Question

The global economic system is increasingly important to the developing nations. Discuss the relationship between the two.

Answer 1

Abstract

The global economic system is refers to the interconnected worldwide economic activities that take place between multiple countries.

It refers to the exchange of goods and services between different countries, and it has also helped countries to specialise in products which they have a comparative advantage in.

The global economic system is increasingly important to the developing nation, We will discuss the relationship between two with the help of following some points :

1. There is high unemployment in developing countries due to the deficiency of the availability of essential consumer goods, but if we look at developed countries the unemployment ratio is minimum in normal state of economy except there is no recession or financial crises or pandemic like COVID-19

Therefore it is very necessary to developing nation to follow the best practices from the global economic system and improve the status of unemployment and other problems like Growth of high population and enviornmental related issues

2. If compared both nations i.e. Developed and Developing- we will found that there is huge differences in overall efficiency of the economy, i.e. its productivity, it causes an increase in real incomes that may be shared with job earnings. High income countries have high productivity and vice versa

  Therefore it is very necessary to developing nation to follow the best practices from the global economic system and improve the status of overall effciency of the economy

3. Also there are another factors like easy availability of human capital., productive working conditions, low gender discrimination and supportive government actions which can help to generate high income and optimum utilization of resources in developed countries.

Whereas developing countries lack access to this basic requirement and unable to generate maximum yield, Therefore it is very necessary to developing nation to follow the best practices from the global economic system and improve the status of easy access to required resources

4. Regulation offered by government in developing countries also will not change the productivity of very poor workers. and it will only change the incentives, This will be the reason that why developing countries lack the growth in term of economic prosperity

But it compared with developed countries which offer very lucrative policies to maximize the productivity and economic growth by offering high wages to workers

5. Also there is another reason that is total amount of overseas foreign direct investment which is ineffective in developing countries due to very strict laws and trade barriers. Also there is low index on the ranking of Ease of Doing Business.

In contrast there is high ranking of Ease of Doing Business in developed countries and very supportive government policies with minimum restrictions on trade which ultimately cause to foster the economic growth.

  Therefore it is very necessary to developing nation to follow the best practices from the global economic system and improve the status foreign direct investment in home countries and achich the economic growth.