The global economy and globalization
The global economy includes the economies of all nations and countries. Its key figures and values are often represented in US dollars; the United States is the world’s largest economy, leading the ranking of the countries with the largest gross domestic product / GDP. Gross domestic product is considered to be the most important factor when it comes to an economy’s strength and power.
Apart from gross domestic product, other indicators for the state of the world economy are GDP per capita and the GDP growth rate, inflation rate, unemployment rate, median income (which shows the purchasing power parity of a country) and trade balance (imports and exports). Global debt, as calculated from the amount of national debt of all countries, is also an important factor.
One term that is inevitably connected to the global economy is “globalization”, the global expansion of national or local economy. Globalization is a controversial topic. Many critics believe that it leads to the demise of local businesses and industries and thus only benefits large companies and conglomerates, who, in their aim to expand, open subsidiaries all over the world. A significant part of globalization is outsourcing, which leads to job loss in certain areas and cheap labor in others.
The global economy suffered a setback in 2009 when the financial crisis hit and left several countries in severe financial distress. Growth of the global gross domestic product / gdp shows a deficit that year, but it has been back to stable values since.