How does INTERPENDENCE affect NM economy?
Answer:
Economic interdependence is when people rely on others to provide the goods and services required for supporting their lives or for convenience.
Economic interdependence, a concept that came about in the 19th and early 20th centuries, was stymied initially by the Great Depression and the Cold War. The foremost global economic powers of the time raised rates against each other to fix their own economies, leading to a collapse in international trade.
When organizations, including the World Bank and the IMF, increased the level of international trade and worldwide investment, it therefore increased global economic interdependence.
Because many are unable to acquire their goods due to lack of particular skills or knowledge, ‘labor specialization’ becomes key to this reliance. It can be a complicated system involving many layers of society, including businesses and people. Labor is often separated in such a way that most people work towards providing a service or resource for other individuals/companies. People seldom work directly to source for themselves a certain good or service.
Often, economies that are advanced will trust other nations for goods and services that are not made nationwide (in their own country), again reinforcing a dependency. As a populace develops, it can either advance further to create its own required goods within its own borders, or it will continue to seek out commodities and raw materials further afield. Countries like the UK and US rely on other nations for manufactured goods such as clothing, electronics and even food.
However, note that it’s not just the manufacturing of goods that forms the reliance. Certain countries are the only ones to produce a needed product, such as oil or rice. Therefore, a heavier burden is placed on these nations to meet the demand.
Explanation: