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Macroeconomics: International Economic Issues

Towards the end of 2007 and through 2008, the world economy went through a severe sock that brought many markets to a standstill. And for those trying to interpret trends, challenges, and opportunities, this may be a good opportunity for them. Every nation in the world has concerns about their economies, and they set in place laws that keep things flowing. But the 2007/2008 recession hit the whole world. There were concerns about energy security and environmental sustainability, which converged in a single bucket bringing agreements and consensus among many stakeholders who sort action in the USA. Even then, they were still not enough to give the world the economic peace they need. The economy is altogether quite a sensitive matter; issues like unemployment will never fully go away. While many developing countries are succeeding in elimination poverty, there are many other who are still in the depression of poverty, conflict, and diseases, even with all the technical steps the world has taken, and a large number of philanthropists, advocates and global corporations that have fueled significant development.

It is amazing, however, how some of these countries are doing pretty well. Consider China; for instance, it has a projected annual growth of 9.6% and working with the smallest nations in the world. The nation has managed to spread its wings to the furthest corners of the world, which has helped it create opportunities. Even though many economists argue that they do so with a significant risk, it is still seen as a way of growing its economy.

And despite their 'quick action,' they are yet to reach the United States, which has remained in the "green zone." However, it leaves many to wonder why the US has continued to entertain borrowing abroad. In contrast, many of its citizens continue to complain about widening inequality, whereas opportunities continue to deteriorate. The nation has continued to invest in military warfare, working in the Middle East. In contrast, many leaders across the region continue pressuring the younger generation to work so that they can increase the productivity of their nation.  

The biggest question still lingers around the challenges economies face and what can be done to mitigate them. Every nation has to struggle with these challenges and offer the most appropriate way out. When the financial depression came, the Federal Reserve and the Treasury, among other bodies, rushed to save the crushing markets. It all about finding short term solutions as well as a long term one for a problem that would probably never fully go away. In the capital of America, there are often many short-run political wrangles that overwhelm the most important long-term changes. And it is the same situation in many other regions where politics is often the number one determinant of general economies.

Over the years, the world economy has gone through a lot of changes. They have all followed the previous financial crisis, which brought in increasing inequality. Among other 

issues, the pressures of immigration, emerging technologies, environmental issues, and geographical shifts have continued to impact national economies.

The History of the modern economy

Many experts feel that the reason went into the Great Recession was because the markets, especially the housing industry, was not careful enough. Who could have blamed them anyway? By the beginning of 2007, the economic bubble was so high everyone was excited. Things were going well in the United States economy. Banks were giving out loans without going through many details since they were not the ones holding the loans. But then, it happened in summer, when the housing industry fell. Immediately, lenders realized the securities which has been used to secure the loans started depreciating rapidly. And since the lenders have not thoroughly vetted the borrowers' abilities to repay the loans, they could not get back their investments. Markets collapsed, and households and firms lost their faith in the financial systems. And 24 months later, entire Europe was sailing in its own crises. The financial markets went confusion as some major institutions collapsed or nearly collapsed.

Amazingly, the recovery progress has been a fairly steady one ever since. Despite this, the world economy has failed to recover fully. In 2016, for instance, there were worrying trends in North America and the European region. Some major entities started to become less committed to multi-lateral cooperation, as they showed criticism of open and free trade as well as reducing the concern for climate change. With such a landscape, it was obvious that uncertainty would increase, and a major threat would soon be facing macroeconomic and financial processes. As if that is not enough, the relations between major international stakeholders may not be as strong as it should be, extending the effects of citizens and domestic participants. The situation split the society into two major economies like the USA and the UK, which risked the collapse of many years of an international corporation.

And when it begins from the ground, international organizations feel the pressures. They are constantly called on to re-explain the roles they play in ensuring the programs and processes remain relevant even as political and macroeconomic worlds continue to shift. They often are compelled to improve the status of a nation's citizens. But they cannot get fulling to involve in everything since that would overburden citizens in terms of taxes and enhancing efficiency, effectiveness, and service delivery.

When it comes to the world economy, it is all about who is who? And when things are not working well with economic powers, then the pressure flows down to even the lowest nations. No matter, some of the issues that affect global economies are general. Consider the following:

Increased social Gap in Income

It is normal to find people comparing themselves to their neighbors, more so in terms of wealth. In the modern world, there seems to be a high competition for everyone to show what they have and what they can do. Everyone is less thoughtful about their obsolete wealth; rather, we often compare what others around us have or don't have. In 2016, it was recorded that the Global private wealth reached $166.5 trillion, which has been the largest increase (5-3%) compared to the previous year, as reported by the Boston Consulting Group (BCG). The growth was recorded at 4.4% in 2015, whereby the growth was attributed to an increase in economic growth and stock prices.

