GLOBALISATION OF WORLD ECONOMY

GLOBALISATION OF WORLD ECONOMYincreasingly becoming transnational and universally
 obtainable. Drucker, therefore, argues that it is
            The world economy has beenmanagement on which competitive position has to be
emerging as a global or transnational economy. Abased.
global or-transnational economy is one which            3. In the transnational economy
transcends the national borders unhindered by artificialthe goal is market maximisation and not profit
restrictions like Government restrictions on trade andmaximisation.
factor movements. Globalisation is a process of            4. Trade, which increasingly follows
development of the world into a single integratedinvestment, is becoming a function of investment.
economic unit. The Transnational economy is            5. The decision making power is
different from the international economy. Theshifting from the national state to the region (i.e., the
international economy is characterised by theregional blocs like the European Community, North
existence of different national economies theAmerican Free Trade Agreement,           
economic relations between them being regulated byetc.)
the national Governments. The transnational economy            6. There is a genuine — and
is a borderless world economy characterised by freealmost autonomous — world economy of money,
flow of trade and factors of production acrosscredit and investment flows. It is organised by
national borders.information which no longer knows national
            Drucker in his New Realitiesboundaries.
observes that in the early or mid seventies —      7. Finally, there is a growing pervasiveness
with OPEC and President Nixon's floating of the dollarof the transnational corporations which see the entire
— the world economy changed from beingworld as a single market for production and
international to transnational. According to Drucker,marketing of goods and services.
Che transnational economy is characterised by, inter            There are, thus, many factors
alia, the following featureswhich tend to promote the transnatlonalisation of the
            1. The transnational economy isworld economy. The multilateral trade negotiations
shaped mainly by money flows rather than by tradeunder the auspices of GATT/WTO have been
in goods and services. These money flows have theirliberalising trade and investment.
own dynamics. The monetary and  fiscal policies of            A growing proportion of the world
sovereign Governments increasingly react to eventsoutput is traded internationally and the faster growth
in the international money and capital markets ratherof trade, than the GDP, is bringing about world
than, actively shape them.economic integration. This economic integration is
            2. In the transnational economyreinforced by the massive cross-border capital flows.
management has emerged as the decisive factor ofThe progress of the regional blocs increasingly
production and the traditional factors of production,integrate the regional economies.
land and labour, have increasingly become secondary.C.Pavithira
Money and capital markets too have beenM.