According to traditional statistics of measuring economic success, trade flows, exchange rates and productivity improvement has been stagnant in the European economy recently. The new virtually borderless global economy has left the European system with high unemployment, high social welfare costs and a fear of invasion by American business interests. However, the troubles do not end there. Japan has been extremely successful in the new world economy and has given the European policy reason to fear invasion from them as well. According to the author, Europeans have been given a choice between better profits and higher dividends or social stability and a large working middle class. Most of the European societies had accepted this way of life, willing to pay higher prices and receive lower returns from their companies, but the new economy has changed this. While comparing their way of life to that of those in North America and Japan, their expectations have changed. The majorities of Europeans place a high value on the quality of life and for the most part live comfortably with a considerable amount of luxuries. The newly evolved global economy however, has moved them away from being happy with social stability and left them with the urge for an unrestricted business environment that rewards a few with wealth instead of the majority with comfortable incomes. Despite the urge for a reformed economic system by the citizens, the author, who is from Britain, concludes that Europe prides themselves on their economic policy, which although still successful cannot match up to either North America’s or Japan’s.
Does third world growth play any negative effects on world prosperity?
Many economists and corporate executives have been led to believe that third world economic growth may pose a threat to the global economy. However, the author demonstrates evidence that the progression of underdeveloped countries from poverty has not affected the economy in a negative way; in fact it has helped it. When the world economic productivity increases, the average world living standards must raise. If they are active producers of certain products, their outputs must go somewhere to benefit someone. This would allow lower income families to live better lives and maybe afford some luxury items.
How have international companies changed their managing ways to adapt to the newly evolved global economy?
Most companies are stuck focusing their intention inside their home countries borders. They sell to who they know best, the consumers close to home. The author puts particular stress on the need for companies to start looking with an “equidistance of perspective.” This means that he suggests for international companies to be successful they must treat foreign customers the same as domestic ones. Today there are real physical boundaries between countries, information and ideas can be transferred in seconds. It is now more important than ever that companies understand this and target a larger market. The author states that for a company to be successful globally, they must study and do research on the places they plan on investing. The company must give the consumers what they want, no matter where they are from. This is the idea of an “equidistant view” as mentioned before.
The global economy was kind of a blurry subject to me before reading this book. This work has really brought me aware to the current global economic situation. Today, the global economy, borderless in nature, allows new ideas and innovations to flow across the globe at unprecedented speed. Consumers are able to shop for the cheapest and best item without distance restrictions. Major companies are starting to understand the need to expand their horizons from domestic markets only. Even third world countries are beginning to get in on the act, with their progression they allow for a greater number of people to live a higher quality of life. Basically, the global economy has opened up many opportunities for both consumers and producers worldwide. As long as used in the right way, the new borderless economy can be beneficial to everyone.
