global economy - reina's report

8/8/2019 Global Economy - Reina's report

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Global

Economy



EconomicEconomic

SuperpowerSuperpower



´SUPERPOWERµ

- state with a dominant position in theinternational system which has the ability toinfluence events and its own interests andproject power on a worldwide scale to protectthose interests. It is traditionally considered

to be one step higher than a great power.



A pplication ofthe term



It was a term first applied in 1944

-nations with greater than great powerstatus as early as 1944, but only gained itsspecific meaning with regard to the UnitedStates, the British Empire and the Soviet Union

The British Empire was the most extensiveempire in world history, which was consideredthe foremost great power.

The United States and the Soviet Union grew

in power in WWII and had proved themselvesto be capable of casting great influence in globalpolitics.



Following World War II, the British Empire transformeditself into the Commonwealth and its territories became

independent.

The United States and Soviet Union

- generally came to be regarded as the only two

superpowers, and confronted each other in the Cold War

The two countries opposed each other ideologically, politically,militarily, and economically.

The Soviet Union promoted the ideology of communism

The United States promoted the ideologies of liberaldemocracy and the free market.



Soviet Union

Political

Strong socialist state

Geographic

Largest country in the world

Cultural

Wielded influence through Communist or

left-wing dictatorships, and numerous

socialist organizations around the world.

Military

Essentially land-based: largest armed forces

in the world and one of the two largest air

force in the world. One of the world's

strongest navies. Global intelligence network,

the KGB.

Economic

Seventh largest economy in the world.Marxist economic theory based primarily on

production: industrial production directed by

centralized state organs leading to a high

degree of inefficiency.

Demographic

the third largest on Earth behind China and

India.

United States

Strong and stable capitalist federation

/constitutional republic

Fourth largest country in the world

Wielded influence through sponsoring right-

wing republics or dictatorships, capitalist

democracies, and numerous democratic

organizations around the world. Rich cultural

influence Essentially naval-based advanced military

with the highest military expenditure in the

world, World's largest navy. One of the

largest armies in the world. One of the two

largest and most advanced air forces in the

world. Global intelligence network, the CIA.

Largest economy in the world. U.S. Dollar as

the dominant world reserve currency under

Bretton Woods Conference. Western

economic theory based on supply and

demand: production determined by

customers' demands.

the fourth largest on Earth



After the dissolution of the Soviet Union:

United States - the sole world superpower.

the world's largest long-term creditor nation

and its principal supplier of goodsbuilt up a strong industrial and technologicalinfrastructure

had greatly advanced its military strengthinto a primary position on the global stage.



Characteristics



A large nominal GDP and a world reserve

currency - important factors in projection of hard power

Military assets- a means of power projection

According to Lyman Miller

"The basic components of superpowerstature may be measured along four axes of

power: military, economic, political, andcultural (or what political scientist JosephNye has termed ´soft powerµ).



Kim Richard Nossal

a political community

that occupied acontinental-sizedlandmass

had a sizable population

a super ordinateeconomic capacity

enjoyed a high degree of

non-dependence oninternational intercourse

had a well-developednuclear capacity

Professor Paul Dukes

conduct a global strategy

including the possibilityof destroying the world

to command vasteconomic potential andinfluence

to present a universalideology



Post Cold War (1991²present)



In the words of Samuel P. Huntington"The United States, of course, is the sole state

with preeminence in every domain of power

³ economic, military, diplomatic,ideological, technological, and cultural ³with the capabilities to promote its interestsin virtually every part of the world."



Others argue that the notion of a superpower isoutdated, considering complex global economic

interdependencies, and propose that the world ismultipolar.

According to Samuel P. Huntington, "There isnow only one superpower. But that does not

mean that the world is unipolar. A unipolarsystem would have one superpower, nosignificant major powers, and many minorpowers.µ

A

dditionally, there has been some recentspeculation that the United States is decliningin relative power as the rest of the world rises tomatch its levels of economic and technologicaldevelopment.



Potential

Superpowers



A potential superpower is a state that isspeculated to be, or to be in the process of becoming, a superpower at some point in the21st century.

United States of America (currentsuperpower)

The list of governmentsDue to their large markets, growing militarystrength, and economic potential and influencein international affairs

Five States- among the powers which aremost often cited as having the ability toinfluence future world politics and reach thestatus of superpower in the 21st century.



