Impact Of Globalization On The Economy - 2380 Words

â€Å"Economic globalisation† is a terminology that is used commonly to describe the ever-increasing interdependence of economies around the world. It is additionally, the manifestation of increase openness in world economies, commonly due to an increase in cross-border trade scale of services and supplies, as well as flows of international capital and spreads of technology. Naturally, the impact of globalization over the last few decades has been very significant, in particular on the macroeconomic dynamics in small economies, such as the Tunisian economy. The consequences of globalisation are felt on many levels in the Tunisian economy, in particular with respect to its financial markets which include its money and capital markets. The†¦show more content†¦2. Flows of Investment (Foreign Direct Investment, FDI): Globalisation is likely to produce significant effects on the flows of direct investments between countries. FDI is defined as the investment between countries (normally by private sectors). It tends to involve establishing operations. It also includes stakes in various other businesses. FDI is considered extremely important, specifically for economies in need for recovery, such as the Tunisian economy that has been in decay since the revolution of 2011. The instability associated of the revolution has led to a decline in the inflow of direct investments into the country. However, it is believed that this decline however is not expected to continue, especially as the government is trying to improve the business environment, remarkably through the launch of new infrastructure projects within the country. It has been stated by many economists, that attracting more FDI can promote positive spill-overs to the economy. I think that Tunisia will eventually succeed in attracting more FDI , which will have a positive effect on the productive sectors of the economy. Taking Tunisia’s automotive and aerospace sectors for example, they managed to demonstrate small and medium suppliers to multinational companies that would have an opportunity to not only absorb technology, but