Today’s Global Economy is very top-down driven with the government making all the decisions and regulations as it relates to doing business globally.
What are some advantages and disadvantages to this approach?
Is there another approach that might work better?
Please provide references.
Answer preview
Another approach that may be applied in controlling the global economy is the bottom-up model. It comprises of agents who have a limited understanding of the entire global economy. Instead, they pull the pieces of data that they can familiarize wit and utilize them in developing the international market. This approach is, however, not recommendable because players are equipped with incomplete information. Decision making in governing the economy will be filled with gaps and errors (De Grauwe, 2014). It will lead to a slow or unstable economic growth because the loopholes may negatively influence the market. Therefore, no better technique might work better in managing the international economy.
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