The Significance of International Trade in the Global Economy
This paper looks at the global importance of financial markets, international trade, and governance. International trade is among the most dominant and critical factors. It significantly assists several businesses to commerce all around the world in order to develop and thrive in the marketplace and to conserve its place in the industry for a longer period of time which is very fierce and enterprising in its nature (Ahn 2020). Countries with efficient international trade are thriving and flourishing and have the ability to dominate the global economy. This paper explores the financial markets of the United Kingdom. The Financial market is essential in the current time. It has the ability to develop and evolve a nation's productivity and performance in a favourable way. The financial market is a locus in which deals of financial securities, including all forms of equities, debentures, bonds and so on, are done on a regular basis. Further has been discussed below. Secondly, the capital allocation within international as well as domestic economies, which is employed by several businesses to accomplish profitability and growth, is studied in this paper. The act of distributing a country's resources in a way that maximizes returns and hence enhances efficiency and effectiveness is known as capital allocation. Because of the country’s magnitude and the worth of its activities, capital allocation is one of the most important aspects. Additionally, the paper also focuses on the evaluation of an emerging country and the difficulties that the nation is facing due to industrialization and trade policies.
The Financial market is essential in the current time, and it has the ability to develop and evolve a nation's productivity and performance in a favourable way. The financial market is a locus in which deals of financial securities, including all forms of equities, debentures, bonds and so on, are done on a regular basis (Accominotti and Ugolini 2019). It is also accessible to the common citizen because no additional charges are required, making it one of the markets that continue in high supply year after year. Most of its commodities, which are traded on a daily, monthly, or annual period, could be worth a lot of money if they have a high rate of return, attracting a lot of bidders to the system (Bouët and Vaubourg 2016). Since the return is bigger, the risk is higher, and it is also expected that the elevated the risk, the larger the reward.
People use a variety of global financial markets instruments to meet their needs, and each instrument has its own value and significance in today's society. As a result, it's highly critical to examine and assess the greatest alternative from the list in order to accomplish improved development and growth in a short period of time. The most prominent and distinguished instruments utilized in global financial markets include the equity markets, which has been among the most widely utilized markets in the past and modern times, as well as the financial securities, derivatives, commodities, and bonds, most of which have tangible importance (Bhogal and Trivedi 2019). The forex market is significant and crucial because it involves with foreign currency reserves and exchange, both of which are critical to an economic growth of the nation. A financial market includes sale and purchase of securities, derivatives, currencies, equities, bonds, and secondary market equity trading.
Importance of the Financial Markets in the United Kingdom
The United Kingdom is at the forefront the list in relation to the amount of financial markets it owns. Because the United Kingdom is reponsible for over eighteen per cent of international cross-border mortgage lending and has one of Europe's and the world's largest insurance businesses, it has a tremendous of value in the existing market. Its insurance premiums amount to around nineteen per cent of all premiums in Europe and five to six per cent of all premiums globally (Niepmann and Schmidt-Eisenlohr 2017). Due to the presence of over more than 200 banking institutions and their branches in London, the United Kingdom's capital, as well as a foreign exchange turnover of over thirty seven per cent when compared to the rest of the world, the city is renowned as a banking hub. Furthermore, the financial services market in the UK forwarded £132 billion to the nation's gross domestic product, a large amount considering it accounted for around six per cent of overall economic activity, with London accounting for roughly half of that (Terzi 2016).
The United Kingdom financial market assists the government by supplying large sum of money in a short amount of time, making it critical to the country's long-term growth and development. There are a variety of financial markets firms that help nations flourish as well as enhance and boost the standard of life by letting residents to transact in the system in order to profit from the current market's greater returns. Aside from that, it creates job chances for a significant number of people, helping to decrease redundancy in the nation by allowing skilled individuals to seek professions in the financial market industry, which provides a diverse choice of long-term personal and professional growth opportunities (Caballero, Candelaria and Hale 2018). Furthermore, the United Kingdom is well-positioned in the secondary and primary markets, allowing it to control the market as per the requirements and giving the nation a competitive edge in market influence.
