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THE GLOBAL THE GLOBAL ECONOMY ECONOMY Changes, Trends, and Changes, Trends, and Challenges for the 21 Challenges for the 21 st st Century Century Kristin Bowles-Pierce USF/Career & Workforce Education EVT 7066

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Page 1: THE GLOBAL ECONOMY Changes, Trends, and Challenges for the 21 st Century Kristin Bowles-Pierce USF/Career & Workforce Education EVT 7066

THE GLOBAL THE GLOBAL ECONOMYECONOMY

Changes, Trends, and Challenges Changes, Trends, and Challenges for the 21for the 21stst Century Century

Kristin Bowles-Pierce

USF/Career & Workforce Education

EVT 7066

Page 2: THE GLOBAL ECONOMY Changes, Trends, and Challenges for the 21 st Century Kristin Bowles-Pierce USF/Career & Workforce Education EVT 7066

Globalization is having a profound effect on Globalization is having a profound effect on the pattern and establishment of economic the pattern and establishment of economic

growth, stability, and development. The growth, stability, and development. The economic face of the world is transforming.economic face of the world is transforming.

For some it will be the end of an era…for For some it will be the end of an era…for others it will be an incredible opportunity.others it will be an incredible opportunity.

SOURCE: Stuart, J. (n.d.). SOURCE: Stuart, J. (n.d.). Predicting Global TrendsPredicting Global Trends. Retrieved October 17, . Retrieved October 17, 2008, from http://www.alt3.co.uk/GlobalEconomy.htm2008, from http://www.alt3.co.uk/GlobalEconomy.htm

Page 3: THE GLOBAL ECONOMY Changes, Trends, and Challenges for the 21 st Century Kristin Bowles-Pierce USF/Career & Workforce Education EVT 7066

What is Globalization?What is Globalization?• Globalization is a process of interaction and integration Globalization is a process of interaction and integration

among the people, companies, and governments of among the people, companies, and governments of different nations, a process driven by international trade different nations, a process driven by international trade and investment and aided by information technology. and investment and aided by information technology.

• Globalization has effects on the environment, culture, Globalization has effects on the environment, culture, political systems, economic development and prosperity, political systems, economic development and prosperity, as well as human physical well-being in societies around as well as human physical well-being in societies around the world.the world.

The Global EconomyIntroduction

Globalization 101)The Levin Institute. (n.d.). Globalization 101)The Levin Institute. (n.d.). Globalization 101Globalization 101. Retrieved October 18, 2008, from . Retrieved October 18, 2008, from http://www.globalization101.org/What_is_Globalization.htmlhttp://www.globalization101.org/What_is_Globalization.html

Page 4: THE GLOBAL ECONOMY Changes, Trends, and Challenges for the 21 st Century Kristin Bowles-Pierce USF/Career & Workforce Education EVT 7066

History of Globalization:History of Globalization:• The term globalization first became widely used in the The term globalization first became widely used in the

1980s, but the concept stretches back decades, perhaps 1980s, but the concept stretches back decades, perhaps even centuries, through the trading empires built by Spain, even centuries, through the trading empires built by Spain, Portugal, Britain, and Holland. Portugal, Britain, and Holland.

• The strategy of Western states to build and strengthen The strategy of Western states to build and strengthen international ties after World War 2 laid the groundwork for international ties after World War 2 laid the groundwork for today's globalization. today's globalization.

• For factors influencing globalization, please link to: For factors influencing globalization, please link to:

The Globalization Timeline, 1940-2005 The Globalization Timeline, 1940-2005 http://new.gbgm-umc.org/media/missionstudies/pdf/globalizationtimeline.pdf

The Global EconomyIntroduction

Globalization 101)The Levin Institute. (n.d.). Globalization 101)The Levin Institute. (n.d.). Globalization 101Globalization 101. Retrieved October 18, 2008, from . Retrieved October 18, 2008, from http://www.globalization101.org/What_is_Globalization.htmlhttp://www.globalization101.org/What_is_Globalization.html

Page 5: THE GLOBAL ECONOMY Changes, Trends, and Challenges for the 21 st Century Kristin Bowles-Pierce USF/Career & Workforce Education EVT 7066

1950:1950:• The shock of a great depression, two world wars, and The shock of a great depression, two world wars, and

restrictions on immigration led to little economic restrictions on immigration led to little economic interconnectedness between countries. interconnectedness between countries.

