrorism continues to grow on a global
level, threat risks to other affluent nations in the world become much greater. And corruption
and terrorism seem to go hand in hand, as the corrupt governments often are involved in the
trafficking of the weaponry, money, crude supplies, etc. in order for the terrorist activities to
even be possible.
Economic Freedoms and Overregulation- They cover so many aspects that affect everything
else, kind of the first domino in a chain reaction. If a country has very strictly regulated or no
economic freedom, it may be very difficult for a business to be able to enter the global trade
market, due to regulations by the government, tariffs, taxation, etc. Also, due to currency
conversion issues, it may be unobtainable for a business to afford conversion rates, etc.
depending upon the amount of capital said business has at their disposal.
List: Business, Trade, Fiscal, Monetary, Investment, Financial and Labor Freedom, from
government and corruption and property rights.
Talent Migration, Illegal Immigration- The movement of talent around the globe, and
unskilled labor too, directly impacts economic success/failure locally, nationally and by ripple
effect, then globally. The previous two areas directly affect this area. If terrorist activities and
corruption increase, citizens of that nation may be inclined to move away to areas where these
things are not occurring in their hometowns. And if the economic freedoms are limited, or the
regulations posed by their domestic governments are preventing them from being able to
compete on a global level, it can make more sense for an entrepreneur to migrate to another
region of the world where they may have greater, easier access. A large portion of the migration
area is pay rates for specific skill sets, as well. It can be attractive for a person to move abroad if
they can receive a much larger salary for their particular skill set. Even in areas like unskilled
labor, salaries in one area of the world may be much higher than in their domestic market,
depending on currency valuations, etc. This is the reason that many immigrants are interested in
coming into the United States, because base salary rates tend to be much higher in the U.S. than
in other areas of the world.
Unfortunately, this also means that illegal immigration will continue to rise. This is definitely
going to have an impact on global trade. In many areas, like the United States, illegal
immigration is a rising problem, costing society as a whole millions of dollars per year. One
example is, Americans end up paying higher tax rates in order to cover the healthcare costs of
illegal immigrants. While illegal immigrants are utilizing public school systems and public
programs, they are not paying income taxes. This leads to a large drain on governmental
spending.
Globalization in terms of Isolationism vs. Homogeneity- Policies that isolate will affect
several other things on this list. On the other hand, the world is steaming headlong into
everything becoming the same, with no differentiation, which does and will have direct
economic impacts. Uniformity can provide quite a convenience factor, but it may not be the best
route for the development of global trade, simply because if everything is the same, the market
will be flooded with competition.
Sustainable Development- Policies to manage the proper use of resources is the final piece of
this puzzle that envelops the other top four. Aside from all of the previous important concepts, if
a nation is not able to even sustain and secure its developmental capabilities, then there is no
possibility of moving into and staying in the fast-paced global environment. As technology
continues to develop at a very rapid pace, the need to be concerned with environmental factors in
order to sustain capabilities for generations to come gets greater and greater.
How Our Top 5 Concepts/Issues Relate to Each Other
These global economic concepts and issues are directly linked as cause and effect. Terrorism
and corruption obviously affect economic freedom and governmental regulations. As
governmental officials are bribed to act in certain ways, whether it be to provide weapons or
technology to terrorist groups, or allowing the laundering of money through governmental
avenues, the corrupt governments are more likely to be self-interested than interested in the
protection or support of their citizens. And as governmental regulations and economics
freedoms suffer, people are likely unable to compete on a global level with larger corporations in
order to sustain their business. This means that they will likely look for alternative locations
(immigrate) where their skill set can be utilized, or the support for their entrepreneurial activities
allows for greater competition and entry into the global market. And as richer nations look for
cheaper ways to produce goods, many of the poorer nations are being forced to illegally
immigrate toward other regions where they can escape the reach of large corporations that hinder
their production. And sustainable development encompasses all of these areas, as it is very
important for any nation to be able to plan for future development capabilities or they will not be
able to keep pace in the global economy.
The Impact Our Top 5 Concepts/Issues Are Likely to Have
As global terrorism increases, we believe that corruption in order to fund it will be relatively
increased. Further, investors will be increasingly reluctant to take risks in high-terror/highcorruption regions, directly.
If strict regulations and restriction of economic freedom continues in corrupt nations, it can
definitely have an impact on world trade. Even strict regulations that are intended to protect its
citizens can have a large impact on world trade. For example, the regulation of food standards
within the United States has affected the amount of food items produced globally that can even
be imported into the country.
Immigration, illegal or otherwise, has always and will continue to impact world trade. As the
regulations, corruption and terrorist activities continue to be a problem; people will look for
other areas of the world where their talents can be used, where they have greater ability and
access to technology so that they can enter into a global world competitively. And on the other
side of the immigration topic, illegal immigration puts constraints on legal citizens and
governmental funds.
Many nations have policies designed to keep them isolated from global influences. But with the
world quickly approaching homogeneity in all areas, for convenience reasons, the impact of
isolating people from external influences can have a negative impact on the economy. But a
homogenous approach can also impact the world economy. If everything is the same, or very
similar, competition will be great, and prices will likely be driven down, reducing the amount of
capital flowing in and out of nations.
Finally, focusing on sustainable development is a very important topic for any nation to consider,
especially if it wants to remain a player in the world economy for any amount of time.
Managing resources is very important, and many nations now are not concerned with this, as
production facilities appear everywhere, and pollution continues to be a huge environmental
concern. However, if stricter plans are put in place to guarantee sustainability, it is likely to
impact the manufacturing industries worldwide, forcing stricter regulations toward greenhouse
gas emissions and the release of polluting toxins.
REFERENCES
Hovey, Craig and Gregory Rehmke. The Complete Idiot’s Guide to Global Economics. New
York: Penguin Group, 2008.
Ensinger, Dustin. “Illegal Immigration and NAFTA.” Economy in Crisis, America’s Economic
Report-Daily. February 5, 2011. http://economyincrisis.org/content/illegal-immigration-andnafta (accessed February 6, 2013).
“What is Sustainable Development?” International Institute for Sustainable Development.
http://www.iisd.org/sd/ (accessed February 4, 2013).