Transformation of Global Economic System

Introduction

An Economic system defines as a systematic method in which a country utilizes its resources and shares the goods and services with its population. (www.businessdictionary.com) .Global economic system includes all those arrangements and organizations which involve in joining the countries' economies at one place. It includes the modernization and trade of goods and services among the countries. (www.business.usi.edu). Transformation in the global economic system has started from 1800 and continues till today.

After the recession period of 1930s countries tried various steps like by stopping international trade, currency devaluation and restrained their population to hold foreign currencies in order to boost their economies. All these steps proved wrong as these steps showed declinations in international trade. Living standards of the people badly effected in many countries. All these situations pushed the monetary organizations to establish an institution to monitor the exports and imports among the countries. Therefore, IMF (International Monetary Fund) was founded in order to boost the world trade and economic development. In these days, IMF (international monetary fund) is playing a vital role in order to boost the international trade and thus playing a key role in transformation of world economic system or shortly globalization. (www.imf.org).

History of the Global Economy

The history of the global economy started from 1800 when the British economy revolutionized because it was drawing its sources of energy from the natural resources specifically from minerals. This activity opened up immense new sources of energy and put direct impact on capitalism. This new economy was cheaper than the old one; therefore, it showed a reduction in transportation cost to a large extent and also increased the food productivity. All these changes were signs of entering into a new phase that is an international trade but simultaneously a war started between the developed and developing countries. Asia and Africa had weak economic structure and thus they lost their domination to developed countries mainly United States, Britain, Germany and France.

These countries forced the developing countries for things like specialization in primary goods, openness of their economies to investment capital, but this hardly brought about any improvement in the living standards of the population of developing countries. This was the first phase of transformation of the global economy. In the 1940s global economy entered its second phase. In this phase, the power transferred to developing countries and acceleration in growth witnessed in the developing countries. With the start of, 1980s power again shifted to the developed and capital intensive countries and by the mid of 1990s, this transformation of the global economy touched its peak. (Apadre & Memedovic, 2009)

Discussion

Exclusive control of British

1. The West's First Global Step

By the starting of the twelfth century, Europeans became more aware of the world economy. The upper class Europeans started using items like spices, imported from India. In the late thirteen century Europeans became more consistent towards economic expansion.

2. Technological Improvements

To cover the west Europeans by the fifteenth century were able to combat the ferocious Atlantic ...