• The U.S. was the world's greatest economic power, The U.S. was the world's greatest economic power, producing 27% of the world's Gross Domestic Product producing 27% of the world's Gross Domestic Product (GDP). (GDP).

• The world's poorest economies were China and India, The world's poorest economies were China and India, each making up only 4% of the world's GDP. each making up only 4% of the world's GDP.

The Global EconomyEconomic Changes: The Past

Farrell, D., Folster, C., & Lund, S. (2008). Long-term trends in the global capital markets. Farrell, D., Folster, C., & Lund, S. (2008). Long-term trends in the global capital markets. The McKinsey QuarterlyThe McKinsey Quarterly. Retrieved October 14, 2008, . Retrieved October 14, 2008, from http://www.mckinseyquarterly.com/Long- term_trends_in_the_global_capital_markets_2100from http://www.mckinseyquarterly.com/Long- term_trends_in_the_global_capital_markets_2100

Page 6: THE GLOBAL ECONOMY Changes, Trends, and Challenges for the 21 st Century Kristin Bowles-Pierce USF/Career & Workforce Education EVT 7066

2006:2006:• Radical changes in communication and information Radical changes in communication and information

technology, and stronger national commitments to technology, and stronger national commitments to globalization have led to international institutions and globalization have led to international institutions and economic interconnectedness. economic interconnectedness.

• The U.S. share was only 22% of the global GDP. The U.S. share was only 22% of the global GDP.

• The new emerging markets of China and India were The new emerging markets of China and India were experiencing unprecedented economic gains. experiencing unprecedented economic gains.

The Global EconomyEconomic Changes: The Present

Farrell, D., Folster, C., & Lund, S. (2008). Long-term trends in the global capital markets. Farrell, D., Folster, C., & Lund, S. (2008). Long-term trends in the global capital markets. The McKinsey QuarterlyThe McKinsey Quarterly. Retrieved October 14, 2008, . Retrieved October 14, 2008, from http://www.mckinseyquarterly.com/Long- term_trends_in_the_global_capital_markets_2100from http://www.mckinseyquarterly.com/Long- term_trends_in_the_global_capital_markets_2100

Page 7: THE GLOBAL ECONOMY Changes, Trends, and Challenges for the 21 st Century Kristin Bowles-Pierce USF/Career & Workforce Education EVT 7066

2040:2040:• Globalization could lead to the Globalization could lead to the

world as a supply base for talent world as a supply base for talent and materials; industry and materials; industry boundaries may become blurred. boundaries may become blurred.

• China could contribute more to China could contribute more to GDP than the U.S. and its GDP than the U.S. and its economy could become larger economy could become larger than that of the U.S., Western than that of the U.S., Western Europe, and Japan combined.Europe, and Japan combined.

The Global EconomyEconomic Changes: The Future

% Contribution to Global % Contribution to Global Growth by Country, 2006-20Growth by Country, 2006-20

Source: Economist Intelligence UnitSource: Economist Intelligence Unit

Economic Intelligence Unit (2006, March). Economic Intelligence Unit (2006, March). Foresight 2020: Economic, industry and corporate trendsForesight 2020: Economic, industry and corporate trends (). Retrieved October 15, 2008 from (). Retrieved October 15, 2008 from http://www.itvendorsdirectory.ca/Online-Resources/foresight-2020-economic-industry-and-corporate-trends-001.html http://www.itvendorsdirectory.ca/Online-Resources/foresight-2020-economic-industry-and-corporate-trends-001.html

Page 8: THE GLOBAL ECONOMY Changes, Trends, and Challenges for the 21 st Century Kristin Bowles-Pierce USF/Career & Workforce Education EVT 7066

The Global EconomyCurrent Trends

Global Financial Trends:Global Financial Trends:Investors outside Europe and the U.S. are increasingly Investors outside Europe and the U.S. are increasingly

shaping trends in financial markets. shaping trends in financial markets.

