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    International Economic Interdependence

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    Priyanka Chandan Sharma
    International economic interdependence has grown significantly in recent generations due to advances in technology and policies opening markets globally. It involves companies and countries depending on one another for goods and services through complex international trade networks. Key aspects of economic interdependence include increased globalization and trade and specialized international division of labor where countries focus production on select goods and services. While economic interdependence promotes growth and development, it also faces challenges like job losses in some countries and potential exploitation of labor in lower costs nations. Nations must consider both advantages and disadvantages when managing their interconnected economies.

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    International Economic Interdependence

    Uploaded by

    Priyanka Chandan Sharma
    28 views3 pages
    International economic interdependence has grown significantly in recent generations due to advances in technology and policies opening markets globally. It involves companies and countries depending on one another for goods and services through complex international trade networks. Key aspects of economic interdependence include increased globalization and trade and specialized international division of labor where countries focus production on select goods and services. While economic interdependence promotes growth and development, it also faces challenges like job losses in some countries and potential exploitation of labor in lower costs nations. Nations must consider both advantages and disadvantages when managing their interconnected economies.

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    International economic interdependence

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    International economic interdependence has grown significantly in recent generations due to advances in technology and policies opening markets globally. It involves companies and countries depending on one another for goods and services through complex international trade networks. Key aspects of economic interdependence include increased globalization and trade and specialized international division of labor where countries focus production on select goods and services. While economic interdependence promotes growth and development, it also faces challenges like job losses in some countries and potential exploitation of labor in lower costs nations. Nations must consider both advantages and disadvantages when managing their interconnected economies.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    28 views3 pages

    International Economic Interdependence

    Uploaded by

    Priyanka Chandan Sharma
    International economic interdependence has grown significantly in recent generations due to advances in technology and policies opening markets globally. It involves companies and countries depending on one another for goods and services through complex international trade networks. Key aspects of economic interdependence include increased globalization and trade and specialized international division of labor where countries focus production on select goods and services. While economic interdependence promotes growth and development, it also faces challenges like job losses in some countries and potential exploitation of labor in lower costs nations. Nations must consider both advantages and disadvantages when managing their interconnected economies.

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    International Economic Interdependence:-

    Economic interdependence is a system by which many companies are economically dependent


    upon each other. This can involve many countries being economically dependent upon each
    other as well. In this, companies must become part of a trading network, and they depend upon
    each other to supply products that they cannot produce themselves. In this economic system, all
    of the parts are connected and react on one another. An increase in the income of the producers
    of commodity A will affect the demand for commodities B, C, etc. and the incomes of their
    producers and by their reaction will affect the demand for commodity A
    In a nation that has multiple industries and manufacturers, such as the United States, not all
    companies can produce all the inputs that they need to make the products they sell. Therefore,
    each industry must rely on other industries to make their components.
    International economic interdependence has grown exponentially in the span of a generation, as a
    result of great technological progress and associated policies that were aimed at opening national
    economies internally and externally to global competition
    Example is Wal-Mart, the largest chain store in the world. Wal-Mart relies upon hundreds of
    other companies and manufacturers for goods to sell in its stores. The suppliers also rely on Wal-
    Mart to sell their goods; it is a co-dependent relationship in which each company relies on the
    other for goods, services, and sales.
    The two symptoms of global economic interdependence are:
    1. Globalization: - One of the symptoms of economic interdependence is globalization.
    This is where each nation and their economies are dependent on other nations for
    products and goods. The indications are
    a. Increase in Global Trade:-Over the last two centuries, trade has grown remarkably,
    completely transforming the global economy. Today about one fourth of total global
    production is exported. Global economic system, countries exchange not only final
    products, but also intermediate inputs. This creates an intricate network of economic
    interactions that cover the whole world. This is reflected from the graph shown here.
    b. Increase in Global Transportation demand:- The Global Transportation has
    increased multiple times in last two decades. With China building economic corridor
    through Pakistan to do transportation to Africa and West Asia, India reaching this
    market through Iran and Afghanistan to Chabahar port. Transport infrastructure
    investment is projected to increase at an average annual rate of about 5% worldwide
    over the period of 2014 to 2025

    2. Division of labour / Labour specialization:- A division of labour means that countries


    produce just a small range of goods or services, and may contribute only a small part to
    finished products sold in global markets. This means that when so many products are
    produced in one nation, jobs become more specialized and economic interdependence is
    bound to form. The Country known for their specialization are
    Country Specialization

    India Software services, Agriculture Products, Gems, Engineering goods


    China Manufactured Goods, Arms
    Japan Manufacturing Process, vehicles goods
    Bangladesh Textile, Fish, Jute
    USA Military equipment, Research, Vehicles
    UAE Oil, Gas
    Switzerland Machinery and electronics, chemicals, precision instruments, watches
    The interdependence creates mix feeling on the part of nations policy makers because this is
    having both advantages and disadvantages. Taking decision based on the given advantages and
    disadvantages is a biggest challenge for a nation.
    Advantages:
    1. The biggest advantage is a country that lacks some expertise / goods can get from some
    other countries and fulfill their demands.
    2. Economic interdependence promotes global economic growth; creates jobs, makes
    companies more competitive, and lowers prices for consumers.
    3. It also provides poor countries, through infusions of foreign capital, technology, with the
    chance to develop economically and by spreading prosperity, creates the conditions in
    which democracy, and respect for human rights may flourish.
    4. There is cultural intermingling and each country is learning more about other cultures
    5. Socially we have become more open and tolerant towards each other and people who live
    in the other part of the world are not considered aliens

    Disadvantages
    1. The biggest problem for developed countries is that jobs are lost and transferred to lower
    cost countries. Also Workers in developed countries face pay-cut demands from
    employers who threaten to export jobs
    2. It also led to exploitation of labor. Prisoners and child workers are used to work in
    inhumane conditions. Safety standards are ignored to produce cheap goods. There is also
    an increase in human trafficking
    3. The general complaint about Economic interdependence is that it has made the rich richer
    while making the non-rich poorer. “It is wonderful for managers, owners and investors,
    but hell on workers and nature.
    4. Multinational corporations, which were previously restricted to commercial activities, are
    increasingly influencing political decisions.
    5. Some experts think that globalization is also leading to the incursion of communicable
    diseases. Travelers to the remotest corners of the globe are spreading deadly diseases like
    HIV/AIDS.

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