Wealth

Economic issues have an impact on several spheres: politics, the environment and demographics. To understand today’s world, it is important to understand how all these spheres interact. Economic and political issues are very closely linked, especially in relation to globalization.

The creation and distribution of wealth differ from country to country. How can a country create wealth? Having natural resources on its territory as well as the physical and financial ability to exploit them is an important factor. Another factor is access to money (capital) that can be invested. This money can be used to build the infrastructure needed for the country’s economic development, such as roads, ports or telecommunications.

A country’s intervention in the economy can also contribute to its development and strength. Investing capital in infrastructure is one example. Workforce training supports economic activity, since the various fields of activity need qualified people for specialized jobs (engineers, welders, accountants or computer programmers). When companies have skilled employees and efficient means of production, they are more productive and have a greater impact on the economy.

Wealth is unevenly distributed across the world and within populations. One of the reasons for this is the unequal distribution of natural wealth around the world. Wealth distribution inequality can be measured by different indicators such as Gross Domestic Product (GDP) and the Gini index. The Human Development Index (HDI) measures the average quality of life of the population by evaluating life expectancy and literacy rates. Countries can implement measures to reduce wealth distribution inequality. These measures improve access for all to education, health care and a minimum wage.

The level of development of countries is another factor to consider when looking at the global economy. Just like wealth is distributed unevenly around the world, not all countries have reached the same level of economic development. Some countries have a lot of capital (money) and a high concentration of high-tech industries, like aeronautics, and information technology, and their people enjoy a high standard of living. These are called developed countries.

Other countries have fast-growing economies but are not fully industrialized. These are called emerging countries.

Some countries have economies based mainly on the exploitation of natural resources (mining or agriculture), are hardly industrialized and their people have lower standards of living. These are called developing countries.

Colonization, decolonization and neocolonialization have had, and continue to have, a major impact on the world’s economy. Some countries are highly industrialized and have developed economies. These countries are usually former mother countries that benefited from the resources of their colonies to develop their economies during the 19th and 20th centuries. Once a former colony gains its independence, it has to make significant changes to its economy. This is due to the fact that their economy was used to meet the needs of the former mother country instead of the country itself. For example, a country’s economy may be centred on cotton production to supply the mother country’s industries, when the country itself does not actually need that much cotton. These days, it is more a matter of neo-colonisation. This means that even if a country is independent, it is still somewhat controlled by its former mother country. This control can take several forms, including economic ties that benefit the former mother country. These ties are often between a developing country and a developed country. They can involve the former colony granting concessions  to companies from the former mother country. These companies exploit the former colony’s natural resources and export them elsewhere, creating little wealth in the former colony.

Regardless of a country’s wealth or level of development, it sometimes has to go into  debt to cover its spending (on infrastructure or social programs). In some cases, this debt barely impacts the country’s economy and does not prevent its development. In other cases, the debt is a heavy burden, and the government has to take action to repay the debt. This can be done by increasing its revenues (raising taxes) and reducing expenditures (infrastructure, social services, military spending and business subsidies).

Globalization has led to a significant increase in trade between countries. Many of these trades are economic in nature. Improved transport and communications have made the movement of goods, people and information much easier. So why stay within your country's borders when it comes to trade? For companies, there are several advantages to trading internationally and spreading activities across countries, including lower production costs, access to new markets and higher profits. There are also certain challenges, like greater competition, risks associated with transportation, use of different currencies and varying qualifications among the workforce. Globalization mainly benefits developed countries and the companies based in them by increasing their revenues. However, it causes many jobs to be outsourced to developing countries where labour is cheaper. In emerging and developing countries, globalization leads to the migration of workers to big urban centres where production facilities are located. Although the economies of these countries may benefit from globalization, it also has a number of negative impacts, including:

• risks to the environment when environmental rules are less strict

• companies using up resources for their own needs, making it difficult for the local populations to access them

Many international organizations have been set up over time to support the global economy and help states and populations deal with numerous economic challenges. Some are part of the United Nations (UN), such as the International Monetary Fund (IMF) and the World Bank (WB). The World Trade Organization (WTO), for its part, was founded to reduce barriers to international trade and establish rules for all member states to follow. There are also several economic groupings that support trade between member states. The European Union is one example. Non-governmental organizations (NGOs), such as the ATD Fourth World and OXFAM International, aim to reduce poverty and contribute to the development of populations around the world.