Issues In The Global Economy Essay Sample

Introduction To Issues In The Global Economy Essay

Finance is the crucial element required for managing the operation of the organization. Increase in need and demand of finances results in creating path for globalization in financial system. Financial globalization refer to the increasing the flow of finances between various countries. This report will include the impact of financial globalisation on environmental issues and polices. It will also discuss on the structure and role of global governance. Information regarding the importance of global governance in managing balance will be provided through the report.

Understanding Financial Globalisation

Financial globalization refers to removing restriction in the sourcing funds from other country. It is refer to the process which involves integrating financial market of different countries as one. For effectively managing the excitability in the macro economics the concept of globalization was introduces (Obstfeld, 2021). Global finance Helps Company in reducing the risk as it involve diversification of risk to international market which helps in increasing in saving. Individual and business are provided with better option to invest and sources funds leading to enhancing their investment decision.

The cost involves in establishing and commencing global business is reduces and the interaction between financial industry with other industries worldwide also enhanced (Nasreen et al, 2020). Global mobility of funds made it easier for business to get capital at lower rate and also helps in enhnacing knowledge of technology in underdeveloped nations (Impact of financial globalization on environmental issues, 2024). Financial globalization results in creating and increasing the environment issue in the country. As Organization is able to gain capital at lower rate the production and industrialization within countries has been increased (Roco, 2020). Industrialization and production result in increasing deforestation and energy consumption which leads to degrading the quality of natural resources results in increasing environmental issues.

It has been determine that energy consumption in worldwide has been increased by 1.5% which results in getting double in the 2022 at 2.9% (Increases in energy consumption, 2022). Due to financial globalization, firm are able to sources funds easily results in increasing in the economic activities within country (Kim, 2020). These result in exhausting natural resources leading to negatively impact on the sustainable development.

Analysis of environmental policies

Environment policies and practices within country are highly impacted by the globalization in financial system. This has been raised as individual and organization concern towards economic development has been increased leading to decreases concern on the sustainable practices (Sethi, Chakrabarti and Bhattacharjee, 2020). To gather the focus on environment government has establish various environmental policies and practices which mitigate the risk associated with degradation of natural resources.

Financial globalisation helps in creating and developing knowledge regarding technology which results in reducing wastage in the operation. Government of countries make it necessary to adopt the technology that will help in reduce waste resulting improving overall environment condition (Ahmed Zhang and Cary, 2021). By increasing the access to global finance, company has focused on expanding it operations' which result in creating in negative impact on environment. Environmental policies and practices have been formed that restrict the company in using non sustainable measures and creates obligation to use to all the prescribe strategies. To reduce the scope of carbon emission that has been increased because of the industrialization, environmental policies has been revised.

It has been determine that it is very necessary to formulate environmental policies and practices as at initial level it is difficult for company to adopt renewable measures (Aluko, Opoku and Ibrahim, 2021). This requires company to incur high cost to acquire such technology which increases the overall expense of the organization. Financial globalization helps in improving the environmental practices as organization focus on adopting technology and measures that support in better resource mobilization.

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For instance a company is planning to expand their business into a new country and for this they require the funds. Thus, this is the case of financial globalisation wherein the company operating in a particular country is planning to expand its operations in any another country and for that it requires finance. Thus, this helps in shaping the environment and the economy of both the countries. The country from which the company is planning to expand and the country within which the company is planning to expand both will grow and develop. Thus, as a result of this the overall working capability will be improved and people will be in a position to improve the working capability of both the companies.

Structure of Global Governance

Global governances refer to the combination of various authorities, process and the institution that are liable for managing cross border obstacles such as climate changes, international financial transaction and environmental issues. They are liable to articulate common interest and right and obligation for both public and private sectors (Abadie and Gardeazabal, 2019). Structure of global governances consists of 4 institutions that include Public- private partnership, International governmental organization, Private governances and tripartite governance. International government organizations are the institutions that are formed by combination of more than one national government. This are created as state-nation level organisation by convention (Hulstaert et al, 2020). UN, World Health Organisations, African union, INTERPOL are the example of International government organisation. This are formed with the motive of maintain peace and security within world and carrying out operation in an effective manager by solving various social and economic issues. For including sectors that is having more resources and expertise PPP was introduces that aim at partnership between both sectors for achieving the objective (Ibn-Mohammed et al, 2021). UN Global compact is one such organization of PPP that aim at forcing transactional company to provide all the data related to activities that they are doing in the country in which they operate.

Tripartite governances refer to form of organisation that focus on establishing economic policy after negotiation business interest and the labour unions (Epstein, 2019). This type of government aim at resolving all Private governances' refer to the formulation of laws, policies, Code of conduct within organisation that ism overcoming the issue related to environmental, health and labour. This contributes in the global governances by maintain self regulation within various industries and organization.

for the effective management of the financial globalisation, the Markowitz portfolio theory is applied. This is particularly necessary because this theory focuses on the risk return rate trade-off between the investors. It assists the company in evaluating that how the funds will be managed beyond the borders and how the financial globalisation will be improved. In case it will not be managed successfully then it will result in loss for the companies and as a result of this the funds will not be gathered from the various global sources.

