Fundamentals of the global economy: what you need to know and recommendations

All participants in the global economy interact with each other. There are more “open” and “closed” countries, but each state makes its contribution to international economic relations. At the same time, states are at different levels of socio-economic development.

Usually, developed and developing countries with a market economy are distinguished, as well as countries with a transitional economy. Today, the global economy is gradually turning into a single market that operates according to common rules, and the influence of individual states on economic relations is decreasing.

There is no single currency system within the global economy. Foreign trade transactions are conducted in the currency that the participants have fixed in the agreement. Most often, the US dollar, euro, Chinese yuan, Japanese yen and British pound sterling are used for international settlements.

The main indicators used to assess the economy of individual countries and the world economy as a whole are the gross national product (GNP) and the gross domestic product (GDP).

A country’s GNP is the market price of goods and services produced over a certain period of time, for example, over a calendar year, by residents of the state. These are citizens of the country and legal entities registered on its territory. The location of production or the place where services are provided do not matter.

GDP is the value of goods and services that were produced and provided over a certain period on the territory of the country. It does not matter who owns the enterprises.

In both cases, we are talking about products intended for consumption, and not for further use in production.