The Importance Of Globalization And International Trade

727 Words2 Pages
bulb-icon

Recommended: Side effects of globalization

The concern about natural and man-made disasters and the economic impact beyond United States and other countries is due to globalization and international trade. Past thirty years, the world has gotten more connected through globalization and through international trade more reliant on upon each other. Because of the complexity of world economics, there is increased economic risk for that country as well as the international community.
Countries who depend upon the global financial market, for which they have little control, they are essentially at the mercy of the global market. Of course, countries expect a greater return to offset the risk. To minimize risk countries invest in insurance. According to the article The Risk-Sharing Implications …show more content…

The impact on the global financial market was rather muted because many of the damaged facilities were uninsured, minimizing the exposure of Western and Asian financial services companies to the tsunami destruction” (Athukorala & Resosudarmo, 2005)
According to Monica Escaleras and Charles Register who compared economically wealthy and poor countries that experienced disasters found “This is due to the fact that countries with high-quality infrastructure stand to have greater potential economic losses, even if they have relatively few deaths, when a disaster strikes than those without well-developed infrastructure. Conversely, a country may lose many lives due to poor infrastructure but have a relatively low economic loss from an event” (Escaleras & Register, 2016)
To sum up, countries that are poor and without a significate part in international trade disaster is limited to local destruction and will not have significate effect upon world financial markets. Important economic industries that survive a disaster will keep a country’s GDP stabilized and the international financial market fare well if a lower percentage of insurance claims are paid

Show More
Related

  • Hurricane Ike

    1406 Words  | 3 Pages

    Gene understands that the story does not end with just the damages but also what it contributes to the future. It has brought with it new measures in structural development, social relationships and insurance holding. It is a major step to the lessening of the impact of future disasters.

    Read More

  • Chile Earthquakes In Chile

    729 Words  | 2 Pages

    This was great for Chile until the earthquake. After the earthquake, the economy grew at a lower rate of 2% in 1961 to 19363. Later, in 1964-65, the country had a second recession. As I mention early in the paper, the losses were approximately $550 million, however, till this day the cost remains unknown. To repair the damage, the Chilean state invested 136.4 million U.S. dollars from donation and 292.6 million from the government. It is estimated that the houses in Valdivia were destroyed by 40%. The houses and building that were built by concrete, were affected the most. The wooden houses fared better.

    Read More

  • Economic Globazation-Source Analysis

    778 Words  | 2 Pages

    Our global world is becoming more connected as we become integrated politically, socially and even economically. Due to the Bretton Woods agreement, different countries have been economically dependent on each other in fear of war to erupt. From then on, different organizations and policies tied more countries into being economic globalized. This economic globalization has then given us many opportunities in trade and more access to natural resources in other countries. Unfortunately, there are some negative effects that are brought to less developed countries.

    Read More

  • Sierra Leone Negative Impacts

    914 Words  | 2 Pages

    For a country like Sierra Leone that is heavily reliant on importation and exportation of goods, having these systems backed up can be detrimental to the economy. As I mentioned in the first section of this essay, Sierra Leone’s exports and imports compose of 59.2% of the nations GDP. When 59.2% of a country’s economic income is wiped out over night it becomes difficult for the country to rebuild without external help. Thankfully help is being provided by organizations like the UNDP, however, it is not coming fast enough and the people of Sierra Leone are still struggling.

    Read More

  • How Does World Systems Theory Affect World System Theory

    1773 Words  | 4 Pages

    The world woke up to the news of Wall Street collapsing in 2008 that threatened large numbers of financial institutions in the United States of America and across the globe. It is known to be one of the most financial crisis since the Great Depression of the 1930’s. The crisis was triggered by financiers from various lending institutions, Central bankers and other regulators who created the bubble in the financial sector. This had a domino effect across the globe triggering a massive bankruptcy across the financial institutions. Shares plunged in various stock markets in Americas, Asia, Europe, Africa, and Asia Pacific. That is an example of how interconnected (globalized) the world is, what happens in one part of the world can have an affect

    Read More

  • Natural Disaster Essay

    1156 Words  | 3 Pages

    There are hundreds of natural disasters that occur on the earth on a yearly basis. Some natural disasters are more severe than other natural disasters. disasters include floods, hurricanes, tornadoes, volcanic eruptions, earthquakes, and tsunamis. These disasters cause great trauma, stress, major property damage and sometimes death. Natural disasters is any catastrophic event that is caused by nature or the natural processes of the earth. The severity of a disaster are measured in lives lost, economic loss, and the ability of the population to rebuild. The bigger, the population the disaster hits, the more repairs needed. In many cases, these major events are heartbreaking to watch, let alone to experience. (“Natural disasters,” n.d.)

