In the globalised economy, the interconnectedness of economies means that when one economy is negatively impacted, it can have repercussions on other economies to varying degrees. Here are some points to consider:
1.Trade Interdependence: Economies are interconnected through trade relations. If one economy experiences a decline in demand or faces trade barriers, it can affect the export-oriented economies that rely on that market. Reduced trade can lead to lower economic growth and employment in interconnected economies.
2.Financial Contagion: Financial systems are interconnected through capital flows and investment channels. If one economy faces a financial crisis or instability, it can spill over to other economies through contagion effects. This can impact investor confidence, capital flows, exchange rates, and overall financial stability.
3.Supply Chain Disruptions: Global supply chains are complex and involve the integration of various economies. Disruptions in one economy, such as natural disasters, political instability, or production failures, can disrupt the supply chain and affect other economies that depend on those inputs or products.
4.Confidence and Sentiment: Economic activities are influenced by consumer and investor confidence. If one economy experiences a significant downturn, it can have a negative impact on global sentiment, leading to reduced investments, consumer spending, and overall economic activity.
Development Potential of Globalised Economy and Closed Economy:
Development Potential of Globalised Economy:
The globalised economy has greater development potential due to the various opportunities it brings. Here are some key points regarding its development potential:
Market Expansion: The globalised economy can expand market size through import and export activities, attracting domestic and international businesses to compete and improve the quality and diversity of products and services.
Optimal Resource Allocation: Through cross-border investments and collaborations, the globalized economy can optimize resource allocation and utilization, leading to more efficient production and supply chain management.
Technological Innovation: The globalised economy has better access to and adoption of the latest technologies and innovations, promoting industrial upgrades and economic growth.
Talent Mobility and Knowledge Transfer: The globalised economy attracts talent from around the world, facilitating the flow of knowledge and promoting innovation and knowledge-based economy.
In summary, the globalised economy has greater development potential, benefiting from economic opportunities and competitive advantages.
Development Potential of Closed Economy:
The closed economy has relatively limited development potential due to its restricted connections with external economies. Here are some key points regarding its development potential:
Limited Market Size: Closed economies are constrained by the size of their domestic markets, making it challenging to achieve economies of scale and meet broader market demands.
Technological and Knowledge Lag: Closed economies may face delays in accessing and adopting the latest technologies and knowledge due to their isolation from external economies, limiting innovation and technological advancements.
Resource Depend