An interdependent economy can be defined as one with a high degree of division of labor, where people depend on one another to produce most of the goods and services required to sustain life and living. That certainly describes the current state of the world economy. One nation’s economic strength relies (often to a high degree) on the economic strength of one or more other countries. The world economy is continuing to become more interdependent with each passing year.
For example, interdependency can be found in various aspects of national economies, and nations may depend on each other for one or more of the following; food, energy, minerals, manufactured goods, financial institutions, and debt. While not everyone has benefitted directly from these relationships, there are a number of ways that an interdependent economy can be beneficial.
Increased Opportunity. An interdependent economy, with the importing and exporting of goods and services, has had the effect of increasing economic opportunity for vast portions of the population in many parts of the world.
Unfortunately, increased opportunities have not yet reached everyone. There are still one billion people, around the globe, who struggle to survive on less than $1 a day. Increased interdependence, with a focus on sustainability, must continue in order for these benefits to be universally available.
Specialization. Because specialization allows national economies to avoid having to produce everything they need for their citizens, they can avoid having to engage in inefficient (and therefore wasteful and/or detrimental to the environment) manufacturing processes. Rather, they can rely upon their interdependencies and trade the goods or services that they specialize in (and produce most efficiently) for the goods or services that they need.
Sustainability. The broadest definition of “sustainability” is the capacity to endure. In the context of human activity, sustainability refers to the ability of society to find a way to maintain its long-term well-being. Because interdependency allows for greater efficiency, and a greater understanding of the far-reaching implications of our economic activities, it can bring about a greater level of sustainability.
Strong Economy and Vibrant Businesses. While it’s not always apparent in the short term, and some business owners still resist the idea, interdependency (and the related concepts of glocality) is good business. Becoming closer connected has the potential to provide a greater level of well-being for more people.
Food Security. While it’s not yet regarded as a wide-reaching problem in highly developed countries, food security is a problem for many. An interdependent economy facilitates a greater level of trade among nations, which improves the likelihood of greater food security for all.
Finally, it’s important to realize that the movement to an interdependent economy is no longer a choice for businesses to make. Freer migration, incredible advancements in technology, and media make interdependency impossible to ignore.