Global Economy International Monetary and Financial Environments
This was enabled, in part, by globalization of finance, which is characterized by the massive flow of capital and money between among the world’s economies. The International Monetary Fund, World Bank, banks, and governments played important roles in mitigating this crisis. This paper will highlight the important players who hold the greatest responsibility in stimulating the growth of national economies of various countries as the world recovers from the global financial crisis of 2008: the IMF, World Bank, central banks, national governments, banks, and firms. It will also focus on the role of the government of Saudi Arabia in this respect. Global Economy: International Monetary and Financial Environments The development of any national economy as the world emerges from the 2008 global financial crisis depends on the concerted efforts of certain institutions both within and outside its borders.
The International Monetary Fund (IMF) The main function of the IMF revolves around formulating and implementing regulations that govern the Global Monetary System. It has both international and national jurisdiction when it comes to regulating the global economy. It is its authority over national economies that makes it a key player in stimulating national economic growth following the global financial crisis. The International Monetary Fund studies the economies of individual countries and comes up with recommendations and regulations that are designed to accelerate economic growth. Additionally, it works from a wider point of view to streamline economic growth on a global scale, hence preventing economic disarray. However, as globalization advances and the world’s financial systems integrate, the actions of central banks are having effects far and beyond their borders, according to Prasad (2016).
Banks Local banks are pivotal in national economic development as they play several crucial roles. Most importantly, banks are responsible for raising and attracting capital for local investments which ultimately drive economic development. They also issue loans to individuals looking to invest and start small businesses, hence stimulating economic development. In dire situations, local banks also intervene to ensure stability in exchange rates, hence ensuring economic stability. They play several roles in stimulating national economic growth. To start with, a firm is responsible for creating employment, and employment is crucial in any economy’s development. Firms also make investments that generate revenues not only for themselves but also for the national governments, hence providing the much needed funds required to undertake national development projects that stimulate economic growth.
Additionally, firms are taking on the role of technological development, and technology is playing a crucial role not only in the development of national economies but also the global economy. For instance, Facebook and Google have been instrumental in advancing communication and access to the internet, and in doing so they have accelerated economic growth both internationally and on national levels. The government should also improve its tourism sector as this will attract foreign revenue and attract potential investors – this would already be in line with its vision 2030 objectives. Finally, it should create more jobs to lower unemployment, which is currently standing at over 11% -- it should also consider improving women’s participation in the workforce. Conclusion The global financial crisis of 2008 set the world back years in economic growth and development.
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