An economy can be define as a structure or, more precisely, a platform in which all acts related to economic operations are carried out, demonstrating how people in a certain area earn a livelihood and meet their day to day costs (Maggiori, Neiman and Schreger 2018). Economic activities, on the other hand, rely on or are linked to the usage of limited capacity to meet every need, including consumption, which entails the exchange of goods and services for cash. The three sorts of economies are mixed economies, planned or socialist economies, and market-based or capitalist economies, and each country runs its economy differently depending on its needs and requirements (Faccio, Marchica and Mura 2016).
Domestic economy refers to the commerce of goods and services inside a single economy that is located entirely within a country's borders. The United Kingdom is in a strong position in this regard, as it is performing extraordinarily well on both domestic and international markets. The United Kingdom's economy is the world's sixth largest, with a value of $2.83 trillion, trailing only India, Germany, Japan, China, and the United States (Bauer and Zanjani 2016). It has a population of 66 million people, the significant proportion of who are youngsters and thereby contribute to the country's growth and development by participating in economically beneficial activities. The 4 constituent parts of the United Kingdom are Scotland, Wales, Northern Ireland, and England with England contributing the majority of gross domestic product and garnering the title “heart of the united kingdom" (Li and Xing 2018). Without it, the United Kingdom would struggle to compete in the market. It employs a mixed economy, in which both the public and private sectors own and manage all resources, rendering it among the greatest significant and crucial components of the country's long-term prosperity and progress. The European Union is the United Kingdom's foremost significant trading partner, accounting for around 44 per cent of all exports each year. Despite the fact that all industries contribute to the economy, aerospace sectors, gas, and the crude oil account for a significant portion of it, resulting in rapid growth over a short period of time (Said 2016). Q
Global Financial Markets Instruments
The act of distributing a country's resources in a way that maximizes returns and hence enhances efficiency and effectiveness is known as capital allocation (Burton 2020). . Because of the country’s magnitude and the worth of its activities, capital allocation is one of the most important aspects, and all of them are discussed in brief in a methodical and chronological manner below.
Small companies: Small companies are critical for any country because they fill the gap between consumers and wholesalers by supplying goods and services to people without direct accessibility to bigger firms that can match their wants and expectations. The United Kingdom invests much in this area due to the numerous benefits (Burton 2020). It gives work opportunities, for example, which helps to reduce unemployment in the country, resulting in a greater and better standard of living for general public.
Infrastructure: It is vital to a country's economy since it can assist it grow and prosper, however if it isn't created properly, it could affect the nation's brand and economic potential in the longer run. Moreover it contributes to the improvement of living standards by giving people with numerous possibilities to advance in an extremely competitive atmosphere. The United Kingdom pays special attention to this and has maintained an infrastructure that allows enterprises operating there to contribute meaningfully to the Country's GDP by precisely utilizing the infrastructure put up by the United Kingdom government. As a result, it aids in the country's connectivity with the rest of the world, allowing for smooth corporate transactions with little hiccups (Aktas, et al. 2019).
The international market is a market where companies trade from all over the world to help them develop and flourish in the market by enhancing the company's worth in the market (Banerjee, Devereux and Lombardo 2016). The United Kingdom uses a variety of techniques to move its capital to the international market, all of which are detailed below:
Mergers and acquisition: Mergers and acquisition are key elements because they allow a company that isn't performing well in the market to join forces with one that is, allowing both to profit. It also helps with competition reduction and, in some situations, the acquisition of a larger part of the industry (Zysman 2018). The United Kingdom makes excellent use of this in order to succeed in the United Arab Emirates market, allowing both countries to thrive and gain in the long run.
Debt repayment: Debt repayment refers to a country's need to repay interest on top of the principal amount borrowed for a variety of objectives and goals, the most frequent of them is financial investment. Debt could occur in numerous types, such as financial instruments, bonds, and cash and so on, and the United Kingdom makes timely payments to the United Arab Emirates to avoid prevent sliding into a debt trap which would limit the nation's activities over time (Bustos Garber and Ponticelli 2016).