Role of Global Governance

Global governance helps in balancing environment and economic growth within country. This has been achieved as the institution involve in the governances has provide the set code of conduct on which other company needs to performed. By evaluating the performance of company's Global governance is able to identified that the deviation in their operation. This assists them in forming strategies and policies that will help in overcoming all the deviations (Awosusi et al, 2022). On the other hand, guideline provided by them is very rigid and some time it creates difficulty for firm to follow all this; leading to impacting on the overall working of the firm.

For maintaining the economy position of organisation, global governances have formed various polices regarding funding to the organization in some case. This helps in overcoming the related to lack of finance and helps in proper function of the organisation. However, providing excess fund to organization results in increasing in production activates leading to increasing environmental issues (Nathaniel, Nwulu and Bekun, 2021). It has been determined that global governance has introduces various policies that helps in maintain the relationship and prompting labour union within country. This helps company in overcoming all the risk that can be occurred due to challenges created by labour union. This helps in safeguarding company form the protest and helps in navigate the economic and profitability position. This also focuses towards mainating public and private partnership which helps company in attaining their objectives with focuses on social welfare.

Conclusion

By summing up the report it has been determine that financial globalization have a huge impact on the economy and environment of the country. This results in increasing in the pollution and green house effect in country results in creating environmental issues. It ahs been determine that government has formed various policies that helps in reducing environment impacted. IGO, PPP, Private governance and tripartite government are the major element of global government that aim at resolve and managing all the international issues.

References

Books and Journals

• Abadie, A. and Gardeazabal, J., 2019. Terrorism and the world economy. In Transnational Terrorism (pp. 283-310). Routledge.
• Ahmed, Z., Zhang, B. and Cary, M., 2021. Linking economic globalization, economic growth, financial development, and ecological footprint: Evidence from symmetric and asymmetric ARDL. Ecological indicators, 121, p.107060.
• Aluko, O.A., Opoku, E.E.O. and Ibrahim, M., 2021. Investigating the environmental effect of globalization: Insights from selected industrialized countries. Journal of Environmental Management, 281, p.111892.
• Awosusi, A.A., Adebayo, T.S., Kirikkaleli, D. and Altunta?, M., 2022. Role of technological innovation and globalization in BRICS economies: policy towards environmental sustainability. International Journal of Sustainable Development & World Ecology, 29(7), pp.593-610.
• Epstein, G., 2019. The role and control of multinational corporations in the world economy. In The handbook of globalisation, third edition (pp. 165-177). Edward Elgar Publishing.
• Hulstaert, F., Ruether, A., Demotes, J. and Melien, Ø., 2020. Closing the cycle of innovation in healthcare in Europe. International Journal of Technology Assessment in Health Care, 36(2), pp.75-79.
• Ibn-Mohammed, T., Mustapha, K.B., Godsell, J., Adamu, Z., Babatunde, K.A., Akintade, D.D., Acquaye, A., Fujii, H., Ndiaye, M.M., Yamoah, F.A. and Koh, S.C.L., 2021. A critical analysis of the impacts of COVID-19 on the global economy and ecosystems and opportunities for circular economy strategies. Resources, Conservation and Recycling, 164, p.105169.
• Kim, R.E., 2020. Is global governance fragmented, polycentric, or complex? The state of the art of the network approach. International Studies Review, 22(4), pp.903-931.
• Nasreen, S., Mahalik, M.K., Shahbaz, M. and Abbas, Q., 2020. How do financial globalization, institutions and economic growth impact financial sector development in European countries?. Research in International Business and Finance, 54, p.101247.
• Nathaniel, S.P., Nwulu, N. and Bekun, F., 2021. Natural resource, globalization, urbanization, human capital, and environmental degradation in Latin American and Caribbean countries. Environmental Science and Pollution Research, 28, pp.6207-6221.
• Obstfeld, M., 2021. Trilemmas and tradeoffs: living with financial globalization. In The Asian Monetary Policy Forum: Insights for Central Banking (pp. 16-84).
• Roco, M.C., 2020. Possibilities for global governance of converging technologies. In Emerging Technologies (pp. 447-465). Routledge.
• Sethi, P., Chakrabarti, D. and Bhattacharjee, S., 2020. Globalization, financial development and economic growth: Perils on the environmental sustainability of an emerging economy. Journal of Policy Modeling, 42(3), pp.520-535.

Online

• Impact of financial globalization on environmental issues. 2024. Online Available through: < https://www.mdpi.com/2071-1050/15/2/1705#:~:text=A%20direct%20relationship%20exists%20between,indirect%20relationship%20with%20each%20other. >
• Increases in energy consumption. 2022. Online Available through: < https://terrapass.com/blog/impact-world-energy-consumption-and-solutions/#:~:text=The%20total%20world%20energy%20consumption%20is%20projected%20to%20reach%20580,300%20million%20terajoules%20of%20energy.>
• Impact of Financial globalization on Environmental, 202. Online Available through: < https://www.google.com/url?sa=i&url=https%3A%2F%2Fwww.mdpi.com%2F2071-1050%2F15%2F2%2F1705&psig=AOvVaw0NhYBPPF5Asb7-MFblfsqV&ust=1707567868380000&source=images&cd=vfe&opi=89978449&ved=0CBMQjhxqFwoTCJDPgrygnoQDFQAAAAAdAAAAABAD>
• Financial globalization. 2024. Online Available through: < https://fastercapital.com/content/Financial-globalization--Eurocurrency--Fueling-Financial-Globalization.html>.