Anand CV Mallaya

World financial crisis and the dawn of new economic equation

In Blogroll, Economics, Globalisation on November 23, 2008 at 6:22 am

The world is looking at the current financial situation with a sweaty forehead. Everyone from common man to multi-billionaires are not exempted from the tension. As the crisis is about the trust and not about the money, there is a huge potential for a new world order, in which many of the existing equations will be rewritten. The evidence of globalisation is very much visible. As chaos develops, there will be order in due course. Due to globalisation, most of the developed countries were affected by the crisis more easily than developing countries . The reason is nothing but the close trade links these developing countries have with each other. According Paul Krugman’s trade theory, the trade must be done between countries of different characteristics. Which may mean that developed countries should do trade with developing countries and underdeveloped countries. The scenario was not like that. The economic crisis has raised attention to ideas of economists like Krugman. Which, hopefully, will help building new economic equation that will help globalisation turn into a better way.

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