FEDERATIVE REPUBLIC

OF BRAZIL



Numerous obstacles to Brazil reachingsuperpower status.

Energy analyst Mark Burger writes that Brazil,in general, will improve its energy situation,but not to the point of being a "superpower"(or energy superpower).



PEOPLE'S REPUBLIC OF CHINA



The People's Republic of China

has been identified as a rising or emergingeconomic and military superpower

Barry Buzan asserts that "China certainly

presents the most promising all-roundprofile" of a potential superpower

He notes that "China will overtake the

United States to become the world's largesteconomy by 2038 if current growth ratescontinue.



the risks and obstacles China faces in managing

its population and resourcescounter coalition of states in Asia

Other factors that could constrain China'sability to become a superpower in the future

include: limited supplies of energy and rawmaterials, questions over its innovationcapability, inequality and corruption, and risksto social stability and the environment.

Amy Chua also writes that China lacks the pullto bring scientists, thinkers, and innovatorsfrom other countries as immigrants.



EUROPEAN UNION



European Union

Mark Leonard cites several factors: the EU's largepopulation, large economy, low inflation rates, theunpopularity and perceived failure of US foreignpolicy in recent years, and certain EU members states'high quality of life.

Notably, the EU as a whole is among the mostculturally diverse "entities" on the planet, with someof the world's largest and most influential languagesbeing official within its borders.

Robert J. Guttman remarks that the very definition of the term superpower has changed and that in the

new 21st century, it does not only refer to states withmilitary power, but also to groups such as theEuropean Union, which has strong market economics,young, highly educated workers who are savvy in hightechnology, and a global vision.



While the EU is a superpower in the sense

that it is the largest political union, singlemarket and aid donor in the world, it is not asuperpower in the defense or foreign policyspheres.

Lacking a unified foreign policy and with aninability to project military powerworldwide, the EU lacks "the substance of superpowers," who by definition have "first

of all military reach [and] possess thecapacity to arrive quickly anywhere with .



REPUBLIC OF INDIA



India Daniel Lak describes India as the underdog, facing

more challenges than advantages, yet it isapproaching superpower status.

However, she notes that India has made tremendousstrides to fix this, stating that some of India'sachievements, such as working to dismantle thecenturies old caste system and maintaining theworld's largest diverse democracy is historicallyunprecedented.

Parag Khanna says that India is "big but notimportant," has a highly successful professional class,while hundreds of millions of its citizens still live inextreme poverty. It is "almost completely thirdworld".



RUSSIAN FEDERATION



Russian Federation Rosefielde further argues that Russia "has an

intact military-industrial complex...and themineral wealth to reactivate its dormantstructurally militarized potential," and that"supply-side constraints don't preclude a return

to prodigal superpowerdom" According to Francis Matthew, Editor at Large

of the Gulfnews, facts constraining Russia's riseto superpower-status, includes a lack of important allies, relatively small and failingeconomy and, again, a relatively small, andshrinking, population.



Richest and Poorest Countries

Data and forecasts for 2008, 2009 and 2010

According to data gathered by the InternationalMonetary Fund and the CIA World Factbook.

The wealth of a country is measured by GDP percapita- it stands for the average value of goodsand services a person produced living hiscountry

GDP- the value of all final goods and services

produced within a country in a given yearGDP per capita-the value an average person

produces.



There are two standard methods of measuringthe wealth of countries and how rich or poor its

inhabitants are. The measure most often used isGross Domestic Product (GDP), which representsthe size of a countrys economy. A refinement of this is per-capita GDP, which is a measure of theaverage welfare and affluence, or poverty, of residents of a country.

GDP (PPP) compares generalized differences inliving standards on the whole between nationsbecause PPP takes into account the relative cost

of living and the inflation rates of countries,rather than using just exchange rates, which maydistort the real differences in income.



Country

United States China Japan India

Germany United Kingdom Russia France

Brazil Italy

GDP(purchasing power parity)

$13,860,000,000,000 $7,043,000,000,000 $4,417,000,000,000 $2,965,000,000,000

$2,833,000,000,000 $2,147,000,000,000 $2,076,000,000,000 $2,067,000,000,000

$1,838,000,000,000 $1,800,000,000,000



Richest countries



6. United States

What sets the US apart from most othercountries in this list is its size. While most

other countries in this list are among the

smallest in the world the US has a population

of over 300 million and a total land area of

3,79 million square miles (9.83 million sq

km). The US is also home to the largest

amount of billionaires in the world. It isspeculated that as many billionaires live in

the US as in the rest of the world.



