An analysis of some of the major factors affecting the Worlds Economy will be examined. These will differ between human decisions, such as wars and conflicts between nations and natural disasters. Furthermore a summary of the fluctuation of the world economy will be produced. In this sections a few examples will be given of major nations influencing the economy, aiming to gain a vaster understand of the shifts in the World Economy. Additionally, to observe the implications of these shifts for international businesses based in the United Kingdom, an example of a Multinational Enterprise globally expanded, such as Tesco Ltd, will be used.
Over the last five years many natural disasters have affected world population and the world’s economy. Probably the two most astonishing, disruptive and destructive events were the 2004 Tsunami, on the Indonesian island, where a two meter wall of water hit the coast killing over 200,000 people and the 2005 Hurricane Katrina, one of the deadliest hurricanes in the history of the United States.
Both these events have produced long terms implications. When looking at Hurricane Katrina, social issues, such as new housing, transport and the restorations of roads are a few examples. Although these are very serious factors, the most direct affect to the worlds economy is the astonishing increase of oil and gas, which has risen dramatically not only in the United States, but also Canada, Europe and Africa. Previous to Hurricane Katrina the oil prices were increasing as China and India both had a high demand, due to concerns about supply. The damage caused to the oil-ring in the Gulf of Mexico, which accounts to 25 per cent of US oil supplies and around 10 per cent of the world’s supply of oil, was so great that oil per barrel increased by more than $20.
Natural disasters are not the only factors that affect the world economy. Human intervention, conflicts between nations and terrorist attacks can play a major role in the disruption of the world’s economy. A good example is September 11 terrorist attacks in the United States. The World Bank stated “another 10 million people in developing countries could be pushed below the poverty line, as a result of the economic impact of the terrorist attacks,”1 furthermore, ” 10 million more people are likely to be living on less than $1 dollar a day in developing nations, especially in Africa”2 ( World Bank). Such terrorist attacks have affected the mentality of many individuals; holidays planned by families have been cancelled due to the fear of further attacks.
Over the last 30 years, there has been a huge transformation in China’s export rate. Its production of goods has had a great impact on the world’s economy. The manufacturing of goods have increased from an average of 50 per cent to an astonishing 90 per cent, becoming the manufacturing centre of the world. Technological gadgets, such as digital cameras, mobile phones and computers are some of the products produced by China. Most of this production is exported, increasing to $400 billion dollars since 1990 the exporting ratio.