Farrell, D., Folster, C., & Lund, S. (2008). Long-term trends in the global capital markets. Farrell, D., Folster, C., & Lund, S. (2008). Long-term trends in the global capital markets. The McKinsey QuarterlyThe McKinsey Quarterly. Retrieved October 14, 2008, . Retrieved October 14, 2008, from http://www.mckinseyquarterly.com/Long- term_trends_in_the_global_capital_markets_2100from http://www.mckinseyquarterly.com/Long- term_trends_in_the_global_capital_markets_2100

– Increased ties Increased ties between the between the financial markets of financial markets of the developed and the developed and emerging worlds. emerging worlds.

– The shift of financial The shift of financial weight in Asia from weight in Asia from Japan to China.Japan to China. Source: McKinsey Financial InstituteSource: McKinsey Financial Institute

Page 9: THE GLOBAL ECONOMY Changes, Trends, and Challenges for the 21 st Century Kristin Bowles-Pierce USF/Career & Workforce Education EVT 7066

The Global EconomyCurrent Trends

Global Financial Trends (continued):Global Financial Trends (continued):

• The Eurozone’s growing financial clout per the euro The Eurozone’s growing financial clout per the euro emerging as an international currency that could emerging as an international currency that could challenge the dollar.challenge the dollar.

• The burgeoning financial role of Middle Eastern The burgeoning financial role of Middle Eastern countries.countries.

• An unprecedented escalation in global energy and An unprecedented escalation in global energy and commodity prices, allowing for inflationary forces.commodity prices, allowing for inflationary forces.

Farrell, D., Folster, C., & Lund, S. (2008). Long-term trends in the global capital markets. Farrell, D., Folster, C., & Lund, S. (2008). Long-term trends in the global capital markets. The McKinsey QuarterlyThe McKinsey Quarterly. Retrieved October 14, . Retrieved October 14, 2008, from http://www.mckinseyquarterly.com/Long- term_trends_in_the_global_capital_markets_21002008, from http://www.mckinseyquarterly.com/Long- term_trends_in_the_global_capital_markets_2100

Page 10: THE GLOBAL ECONOMY Changes, Trends, and Challenges for the 21 st Century Kristin Bowles-Pierce USF/Career & Workforce Education EVT 7066

The Global EconomyCurrent Trends

Global Financial Trends (continued):Global Financial Trends (continued):• The emergence of capital sovereign wealth funds (state-The emergence of capital sovereign wealth funds (state-

owned funds) set up by oil-exporting countries to invest owned funds) set up by oil-exporting countries to invest oil surpluses in global financial assets. oil surpluses in global financial assets.

– Petrodollar investors Petrodollar investors are the largest and are the largest and fastest growing fastest growing component of a broad component of a broad shift in global financial shift in global financial market that includes market that includes Asian central banks, Asian central banks, private-equity firms, private-equity firms, and hedge funds.and hedge funds.

Source: McKinsey Financial InstituteSource: McKinsey Financial Institute

Sovereign WealthSovereign Wealth

Page 11: THE GLOBAL ECONOMY Changes, Trends, and Challenges for the 21 st Century Kristin Bowles-Pierce USF/Career & Workforce Education EVT 7066

The Global EconomyCurrent Trends

Global Employment Trends:Global Employment Trends:Globalization and rapidly changing technical progress Globalization and rapidly changing technical progress

continue to impact labor markets around the world. continue to impact labor markets around the world.