5. Brunei

-officially the State of Brunei Darussalam orthe Nation of Brunei, the Abode of Peace

Southeast Asia·s youngest and richest

nation. It is the only sovereign statecompletely on the island of Borneo, with theremainder of the island belonging toMalaysia and Indonesia. It is classified as a

Developed Country. The governmentprovides for all medical services andsubsidizes rice and housing.



4. Singapore

This country tiny country consist of 63island and some mainland with a total areaof only 270 square miles (704 sq km). WithHong Kong, South Korea and Taiwan it is

considered one of the Four Asian Tigers. Singapore has the busiest port in the world

and is the 4th largest foreign exchangetrading center in the world.

Singapore is widely believed to be the mostbusiness-friendly economy in the world.



3. Norway

Norway is one of the few highly developedcountries in Europe that are not part of the

European Union. This oil and natural gasrich country has living costs more than 30%higher than in the United States. In 2006only Russia and Saudi Arabia exported more

oil than Norway.



2. Luxembourg

This tiny country with a total population of less

than 500 000 is a true European miracle. By tinywe mean the 8 smallest country in the world.From top to bottom its only about 50 miles andat its widest about 30 miles.

Well, there is over 250 banks crammed into thesmall country! It has the largest bankingconcentration in the European Union andprobably in the world. In addition to being richthe people are smart as well. In elementaryschool everyone studies in French, starting frommiddle school they learn in German and in highschool the main language is English.

Their own language Lëtzebuergesch.



1. Qatar

Qatar used to be a poor Islamic country butsince the discovery of oil and natural gas inthe 1940s, it is completely transformed. Withno income tax it is one of the least taxedcountries in the world, while still offeringmost of its services to the population for free.Qatar is also expected to be the fastest

growing economy in the world!



PoorestCountries



A country with a GDP per capita of

$765 dollars or less is defined as a low-income or poor country.

Industrialization, overpopulation,

investment, infrastructure, geography,resources, colonialism, education,government and debt are few of the

most critical aspects that make poorcountries remain poor.



5. Eritrea

A typical wedding ceremony dance in

Eritrea



5. Eritrea

In the present Eritrea has been accused bythe USA of having relations with terrorists.In 2009 US Secretary of State HillaryClinton accused Eritrea in supplying

weapons to Somalian militant group al-Shabab which is believed to have relationswith Al Qaeda.

The whole country only has 824 schools and

2 universities ² unnecessary to say illiteracyis a huge problem.



4. Liberia

A rebel in Monrovia, Liberia, keeping watch in

front of a house and car full of bullet holes



4. Liberia Liberia is one of the few countries in Africa that

have not been colonized by Europe. In 1980 thepresident of Liberia was overthrown and aperiod of instability and civil war followed.After the killings of hundreds of thousands

Liberia is in a deep economic crisis. Statisticsindicate that about 90% of the population livesbelow $1.25 a day.

Liberia has an unemployment rate of 85,compared to the 7 children each women givesbirth to on average ² the life expectancy of 44years seems incredibly short.



3. Burundi

People dancing in Burundi Village



3. Burundi

This small landlocked African country is known for

its wars between the inhabiting competing tribes.The reason Burundi is so poor is because they havenever really had any peaceful time between theeverlasting civil wars. Corruption, poor access to

education, and a high percentage of HIV andA

IDSare all the things that Burundi is known for.Approximately 80% of Burundians live in povertyand according to the World Food Program 57% of children under 5 years suffer from chronic

malnutrition. the lowest life satisfaction in the world. As a result of

poverty it is almost entirely dependent on foreignaid.



2. Zimbabwe

A traditional house in a village in Zimbabwe



2. Zimbabwe hyperinflation Zimbabwe has become the second

poorest country in the world. It used to one of the 10poorest countries but the 87.9 sextillion percentinflation has left the countries economy into ruins.The inflation worrying the country since 2007 sawthe government printing 100 billion dollar bills that

were only good enough to buy a few eggs. The 87sextillion percent inflation meant that throughout theyear prices kept doubling every 1.1 days.

