We the people of the world including each and every one of us are in touch with the Global Market in one way or the other, directly or indirectly. Hence the Global Market is impacting our day to day lives, so let us dive into the article to know better about what exactly global market is about, how the era of global market evolved from the time when we used to make everything by our own, its key components, the trends in global market, challenges coming in global markets and detailing about the future of Global Markets. The article also details worldwide key statistics of Global Market as well as for India. Read the article to know everything in detail.
What is the Global Market?
- The Global Market is a global platform facilitating interconnectedness between various nations all around the globe.
- In simple terms, nations specialising in richness of a commodity trades with other nations who are in need of it and vice versa, it is achieved through the platform of Global Market as factors like finances, technological aids are easily available to boost economies.
- The complexities and dynamics of the web of the Global market is affected by various economic, cultural and technological factors.
- With key components including International Trade, Investments and Global Supply Chains, the global market in today’s era has enhanced rapidly.
- Growth in these components has led to economic growth and innovation all around the globe providing a global platform for all to prosper in the field of their specialisation.
- Indulging in the Global Markets can give opportunities and can pose challenges as well, for the businesses as this is an era of changing and advancing technologies rapidly, so it is necessary for businesses to cope up with it regularly.
The Birth of the Global Market: Historical Context
- The Global Market we see today has been significantly related to the historical era since the evolution of industrialisation and globalisation.
- Before industrialisation and Globalisation came into the picture, people used to manufacture things on their own within a nation and trade was primarily local.
- And then with the development of machinery, industrialisation came into the picture and gave rise to the Industrial Revolution in the 18th and the 19th century.
- Now people were able to manufacture things in huge quantities which were way more than their requirement.
- This forced the people to go beyond their nations and sell things at different places, this gave rise to globalisation in the late 20th century.
- Following it, countries started to trade between each other on a global level and started becoming dependent on each other for various goods and services.
- Further the development in transportation modes of ships and trains took trades to new heights.
Essential Components of Global Market
There are basically three components of Global Market which are: International Trade, Foreign Direct Investment (FDI) and Global Supply Chains. The entire web of the Global market revolves around these components, these are explained as follows:
International Trade
- The Global Market has been dependent primarily on International Trade. It refers to the trade of goods and services beyond borders between various nations.
- The International Trade is a worldwide marketplace connecting consumers and producers across the globe.
- Exporting, Importing and Re-Exporting goods with value addition are the types of international trade primarily seen.
- Governments, Businesses, Consumers and International Organisations (World Trade Organisation and World Bank) majorly affect the International trade across nations.
- Various nations tend to develop trade agreements between each other for a lower trade barriers and easy flow of goods. North American Free Trade Agreement (NAFTA) and European Union (EU) are examples of such agreements.
- International Trade is constantly evolving and changing regularly. Various factors like International relations between nations, technological developments and emerging markets along with others are the factors affecting international trade.
- Despite being rivals in international tensions, the US and China maintain a healthy trade relationship with each other. The US imports consumer goods, electronics and machinery from China and exports aircrafts, automobiles and agricultural products to China.
Foreign Direct Investment (FDI)
- As the name suggests, Foreign Direct Investment is the investment made by an individual or a business in a foreign country.
- This investment can be in terms of an asset, digital currency or in terms of funds.
- FDI is usually made by big MNCs into some developing nations where the cost of manufacturing or labour is on a lower side. And subsequently they get bigger returns.
- For example, In the past few years, India has received a lot of FDI from major Information Technology and pharmaceutical tycoons such as Apple, Google and Facebook.
- This investment not only grows the investor but along with it also boosts the overall economic growth of the hosting nation as well.
Global Supply Chains
- Global Supply Chains are the network of sourcing, production and distribution of Goods from the manufacturer to the consumer across multiple nations.
- This network may involve individuals, organisations, resources and information technology to source, produce and distribute commodities globally.
- Big companies use the global supply chains to pick their desired product from the specialised manufacturers to make the best use of it.
