Globalization has helped the realization of the world economy characterized with various features although some factors are not exclusive; they are not present in every country on the globe. To help in gaining more understanding of globalization and the world economy, it is paramount to consider the case of Japan and the US economies. There is a considerably stable status of the world economy, with some economies such as Japan and US indicating an upward progression over the recent years’ time. More specifically America has registered a healthy economic growth rated at 3.5% in 2005 and 5% in 2006’ s first quarter of the year.
However, the healthy economic growth was hard to be sustained following the consistent increase in oil prices globally as well as the extensive Katrina’ s hurricane devastation. However, the US government adopted immediate fiscal and monetary policies which had effective responses. The adopted measures helped in regaining the economic stability of the US. The economy of Japan receives a substantial economic boost registering phenomenal progression rates following the country's continued trading with China. The continent of Europe has also indicated a marginal growth in the recent past.
Several European Union countries have recorded unexpected growth rates economically. The establishment of the key free trade consensus including the "North American Free Trade Agreement (NAFTA)" as well as South Asian Free Trade Agreement (SAFTA) in an effort of boosting globally exercised trade. The concept of global "dollarization" of currencies has assisted economies of the world to measure their respective currencies against America's dollar. Consequently, currencies dollarization has led to the reduction in the independence of the fiscal and monetary policies used in respective economies.
Recently, China adopted a key monetary reform while pegging the Yuan or Renminbi to a collection of currencies. Additionally, the Indian Rupee indicates positive signs of strengthening against US dollar. There are other global currencies which have indicated stability for the past several years. Such currencies include Euro and Yen.
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