What are the Challenges that face World Economy?
“The financial sector witnesses a more cutthroat scenario than before and allows comparatively large mass of international monetary flow. ”
We are living in a globalised world today i.e. entire world has become one economy. For developing countries, it means integration with world economy. The wind of globalization has brought many changes, which are opportunities on one hand and threats on the other. Nevertheless, one thing is for sure that competition has increased to a great extent and this situation is to stay the same for a long time to come.The wave of globalization has brought many developing countries on the path of growth by providing them with opportunity to take advantage through sharing of technology, knowledge, modernization, business processes outsourcing, widened and global market, etc.
Liberalization and privatization, which are the natural outcomes of globalization, collectively called LPG, have changed the face of the financial sector of developing countries. The financial sector witnesses a more cutthroat scenario than before and allows comparatively large mass of international monetary flow.
The global finance has now integrated a lot because many kinds of financial deregulations have been brought in all over the world. This also has led to some kind of instability and this challenge is to be met by us in a collective way.
Privatization of banking and insurance sector has brought public sector under tough competition and globalization has brought both public and private sector under the threat of global giants and fear of cutthroat competition.
So competition is going to be tough and with financial liberalization under the WTO, banks in the developing countries will have to benchmark themselves against the best in the world.
In insurance sector, private sector operators in collaboration with their overseas partners are likely to bring more professional and focused approach. The success of banking and insurance industry will primarily depend upon meeting the rising expectations of the customers who will be the real king in the liberalized market in future.
Some economists are of the view that such kind of competition is good and it will force different countries to open up their trades. They consider it a first step in the free trade world scenario. Others are not that optimistic and feel that the present situation will put a lot of pressure on the common man and the unemployed.
Author - DeeKay
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