- For example, Apple Inc., is a MNC that has a huge network sourcing components from different locations. Semiconductors from Taiwan, Displays from South Korea and Assembly in China (because of cheap labour).
- This sort of global supply chain network even helps companies like Apple to build quality products without setting up their own manufacturing unit. Hence it is cost effective as well.
Global Market: Statistical Facts
Global Trade Volume:
- As per the latest July 2024 update of United Nations Conference on Trade and Development (UNCTAD), the Global Trade Volume by the end of the year is expected to reach around $32 trillion (USD). However, this is an approximate data which may vary.
- As per a forecast from World Trade Organisation (WTO), $2.8 trillion (USD) growth in Merchandise Trade Volume in 2024 as compared to the year 2023. This data may vary as the values affecting it may change in real time.
- As per the forecast of the International Monetary Fund (IMF), World Trade Growth is expected to be around 3% for the year 2024.
Foreign Direct Investment (FDI)
- As per the data shared by UNCTAD in World Investment Report 2024, FDI inflows into the entire globe has fallen by (-2%) to a figure of $1.33 trillion (USD) in 2023.
- Further, FDI inflows into developing economies have fallen by (-7%) to a figure of $867 billion (USD) in 2023.
- While the FDI inflows for developed economies have witnessed a rise of (+9%) to a figure of $464 billion (USD) in 2023.
Global GDP
- As per International Monetary Fund (IMF), Global GDP is expected to grow by (+3.2%).
- Global Inflation rate has dropped to 5.9% for the year 2024 from 6.8% in 2023 for the developing economies as per the World Economic Outlook by IMF.
Employment & Income
- As per the World Employment and Social Outlook: May 2024 by International Labour Organisation (ILO), the global rate for unemployment is expected to fall around 4.9% in the year 2024. It means there will be 183 million people unemployed in 2024.
Global Market Trends
The major global market trends impacting the market internationally are explained as under:
Emerging Markets
- Emerging Markets are those economies which are based on inviting rapid urbanisation and industrialisation partially or completely.
- Countries like China and India have been the highlights of the world as Emerging Markets for rapid industrialisation and urbanisation.
- Huge manufacturing and export grew China’s economy while the growing technology sector in India grew India’s GDP.
Digital Transformation
- With the arrival of digital transformation, the whole world has been revolutionised completely. The use of Digital Currencies including cryptocurrencies and Central Bank Digital Currencies (CBDCs) have changed the global landscape of finance and payment methods.
- For example, the cryptocurrency Bitcoin has gained a lot of attention as an alternative investment option. The People’s Bank of China and the European Union (EU) are exploring CBDCs to enhance payment systems.
- With the rapid use of e-commerce, digital payment methods and cloud computing, the industrial and the retail sector has been transformed heavily.
- With the rapid increase in the sales of Amazon, Alibaba, Flipkart and Shopify, the e-commerce market value has reached the next level.
- Global e-commerce sales were around $5.8 trillion (USD) in 2023 and expected to grow to $6.3 trillion (USD) in 2024.
Technological Advancements
- With the development in Artificial Intelligence (AI), the global market has been revolutionised and transformed by reducing the time for completing a task by AI driven techniques.
- AI has entered into the healthcare system, finance and manufacturing system. This technique will enhance risk management and will improve fraud detection.
Geopolitical Tensions & Trade Wars
- Geopolitical Tensions can give rise to trade wars between nations and impact the world market by disrupting partial or a complete Global Supply Chain.
- Trade War between the US and China in 2018 led to the imposition of billions of Tariffs and thus ended up making the overall cost high to the consumer as a whole. This indicates how the relationship between nations in the global market affects our local market.
Regional Trade Agreement (RTA)
- Regional Trade Agreements (RTA) between nations make sure that the trade of goods and services is done smoothly with less restrictions, reduce trade barriers and enhance economic cooperation among members.
- Agreements like the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP) includes Japan, Canada and Australia in a mutual agreement to make trade easy and smooth between nations. Launched in 2021, the African Continental Free Trade Area (AfCFTA) smoothens trade in between Africa.
