Question

Does the global economy play any role in financing our deficits?

Answer 1

In today's scenario of multinational companies and when the countries are trading beyond their borders, so the global economy is playing a key role. Global economy is that the entire world acts as a single platform without any trade barriers and can freely trade with each other.

There are several trade unions being developed like BRICS, ASEAN, European Union where there is free trade amongst the member countries. Countries go for global economy so as to replace their expensive workers with the cheaper workers of other countries. At the time of recession, global economy plays an important role in financing the deficits of each other. Countries facing the deficit or recession can rely on other countries in case of global economy for projects and thus can finance their deficit. They can even trade with other financially sound countries to improve their balance of payments. The work force can also be easily exchanged between the member countries in case of recession and thus the problem of unemployment can be solved.