• Continuing massive work deficit in the world.Continuing massive work deficit in the world.

• Five of ten people are Five of ten people are – in vulnerable work situations.in vulnerable work situations.– living with their families, in poverty, despite working.living with their families, in poverty, despite working.

• The ongoing world GDP growth will continue to have a The ongoing world GDP growth will continue to have a low impact on job creation and on the decrease working low impact on job creation and on the decrease working poverty. poverty.

International Labour Organization (2008, January). International Labour Organization (2008, January). Global Employment TrendsGlobal Employment Trends (978-92-2-120912-6). Retrieved October 18, 2008 from (978-92-2-120912-6). Retrieved October 18, 2008 from http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_090106.pdf http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_090106.pdf

Page 12: THE GLOBAL ECONOMY Changes, Trends, and Challenges for the 21 st Century Kristin Bowles-Pierce USF/Career & Workforce Education EVT 7066

The Global EconomyCurrent Trends

Global Employment Trends (continued):Global Employment Trends (continued):

– The services sector The services sector (42.7%) over took the (42.7%) over took the agricultural sector (34.9%) agricultural sector (34.9%) in contributing to in contributing to employment in the world.employment in the world.

– The industry sector, which The industry sector, which had seen a slightly had seen a slightly downward trend is now in downward trend is now in a slow upward trend a slow upward trend (22.7%). (22.7%).

Sectoral Employment Shares, 1997-2007Sectoral Employment Shares, 1997-2007

Source: ILO Global Employment Trends Model, November 2007Source: ILO Global Employment Trends Model, November 2007

International Labour Organization (2008, January). International Labour Organization (2008, January). Global Employment TrendsGlobal Employment Trends (978-92-2-120912-6). Retrieved October 18, 2008 from (978-92-2-120912-6). Retrieved October 18, 2008 from http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_090106.pdf http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_090106.pdf

Page 13: THE GLOBAL ECONOMY Changes, Trends, and Challenges for the 21 st Century Kristin Bowles-Pierce USF/Career & Workforce Education EVT 7066

The Global EconomyCurrent Trends

Global Employment Trends (continued):Global Employment Trends (continued):

• Labor productivity increase in all regions, except for the Labor productivity increase in all regions, except for the Middle East, with the highest increase in East Asia. Middle East, with the highest increase in East Asia.

• Demand for offshore labor by the developed world Demand for offshore labor by the developed world pushes up wage rates for some occupations in low-pushes up wage rates for some occupations in low-wage countries, but not as high as current wage levels wage countries, but not as high as current wage levels for those occupations in developed ones.for those occupations in developed ones.

International Labour Organization (2008, January). International Labour Organization (2008, January). Global Employment TrendsGlobal Employment Trends (978-92-2-120912-6). Retrieved October 18, 2008 from (978-92-2-120912-6). Retrieved October 18, 2008 from http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_090106.pdf http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_090106.pdf

Page 14: THE GLOBAL ECONOMY Changes, Trends, and Challenges for the 21 st Century Kristin Bowles-Pierce USF/Career & Workforce Education EVT 7066

Source: ILO Global Employment Trends Model, November 2007Source: ILO Global Employment Trends Model, November 2007

The Global EconomyCurrent Trends

Global Employment Global Employment

Trends (continued):Trends (continued):Labor Productivity/Per Person, 1997-2007Labor Productivity/Per Person, 1997-2007

– The labor productivity The labor productivity gap between gap between developing regions and developing regions and the developed world the developed world continues to grow, continues to grow, even for well-even for well-performing regions.performing regions.