Changing Demographics
- Concentration of a large amount of population in a particular age group tends to change demographics of the country in the Global Market by decreasing the overall National Income.
- For example, because of a lot of senior citizens in the nation, Japan faces a problem of labour shortages and increasing healthcare costs. Whereas a country like Nigeria has a more young population and has the capabilities of becoming an Emerging Market in the Global Market.
Top GDP Earning Countries
As per the data available on the website of World Bank by the end of 2023, the top 5 countries with the highest GDP are mentioned below:
- United States: $27.36 trillion (USD) GDP for the year 2023. Silicon Valley in California and the financial sector in New York City are the major source of GDP for the country. Companies like Google, Facebook and Apple are based in Silicon Valley, while Goldman Sachs and JP Morgan are the two financial institutes.
- China : $17.79 trillion (USD) GDP for the year 2023. Rapid Industrialisation and Manufacturing along with large Exports are the major source of GDP.
- Germany: $4.45 trillion (USD), GDP for the year 2023. Engineering, automobile and chemical industries are the major source of GDP. Brands like Volkswagen, BMW and Mercedes – Benz belongs to Germany. Along with this the country has huge contributions and a leader in renewable energy of Wind and Solar.
- Japan: $4.21 trillion (USD) GDP for the year 2023. Japan is known for advanced technology, automotive manufacturing and strong research and development. Toyota, Honda and Nissan are the leading leaders in innovation and production. While companies like Sony and Panasonic are technological giants of the nation.
- India: $3.54 trillion (USD) GDP for the year 2023. Digital Transformation in India along with companies like TCS, Wipro, IBM and Infosys are providing IT services and solutions worldwide. Along with this Digital India initiative has enhanced the GDP of the country.
Challenges in Global Market
With the benefits of Globalisation, Global Markets evolved, easing the way for world trade but there are a lot of challenges that the global markets face, these are explained below:
Economic Inequality
- Economic Inequality is one of those challenges faced by various nations throughout the globe. It is the concentration of most of the nation’s wealth in some hands.
- A country may appear to be rich with GDP but one can find the wealth distribution among citizens not equal. Chances of people suffering from poverty would be more.
- As per World Inequality Report 2022, 76% of the total wealth is acquired by the top 10% of the population whereas the 2% of the wealth is acquired by the bottom 50% of the population.
Climate Change
- Climate Change is one of those factors which can adversely affect the economies by disturbing the Supply Chains all around the globe. It can bring a complete shutdown as no one would be able to control it at that point of time.
- With increasing global warming and rising sea levels, dangers are coming to us at an alarming rate. And this can be overcomed by a collective effort.
- For example, the floods in Germany and China in 2021, resulted in significant damage to their economies and caused a huge impact on the global supply chains.
Technological Disruptions
- The development in technology is better on one hand and on another side it can lead to job displacement as the technology would have replaced them in their work.
- For example, the rise of self-driving cars and autonomous vehicles are a threat to the drivers in the transportation sector.
- It is essential to train the workforce with essential skills to have jobs in the future when Artificial Intelligence (AI) would replace them completely.
Global Market: Future Trends
Global Market is changing day by day and is adapting with the shifts coming into the market, financial shifts, technological shifts or shifts for preserving climate. A business needs to shift according to the requirements of the Global Market. Below mentioned are some of the major future trends as far as Global Markets are concerned:
Sustainable Development
- Sustainable Development coming into the picture at a global level because of adversely affecting climate conditions and increasing global warming.
- To achieve the targets of economic growth and environmental protection, the global market is aligning with Sustainable Development Goals (SDGs) of the United Nations.
- Businesses are shifting towards a circular economy facilitating recycling and reuse of materials. For example companies like Unilever and Patagonia.
- For example, the shift of the automobile industry towards electrically driven vehicles is an example of a step of shifting towards a cleaner and greener future.
Technological Advancements
- With the introduction of AI in the global market, the global market is already shifting towards adapting AI for executing their day to day tasks.
