Note: In this article long run means a period of 10 years.
The world economy moves onto a growth path when goods and services produced are consumed in a palatable manner and thereby providing revenues to the factors of production, normally. In the similar way, the economy moves onto a slowdown or recession or slump path when at least sufficient or minimum goods and services produced are not consumed & thereby providing lack of revenues to the factors of production, basically. These two economic incidents happen due to monetary reasons mainly, as per me, which can also be referred as economic causes.
The world economy consists of over 200 economies, broadly, which contribute to both the prosperity and slump of the economy. Taking this pivotal factor into account, one need to embrace that dependency is inevitable which leads us to experience profit and loss or prosperity and slump in the economy.
Let us now heed to the above title which is in fact an economic quote made by Naveen Kalyani. It is very important to contemplate and accept that competition factor in the world economy, primarily to make money, leads to the imbalances in the whole economy. Well, how? It is quite common, when one economy posts deficit in its current account or balance sheet that means it was made cashless by other economies of the world. These imbalances happen for economic reasons like aforementioned (equally noteworthy it is), survival, stability, etc. factors. Therefore, when there is an on the rise of competition for money among the world’s economies, some economies make money, some economies make more money, some economies lose money, & some economies lose more money. When surplus nations become richer and richer or go on to make more and more money, other economies become financially embarrassed and sooner or later (productive) demand from them (poorer states) towards surplus nations’ products and services wane, then, even surplus nations suffer due to dependency, technically, and so as deficit-stricken economies. Then, credits or debts may become inevitable to experience for deficit nations in order to move on, but such credits come with restrictions usually which are not good from the growth point of view. Thus, to get back to normal or good economic days, time taken is unpredictable, as per me. Surplus nations would move into a slowdown economic situation. Thus, such nations may look for new buyers or try to boost their endogenous or domestic demand to keep their economies moving up, which is a daunting task, and thus, it takes time which means their economies start slowing down and leading to a possible recession in the world economy and joining deficit-stricken economies in the slowdown activity. Thus, it is inevitable as per me; the global economy’s growth or slump cannot last for a long run which means economic ups and downs are unshunnable. We experienced the Great Recession in the period 2007-‘9 and also a slowdown in the beginning of the 21st century. And that signifies why THE GLOBAL ECONOMY WOULD NEVER BE IN A STABLE STATE IN A LONG RUN.
The bottom line is that it is more likely to experience at least one big shake up event in the global economy, in a period of 10 years, which is mainly due to the lust for making money by economies of the world. And also, some reasons maybe political ones, sociological ones, environmental ones, etc but ultimately they can be termed as monetary ones, as per me and they connected to each other.
