Global Economic Shifts: 1973-2000 Analysis

Posted on Mar 11, 2025 in Geography

Global Economic Shifts: 1973-2000

Energy Consumption and Economic Significance (1973-2000)

Increasing global economic activity increases the demand on energy resources. The largest increases in energy consumption occurred in less developed countries. Europe significantly reduced power consumption, the USA did so less dramatically, and Japan followed suit.

The Economic Crisis of 1973: Causes

  1. Rising price of oil.
  2. External imbalance in the USA: military spending, capital exports, reducing the competitive gap, increased international liquidity not controlled.
  3. Loss of political consensus prior to the crisis: consensus among Republican and Democratic parties, agreements between workers and employers.

Structural Change in Productive Activities (1973-1992)

Agriculture reduced its weight in the world economy by almost half. Industry rapidly declined in advanced economies with the oil crisis. The tertiary sector (services) expanded.

Policy Accommodation Before the 1973 Crisis

Transfers to the industry, fiscal policy of tax cuts.

Demand-Side Goals of Monetary Policy

  1. Increased liquidity in terms of GDP and in relation to inflation.
  2. Fiscal policy based on direct taxes in proportion to income.

Central Ideas of Public Policy Review: Supply-Side Policy

  1. Regulation of international bodies: WTO (World Trade Organization), EU (European Union).
  2. Release of the world market.
  3. Privatization of public enterprises.
  4. Incentives for efficient market behavior.

General Features of Economic Recovery After World War II

  1. World GDP growth: Large differences between developed and third world countries. The gains were for Japan, Asia (excluding Japan), and Latin America. Africa experienced slight gains or losses.
  2. Demographic behavior: The population increased faster than the world average in Latin America, Africa, and Asia, and slowest in Western Europe.
  3. Per capita GDP growth: The backward continents grew at a rate below 3%, while Western Europe recorded a rate of 4.08%. Japan showed a higher rate. Economic growth was long and sustained.

Basis for Rapid Recovery of the Global Economy

  1. Cooperation within and between nations: the creation of an atmosphere of harmony and commitment to a future of peace and prosperity for the citizens of Europe.
  2. The new international economic order: The U.S. intervened in the reconstruction in peace and in creating a new world order under American hegemony.
  3. The new role of the state: The state began to intervene directly in production by public companies in the countries of Western Europe.

Phenomena in Countries’ Economies Enabling Economic Growth

  1. Real convergence of economies: diversity in growth rates in the distribution of GDP in the developed world.
  2. Full employment: European countries differed in the creation of jobs, as in the workforce.
  3. Structural changes in production: there was a decline in agriculture in developed countries, and an increase in mining, industry, and construction.
  4. Monetary and exchange rate stability: it consolidated a type of fixed exchange systems operate smoothly and efficiently.
  5. Improvements in welfare levels: citizens have access to better and more varied food, and were able to acquire more and better clothing.