Despite such incredible growth, which should be celebrated, you will notice it is not spread equally. According to the Analysis from the BCG, the private wealth in Asia-Pacific could be more than what is in Western Europe in the next few years. Should this happen, it will come as a great shock to the known western economic giants. However, such a shift cannot be taken lightly. It has to be handled well to avoid tilting even political power.

As Sir Halford, a British geographer and a politician, stated, such unparallel growth in these states seems to bring about hegemony in the world every ten decades. It this is right, then it would mean the world economy is a risk or shifting slowly. And things are not getting any better, as inequality keeps getting worst. In 2015, we witness the tip when the 1% riches seemed to own almost all humanity. The trend has only kept surging. There are just eight men in the world now from whose arms 3.6 billion people across the globe are feeding. This is more than half of the human population, as reported in the 2017 Oxfam report. An increase in income inequality has been reported in every corner of the world as the 'haves' continue to gain more wealth, mostly by stepping on the poor.

In his book, "Dream Hoarders" pointed out that apart from the 1%, we should also be concerned, not only the 1% as there is more to society now than we could ever imagine. For instance, in a country like the US, there is an ever-widening gap between the upper society and other people. And in this case, anyone whose income features in the top 20% of the US society is in the middle-class. These differences can be seen through many parameters, including family structures, neighborhoods, attitudes, and way of life. And those who are rich often pass their stature to their children.

It is paradoxical that as much as countries have been fighting to eradicate poverty since the 1980s, there has been a constant increase in inequality. And today, nearly a third of the global inequality begins from in-country features where voters have different feelings about their statuses in society.

Technological and scientific innovations

We are living in a world where everything is driven by technology. This raises the question of how far the effects of globalization and technological advances will change the world, especially the labor market. For the last thirty years, there has been a shift in the labor-intensive markets of advanced economies towards emerging markets. In many cases, technology has completely eliminated human labor. And according to a report by the United Nations Conference on Trade and Development, robots can make two-thirds of jobs obsolete, especially in the developing world.

And the shift is already in effect, considering the most significant global companies like Apple, Alphabet, and Facebook, among others. These companies have employed more than 720,000 people. Comparing to PetroChina, Exxon Mobile, General Electric, China Mobile, and Bank of China, which were the biggest five years ago and employed more than 1million people, we can say technology companies are the biggest players in the global economy. And market capitalization of today's top 5 companies, which are technology firms, is 30% above what top companies half a decade ago had. And what more, they achieve this capitalization with 44% fewer workers. This means they have a great impact on the global labor market. And as you can imagine, this trend is bound to affect the carrier choices. Millennial and future job seekers say they are receiving conflicting information from everywhere. On one side, they are told they need hands-on skills to compete in the job market. On the other hand, they are told job robots may replace their jobs in the future.

It is also extending to those seeking to create job opportunities. They have put aside traditional works like banking, accounting, and similar job and instead opting to become YouTubers, Vloggers, or Instagram photographers. They are paid on commission by sponsors; people visit their sites and promote the intended brand. And while this is happening, they are new jobs in professions that have been ignored for many years. Opportunities like old merchant jobs, organic bakers, and so on have been re-opened. Yet, it remains that 45% of the world's working-age has not been fully utilized.

Energy and Environmental Security

Since 2007, there have been issues and concerns regarding energy and environment, and it has become a global agenda. And recently, involved parties have reached a consensus on the possible long-term effects of different factors, including economy and technological advances on the environment. The potential use of technologies with low-polluting and secure energy sources have been widely discussed. Despite what has already been done, fossil fuels continue rocking the world with greenhouse gas emissions still affecting environments.

High oil prices continue to feature among the biggest issues on international policy even as global warming continues to threaten the world. In this case, some countries enjoy it because they have been shielded, while others have to take in more rapid changes.


The world faces a threat from different factors, some of which include internal conflicts on boundaries and borders. It seems distant threats can change into major problems even as many governments tighten their fight against poverty and global insecurities. For instance, American policymaker view traditional security threats in terms of bombs and bullets, when has contributed more to the relationship conflict has with poverty. When any country is involved in the war, they put aside any economic progress, instead choosing to focus on defending their borders.

From the issues discussed above, we can conclude that when a major economy in the world faces external and internal issues, the rest of the world feels the impact. In other words, when there are any issues with the US economy, other nations go through the same stress. HenceEconomic Issues, it is important to study these economies so that we can learn how to deal with situations when they arise. 

Author: James Hamilton

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