In addition to the economic problems the lifeexpectancy of Zimbabwe is the lowest in the world ²

37 years for men and just 34 for women. One of theproblems for the early deaths are the 20.1% of thepopulation with HIV and AIDS. The health issuesaren·t seeing any improvement



1. Democratic Republic of Congo

A child in Congo riding a self made wooden bike



1. Democratic Republic of the Congo

Not to be mixed with the neighboring Republic of

Congo, the Democratic Republic of the Congo wasknown as Zaire until 1997. Congo is the largestcountry in the world that has French as an officiallanguage.

Congo is also one of the last places on earth withtribes of cannibals. An Mbuti pygmy testified beforethe UN that their people were hunted down andeaten like animals by neighboring tribes. Eating otherpeople is a way to survive the famines that is

affecting about 67% of the population. Congo is alsobelieved to be the worst place in the world forwomen it has the most rapes per women in a year.



Philippines- 56th out of 182



A crisis so severe, the world financial system isaffected

Following a period of economic boom, afinancial bubble³global in scope³has nowburst.

Around the world stock markets have fallen,

large financial institutions have collapsed orbeen bought out, and governments in even thewealthiest nations have had to come up withrescue packages to bail out their financialsystems.

A collapse of the US sub-prime mortgagemarket and the reversal of the housing boom inother industrialized economies have had a rippleeffect around the world.



Global Financial Crisis

affect the livelihoods of almost everyone in an

increasingly inter-connected world.

Others have been bought out by their competition at lowprices and in other cases, the governments of thewealthiest nations in the world have resorted to extensive

bail-out and rescue packages for the remaining largebanks and financial institutions.

A crisis so severe, those responsible are bailed out

Some of the bail-outs have also been accompanied withcharges of hypocrisy due to the appearance of socializing

the costs while privatizing the profits. Furthermore, the institutions being rescued are typically

the ones got the world into this trouble in the firstplace(many of whom pushed for the kind of lax policiesthat allowed this to happen in the first place).



For smaller businesses and poorer people,

such options for bail out and rescue are rarelyavailable when they find themselves incrisis. There is the argument that when thelarger banks show signs of crisis, it is not just

the wealthy that will suffer, but potentiallyeveryone because of the ripple effect thatproblems at the top could have throughout

the entire economy.



GlobalFinancial Crisis > GlobalEconomic Crisis



A crisis so severe, the rest suffer too

Because of the critical role banks play in the

current market system, when the larger banksshow signs of crisis, it is not just the wealthythat suffer, but potentially everyone. With aglobalized system, a credit crunch can ripplethrough the entire (real) economy very quicklyturning a global financial crisis into a globaleconomic crisis.

And so, many nations, whether wealthy andindustrialized, or poor and developing, are

sliding into recession if they are not alreadythere.



A crisis signaling the decline of US·s superpowerstatus?

Even before this global financial crisis took hold,some commentators were writing that the US was indecline, evidenced by its challenges in Iraq andAfghanistan, and its declining image in Europe,Asiaand elsewhere.The BBC also asked if the US·s

superpower status was shaken by this financial crisis:The financial crisis is likely to diminish the status of the United States as the world·s only superpower. Onthe practical level, the US is already stretchedmilitarily, in Afghanistan and Iraq, and is now

stretched financially. On the philosophical level, itwill be harder for it to argue in favor of its freemarket ideas, if its own markets have collapsed.



The financial crisis and the developing world

For the developing world, the rise in foodprices as well as the knock-on effects fromthe financial instability and uncertainty inindustrialized nations are having acompounding effect, especially ondeveloping countries that are dependent oncommodities for import or export. High fuel

costs, soaring commodity prices togetherwith fears of global recession are worryingmany developing country analysts.



Dealing with recession:

Most economic regions are now facingrecession, or are in it. This includes the US,the Eurozone, and many others. At suchtimes governments attempt to stimulate the

economy. Standard macroeconomic policyincludes policies to

Increase borrowing

Reduce interest rates

Reduce taxes

Spend on public works such as infrastructure.



While these might be reasonably standardthings to do, it requires that during economic

good times, a reversal of some of these policiesare required; interest rates may need to increase(one reason for the housing booms in the US, UKand elsewhere was that interest rates were too

low during good times), borrowing should bereduced and debts should start to be repaid,infrastructure investments may not need to beas direct from government and private

enterprise may be able to contribute, and mostpolitically sensitive of all, taxes should increaseagain to offset the reduction in borrowing.

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