Wider economic divide

Description:

[1] The world economy is undergoing the drawbacks of being connected to the US economy since the end of World War II. Currently, due to the developing countries, it seems that the world economy is able give up the adherence to the strongest economy worldwide.

The US economy stepped into a regression phase in 2006 and the interest rate started increasing since 2004, thereby affecting highly indebted families. This led to significant real estate crisis, which contributed to a decreasing investment in real estate and a drop in the prices of properties.

[2] World inequality increased until about 1980 and then narrowed – especially due to Asia. [1] In fact, other countries of the world have started to replace the US economy as the engine of the world economy. Asia, with the increasing economic power of China, and European Union, with the dynamism of its members in Central and Western Europe, have witnessed one of the most substantial growth rates. These started in 2001 and surpassed the US economy in 2007. In 2006, the contribution of the US economy to boosting the world economy was 21%, while China contributed 12.5% and the European Union 22%.

This is considered promising as it shows the world is less liable to comply with the US demand and debt. The boom has driven the international bodies in the UN, as well as NGO’s to show an interest in distributing resources for the benefit of the largest share of the population. [4] Inequalities are ingrained in the laws of motion of capitalism

Enablers:

• Reliance on US economy causing the underdeveloped countries yielding to the economic fate of the richest economy worldwide
• Technological achievements (or other forms of dependency) are one of the highest contributing factors to the mounting inequality and the increasing financial globalization according to World Bank report published in October 2007.
• [3] Uneven spread of capitalism that segmented the international division of labor from min-1800s to mid-1900s
• [4] Capitalism being the greatest engine of the production growth

Inhibitors:

• Developing countries achieving a massive and solid growth
• Separation of the US and world economies paving the way for better distribution of growth returns
• [4] Capitalism being the greatest engine of the production growth

Paradigms:

The world growth, which is unprecedented in its expansion and globalization in the history of modern capitalization, brings a number of challenges that define the future and stability.

The inequality in the allocation of the GNP or income keeps on escalating. [2] Across the world, real income has risen six fold in the 20th century, but they are distributed more unfairly than ever.

Web Resources:

[1] Al Hayat Newspaper, 17 December 2007, Inequality and Environment Challenge the World Economy, , Retrieved September 14, 2009:http://global.factiva.com/
[2] The Independent, 17 January 2000, How inequality spoil the achievements of economic growth,
Retrieved September 14, 2009:http://global.factiva.com/
[3] Social Forces, 1 June 2006, The Persistance of Structural Inequality? A Network Analysis of International Trade, 1965-2000, Retrieved September 14, 2009:http://global.factiva.com/
[4] Monthy Review, 1 February 2004, Poverty and Inequality in the Global Economy, Retrieved September 14, 2009:http://global.factiva.com/