    Read More

  • The Great Tohoku Earthquake

    1226 Words  | 3 Pages

    While the early warning saved thousands of people, the Japan’s Meteorological Agency underestimated this earthquake as the subduction zone of Japan should not produce the magnitude 9.0 quake (Oskin, 2013a). The Tohoku Earthquake and its tsunami approximately killed 16 thousand people, injured 6 thousand people and around 3 thousand people were missing. Most people died from drowning. Around 300 thousand buildings, 4000 roads, 78 bridges, and many more were affected by the earthquake, tsunami, and fires from leaking oils and gas. Electricity, telecommunication, and railways were severely damaged. The debris of 25 million tons was generated and carried out to the sea by water (BBC News, 2012). The country’s authorities estimated more than 309 billion US dollars of damages. Landslides occurred in Miyagi and liquefaction in Chiba, Tokyo, Odaiba, and Urayasu (USGS, 2013). Furthermore, the tsunami destroyed protective tsunami seawalls. Approximately 217 square miles of Japan covered in water (Oskin,

    Read More

  • Catastrophe Bonds: The New Insurance

    2559 Words  | 6 Pages

    Catastrophe bonds are a new type of insurance securitization and have become increasingly popular in the insurance industry throughout the 21st century. Unlike traditional reinsurance products, cat bonds are “fixed income instruments issued primarily by insurers and reinsurers as a way of passing on their exposure to potential large financial risks associated with natural catastrophes” (Ip). in the form of an insurance linked security. These securities are designed to protect insurers and reinsurers against “super” catastrophes, or events that are high severity, but low frequency of occurrence, defined as having around a 1% or 1 in 100 years probability. Cat bonds first emerged in the 1990s, after hurricane Andrew and the Northridge Earthquake in California wiped approximately USD 30 billion off balance sheets of insurers and reinsurers. Insurers and reinsurers noticed the industry’s vulnerability to such “super” catastrophes. “The potential cost of a disaster had outgrown the capacity of the insurance industry to protect against it” (Ip). Reinsurers had to increase equity levels in order to protect against a natural disaster which increased the price for catastrophe risk. Although catastrophe bonds have parameters which strictly limit the type and location of a disaster they cover, cat bonds have had a positive impact on the insurance industry because cat bonds add reinsurance capacity through the financial market, cat bonds influence the price of traditional reinsurance, and cat bonds enable regional insurance carriers to expand underwriting.

    Read More

  • The Global Financial Crisis

    2672 Words  | 6 Pages

    Velde,D.K (2008). The global financial crisis and developing countries. Available at: http://www.odi.org.uk/resources/download/2462.pdf (Accessed: 5th August 2010).

    Read More

  • Financial Services Industry

    742 Words  | 2 Pages

    With the opening of global markets financial institutions have been playing a key role in globalizations. From securities, stocks, investments, financial institutions have opened markets. For instance in Europe, financial and governmental agencies have established a currency, electronic foreign exchange trading. The World Trade Organization, (WTO) has established markets that are constantly debating ethical issues. World-wide tragedies make financial institutions a key player in relief efforts, such as hurricanes, earthquakes, and other natural and world-wide conflicts. The World Bank plays a major role in debt relief as well. There are many roles that financial institutions have on the global economy.

    Read More

  • Different Types of Disasters

    1421 Words  | 3 Pages

    There are different types and causes of disasters; man-made, natural and a combination. Man-made disasters are caused by human error or human actions that cause harm to the environment, and people (Baack & Alfred, 2013). Natural disasters are caused by nature a hurricane for example; and a combination; NA-TECH (natural-technological) examples are earthquakes that cause structural damage such as a collapse of a bridge (Nies & McEwen, 2011). Communities must have effective emergency preparedness in place to reduce the causalities from a disaster.

    Read More

  • The Global Economic Crisis

    664 Words  | 2 Pages

    Many researchers have pointed out that the global imbalances are the root of the recent financial crisis. Portes claims that “the underlying problem in international finance over the past decade has been global imbalances, not greed, poor incentive structures, or weak financial regulation, however egregious and important these may be.” (2). According to him, the global imbalances lead to “the increasing in dispersion of current account”, which “puts a burden on financial systems to intermediate.”

    Read More

  • Causes And Effects Of Earthquakes

    1203 Words  | 3 Pages

    Lets start off with the consequences of an earthquake. The consequences depend on a combination of factors like the magnitude, depth, distance from a populated area, the nature of local earth materials, and also the way structures like houses, buildings, roads, railroads, utility lines, and pipelines are built. (Natural Hazards, Second Edition) Earthquake losses, like those of other disasters, tend to cause more financial losses in industrialized countries and more injuries and deaths in undeveloped countries. Earthquakes can also cause secondary disasters like tsunamis, a natural disaster where a series of waves of very great length and period, are usually caused by large earthquakes under or near oceans that are close to the edges of tectonic plates. The waves created by a tsunami can travel long distances and increase their height as they hit shallow water. Tsunamis are able to create great damage and destruction far away from their source. (American Public Health Association, 2005)

    Read More

  • The Importance of Globalization

    1568 Words  | 4 Pages

    Asian financial crisis in 1997 is a good example to demonstrate the globalisation as a single issue in one country will motivate a domino effect on other countries. Since the crisis stared in Thailand because of the fail in banking system, a political upheaval was triggered in South Korea and Indonesia. At the same time, financial centres in New York, London, Hong Kong and Tokyo were also affected in this crisis. During the crisis, global news agencies utilised the Internet and telegraph updating news to their home countries. Such as the Economist, Reuters and the Financial Times which ar...

    Read More

  • Earthquake in Japan

    726 Words  | 2 Pages

    The death toll climbs to over 10,000 and is still rising (Branigan 2). The disaster in Japan began without warning on Friday March 11, 2011 at 2:46pm with a 9.0 magnitude earthquake, the strongest ever recorded in the country (Fackler 3). A massive thirty-three foot high tsunami, generated by the earthquake, swept over lands in northern Japan, taking objects and debris with it. To make matters worse, the tsunami caused the cooling systems at several nuclear power plants to fail. The disaster in Japan was a tragic event, and it had a plethora of causes and effects.

    Read More

More about The Importance Of Globalization And International Trade

Open Document