what is called the interaction among economics of the world?
plz answer.
Answers
Answer:
Economic interdependence is a consequence of specialization or the division of labour. The participants in any economic system must belong to a trading network to obtain the products they cannot produce efficiently for themselves. A change in the economic behavior of any participant on such a network usually affects many others, so that the demands and incomes of the participants are interdependent.
A. A. Cournot wrote in Mathematical Researches into the theory of Wealth "...the economic system is a whole in which all of the parts are connected and react on one another. An increase in the income of the producers of commodity A will affect the demand for commodities B, C, etc. and the incomes of their producers, and by their reaction will affect the demand for commodity A." [1] Such complex reactions are evident in general equilibrium theory.
The economic interdependence of nations has been studied extensively by professors all around the world. Such an international economic interaction is commonly thought of as a dollar value of the transaction of goods and services between nations (Cooper);[2] several academics have challenged this fundamental paradigm over time. Baldwin suggests that economic interdependence may be conceived as the opportunity costs incurred from potential exit costs that incur as a result of breaking existing economic ties between nations. Whitman, cited by Baldwin, further expands on Cooper's definition and proposes that economic interdependence should also involve the degree of sensitivity of a country’s economic behaviour to policies and development of countries outside its border. However, empirical evidence to support the latter definition is a lot harder to find, given its ambiguity (Baldwin).[3]
Global economic interdependence has grown exponentially in the span of a generation, as a result of great technological progress and associated policies that were aimed at opening national economies internally and externally to global competition.[4]
Paehlke notes that investment and international trade have drastically increased over the last 100 of years except during the World War I and World War II.[5] Over time, economic interdependence has incorporated other aspects that were brought about by contemporary globalisation - as a result of the onset of the age of computerisation, telecommunications and low-cost travel and shipping. As international trade have been increasing at a rate beyond 8% during the 1950s to 1970s, and has also been driven by improvements in information technology in the 1990s, economic interdependence between countries has increased even more rapidly.[6]
Given such rapid increase in international trade and capital flows that are traditionally associated with globalisation, there has been increasing interest in the issues of financial and economic interdependence, partly driven by the contagion that resulted from the financial crisis.[7]
- plz subscribe to my YouTube channel MEDICUS GNARITAS
- plz follow me
- plz mark me as Brainlist