Because it is among the globe's largest producers and exporters of oil and its derivatives, the United Arab Emirates' economy is largely based on the commodity. It has a mixed market free economy based on natural gas and oil production in the market, which accounts for roughly around 77 per cent of GDP and employs the majority of the country's 97 million people. With a Gross Domestic Product of around US$ 415 billion, it is the second largest economy in Middle East after Saudi Arabia (Nuhoho, et al. 2018). Furthermore, the country has met and exceeded its aim for additional GDP growth, as it continues to outperform the preceding year's performance over the long run. The country mainly exports dried fish, natural gas, dates, crude oil, and other agricultural products to Oman, India, the United States, Switzerland, Iran and Japan, while importing chemical, food, and machinery products primarily from India and the United States (Small and Al Mazrooei 2016).
The Role of the United Kingdom's Financial Market in the Global Economy
Industrialization: For any nation that wants to diversify in the market, industrialization is the most significant, critical, and crucial aspect because t is a practise which aids in the growth of industrialization by the usages of advanced strategies and methodologies, which can be helpful in terms of raising the quality of economic growth (Manda and Ben Dhaou 2019). Connections, technology, labour capital, and Land are five key aspects that all work together to aid a country's industrialization. It originated in late eighteenth-century Europe and North America, and due to its great value, it spread over the world. The United Arab Emirates is a strategically located country with developed and well-connected parts to the rest of the globe, allowing it to ensure that all actions are directed toward achieving the stated goals and objectives (Xu, David and Kim 2018). By increasing the usage of advanced technology in the production of products and services, industrialization could significant aid a country like the United Arab Emirates alleviate poverty and hence raise the standard of living of its population. On this path, there are a few challenges along the way, which are explained here.
Emigration: Individuals move to other nations where employment prospects are more plentiful, enabling them to earn more money than they could in the United Arab Emirates. In the United Arab Emirates, emigration is a big problem (Alshamsi and Saeed 2018). Businesses operating there operate under no established code of behaviour, conventions, regulations, or, enacting laws rendering it harder for people to work in such a toxic environment.
Unequal income distribution: When the disparity between the wealthy and the impoverished expands over period, unequal income distribution emerges, and it is among the unpleasant situations for community since it takes a while to mend (Ghani and O’Connell 2016). The United Arab Emirates is in an analogous predicament, with the impoverished becoming impoverished day by day and the rich becoming wealthier by the day, causing serious economic damage. Because there is no mechanism in place to ensure that wealth is divided properly, this element becomes significantly more complicated and demanding.
Trade policies: Trade policies are laws and regulations aimed at allowing businesses to expand into new markets and achieve high levels of growth by allowing them to trade with other countries (Su, Zhang and Su 2015). The United Arab Emirates has a number of protocols in place to ensure that everything is thoroughly scrutinized, all of which are described below. All of which are described below.
Theft of Intellectual Property: Trade policies are a source of intellectual property theft since they assist a corporation in expanding into new countries and adjusting to changing business circumstances. Businesses have the ability to steal other people's inventions, creativity, ideas, or, plans which can be terrible for a nation like the United Arab Emirates and constitute a severe threat (Daleure 2017).
Economic warfare: It is a term used for warfare where one nation target with the aim of weakening the economy of other nations. The United Arab Emirates takes this method, that strives to destabilize the economic systems of other industrialized nations to aid the nation's future growth and prosperity (Jensen 2018).
The Importance of a Nation's Domestic Economy
Thereby to conclude, international trade financing and investment are among the most important components, as it helps businesses expand into new markets and is thus very important in the long run. In the current market climate, the financial market, as well as its connected instruments and procedures, are extremely important and each of them must be thoroughly understood so that they can contribute to the firm's worth rather than detract from it. Countries with efficient international trade are thriving and flourishing and have the ability to dominate the global economy. The Financial market is essential in the current time. It has the ability to develop and evolve a nation's productivity and performance in a favourable way. The financial market is a locus in which deals of financial securities, including all forms of equities, debentures, bonds and so on, are done on a regular basis. Apart from that, United Arab Emirates' economy is largely based on the commodity because it is among the world's greatest producers and exporters of oil and its derivatives. It has a mixed market free economy based on natural gas and oil production in the industry. The economies of the United Kingdom and the United Arab Emirates are doing well. While there are certain areas of worry, they are still far ahead of the pack.
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