Economic Crises and Globalization: Impact and Risks
The Great Recession and Its Aftermath
Crisis. Since the oil crisis in 1973, the world has experienced numerous crises. The most recent, which began in 2008 and is only now subsiding, is known as “The Great Recession.” This crisis was particularly severe.
The Recession originated in the United States following the collapse of Lehman Brothers. It was triggered by failures in economic regulation, crimes committed by banks, and overvalued financial products. The subsequent decline in subprime mortgages led to a collapse of the stock market and impacted both small and large American investment banks. This precipitated the global financial crisis of 2008.
In Europe, the European Central Bank (ECB) did not prevent the crisis. Preventative measures were delayed, and implemented only after the crisis had begun to rapidly and significantly affect many European Union countries.
While countries such as Denmark, France, and Germany experienced economic slowdowns as a result of the Great Recession, *not* all countries did. For example, Spain, attempted to avoid the economic slowdown. However, its economy grew only feebly, and its unemployment rate increased.
Consequently, a meeting with the European Council was organized to mitigate the impact of the crisis on Europe. A significant amount of money was allocated to protect personal and private deposits. A treasury fund was also created at the same meeting to provide quality assets for business financing and offer guarantees to citizens. Furthermore, the European Central Bank reduced interest rates to below those of the United States.
As previously mentioned, the delay in implementing preventative measures by Europe has contributed to a slower global economic recovery.
Globalization: Process, Benefits, and Risks
Globalization is a worldwide economic, technological, political, and cultural process. It involves increasing communication and interdependence between different countries, connecting markets, societies, and cultures through a series of social, economic, and political transformations.
Globalization is not a static phenomenon; it is constantly evolving. This development is driven by the opening of national markets (free market principles), mergers between companies (creating multinational corporations), the elimination of public companies (privatization), and financial deregulation in favor of free trade (facilitated by Free Trade Agreements).
This process offers potential benefits but also entails significant risks.
- Potential Benefits:
- Greater market efficiency, leading to increased competition and reduced market power.
- Improvements in communication and international cooperation, resulting in better resource utilization.
- Promotion of scientific and technical developments.
- Increased maneuverability against fluctuations in national economies.
- Elimination of entry barriers in labor, financial, and goods and services markets.
- Risks:
- Irresponsibility of companies and multinationals.
- Increases in economic, social, and territorial imbalances.
- Potential oversights on human development indices, potentially leading to increased poverty.
Despite the existence of both positive (potential benefits) and negative (risks) aspects, public opinion on globalization varies widely, influenced by individual ideologies. This divergence may stem from the fact that globalization has fostered enthusiasm in areas like technological growth, while simultaneously generating significant opposition in others, such as environmental concerns (contamination).