WORLD ECONOMY

World Economy

Table of Contents

INTRODUCTION3

LITERATURE REVIEW4

General Economic Crisis5

Definitions5

Reasons6

Historical Background7

Current Global Financial Conditions8

Social, Economic and Political Forces9

Strategic Response11

HR Strategy and Marketing Strategy14

Economic Models15

RESEARCH QUESTION16

RESEARCH METHODOLOGY17

Marketing strategy changes17

ETHICAL ISSUES19

LIMITATIONS OF THE RESEARCH20

CONCLUSION20

REFERENCES21

APPENDIX26

Introduction

The topic of world economy has become very interesting for all of us. The disintegrate of the centrally designed finances, the oil demand and crisis, the Great Depression during 1930s, the malfunction of Latin America in the lost ten years of the 1980s and the achievement of the Asian 'tigers' in spite of the provisional economic disturbance in 1997/98 these are all fascinating issues. The world economy is becoming more powerful than politics. The segmentation of markets is being reduced; new districts, which have until lately scarcely been engaged in world trade, are impelling into the worldwide partition of labour. The economists will be familiarised with the most significant variables of the world finances, especially world merchandise and its composition from the output and the expenditure edge as well as its local structure. The world economy is changing due to present economic recession. Thus, the freshly industrialising nations have did well in evolving much more integrated into the worldwide partition of labour. Meanwhile some of them have come to amazing locations in the grading of competitiveness. For these and other difficulties economic professionals have to take a international outlook, as if the world is being analysed from outside space.

Literature Review

Recent episodes of financial crises and recession in the global economy have common patterns. In most cases, a country or region initially benefits from expanded supplies of base money, new 'quasi-moneys' which are created from base moneys, and credit supplies a financial liberalisation phase. The financial sector expands as it captures profit from new efficiencies and opportunities allowed by globalization. (Soros 2008, 11-19) The country or region, for a time, may be favoured by international investors; thus the banking system, including government, is well-capitalized and able to expand money-liquidity. Assets increase in monetary value and interest rates are low, and this wealth effect encourages consumption, borrowing, business investment, and perhaps government spending. Productive resources are more fully utilised and economic growth is well supported. There is a 'boom', as measured by increased (a) monetary wealth held by private and public sectors of an economy, such as the value of stocks, real estate, currency reserves, etc., and/or (b) current production of merchandise and services (GDP).

Then, typically, the supply of base money (m) times its rate of circulation or velocity for GDP purposes (v) contracts, and so therefore does the equivalent nominal GDP. The decline in nominal GDP is usually split between its two components, real GDP which is the volume of current production measured in constant prices (q), and the GDP price level (p). By definition, the quantity equation requires (m x v = p x q). When (q) declines for a sustained period (typically at least six months) we call it a recession, and when (p) declines we call it deflation. After this process starts, monetary policymakers may react by rapidly expanding ...