Drivers of global economy

Abstract

The article is devoted to an in-depth study of the basic factors, i.e. drivers of the modern world economy development. On the basis of an overview of the topical economic literature the author proposes a theoretical framework and concept of analyzing this problem. Traditionally, various kinds of factors are considered, including labor, capital, technology, population, human resources, and incomes. Basing on the theoretical exploration of the substance of related categories the author gives his own vision of the global economy fundamental drivers. Three of them are identified in the article: globalization, computer and China’s opening to the world. As the available statistics shows, globalization of economic activities pushed up rapid growth of the migration, international trade, foreign direct investment, capital flows, and the spread of technology. Computer and computer-based manufacturing technologies had a considerable effect on the productivity and economic growth. Globalization and computer led to enormous changes in manufacturing, management, household, as well as in everyday life of billions of the people. Special attention is given to the China’s factor in the global development. As of now, China is the world’s largest economy by GDP in terms of purchasing power parity (PPP). In 2018, it generated about 18.6 percent of global GDP based on PPP, or 15.8 percent of global GDP in current US dollars. The United States holds a 15.1 percent share of global GDP in PPP terms and a 23.9 percent of global GDP in current US dollars (2018). In the recent years China’s contribution to global GDP growth reached about 30 percent of the total, while USA provided only 20 percent. Simultaneous influence of the above fundamental drivers has led to cumulative effect and profound changes in the real world. They have transformed humanity in many ways and made the Earth small and the Space closer. The author’s general conclusion is that the global proportion between the production for domestic consumption and the foreign trade that have been established by now may be considered as optimal and normal in terms of global reproduction system.