The Impact of International Business on the Global Economy
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Global Economy
International business is transforming the world as never before. The decades following the establishment of the General Agreement on Tariffs and Trade (GATT) in 1947 witnessed unprecedented growth in international trade and investment. Companies focused more and more on the mass production of products and services to meet insatiable world demand. Since the 1980s, emerging markets provided new impetus to worldwide economic interconnectedness. These fast-growth developing economies—some two dozen countries including Brazil, India, China, and Poland—are experiencing substantial market liberalization, privatization, and industrialization, which are fueling global economic transformation. These emerging markets, located on every continent, are gradually breaking away from the stagnation typical of developing economies. Collectively, the emerging markets are home to the largest proportion of world population and participate increasingly in foreign trade.
Along with market globalization, another megatrend, advances in technology, has also served to transform the global economy. The rise of information and communication technologies, as well as production and process technologies, has dramatically reduced the cost of conducting business with customers located abroad. The Internet and e-commerce make international business increasingly imperative for firms of all sizes and resource levels. Technological advances both facilitate, and are facilitated by, globalization. They allow globalization to progress more rapidly. Globalization, in turn, accelerates the development of the latest technologies.
International business contributes to economic prosperity and standards of living, provides interconnectedness to the world economy and access to a range of valuable intermediate and finished products and services, and helps countries use their resources more efficiently. Consequently, governments have become more willing to open their borders to foreign trade and investment