A limited time offer!

urgent 3h delivery guaranteed

The centuries, developments in transportation and communications technologies

Essay Topic:

Introduction:

Throughout the centuries, developments in transportation and communications technologies have weakened the barriers of space and time and brought people progressively closer together (Isard, 2005, p.3). Along with the increasing connectedness, the cooperation of international trade, economy, education and cultures also have become integrated, and this progress can be defined as globalization.

We will write a custom essay sample on The centuries, developments in transportation and communications technologies

or any similar topic only for you

Order Now

The economic area perhaps is the most significance symbol of globalization. A well-regulated financial market is the cornerstone of the global economy. As an indispensable part of economic globalization, financial globalization plays a key role in promoting the economic development and stability. According to a number of policies and methods, it could help to raise the growth rate in developing economies through foreign direct investment, risk management, technical assistance and so on. However, the financial globalization not always show the positive effects, financial crisis could leads to panic and economic depression, even develop into a disaster. Therefore, global economy can profit from getting a clearly perspective of financial globalization, and to make global economy system work better. This essay describes the increasingly developing period of financial globalization through two significant organizations, and then discusses the benefits of it.

For the developing economies, several strategic policy measures and organizations are established to avoid international economic disorder and promote global cooperation. In recent decades, high capital mobility and a great deal of gross international financial flows are the results of the increasingly significant financial globalization, especially in the developing economies (Obadan, 2006, p.317). In this aspect, private capital flows to developing countries increased dramatically from US $62 billion in 1991 to almost US$226 billion in 2000, and falling to US$160 billion in 2001(World Bank, 2002, p.32). Also, according to Obadan (2006, p.317), “between 1997 and 2000, cross-border capital flows increased from less than 3% of GDP to 17% for advanced economies and from virtually nothing to about 5% for developing economies”. The International Bank for Reconstruction and Development (the World Bank) and the International Monetary Fund (IMF) are two main organizations, which promote global cooperation and avoid international economic disorder. The World Bank was established to finance economic reconstruction and development. The IMF has four purposes – first of all, it promotes international monetary cooperation. it also facilitates the expansion of international trade. To be specific, the IMF creates employment opportunities, improves real income and develops the productive resources. Thirdly, it maintains an orderly exchange rate system. Lastly, the IMF makes some financial resources available to members to decrease the balance of payment adjustment (Isard, 2005, p.69). Until now, there are 187 countries participated in this organization to promote international monetary cooperation (IMF, 2011).

Financial globalization boosts the economic development through economic reforms and financial liberalization and capital markets able to access private global capital markets. The increasing trans-border financial flows through various channels contribute to integrate the financial markets into a global whole. And a myriad of benefits come from the development of global financial integration. One benefit of financial globalization, for the developing countries, is improving access provides a rich source of capital at a lower cost. And abundant capital makes increase potentially productive and creditworthy projects available (Das, 2010, p.100). Take the emerging-market economies (EMES) as an example, EMES are able to provide more cheaper loans than main lending markets. Secondly, the advanced industrial economies not only can get higher rates of return due to the cheaper loan interest rate, but also can diversify risk by investing in the EMES. Thirdly, a growing number of branches of financial institutions, which come from advanced industrial economies, improve the level of efficiency of local institutions with the increasingly fierce competition (Das, 2010, p.101). Fourthly, governments also profit from the competition. The authorities learn the value of market discipline and pay for the policy mistakes and establish new macroeconomic policy discipline (Das, 2010, p. xvii).

As an inevitable part of financial globalization, the global financial crisis showed the huge negative effects on world’s economies. Past episodes of financial globalization were all success cases for contributing to financial stability and supporting high growth of economy, yet they all meet the crises. On 15 September 2008, Lehman Brothers, which was the fourth largest investment bank in the USA, declared bankruptcy, and this lead to the financial crisis spilled over globally (Das, 2010, p.127). The bankruptcy of this excellent investment bank shocked the financial world, causing panic in the global financial system. At this point, a great deal of the world’s largest banks were short of money, even some of them were near collapsed. However, why the current crisis happened so suddenly after more than 15 years of successful growth of the global economyOne major course of this financial crisis was the built-up of risk. Some banks and financial institutions over puddle the sub-prime mortgage because of greedy, even they lent money to some people who had problems repaying the loans. This lead to excessive risk was built-up in the global financial system for a long time, and this bubble burst until the risk was too high to afford (Das, 2010, p.132). With the financial cooperation closer and closer, this current crisis was widespread. According to IMF (2009), there were 78 countries recorded negative GDP growth in 2009. More and more economies realized that this crisis was totally a disaster of global economy, and they started to look for some measures to deal with it. Global crisis requires a global solution, for this reason, many countries and economies worked together to solve problems. For instance, Chinese government and American Government provided $ 600 billion and $ 700 billion separately to stimulate economic development. On the other hand, the IMF and the World Bank published a series of polices and provided much cheaper loans to encourage economic recovery immediately.

Obviously, financial globalization plays a key role in economic globalization, and boosts the economic development. It leads to high capital mobility and a large volume of international financial flows. Financial globalization results in several benefits on the economic growth. It also shows some negative effect on the global economy simultaneously, particularly the serious financial crises. However, the key challenge is not to resolve whether the advantages outweigh the disadvantages but to find effective measures to address the problems, which are caused by the financial globalization, to make the process of financial globalization work better (Isard, 2005, p.6).

References:

Das, D. K., 2010. Financial globalization: growth, integration, innovation and crisis. London: Palgrave Macmillan.

International Monetary Fund, 2009. World Economic Outlook. Washington. DC. April.

International Monetary Fund, 2011. About the IMF. (Updated 23 May 2011) Available at: [Accessed 24 May 2011].

Isard, P., 2005. Globalization and the International Financial System. Cambridge: Cambridge University Press.

Obadan, M.I., 2006. Globalization of finance and the challenge of national financial sector development. Journal of Asia Economics. 17, pp.316-332.

World Bank, 2002. World development indicators. Washington, DC: The World Bank.

How to cite this page

Choose cite format:
The centuries, developments in transportation and communications technologies. (2019, Mar 13). Retrieved June 27, 2019, from https://phdessay.com/the-centuries-developments-in-transportation-and-communications-technologies/.