- Artificial Intelligence (AI) will continue to grow in the future and will assist small and large businesses in their tasks, hence there is a need for businesses to align with the growing technological advancements in the market.
- Further technologies like quantum computing, more fast and reliable network speeds will continue to grow along with the time.
Collective and Inclusive Growth
- In terms of the growth of the society along with the growth of the nation, one needs to move to an inclusive way of growing further.
- With development of schemes for all sections of the society, a small business can also prosper and grow. It will further develop every section of the society.
- For example, the inclusive financial approach in Bangladesh with the development of Grameen Bank’s microfinance scheme for small loans to small business owners, particularly women has facilitated the improvement of their standard of living.
Global Market: India Statistics
- Global Trade Volume in India in the year 2023 for the financial year 2023-2024 (ending in March 2024) was $1.63 trillion (USD). It is expected to grow in the next financial year.
- As per Invest India, for FY 2023-24, the total FDI inflows was $70.95 billion (USD) while the total FDI equity inflows were $44.42 billion (USD).
- Mauritius (25%), Singapore(23%), USA(9%), Netherland(7%) and Japan(6%) are the top 5 contributors to the FDI inflows.
- $3.54 trillion (USD) is the total GDP for India in the year 2023.
- As per Periodic Labour Force Survey (PLFS) conducted by the Ministry of Statistics and Programme Implementation, the Unemployment Rate (UR) has declined to 3.2% in the year 2022-23 from 4.1% in 2021-22.
- While the Unemployment Rate (UR) in rural and urban areas has declined to 2.4% and 5.4% in 2022-23.
- As per World Inequality Report 2022, the top 1% and the top 10% people of India are acquiring 22% and 57% of total national income. While the bottom 50% is only acquiring 13% of the total national income. It means India is totally an unequal country.
- As per the report from Oxfam India, In terms of collection of Goods and Service Tax (GST) of indirect taxation comprising food and non food items, 64.3% of the total GST is coming from the bottom 50% and 4% of GST is coming from the Top 10% of the population.
- Global System of Trade Preferences (GSTP) (42 nations), India ASEAN Trade in Goods Agreement (India ASEAN TIG) (11 nations) and many more are some of the regional trade agreements of India currently running.
Excessive Wealth Guarantees Hell
It is worth noting that the one who has excessive wealth is majorly equipped with other worldly tensions and worries. Even managing lots of money is not easy, people try to save taxes, earn money by unlawful means, this inturn gives unnecessary tensions. And the sins while accumulating false and unlawful money adds up to your fate for the future. It is by the awareness of the true spiritual knowledge that one gets to know that accumulation of excessive wealth takes us away from God and gives us sins in return. Kabir Saheb stated in His divine verses:
Kabir, Yeh Maya Atpati, Sab Ghat Aan Adi |
Kis Kis Ku Samjhau, Kuye Bhaang Padi ||
It is by the true spiritual knowledge given by Sant Rampal Ji Maharaj that one comes to know that wealth accumulation is not the primary goal of this human birth, instead salvation is the first and the foremost goal. One can attain Supreme peace and attain the everlasting abode Satlok by worshipping Supreme God Kabir by the method of worship given by Sant Rampal Ji Maharaj.
To know more about the divine spiritual knowledge of Sant Rampal Ji Maharaj visit www.jagatgururampalji.org or you can visit ‘Sant Rampal Ji Maharaj’ youtube channel.
Global Market: FAQs
Q: What is meant by Global Market?
A: A global market is a global platform where goods and services are sold by global sellers and purchased by consumers.
Q: Why is Global Market good?
A: A global market gives a platform to a business to expand and gives various options for a consumer to choose from.
Q: Why choose Global Markets?
A: It is because of the fact that the Global Market gives you a lot of options to choose from and analyse whether the product is suitable or not.
Q: What is a global product?
A: A global product is that product which is available and sold in more than one country. For example Apple products are available in more than 100 countries, it is a global product.
