Srita.

I. GLOBAL
ECONOMICS
Enterprise and Business in the World
ITESM
Fall, 2011

•Define “ECONOMY”
The correct and effective use of available resources
The system or range of economic activity in a country or
region

Activities related to the production and distribution of goods
and services in a particular geographic region

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GLOBAL ECONOMY
• WHAT IS GLOBAL ECONOMY?
INTEGRATEDWORLD ECONOMY WITH UNRESTRICTED AND FREE
MOVEMENT OF GOODS, SERVICES AND LABOUR TRANSNATIONALLY

A GLOBAL ECONOMY IS CHARACTERIZED AS A WORLD ECONOMY WITH A UNIFIED
MARKET FOR ALL GOODS PRODUCED ACROSS THE WORLD

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GLOBAL ECONOMY
THE SUM OF THE ECONOMIC ACTIVITY OF EACH COUNTRY

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GLOBAL ECONOMY

 INCREASINGLY INTERCONNECTED WORLD
 FREE MOVEMENT OF CAPITAL ACROSS COUNTRIES
UNIFIED MARKET FOR ALL GOODS PRODUCED ACROSS THE
WORLD
 MOBILITY OF JOBS TO OTHER COUNTRIES

•VALUATION OF THE GLOBAL ECONOMY
Typically judged in monetary terms: in a certain currency (e. g.
US Dollars)
even if:
there is no efficient market to help valuate certain goods or
services,
a lack of independent research or government cooperation
makes establishing figures difficult(EXAMPLE: BLACK MARKETS, DRUGS, ETC.)

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•VALUATION OF THE GLOBAL ECONOMY
IN TERMS OF MONEY:

$61 TRILLION USD (est. 2010) 1
REAL GDP GROWTH (%) 2

1.

The World Bank
2. Ibidem

THE LARGEST ECONOMIES IN THE WORLD

Source: EconomyWatch & World Bank
All information considering 2010 GDP Figures

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THE POOREST ECONOMIES IN THE WORLD
United Nations categorization considers threevariables:

1. Annual GDP below $900 per capita
2. Quality of life is a function of life expectancy at birth, per capita
calorie intake, primary and secondary school enrollment rates and
adult literacy rate.
3. Economic vulnerability which mainly depends on the stability in
agricultural production, export and import.
Source: EconomyWatch & World Bank
All information considering 2010 GDPFigures

THE POOREST ECONOMIES IN THE WORLD

MALAWI
DEM. REP. CONGO

Source: EconomyWatch & World Bank
All information considering 2010 GDP Figures

•Group discussion:
• 6 TEAMS OF 10 PEOPLE
•PREPARE 5 REASONS THAT COULD ANSWER:

WHY IS GLOBAL ECONOMY
IMPORTANT for
INTERNATIONAL BUSINESS?

GLOBAL ECONOMY
SPECTRUM

STATISTICAL INDICATORS OF THE GLOBAL
ECONOMY
ECONOMY
GROSSDOMESTIC PRODUCT (GDP) / GROSS WORLD PRODUCT
INFLATION
GLOBAL DEBT ISSUANCE
GLOBAL EQUITY ISSUANCE

EMPLOYMENT
UNEMPLOYMENT RATE

INDUSTRIES
INDUSTRIAL PRODUCTION RATE

ENERGY
YEARLY ELECTRICITY PRODUCTION / CONSUMPTION
OIL PRODUCTION / CONSUMPTION / PROVED RESERVES
NATURAL GAS PRODUCTION / CONSUMPTION / PROVED RESERVES

INTERNATIONAL TRADE
YEARLY EXPORTS
YEARLYIMPORTS
EXTERNAL DEBT

COMMUNICATIONS AND TRANSPORTATION (infrastructure)
No. OF TELEPHONES- MAIN LINES IN USE / CELL PHONES
INTERNET USERS / SERVICE PROVIDERS
AIRPORTS (DOMESTIC / REGIONAL / INTERNATIONAL)
ROADWAYS (PAVED / UNPAVED)
RAILWAYS

MILITARY
YEARLY MILITARY EXPENDITURE

HOMEWORK 1
1.-Research:
• Team up in teams of 6-7 people each
• Choose one of the biggesteconomies in the world and one of the
poorest economies in the world
• Each team member should research information in one statistical
indicator
• Present briefly to the class

In order to standardize the value of goods and services
worldwide, Economists use de PURCHASING POWER
PARITY to establish the price of goods and services

Purchasing power parity (PPP)
Is a well-known theory thatseeks to define relationships between currencies.
In essence, it claims that a change in relative inflation (meaning a comparison
of the countries’ rates of inflation) between two countries must cause a change
in exchange rates to keep the prices of goods in two countries fairly similar.

a bundle of goods should cost the same in
Country A and Country B, once you take the
exchange rate...