International Labour Organization (2008, January). International Labour Organization (2008, January). Global Global Employment TrendsEmployment Trends (978-92-2-120912-6). Retrieved October 18, (978-92-2-120912-6). Retrieved October 18, 2008 from http://www.ilo.org/wcmsp5/groups/public/---2008 from http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_090106.pdf dgreports/---dcomm/documents/publication/wcms_090106.pdf

Page 15: THE GLOBAL ECONOMY Changes, Trends, and Challenges for the 21 st Century Kristin Bowles-Pierce USF/Career & Workforce Education EVT 7066

The Global EconomyCurrent Trends

Global Employment Trends (continued):Global Employment Trends (continued):

– A continuing decline in the A continuing decline in the world’s employment-to-world’s employment-to-population ratio.population ratio.

– The decline is growing The decline is growing among young people (age among young people (age 15 – 24) partially due to 15 – 24) partially due to education and increased education and increased discouragement of young discouragement of young people to participate in labor people to participate in labor markets.markets.

Global Employment Trend, 1997-2007Global Employment Trend, 1997-2007

Source: ILO Global Employment Trends Model, November 2007Source: ILO Global Employment Trends Model, November 2007

International Labour Organization (2008, January). International Labour Organization (2008, January). Global Employment TrendsGlobal Employment Trends (978-92-2-120912-6). Retrieved October 18, 2008 from (978-92-2-120912-6). Retrieved October 18, 2008 from http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_090106.pdf http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_090106.pdf

Page 16: THE GLOBAL ECONOMY Changes, Trends, and Challenges for the 21 st Century Kristin Bowles-Pierce USF/Career & Workforce Education EVT 7066

The Global EconomyCurrent Trends

Global Demographic Trends:Global Demographic Trends:The world’s population continues to grow; however the The world’s population continues to grow; however the

overall growth rate is on a downward trend.overall growth rate is on a downward trend.

Rosenburg, L., & Bloom, D. (2006). Global demographic Trends. Rosenburg, L., & Bloom, D. (2006). Global demographic Trends. Finance Finance and Development, 43and Development, 43(3), . Retrieved October 18, 2008, from (3), . Retrieved October 18, 2008, from http://www.imf.org/external/pubs/ft/fandd/2006/09/picture.htmhttp://www.imf.org/external/pubs/ft/fandd/2006/09/picture.htm

– Growth in less developed Growth in less developed countries is increasing more countries is increasing more than five times as fast as that than five times as fast as that of developed countries.of developed countries.

– The population is aging, and The population is aging, and in developed countries, has in developed countries, has already surpassed that of the already surpassed that of the 12-24 age group. 12-24 age group.

Source: United Nations, World Population Trends, 2004Source: United Nations, World Population Trends, 2004

Page 17: THE GLOBAL ECONOMY Changes, Trends, and Challenges for the 21 st Century Kristin Bowles-Pierce USF/Career & Workforce Education EVT 7066

The Global EconomyCurrent Trends

Global Demographic Trends (continued):Global Demographic Trends (continued):

• The fastest growing segment of humanity today is the middle class. In The fastest growing segment of humanity today is the middle class. In China and India the middle class is growing. In Turkey, Brazil, Mexico, China and India the middle class is growing. In Turkey, Brazil, Mexico, Ukraine and Brazil, a middle class is emerging. Ukraine and Brazil, a middle class is emerging.

• The growing middle class will increase over the next decade from 30% of The growing middle class will increase over the next decade from 30% of the world’s population to 52%. the world’s population to 52%.

• The world's urban population is expected to grow by 1.8% a year The world's urban population is expected to grow by 1.8% a year between 2000 and 2030, almost twice as fast as the global population between 2000 and 2030, almost twice as fast as the global population growth.growth.

