The economic recessions that the world has been experiencing can not be prevented without a collective effort from the international community. The current global economy is characterized by high unemployment rates, social inequality and lack of proper regulations which have led to economic instability in many countries around the world (Danes, 2008). The international community has been reluctant to come up with appropriate measures to prevent present and future economic recessions.
The current global economic model does not enhance accountability in the global financial system and this has been one of the major causes of recent economic recessions (Danes, 2008). Developing countries find it difficult to sustain their debts and this is always a major challenge to trade and investment. This paper will discuss how the international community can work together to protect the global economy from recession.
The international community should come up with global solutions to prevent global economic recessions (Carbaugh, 2011). Each country should come up with necessary structural reforms that can streamline the financial system and at the same time deal with all internal economic imbalances.
Good economic governance plays a critical role in creating the necessary conditions for economic growth (Carbaugh, 2011). The leadership in every country should take good care of public resources as a way of enhancing economic sustainability. Good governance ensures that necessary financial firewalls are put in place to promote global economic sustainability (Nanto, 2009).
The leadership in the financial sector can prevent or trigger an economic recession depending on how it controls the financial market. All economic unions around the world should come up with structures that can promote economic sustainability in their respective regions (Nanto, 2009).
Communication among members of the international community is very critical in protecting the global economy from recession (Nanto, 2009). Some of the past economic recessions were caused by lack of communication among nations. Timely communication brings certainty when it comes to the global economic situation. Communication can help in preventing economic failures because it is a good sign of global solidarity (Danes, 2008).
Global economic development depends on the collective effort of all members of the international community. Communication enhances international coordination when dealing with the effects of an economic recession (Danes, 2008). Global solidarity provides the international community with a good opportunity to implement economic policies that can help in protecting the global economy from a recession.
International financial institutions are very critical in determining the global economic outlook and therefore the international community should come up with necessary reforms to prevent the current chaos in the international capital market (Danes, 2008). Developing countries should be given an equal representation in global financial institutions for them to participate in the process of making economic decisions.
All governments should play their role in enhancing global economic stability (Nanto, 2009). The regulatory systems of global financial institutions should be harmonized and strengthened through the collective effort of all members of the international community. The international community should work together to remove all trade barriers in order to enable every country to realize its full potential when it comes to international trade (Nanto, 2009).
Many developing countries have suffered for a very long time as a result of unfair trading systems. The international trading system should be streamlined in order to eliminate all current imbalances that can lead to an economic recession (Danes, 2008). The international community should come up with a trading system that is predictable and fair to all regions.
Debt vulnerability is another critical issue that the international community should tackle as soon as possible to protect the global economy from recession (Danes, 2008). It is estimated that almost 130 developing countries have budget deficits and are not in a better position to enter the loan market (Nanto, 2009).
The international community should come up with legal mechanisms to deal with all speculative activities that lead to high debts. The international community should not put restrictions on countries with high debts but should instead encourage them to increase productivity.
International lending and borrowing should be guided by principles that ensure accountability (Nanto, 2009). The majority of global economic problems are caused by issues to do with the exchange rate. It is the responsibility of the international community to put in place efficient warning systems to control all problems related to exchange rates (Danes, 2008). The international community should regulate the global monetary supply to curb liquidity problems.
In conclusion, the responsibility of protecting the global economy from recession lies with the international community. The international community should work together to prevent present and future worldwide economic recessions. Economic development is a collective initiative and all economic barriers can only be overcome if nations work together to deal with global economic issues (Nanto, 2009).
Global economic recessions are caused by lack of proper regulations, high debts, poor economic governance, exchange rate issues and failure by international financial institutions to maintain the required financial stability. The international community should come up with proper institutional and legislative reforms to ensure that no country is disadvantaged when it comes to international trade (Danes, 2008).
References
Carbaugh, R. (2011). International economics. New York, NY: Cengage Learning.
Danes, H. (2008). Surviving a global economic crisis. London: Xulon Press.
Nanto, D. (2009). The global financial crisis: Analysis and policy implications. London: DIANE Publishing.