How Have Changes In The World Economy Since 1945 Affected Room For Essay - 1

How Have Changes In The World Economy Since 1945 Affected Room For Maneuver Of Multinational Firms - Essay Example The World War of 1945 proved to be a massive disaster for world’s economy with its most effects on the European countries and Japan. These two countries were considered to be the greatest raw material suppliers throughout the world which significantly fell down in the war years. The countries who were not directly involved in the war were the gainers of the economy soon after the war as they fulfilled the gaps and needs of world economy in that crucial time. However, post war phase that is the recovery period from the war had been quite rapid and remarkable for the affected countries, the reasons being that the civilian production came to a halt in the war period and there was growth in the fields of metal working, engineering, chemical capacity etc that boomed during the period and was utilized in the peace time. The infrastructure of the countries was well established in the pre war phase and had to go through the repairs after the war. Additionally there was ample trained a nd knowledgeable human resource to be mobilized to improve and recover the conditions. All these reasons altogether along with the help from some undamaged countries like USA and Canada helped them in the recovery phase. It was seen after 5 years, in the available statistics of 1950 that the GNP and income levels of most of the affected countries was way more than it was in 10 years before the war in 1930s. USA had played a significant role in world economy after the world war. Right after the world war the European countries faced shortage of fuel, food and resources. The only country who could have helped them with its undamaged economy was USA, but to buy all these resources huge reserves of dollars were required and dollar shortage was faced. It seemed in that era that all the world’s resources were shifting from Europe to North American regions and the US economy boomed and it looked it would be impossible to catch up with such an economy which is richer in resources and is the hub of investment. This era give US the opportunity to utilize its resources to the maximum and US utilized this well. (POLLARD. 1997) Post World War II Period: After the Second World War many imbalances were seen in the world’s economy in technological advancements, investment and consumption policies etc. In the late 1950s the prices of primary commodities in the world started decreasing along with general fall in the world trade which led to accumulation of debts for many countries. These reasons mainly later on accounted for the economic crisis in 1970s. The poverty and problems increased in the world economy with an increasing trend of international division of labor introduced by the uncontrolled activities of multinationals all over the world. The result of this unequal distribution in the world’s economy lead to unequal and imbalanced international relationships among highly industrialized and experts and monopoly of industrial research and technology a nd peripheral countries which were dependent on few industries but were technologically controlled by the transnational companies. The most affected by these imbalances were the developing countries which paved ways to global world crisis in later years. (GONZALEZ, CAMPO URBANO & MESA.1984; TOLENTINO. 2000) The boom in the development of MNCs was a result to various important forces. The economic conditions prevailing in the post world war era were more nurturing. The bad experiences faced in 1930s provided the guidelines for not repeating the economical mistakes. The set of policies adopted were designed to rebuild, strengthen and restore the economies of affected countries during the World War. (COHEN. 2007) Role of USA: A few theorists argue that after 1945 the conditions to ‘