The Brookings Institution (2008, April 29). The Brookings Institution (2008, April 29). Moises Naim presents on Global Economic TrendsMoises Naim presents on Global Economic Trends. Paper presented at the meeting of the . Paper presented at the meeting of the Global Young Professionals. Retrieved October 18, 2008 from http://www.brookings.edu/Global Young Professionals. Retrieved October 18, 2008 from http://www.brookings.edu/

Rosenburg, L., & Bloom, D. (2006). Global demographic Trends. Rosenburg, L., & Bloom, D. (2006). Global demographic Trends. Finance and Development, 43Finance and Development, 43(3), . Retrieved October 18, 2008, from (3), . Retrieved October 18, 2008, from http://www.imf.org/external/pubs/ft/fandd/2006/09/picture.htmhttp://www.imf.org/external/pubs/ft/fandd/2006/09/picture.htm

Page 18: THE GLOBAL ECONOMY Changes, Trends, and Challenges for the 21 st Century Kristin Bowles-Pierce USF/Career & Workforce Education EVT 7066

The Global EconomyCurrent Trends

Global Social Trends:Global Social Trends:An" uneasiness” permeates the global economy as An" uneasiness” permeates the global economy as

regions size up economic impacts on the world. regions size up economic impacts on the world.

• Degradation of the eco-system. Degradation of the eco-system.

• Uneven experience in the costs/benefits of globalization.Uneven experience in the costs/benefits of globalization.

• Widespread perception of governments as weak on both Widespread perception of governments as weak on both international and national levels.international and national levels.

• Disquiet at scale, impact and governance of global Disquiet at scale, impact and governance of global companies. companies.

• Revival of faith-based affiliation in many cultures. Revival of faith-based affiliation in many cultures. Department Of Economic And Social Affairs (2004). Department Of Economic And Social Affairs (2004). World economic and social surveyWorld economic and social survey (). Retrieved October 16, 2008 from (). Retrieved October 16, 2008 from

http://www.un.org/esa/policy/wess/wess2004files/part1web.pdfhttp://www.un.org/esa/policy/wess/wess2004files/part1web.pdf

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• 1998: Asian Currency Collapse

• 2000: Dot.com Meltdown

• 2001: Global Telecom Restructuring

• 2001-2003: Impact of 9-11

• 2007-2008: Rising Oil Costs

• 2008: Sub-Prime/Financial Crisis

The Global EconomyThe Challenges of the LAST 10 Years

Carroll, J. (2008). Carroll, J. (2008). Global economic trends: Which way forward? An interview with Jim CarrollGlobal economic trends: Which way forward? An interview with Jim Carroll (). Retrieved October 18, 2008 from (). Retrieved October 18, 2008 from http://www.jimcarroll.com/acrobat/Global-EconomicTrends.pdf http://www.jimcarroll.com/acrobat/Global-EconomicTrends.pdf

Page 20: THE GLOBAL ECONOMY Changes, Trends, and Challenges for the 21 st Century Kristin Bowles-Pierce USF/Career & Workforce Education EVT 7066

• Poverty

• Equitable Globalization

• Climate Change

• Education

• Middle East

• Global Governance

The Global EconomyThe Challenges of the NEXT 10 Years

World Economic Forum. (2006). World Economic Forum. (2006). Global leaders prioritize key issues facing our worldGlobal leaders prioritize key issues facing our world. Retrieved October 18, 2008, . Retrieved October 18, 2008, from http://www.weforum.org/pdf/AM2005/Global_Town_Hall.pdffrom http://www.weforum.org/pdf/AM2005/Global_Town_Hall.pdf

Page 21: THE GLOBAL ECONOMY Changes, Trends, and Challenges for the 21 st Century Kristin Bowles-Pierce USF/Career & Workforce Education EVT 7066

Globalization is increasing the pace of Globalization is increasing the pace of change in the world. We are entering a change in the world. We are entering a period of significant and fundamental period of significant and fundamental

transformation. transformation.

How will this affect you?How will this affect you?

SOURCE: Stuart, J. (n.d.). SOURCE: Stuart, J. (n.d.). Predicting Global TrendsPredicting Global Trends. Retrieved October 17, . Retrieved October 17, 2008, from http://www.alt3.co.uk/GlobalEconomy.htm2008, from http://www.alt3.co.uk/GlobalEconomy.htm