There is a series of important elements and events that has shaded the world’s economy to what is it today. This essay summaries the major historical developments that have led to the creation of your dominant economic systems prevalent in today’s society. After a century of decline and stagnation, in the fifteenth century the European population began to grow. However, this growth had soon decreased in the early seventeen hundreds. The economies of Europe as well as the rest of the world started to change.
This change was mostly attributed to the greatly expanded geographical horizons and resources’, which caused changes in the European economy especially in respects of the importance of government in an economy. Migration, both local and overseas, began to surface. Thus resulting in urban population growth. Exploration and discovery grew and soon led to the direct commerce between Europe and Asia, as well as other remotes parts of the world. Spain and Portugal were greatly responsible for many of Rupee’s discoveries, exploration, overseas expansion and colonial conquest.
Soon precious metals, such as gold and silver, started spread throughout Europe, which eventually led to a spectacular and prolonged rise in prices resulting in “The Price Revolution”. Inflation began to worsen, due to a variety of factors, and it resulted in devastating effects on the standard of living because of the decline in real wage. The failure of the population to adequately feed itself had become a problem in the seventeenth century. There was an increasingly need to significantly advance agricultural technology and increase labor productivity.
Trade between countries was an important element to supplement the food shortages as innovation took place t a very slow pace. Industrial innovation started to emerge in the late fifteenth century as machines and other items were invented. These innovations had a economic, political as well as cultural significance. Of all sectors of the European economy, commerce was undoubtedly the most dynamic between the fifteenth and eighteenth centuries. Some even refer to the sixteenth century as the “Commercial Revolution” due to the significant increase in trade, trade routes and commercial organizations.
As the twentieth century drew to its close, the world’s economy began to intensify. Some people feared globalization while others welcomed it. There was struggle of how economies should be organized. John Maynard Keynes and Frederica von Hayes, economic systems By accountable system which was most suitable. Keynes could see the faults of the free market economy and all these errors could be fixed if the government regulated the economy and opted for a communist system while Hayes thought was that the free market would fix itself, without any government intervention.
Thereafter the aspect of “commanding heights of the economy’ began to surface. The commanding height of the economy means that as long as the government owns the major industries in an economy; it is acceptable for independent individuals to own property. Various views began to evolve on the balance of government intervention causing the “battles of ideas” between Keynes Hayes and a few others. Some countries adapted a socialist approach while others opted for an approach more inclined to communism. The revolution of the world’s economy in the 20th and 21st centuries was very uncertain, and trying.
In the 20th century, economies were beginning to shift due to deficits and inflation. Economic strategies planned to curve the shift by governments worldwide were beginning to fail and were not fulfilling their projected results. Free- market capitalism was to blame for mass unemployment, the recession, and inflation that began to plague world economies. Globalization had evolved as capitalism was now the rule almost everywhere and the stage was set for a single global market woven together by trade, technology and investment.
Globalization is said to have roughs unprecedented prosperity, but it has also brought crises and risks as seen after the 9/1 1 fiasco. A worldwide debate about wealth and poverty, about the “rules of the game” for this new era of globalization was unleashed. No economic idea has shaped the era of globalization more strongly than a acceptance in free and open markets. Restriction off trade between nations are been stripped away creating an emerged global village filled with innovation and technology. However, externalities also have become an increasingly growing problem due to increase in economic activity.
Nations are currently trying to find new rules in which nature, people and economies can prosper together and in harmony. As seen above, the worlds around us has evolved and changed drastically in the last few centuries. So what will the worlds global economy look like a century from now, or even a decade? It is up to us, as future professionals, to fix the problems and errors of today and transform our world to an even more efficient and effective tomorrow. It is up to us to plan a promising yet sustainable future for all.